Legislature(1995 - 1996)

04/06/1995 08:12 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         April 6, 1995                                         
                           8:12 a.m.                                           
 MEMBERS PRESENT                                                               
 Representative Jeannette James, Chair                                         
 Representative Scott Ogan, Vice Chair                                         
 Representative Ivan Ivan                                                      
 Representative Brian Porter                                                   
 Representative Joe Green                                                      
 Representative Caren Robinson                                                 
 Representative Ed Willis                                                      
 MEMBERS ABSENT                                                                
 COMMITTEE CALENDAR                                                            
 HB 267:      "An Act relating to review and expiration of                     
              regulations; and providing for an effective date.                
              PASSED OUT OF COMMITTEE                                          
 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 232:    "An Act establishing an economic development tax                   
            credit; and providing for an effective date.                       
              SCHEDULED BUT NOT HEARD                                          
 * HB 241:    "An Act relating to the use of a candidates campaign             
              SCHEDULED BUT NOT HEARD                                          
 HB 218:      "An Act relating to the payment of certain trucking              
              SCHEDULED BUT NOT HEARD                                          
 (*  First public hearing)                                                     
 WITNESS REGISTER                                                              
 MIC MANNS, Representative                                                     
 Paradise Valley Mining and Development Corporation                            
 Bettles, Alaska 99726                                                         
 Telephone: 479-5704                                                           
 POSITION STATEMENT:  Supports HB 267                                          
 SHEILA PETERSON, Special Assistant                                            
 Office of the Commissioner                                                    
 Department of Education                                                       
 801 West 10th Street, Suite 200                                               
 Juneau, Alaska 99801-1894                                                     
 Telephone: 465-2803                                                           
 POSITION STATEMENT: Testified on HB 267                                       
 DALE ANDERSON, Representative                                                 
 Commercial Fisheries Entry Commission                                         
 880 Glacier Highway                                                           
 Juneau, Alaska 99801                                                          
 Telephone: 789-6160                                                           
 POSITION STATEMENT:  Opposed HB 267                                           
 DEBORAH BEHR, Assistant Attorney General                                      
 Legislation and Regulations Sections                                          
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska 99811-0300                                                     
 POSITION STATEMENT:  Opposed HB 267                                           
 BOB BARTHOLEMEW, Deputy Director                                              
 Income and Excise Audit Division                                              
 Department of Revenue                                                         
 P.O. Box 110420                                                               
 Juneau, Alaska 99811-0420                                                     
 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                                        
 SHARON BARTON, Director                                                       
 Division of Administrative Services                                           
 Department of Administration                                                  
 P.O. Box 110208                                                               
 Juneau, Alaska 99811-0208                                                     
 Telephone: 465-2277                                                           
 POSITION STATEMENT:  Opposed to HB 267                                        
 TAMARA COOK, Director                                                         
 Legislative Legal Services                                                    
 Legislative Affairs Agency                                                    
 130 Seward Street, Suite 409                                                  
 Juneau, