Legislature(1995 - 1996)
03/30/1995 08:06 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 30, 1995 8:06 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative Scott Ogan, Vice Chair Representative Joe Green Representative Brian Porter Representative Ivan Representative Ed Willis Representative Caren Robinson MEMBERS ABSENT None COMMITTEE CALENDAR SB 1: "An Act relating to state implementation of federal statutes." PASSED OUT OF COMMITTEE * HB 267: "An Act relating to review and expiration of regulations; and providing for an effective date. HEARD AND HELD SB 92: "An Act requiring that, in addition to its operating budget, all activities of the Alaska Housing Finance Corporation are subject to the Executive Budget Act. HEARD AND HELD * HB 269: "An Act relating to credits against certain taxes for contributions to certain public educational radio and television networks and stations and to endowments for public educational radio and television networks; and providing for an effective date. PASSED OUT OF COMMITTEE SB 5: "An Act prescribing the use and characteristics of voting booths employed in elections and the color of ballots used in state primary elections. SCHEDULED BUT NOT HEARD HB 270: "An Act relating to retirement incentive programs for the public employees' retirement system and the teachers' retirement system; relating to separation incentives for certain state employees; and providing for an effective date." BILL POSTPONED (* First public hearing) WITNESS REGISTER SENATOR ROBIN TAYLOR Alaska State Legislature State Capitol Building, Room 30 Juneau, Alaska 99801-1182 Telephone: 465-3873 POSITION STATEMENT: Provided sponsor statement for SB 1 CHARLES MCKEE P. O. Box 143452 Anchorage, Alaska 99514 Telephone: None POSITION STATEMENT: Supported SB 1 DELORES FIELDS, Member Alaska Independence Party 2050 Resolution Road Fairbanks, Alaska 99712 Telephone: 322-2720 POSITION STATEMENT: Supported SB 1 and HB 267 ART GRISWOLD, Member Alaska Independence Party 873 Runamuck Ave North Pole, Alaska 99705 Telephone: 488-7805 POSITION STATEMENT: Supported SB 1 and HB 267 DALE ANDERSON, Representative Commercial Fisheries Entry Commission 8800 Glacier Highway Juneau, Alaska 99801 Telephone: 789-6160 POSITION STATEMENT: Opposed to HB 267 BOB BARTHOLEMEW, Deputy Director Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99801-0420 Telephone: 276-5364 POSITION STATEMENT: Opposed to HB 267 ELMER LINDSTROM, Special Assistant Office of the Commissioner Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811-0601 Telephone: 465-3030 POSITION STATEMENT: Opposed to HB 267 WILLIS F. KIRKPATRICK, Director Division of Banking, Securities and Corporations Department of Commerce and Economic Development P.O. Box 110807 Juneau, Alaska 99811 Telephone: 465-2521 POSITION STATEMENT: Opposed to HB 267 DEBORAH BEHR, Assistant Attorney General Legislation and Regulations Section Department of Law P.O. Box 110300 Juneau, Alaska 99811 Telephone: 465-3600 POSITION STATEMENT: Opposed to HB 267 SHARON BARTON, Director Division of Administrative Services Department of Administration P.O. Box 110208 Juneau, Alaska 99811 Telephone: 465-2277 POSITION STATEMENT: Opposed to HB 267 FRANK DILLON, Executive Director Alaska Trucking Association 3443 Minnesota Drive Anchorage, Alaska 99503 Telephone: None POSITION STATEMENT: Supports HB 267 JOHN BITNEY, Legislative Assistant Representative Martin Alaska State Legislature State Capitol, Room 502 Juneau, Alaska 99801 Telephone: 465-3783 POSITION STATEMENT: Supported SB 92 TOM WILLIAMS, Legislative Assistant Senator Frank Alaska State Legislature State Capitol, Room 518 Juneau, Alaska 99801 Telephone: 465-3709 POSITION STATEMENT: Provided sponsor statement for SB 92 MICHAEL CHEVALIER, Housing Director Anchorage Neighborhood Housing 3700 Woodland Drive No. 500 Anchorage, Alaska 99517 Telephone: 243-1558 POSITION STATEMENT: Opposed SB 92 CYNTHIA PARKER, Executive Director Anchorage Neighborhood Housing 3700 Woodland Drive #500 Anchorage, Alaska 99517 Telephone: 243-1558 POSITION STATEMENT: Opposed to SB 92 ROBIN HARRISON, Executive Director Tagiugmiullu Nunamiullu Housing Authority Barrow, Alaska Telephone: 852-0290 POSITION STATEMENT: Opposed to SB 92 BOB MAXWELL 126 Boaters Lane Fairbanks, Alaska 99709 Telephone: 479-0592 POSITION STATEMENT: Opposed to SB 92 DAN FAUSKE, Corporate Executive Officer Alaska Housing and Finance Corporation P.O. Box 101020 Anchorage, Alaska 99502 Telephone: 564-9326 POSITION STATEMENT: Opposed to SB 92 JAN SIEBERTS, Senior Vice President National Bank of Alaska P.O. Box 100600 Anchorage, Alaska 99510 Telephone: 265-2991 POSITION STATEMENT: Opposed to SB 92 SUE BENEDETTI, President Alaska Mortgage Bankers Association P.O. Box 100720 Anchorage, Alaska 99510 Telephone: 273-5637 POSITION STATEMENT: Opposed to SB 92 JOHN EGAN, Volunteer President Housing First 231 Gastineau Avenue Juneau, Alaska 99801 Telephone: 463-3303 POSITION STATEMENT: Opposed to SB 92 TAMARA ROWCROFT, General Manager Alaska Housing Development Corporation 1800 Northwood Ave Juneau, Alaska 99801 Telephone: 780-4533 POSITION STATEMENT: Opposed to SB 92 TOM WRIGHT, Legislative Assistant Representative Ivan Alaska State Legislature State Capitol, Room 503 Juneau, Alaska 99801-1182 Telephone: 465-4942 POSITION STATEMENT: Provided sponsor statement for HB 269 PREVIOUS ACTION BILL: SB 1 SHORT TITLE: REVIEW OF FEDERALLY MANDATED PROGRAMS SPONSOR(S): SENATOR(S) TAYLOR,Kelly,Halford,Sharp JRN-DATE JRN-PG ACTION 01/06/95 12 (S) PREFILE RELEASED - 1/6/95 01/16/95 12 (S) READ THE FIRST TIME - REFERRAL(S) 01/16/95 13 (S) STATE AFFAIRS, JUDICIARY 02/07/95 (S) STA AT 03:30 PM BELTZ ROOM 211 02/07/95 (S) MINUTE(STA) 02/08/95 204 (S) STA RPT 2DP 2NR 02/08/95 204 (S) FN(S):DOT #9,REV #13,DPS #14 LAW #15 02/08/95 204 (S) DHSS #16, F&G #17, DCRA #18 02/08/95 204 (S) ZERO FN(S): (DNR #1, DMVA #2, DOE #3,#4, 02/08/95 204 (S) CORR #5,DCED #6,ADM #7,GOV #8,LABOR 02/08/95 204 (S) #10, F&G #11, DEC #12) 02/08/95 209 (S) JUD REFERRAL WAIVED 02/08/95 209 (S) FIN REFERRAL ADDED 03/02/95 454 (S) FIN RPT 4DP 3NR 03/02/95 454 (S) ZERO FISCAL NOTE (S.FIN/ALL DEPTS #19) 03/02/95 (S) FIN AT 09:00 AM SENATE FINANCE 520 03/03/95 (S) RLS AT 11:20 AM FAHRENKAMP RM 203 03/03/95 (S) MINUTE(RLS) 03/08/95 537 (S) RULES TO CALENDAR 3/8/95 03/08/95 539 (S) READ THE SECOND TIME 03/08/95 539 (S) ADVANCE TO 3RD READING MOTION WITHDRAWN 03/08/95 539 (S) THIRD READING 3/9 CALENDAR 03/09/95 559 (S) READ THE THIRD TIME SB 1 03/09/95 559 (S) PASSED Y11 N8 E1 03/09/95 565 (S) TRANSMITTED TO (H) 03/10/95 696 (H) READ THE FIRST TIME - REFERRAL(S) 03/10/95 696 (H) STATE AFFAIRS, FINANCE 03/15/95 755 (H) WTR REFERRAL ADDED 03/22/95 868 (H) WTR REFERRAL WAIVED 03/28/95 (H) STA AT 08:00 AM CAPITOL 102 03/28/95 (H) MINUTE(STA) 03/30/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 267 SHORT TITLE: REGULATION REVIEW AND EXPIRATION SPONSOR(S): REPRESENTATIVE(S) JAMES,Kelly JRN-DATE JRN-PG ACTION 03/17/95 779 (H) READ THE FIRST TIME - REFERRAL(S) 03/17/95 779 (H) STATE AFFAIRS, FINANCE 03/20/95 825 (H) COSPONSOR(S): KELLY 03/23/95 (H) STA AT 08:00 AM CAPITOL 102 03/23/95 (H) MINUTE(STA) 03/28/95 (H) STA AT 08:00 AM CAPITOL 102 03/28/95 (H) MINUTE(STA) 03/30/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: SB 92 SHORT TITLE: AHFC SUBJECT TO EXEC. BUDGET ACT SPONSOR(S): RULES BY REQUEST OF LEGISLATIVE BUDGET AND AUDIT JRN-DATE JRN-PG ACTION 02/21/95 349 (S) READ THE FIRST TIME - REFERRAL(S) 02/21/95 349 (S) STA, FIN 02/28/95 (S) STA AT 03:30 PM BELTZ ROOM 211 02/28/95 (S) MINUTE(STA) 03/01/95 436 (S) STA RPT 4DP 03/01/95 436 (S) ZERO FISCAL NOTE (REV #1) 03/15/95 617 (S) FIN RPT 6DP 1NR 03/15/95 617 (S) PREVIOUS ZERO FN (REV #1) 03/15/95 (S) FIN AT 09:00 AM SENATE FINANCE 532 03/15/95 (S) MINUTE(FIN) 03/16/95 (S) RLS AT 12:00 PM FAHRENKAMP RM 203 03/16/95 (S) MINUTE(RLS) 03/17/95 664 (S) RULES TO CALENDAR 3/17/95 03/17/95 666 (S) READ THE SECOND TIME 03/17/95 666 (S) ADVANCED TO THIRD READING UNAN CONSENT 03/17/95 666 (S) READ THE THIRD TIME SB 92 03/17/95 666 (S) PASSED Y18 N- E2 03/17/95 679 (S) TRANSMITTED TO (H) 03/20/95 802 (H) READ THE FIRST TIME - REFERRAL(S) 03/20/95 802 (H) STATE AFFAIRS, FINANCE 03/30/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 269 SHORT TITLE: TAX CREDIT: GIFTS TO PUBLIC BROADCASTING SPONSOR(S): REPRESENTATIVE(S) IVAN,Bunde,Foster,Williams JRN-DATE JRN-PG ACTION 03/20/95 813 (H) READ THE FIRST TIME - REFERRAL(S) 03/20/95 813 (H) STATE AFFAIRS, FINANCE 03/24/95 920 (H) COSPONSOR(S): FOSTER 03/29/95 987 (H) COSPONSOR(S): WILLIAMS 03/30/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: SB 5 SHORT TITLE: ELECTION BALLOTS SPONSOR(S): SENATOR(S) KELLY,Salo JRN-DATE JRN-PG ACTION 01/06/95 14 (S) PREFILE RELEASED - 1/6/95 01/16/95 14 (S) READ THE FIRST TIME - REFERRAL(S) 01/16/95 14 (S) STA, FIN 02/14/95 (S) STA AT 03:30 PM BELTZ ROOM 211 02/14/95 (S) MINUTE(STA) 02/16/95 315 (S) STA RPT CS 3DP 1NR SAME TITLE 02/16/95 315 (S) ZERO FISCAL NOTE (GOV #1) 03/02/95 454 (S) FIN RPT 6DP 1NR (STA)CS 03/02/95 454 (S) ZERO FN (GOV #1) 03/02/95 (S) FIN AT 09:00 AM SENATE FINANCE 520 03/03/95 (S) RLS AT 11:20 AM FAHRENKAMP RM 203 03/03/95 (S) MINUTE(RLS) 03/14/95 600 (S) RULES TO CALENDAR 3/14/95 03/14/95 603 (S) HELD TO 3/15 CAL FOR 2ND RDG 03/15/95 619 (S) READ THE SECOND TIME 03/15/95 619 (S) STA CS ADOPTED UNAN CONSENT 03/15/95 619 (S) ADVANCED TO THIRD READING UNAN CONSENT 03/15/95 619 (S) READ THE THIRD TIME CSSB 5(STA) 03/15/95 619 (S) PASSED Y19 N- E1 03/15/95 635 (S) TRANSMITTED TO (H) 03/17/95 764 (H) READ THE FIRST TIME - REFERRAL(S) 03/17/95 765 (H) STATE AFFAIRS, FINANCE 03/30/95 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 270 SHORT TITLE: RETIREMENT INCENTIVE PROGRAM SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 03/20/95 813 (H) READ THE FIRST TIME - REFERRAL(S) 03/20/95 814 (H) STA, L&C, FINANCE 03/20/95 814 (H) 2 FISCAL NOTES (ADM) 03/20/95 814 (H) INDETERMINATE FN (GOV/ALL DEPTS) 03/20/95 814 (H) GOVERNOR'S TRANSMITTAL LETTER 03/30/95 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 95-38, SIDE A Number 000 The meeting of the House State Affairs Standing Committee was called to order by Chair Jeannette James at 8:06 a.m. Members present at the call to order were Representatives James, Ogan, Green and Porter. Representatives Ivan, Willis and Robinson arrived later. CHAIR JEANNETTE JAMES stated there was a quorum present and announced the first bill on the agenda was SB 1. She called Senator Robin Taylor, as the bill sponsor, to testify. SB 1 - REVIEW OF FEDERALLY MANDATED PROGRAMS SENATOR ROBIN TAYLOR introduced himself and commented about an airline whose brakes failed with him as a passenger in Petersburg. He said he introduced SB 1 as a companion bill to his Tenth Amendment resolution, SJR 7. He stated this resolution demands that the U.S. Congress stop passing legislation which exceeds its authority under the Tenth Amendment of our Constitution. SB 1, he said, is an attempt to identify federal mandates, both statutory and regulatory, to see which of these conflict with the policies of our state and the limits of our state Constitution. He commented he thought the agencies would be doing this already, but received all sorts of strange fiscal notes, indicating how much expense this would be the implement. He said, hopefully, this would provide them with a vehicle to focus their attention on those mandates worth reviewing. He stated SB 1 would require an annual review by the Executive Branch of each program mandated by Congress and audit by the Governor. The Legislative Budget and Audit Committee would adopt conclusions and make recommendations for changes in the federal law to make a program more consistent with state policy or more cost-effective. At the same time, a determination could also be made with the Department of Law, to see if the mandate exceeds federal authority under the Tenth amendment. He stated Section 1 of the bill finds there is an urgent need for this review and the bill also allows for legislative review of federal mandates and the Legislative Budget and Audit Committee would be charged with making those recommendations. He thought SB 1 would add credence to the legislatures passage of SJR 7. He pointed out the Senate Finance Committee zeroed out the various fiscal notes submitted by the different agencies of state government. They felt the information for conducting this review were already available to the agencies, and so there was no need for additional staff. On March 9, the Senate passed SB 1 by vote of 11 to 8. He urged quick passage of the bill from committee and expressed appreciation to Chair Jeannette James for hearing the bill. Number 075 CHAIR JAMES asked if there were any questions from the committee for Senator Taylor. She asked if anyone else wished to testify on the bill. CHARLES MCKEE testified via teleconference from Anchorage, saying he approved of this bill as it could relieve the impact of federal intrusion on many different entities, from the permanent fund to the oil industry. He thought this bill made a slight attempt to redress his fiscal difficulties and would help the legislature in dealing with the state budget. Number 141 DELORES FIELDS, Member, Alaska Independence Party stated she was a proud member of the Alaska Independence Party and supported SB 1, because federal mandates needed to be reviewed before being implemented by the state. She thought the mandates coming from the federal government did not always comply with the policies of the state. Number 170 CHAIR JAMES recognized the arrival of Representatives Willis and Ivan at 8:11 a. m. She asked if there was anyone else wishing to testify on teleconference. ART GRISWOLD, Member, Alaska Independence Party, said he also wanted to testify in favor of SB 1. He mentioned he was speaking on behalf of the Interior Region of the Alaska Independence Party, who found the provisions of this bill would help protect states rights and those of the citizens of this state from those unfunded mandates of the federal government that do not pertain to the needs of Alaska. He pledged the support of the Alaska Independence Party in getting passage of SB 1 through the legislature. Number 188 REPRESENTATIVE SCOTT OGAN asked Senator Taylor if he thought it might be better to conduct this review of federal mandates over a four year period, instead of annually. He recognized the bill had a zero fiscal note, but thought many of the mandates would not change annually, and so would not be in need of review. SENATOR TAYLOR said he had considered this, but was fearful that should they allow a review over four years, some administrations might not start the review until the fourth year. He added he did not trust a Republican majority in Congress any more than he had trusted a Democrat majority in Congress. He thought Republicans were just as likely to force silly legislation on Alaska, just as much as the Democrats did. He thought the danger of losing our civil liberties was always in jeopardy whenever you convene a congress or state legislature. He quoted Benjamin Franklin, who said Men are plowing quietly in the fields and women weeping silently in the kitchens of this land, for the legislature is in session and no mans life or property is safe. CHAIR JAMES verified there was no further questions from the committee and asked for a motion to pass SB 1 out of committee. Number 244 REPRESENTATIVE OGAN stated he would be privileged and honored to move to pass SB 1 out of committee with zero fiscal note and individual recommendations. CHAIR JAMES asked if there were any objections from the committee. Hearing none, the bill passed out of committee. HB 267 - REGULATION REVIEW AND EXPIRATION Number 265 CHAIR JAMES announced the next bill on the agenda was HB 267. She called this a simple bill that would provide for all regulations to expire on June 30, unless extended by act of the legislature. This, she said, would provide a mechanism of oversight by the legislature and a means of eliminating those regulations not meeting the intent of the legislature. She said she had many conversations with the Administration on this bill and planned to just take testimony at that meeting. She would then take the suggestions from testimony and draft a proposed committee substitute for consideration by the committee at the next meeting. She asked if there was any questions or comments from the committee before they heard the testimony. Hearing none, she heard from those testifying on teleconference. Number 305 DELORES FIELDS, member of Alaska Independence Party, supported HB 267. She thought there were too many regulations, some of which were in conflict with the Constitution, and that they needed to be reviewed by the legislature. ART GRISWOLD, member of the Alaska Independence Party, thought HB 267 would allow for a regular evaluation of the regulatory process, without extra hassle by the legislature to try and repeal a regulation it disagrees with. He thought this bill would allow the legislature some oversight of regulations and grant the Governor the chance to veto, if they choose. He thought this bill had been developed with considerable thought and hoped it passed through committee without difficulty. He said this bill had the support of the Interior Region organization of the Alaska Independence Party. Number 342 CHAIR JAMES asked if anyone else on teleconference wished to testify on HB 267. Hearing none, she asked who wished to testify from the audience. DALE ANDERSON, Representative of the Alaska Commercial Fisheries Entry Commission, said the commission had been created twenty years ago, to help bring stability to the fishing industry. He thought HB 267 would be devastating to the agency, as the stability they were striving for would cease to exist. He could not see why anyone would invest in a permit, which may expire the next year along with the agencys regulations. He doubted the state loan agency could justify its investment of over $84 million in permits and fishing vessels under such a system. He said the commission could understand the need for checks and balances and regulatory reform, but thought such a broad bill was too much. He said a quasi-judicial commission such as theirs, demands permanence in order to safeguard the adjudicatory process in which they are involved. Thus, they asked for an exemption to their commission from the effects of HB 267, to help maintain the integrity and stability found in the limited entry system. BOB BARTHOLEMEW, Deputy Director for the Income and Excise Tax Division in the Department of Revenue, thought the greatest impact to their agency would be in sections 5, 6, and 8 of HB 267. He said currently, the agency has four programs with significant regulations, the Oil and Gas Tax Division, Corporate Income and Excise Tax Division, Permanent Fund Dividend Program, and the Charitable Gaming Division. He said the regulations for those programs had been established with considerable effort and should those regulations go away, they felt the revenue laws would not function and the state would experience a loss of revenue. He cited the production tax on North Slope Oil as an example. He thought it was necessary to either have the regulations in place, or move them into statute. Finally, he thought this would possibly create instability in the business climate of the state. He urged the committee to consider a way of allowing the legislature to be involved in the drafting process, before they are signed into law. He said the Department of Revenue would like to find a way of working within the current process, rather than having all regulations expire annually. CHAIR JAMES thanked Mr. Bartholemew for his comments on having the legislature get involved in the drafting of regulations. She said this was part of the concept behind HB 105, her comprehensive overall regulation reform bill. She explained the motivation behind HB 267 was that the legislature currently has no authority to change regulations. They can only make suggestions. She said there were two ways to change this, HB 267 and HJR 1, which would give the legislature the ability to annul regulations by concurrent resolution. She did not feel the legislature would expire those regulations having to due with the tax program. She pointed out, that in those states with this type of law, there was more of an attitude of cooperation between the legislature and the agencies in developing regulations that were more user friendly to the public. She asked if Mr. Bartholemew would feel better if there was a provision in the bill that would set a deadline as to when the bill had to pass the legislature. MR. BARTHOLEMEW thought the biggest concern of the Department of Revenue was the possibility of all regulations expiring annually. He thought there would be considerable discussion on the bill as it went through the committee process and debate as to which regulation should be included and which one left out. Thus, the agency would still be concerned about the possibility of all regulations expiring. CHAIR JAMES mentioned there were other states doing this already and it was working fine. She said that with regards to whether this would be a deterrent to industry, this had not been the case in Colorado and Utah, who had this law. She said in discussions with officials in Utah, they viewed this law as a business incentive. She pointed out that Salt Lake City and Denver were thriving business hubs of the West Coast. Thus, she did not see this bill as a deterrent to business. ELMER LINDSTROM, Special Assistant, Office of the Commissioner, Department of Health and Social Services, said he would not take much time testifying, as he had testified before the committee on earlier regulation reform bills and their concerns on this bill were largely the same. He stated their biggest concern was that the department participated in many federal programs and federally funded programs, and should their regulations expire, the department would face the risk of losing these funds. Another area of concern was there licensing programs, which would possibly be problematic if they could not readopt these regulations in substantially the same form. He felt an underlying theme of this bill was that the majority of regulations are bad and in need of review. He thought this was not the case, that it was only a very few. He suggested there be an exemption to regulations mandated by the federal government. Number 579 CHAIR JAMES said she thought he had made her point, in that many of the regulations were not problematic and would not be expired by the legislature. She thought he was in error in suggesting the legislature would not be as sensitive as the Administration in their oversight of regulations. She thought they would be more sensitive, in that they were responsible for lawmaking and the budget of the state. Thus, she did not feel it was a fair estimate to think the legislature was incompetent to deal with these issues. She pointed out the other option was HJR 1, allowing the legislature to annul regulations by resolution, which passed the 34 to 4 on the House floor. She felt there could only be meaningful oversight of regulations by the legislature if they had some form of a hammer to hold over the agencies. HB 267 was meant to provide a hammer for the legislature to allow for meaningful oversight of the regulatory process. She thought there had to be a system set up to allow for the legislature, agencies, and public to have meaningful input into the regulatory process. Number 594 WILLIS KIRKPATRICK, Director, Division of Banking, Securities, and Corporations, Department of Commerce and Economic Development, said his testimony would reflect the regulatory process and concerns of all of the agencies of the department. He mentioned the department decided, two years ago, that it was time to recodify the banking regulations of the state. During this process, it became quite evident, that banking is a rapidly changing industry. Thus, they decided to forego the legislative process in writing statutes and incorporate most of the changes in regulation. As an example, the legal investment list of where banks may invest funds is constantly changing and these changes are incorporated into regulations. As he became aware of HB 267, he also became aware that other states already had this law. One of these was Utah, which like Alaska has a system of state chartered banks and a bank holding company, Keycorp. This system requires state chartered banks to be consistent and uniform in their procedures. Being concerned about his regulations expiring annually, he called banking officials in Utah to see how the system worked for them. He said it was their understanding that the legislature introduced a bill specifying those regulations scheduled to sunset. This would relieve his concern about all of his regulations being up for possible sunset. He cited examples of how the Department of Commerce measures which state is the easiest state to do business in. He said their findings were that states with a consistent business climate are easier to do business in those that are constantly changing. Thus, he was concerned we could be hurting our business climate with this bill. He was also concerned about the provision of the bill that allows an agency to readopt a regulation, but not in substantially the same form. TAPE 95-38, SIDE B Number 000 CHAIR JAMES responded the law in Utah extended all regulations except those listed for sunset. She did not feel the banking and commerce laws were ever likely to be on the sunset list. She added that Utah had a further provision, that allowed the Governor to extend the life of a regulation the agency has scheduled for sunset, should the agencies justify the need for this regulation to them. She thought the legislature having the ability to do this, would lead to an environment of increased cooperation between the agencies and the legislature and most of these problems would be fixed before a regulation was scheduled for sunset by the legislature. She said this bill just provided the legislature with some oversight of the regulatory process they have delegated to the Administration. She saw this bill as a slight deviation from current process to give the legislature some meaningful input into the regulatory process. She pointed out that most of the regulations Mr. Kirkpatrick was referring to were already supported by statutory authority of the legislature. She said this bill was not meant to be a picking of individual philosophy, as much as it was meant to allow the legislature to verify regulations were meeting the intent of the legislature. Thus, she felt there would be very few regulations being sunsetted by the legislature under this criteria. Number 074 DEBORAH BEHR, Regulations Attorney, Department of Law, said she was pleased to offer comments on HB 267. She urged the committee to hold this bill over until the interim. She said her first concern about this bill was the number of regulations there were in state law. She mentioned there were about 10,000 pages of regulations in law currently. She was not sure how much work the Administrative Regulation Review Committee could accomplish over the interim in reviewing regulations. She said she had been told by by the sponsor that the committee would be reviewing those problematic regulations brought to its attention. If this was the case, she wondered why put a cloud over all regulations to deal with the few. After receiving this bill, she did some research on which of the states currently had this law in effect. She found there were four states, Colorado, Utah, Tennessee and Ohio. She was curious of the staffing this bill required to implement and said she found the state of Colorado told her they had 15 attorneys on staff who worked on this part-time. Utah had two full-time attorneys on staff to deal with regulations. She thought there would also be some additional costs to the Administration. One area of concern to her was Section 8 of the bill, that required the agencies to submit certain documentation to the committee after adopting, repealing, or amending a regulation. She thought this was unnecessary paperwork, which would add cost to the administration. On page 4, lines 25-27, there was a requirement that the agency identify persons who opposed or supported the regulation. She thought this was sometimes unable to be determined. She offered an example from her review of the regulations on abortion. She was also concerned about page 4, lines 28-30 require the identification of any Attorney Generals opinion or judicial decisions relevant to the regulation change. She thought again, the amount of paperwork for this requirement could be overwhelming and a cost to the Administration. She also saw a potential cost in the possibility of boards and commissions having to meet to provide information to the committee or to redraft a regulation that has been sunsetted. She was also concerned about the legal issues involved with this bill. She mentioned she had called the four states with this law to see if any of them had had a court challenge and none of them had. She was also concerned about whether doing an omnibus bill would violate the single-subject rule of legislation. She was aware of the fact that legislative legal counsel did not see a problem, but thought this was still an area of uncertainty. She thought this could create an unstable regulatory climate for business. She thought this bill could also violate the ALIVE v. Alaska case of 1980, in that she thought it removed the veto authority of the Governor. She thought, at best, these legal issues were unresolved. She thought there was a better method, where the Administrative Regulation Review Committee could review regulations and draft a statute to repeal those individual regulations. She thought the Governor would be unlikely to veto such a bill. She claimed this could give the legislature a more active oversight of regulations. She also expressed concern about the date of June 30 for the annual sunset of regulations. She offered to work with the committee over the interim on regulation reform. She also was concerned about the language in the bill, that prohibited the agency from readopting a regulation in substantially the same form. She offered to answer any questions of the committee. Number 316 CHAIR JAMES commented she did not see those kinds of disaster situations happening that Ms. Behr described, as she had more confidence in the legislatures ability to make decisions. She thought they would be just as prudent as the Administration if not more so. She said her past experience had been the legislature does not make those kinds of decisions that cause the kinds of disasters described. REPRESENTATIVE BRIAN PORTER thought there was a valid concern over the legislatures sunset of regulations without the Governors ability to veto. He thought there was a possible answer in borrowing Utahs provision of allowing the Governor to extend a regulation the legislature has scheduled for sunset, or by a provision that would sunset a regulation with a date set by the legislature for its expiration. MS. BEHR thought there was some merit in the idea of sunsetting a regulation on a date determined by the legislature, as done with various commissions, but said she could only address the bill as it was currently written. She was concerned about the provision of Utah, allowing the governor some input, that there was some legal problems with allowing the Governor to extend a sunset without having to go through the same committee hearing process the legislature has to do. She also failed to understand why, if this were a good idea, only four states have adopted similar laws to this. Number 361 REPRESENTATIVE JOE GREEN asked if any of the four states with this law had similar constitutional problems to ours with this bill. MS. BEHR said she asked them and was told there had never been a court challenge. She said she specifically addressed the single-subject rule and got mixed results. Some Attorney Generals didnt think there was a legal problem and others were unsure. None of them had experienced a legal challenge to the laws in their states. Ms. Behr thought this was an open legal question and that there would be legal opinions on both sides. CHAIR JAMES agreed and stated there was a memo in the committee packets from Legislative Legal Services, who did not feel there was a legal problem with the single-subject rule. They felt this was no different than any of the omnibus bills that extend commissions or the Administrative Procedures Act itself. REPRESENTATIVE GREEN still wondered if the reason the other states did not experience legal challenge on this law was because they had constitutions that granted differing authority to the legislature than ours. MS. BEHR stated her research had indicated that three of the states did not think there was a legal issue and the fourth thought it was an unresolved legal issue. She said she could not say what the decision of Alaska courts would be on this issue. CHAIR JAMES asked if there were any other questions for Ms. Behr. She called for Sharon Barton to testify. SHARON BARTON, Director of Administrative Services, Division of Administrative Services, Department of Administration, said she could add very little to the comments of her fellow colleagues in the administration. She wanted to echo their general concerns. She concurred the additional information required in Section 8 was going to be costly and thought a better method would be to make this information available on request of the committee. She also thought there would be greater monitoring of the legislation by the agencies leading to greater costs. She also did not think the agencies would have the information available to provide the committee regarding the judicial decisions on a particular regulation, and so would experience an increase in cost. She thought maybe regulation reform would be something to spend more money on, but would want assurances the benefit was going to warrant the additional cost. Number 435 FRANK DILLON, Executive Director of the Alaska Trucking Association, supported HB 267. He said the trucking industry is regulated by a variety of regulations, both state and federal. He claimed over the last decade, regulations had gotten out of sync with reality. He offered an example to illustrate his point. He discussed the requirement of the state that all employers have an employee bulletin board, listing pertinent and necessary information to the employee. This should be pretty straight-forward and easy to comply with. He said the problem was that the information required to be on this board was distributed by approximately nine different agencies and consisted of about 50 items that should be listed on the board. He spoke of a letter from the prior Governors Administration that ended with a statement to not consider the letter as a definitive answer to his questions, as they did not know for sure what was required to be on those bulletin boards. He thought this was pretty symptomatic of the entire regulatory system and was greatful for Chair James introduction of this and other regulatory reform bills. He recognized this could be a terrifying prospect to those in the agencies, but felt that many if not most of the regulations no longer accomplish their stated purpose or legislative intent. He also argued that the main purpose for writing regulations, in his experience with the agencies, was job security. He thought regulations were supposed to be written to protect the public, but when they get so confusing to private industry, many businesses give up trying to comply. He hoped that with the review of regulations proposed by HB 267, it would be possible to weed out bad regulations and write new ones that would be better and easier to comply with. He wanted to reiterate his support for HB 267. Number 479 MR. MCKEE said he supported the concept of the bill, but felt there could be an amendment on page two, line 20 and line 23, which references common law of the state. He thought this should be changed to common law of the individual. He thought this would better address his earlier references to property rights. Number 507 CHAIR JAMES asked if there was anyone else from the public wishing to testify. She said her intention was to send this to a quick subcommittee for some amendments and then recalendar it for the next meeting. She said it would be open to any of the committee members who wished to work with her and the administration on a proposed committee substitute for this bill. REPRESENTATIVE ED WILLIS expressed his interest in participating on the subcommittee. REPRESENTATIVE PORTER also expressed his interest. Representative Robinson arrived at 9:25 a. m. CHAIR JAMES stated the next bill on the agenda SB 92 by House Rules at the request of the Legislative Budget and Audit Committee. SB 92 - AHFC SUBJECT TO EXEC. BUDGET ACT JOHN BITNEY, Legislative Assistant, Representative Terry Martin, Legislative Budget and Audit Committee, said SB 92 was sponsored by the Legislative Rules Committee at the request of the Legislative Budget and Audit Committee. He stated SB 92 was introduced at the unanimous request of LB&A. The concerns about the Alaska Housing and Finance Corporation were initially raised by Senator Steve Frank, who introduced the bill to the committee. He said Senator Frank did have a staff member present, who would like to read the sponsor statement. Thus, he would like to defer to him. He said he would be available to answer any questions of the committee. Number 548 TOM WILLIAMS, Legislative Assistant, Senator Frank, reiterated SB 92 was introduced by the Legislative Rules Committee at the unanimous request of LB&A. He said this bill would bring all of the activities of the Alaska Housing Finance Committee under the review procedures of the Executive Budget Act. Under this Act, an agencys budget programs and services are established through both the executive and legislative processes for the annual general appropriation act. He stated currently the AHFC statutes bring four listed areas under this act: 1) Operating budget of the corporation, 2) the assets of the corporation used for grants or grant programs, 3) interest rates, subsidies, and building subsidies as determined by the corporation, and 4) activities of the corporation related to the former Alaska State Housing Authority program. All other activities of the AHFC are exempt from the Executive Budget Act. He provided an example of the type of programs of AHFC exempted from the Executive Budget Act as the approximately 110 million in funds used for the recent 5 percent housing loan program. SB 92 would bring this operation under legislative review as part of the operating budget. The LB&A feels this and all housing subsidy programs of the AHFC are significant state fiscal policy matters that should fall under the review process of both the Legislative and Executive branches. CHAIR JAMES asked if there were any questions from the committee for Mr. Williams. She decided to hear the testimony from those people on teleconference. She called for Michael Chevalier to testify. Number 570 MICHAEL CHEVALIER, Housing Director for Anchorage Neighborhood Housing Services, wanted to inform the committee of his opposition to SB 92. He felt there was considerable demand in Alaska for affordable housing. He said that typically there are about eight different sources of finance for a housing project and the developer is forced to try to bring all of those pieces together. Thus, he thought the AHFC should be allowed to work within its existing parameters. He thought they had adequately met the needs of the various affordable housing developers. He stated his second point, was he did not feel the AHFC was a runaway renegade organization. He felt they understood the legislatures desire for stability in its operations, but thought stability was the result of continuity in leadership. He argued an environment should be created to enhance the corporations continuity and longevity of board members and executive directors. CYNTHIA PARKER, Executive Director of Anchorage Neighborhood Housing Services, stated her opposition to SB 92. She wanted to state for the record that Anchorage Neighborhood Housing Services had been involved in the housing industry for the last 12 years and had worked closely with the AHFC. She mentioned she was formerly the Chair of the Alaska Housing Market Council, which made a number of recommendations to the legislature regarding Alaskan housing. She said part of that recommendation was to bring the AHFC under the Executive Budget Act to make it responsive to the legislature. She thought one of the problems with SB 92, was that it did not get to the specific problems the legislature was concerned about. She stated she had heard mention earlier, about the recent 5 percent housing loan program, but felt this bill would not address this issue. She argued the AHFC needed to be flexible in its loan programs to be flexible in the marketplace. She stated the funds used in the 5 percent loan program were exempted under this bill, as they are really U. S. federal funds. She urged the legislature to support the Governors plan to request the AHFC to come up with a five year long range fiscal plan and also come up with some goals and objectives they would like to offer to the state, but not to require them to get approval from the legislature for each transaction. ROBIN HARRISON, Executive Director for the Tagiugmullu Nunamiullu Housing Authority, said last year they participated in the AHFCs loan and sponsor program and so were able to develop a mortgage loan product tailored to meet the needs of their low income families in the most remote areas of the North Slope. She argued these families were out of reach of more conventional loan programs, due to their low income level and their remote location. She pointed out several barriers to getting loans from other sources in these remote locations. Thus, the AHFC was about their only option for housing loans. The AHFCs programs allowed 7 communities and 53 families to find homes on the North Slope 2 days before Christmas. These families had zero hope of moving into a home or owning one without this program. She felt certain that should this bill have been in place last year, these families would still be looking for homes. They would have to wait for a decision from the legislature and then another 18 months for the loan programs to be put in place and the construction to take place. Since 1987, with an increase in how to use the AHFC loan program, rural communities in northern Alaska has managed to increase the loans granted to these communities from 2-5 loans per year to 15-20 loans per year. She argued SB 92 would mean for the AHFC to respond in an increase of 30-45 percent demand for housing, they would have to guess correctly at the activity level of their corporation that can change dramatically over 12 months. Should they guess wrong, a year is lost as they wait for the next legislative session. REPRESENTATIVE GREEN asked if Ms. Robinson had any idea of the success ratio for repayment of loans from the rural areas as compared to that of the urban areas. TAPE 95-39, SIDE A Number 000 MS. ROBINSON claimed rural residents tend to not skip, because they are rooted in their community. BOB MAXWELL urged the committee proceed with caution and investigate carefully before passing SB 92, to see if this action would negatively impact the bond rating of the corporation. He mentioned that AHFC has been able to provide $580 million to the general fund since 1992. Thus, he felt it was absolutely necessary to maintain the fiscal integrity of the AHFC so they can continue to generate income and contribute to the general fund. He encouraged the legislature to develop a process, whereby all programs reviewed under the Executive Budget Act be allowed a public hearing. Currently, those programs of AHFC under this Act were not allowed public hearings, he said. He felt it was difficult to do the publics business without public input. Number 059 CHAIR JAMES asked if there was anyone else on teleconference wishing to testify and noted the arrival of Representative Robinson. Hearing none, she called for Dan Fauske, present in the room, to testify. DAN FAUSKE, Corporate Executive Officer of AHFC, said the corporation was created in 1971 to provide Alaskans with low cost mortgage financing. In legislation enacted in June 1980, the legislature found the conventional sources of finance for residential dwellings were inadequate and mandated the AHFC provide financing without regard to income limits and interest rate subsidy program for home purchase. In 1992, the legislature merged AHFC, ASHA, and the Department of Community and Regional Affairs rural loan and energy programs, in order to create a comprehensive housing agency for the state. Through this legislation, AHFC was expanded to include a group of programs beyond its traditional role as a secondary market investor for home mortgages. This decision has benefitted thousands of Alaskans. This approach of combining all housing programs is considered innovative nationally and is being copied by other states. After reviewing SB 92, he interpreted that all activities of the AHFC would require budget submission that would include the current capital and operating budgets and expand to include all loan programs of the corporation. He stated there were currently 23 loan programs that fall under 5 major categories. He felt this would mean certain negatives for the program. Loan programs have historically not been a part of the AHFCs budget submission. This is because the majority of their loan programs that provide housing to the citizens throughout the state, are a result of legislative mandate and direction. They are funded through bond issues, both taxable and tax exempt. Allowing the AHFC to function without legislative oversight has protected the corporations ability to enter the marketplace at opportune times with respect to rising and falling interest rates. This allows the corporation to partner with entities such as HUD, to spearhead new programs, and protect the ability to expeditiously respond to changing economic situations that affect the housing market. He did not feel anyone wanted to interfere with AHFCs ability to enter the marketplace and develop housing programs. He felt this bill was a result of two specific situations, the 5 percent loan program and the new office building. The office building was a politically bad move by the corporation, he said. The loan program was successful in targeting a niche of the states citizens, that otherwise would be unable to attain home ownership. He admitted, though, the mechanics of delivering the program were flawed. He asked that if the majority of their programs were meeting the intent of the legislature and the needs of the states citizens, then why consider such broad oversight that could potentially impede the corporations ability to respond to market conditions. He wanted to assure the committee the corporation would be very sensitive to the ripple effect of loan program development, analyze the positive and negatives of loan programs, be confident they adhere to legislative mandates and makes economic sense before implementation, and better target the intended constituency with each program. He urged the committee to not restrict the corporations ability to respond to the volatility of the marketplace by forced legislative oversight. He wanted to comment he thought oversight was good and suggested forming a work group to better educate everyone of the functions of the corporation. Thus, he welcomed oversight and scrutiny from the legislature, but did not want to see the corporation restricted for seven months when the legislature was not in session. Number 187 REPRESENTATIVE PORTER asked Mr. Fauskes opinion of an oversight similar to the one the legislature has over the Alaska Industrial Development and Export Authority board. MR. FAUSKE thought this idea could work, but the $10 million cap was not high enough to be functional with the AHFC. He pointed out that in 1994, the AHFCs loan portfolio was $864 million. Thus, he thought the oversight was good, but again suggested a work group to see how this oversight should be accomplished. Capping the dollar amount before requiring oversight is conceivable, but the dollar amount would have to be high enough and have some guidelines of activities to not prevent the corporation from taking advantage of opportunities in the marketplace. Number 225 REPRESENTATIVE OGAN expressed his opposition to SB 92. Participating in construction the past twenty years, he said he had seen the stability the AHFC has brought to the market first hand. He thought this bill was overkill to some specific complaints, that could be resolved in a more rational manner. He refused to have his name on a bill that he felt could seriously hurt the construction industry. He urged the committee and legislature to consider holding this bill for investigation over the interim. REPRESENTATIVE IVAN stated he could understand the concerns of LB&A, but heard the testimony that said this corporation was a real benefit to rural families. He felt it might be better to allow the corporation to continue as is and thought the bill was too restrictive without being amended. CHAIR JAMES asked if it was possible for the committee to stay late to allow a chance for all of those who came testify to participate. Number 298 JAN SIEBERTS, Senior Vice President, National Bank of Alaska, expressed his concern over SB 92. He said NBA was a partner with with the AHFC in the development of housing projects in Alaska. He said the NBA was concerned SB 92 would create serious problems for the AHFC and at a minimum should be modified. In 1994, NBA participated with the AHFC in urban and remote loans throughout the state and developed housing for low income and the homeless in Anchorage and Juneau. They also participated in senior citizen housing in Fairbanks and Homer, as well as the housing project on Eielson Air Force Base. Because of the lengthy loan process for housing construction, the AHFC is a necessary and useful tool. He felt if the corporation had to come for approval by the legislature for every project, these projects could be delayed for up to a year. He thought costs would increase dramatically and opportunities would be missed. He requested a modification to the bill to allow AHFC to continue to function and meet the housing needs of Alaska. Number 373 SUE BENEDETTI, President, Alaska Mortgage Bankers Association and Vice President, First National Bank of Anchorage, expressed her serious concerns about placing the AHFC under the Executive Budget Act. She said such an action would prevent the corporation from responding to changing conditions in the economy. This could mean borrowers missing out on good mortgage rates and the corporations missing out on programs that would meet the publics needs. She stated the mortgage industry changes at a rapid rate and markets can be volatile. Thus, the corporation needs to be able to respond on a day to day basis to maximize its potential to meet Alaskas housing needs. The AHFC provides a stable source of funds for mortgage in good times, but more importantly in bad times when other investors pull out. They have an excellent working relationship with banks, mortgage companies, and government agencies to maximize their ability to provide housing for Alaskans. These relationships lead to new sources of funding and it is important the AHFC retain its ability to work on a year round basis. She said the corporation could pay a sizeable dividend to the state for years to come. The Alaska Mortgage Bankers Association believes the focus should be on developing a workable dividend program and not substantially changing the way the AHFC operates and thereby jeopardizing its ability to meet the housing needs of Alaska. JOHN EGAN, Volunteer President of Housing First, Inc., stated he was a customer of the AHFCs products. As a president of a small community based nonprofit corporation, he thought the work they were doing to meet the housing needs of Juneau would not be happening without the support of the AHFC. Multi-family housing projects in general would not be developed without the help of the AHFC. He claimed there was little private secondary mortgage investors for multi-family housing units. He said Housing First could not function without the support of Alaska Housing Finance Corporation. Because many of the AHFCs programs are tied to those of the federal government, there is already a significant delay in processing paperwork in getting a project approved. He felt if SB 92 passed, the AHFC would be cemented into a glacial pace of operation. Banks and nonprofits will not be able to hold projects for months, while waiting for legislative approval. He said the AHFC is now doing the kind of financing the state needs to stabilize the housing market in Alaska. They are a genuine community resource, he said, and nonprofit corporations do not have this resource anywhere else. These community based groups are unable to gather financing from several different investment sources without the support of the AHFC. He pleaded with the committee to not halt an already slow process with passage of SB 92. Number 442 TAMARA ROWCROFT, General Manager, Alaska Housing Development Corporation, said her group was formed over twenty years ago to address the housing needs of Juneau. They operate a 96 unit housing complex for low to moderate income families. About three years ago, they decided they needed to try to develop more affordable housing in Juneau. After seeing what resources were available, they finally got a financing package to Aid to Families with Dependent Children after two years effort. She said they were prompt and granted financing to their project. She said their organization was interested in continuing to provide housing in Juneau and were concerned this bill would make it more difficult and time consuming to get projects started. TOM WILLIAMS responded SB 92 was not intended to put a damper on loan programs. He said the intent was to have the legislature involved in the loan process to allow them some oversight of that process. Testimony from the Senate Finance indicated there was an interest in improving communications between the AHFC and the legislature. They felt this bill would accommodate this effort. He did not feel this bill would preclude the AHFC from participating in loan programs when the legislature was not in session, as the appropriate body to deal with interim activities was the Legislative Budget and Audit Committee. That is why this committee supported this bill. Thus, they did not feel there would be a significant impact on the corporation. He felt any agency would like to be free to do as they pleased and hoped the new administration of the AHFC would improve communication with the legislature. He felt this bill would help to insure this happened. He thought good planning and proper budgeting could provide a reasonable amount of flexibility, especially with the support of the LB&A. He reiterated his feelings that this legislation was necessary and provided a mechanism to insure things did not get out of hand. MR. FAUSKE wanted to point out the Executive Budget Act required the LB&A to finish their review in 45 days. He argued this was a life time in the world of mortgage financing and could mean many missed opportunities. He reiterated he welcomed oversight, but was concerned about the time line and missed opportunities. CHAIR JAMES said this bill would be rolled to next week for consideration by the committee. She stated her intentions of passing out HB 269, before the committee adjourned. HB 269 - TAX CREDIT: GIFTS TO PUBLIC BROADCASTING TOM WRIGHT, legislative assistant to bill sponsor, Representative Ivan, said he would wave his sponsor statement in the interest of time and be available to answer questions from the committee. CHAIR JAMES asked if there was any questions or comments from the committee. Number 536 REPRESENTATIVE PORTER said he would move to pass HB 269 out of committee with individual recommendations and attached fiscal notes. CHAIR JAMES asked if there was any objections. Hearing none, the bill passed out of committee. Chair James adjourned the meeting at 10:19 a.m.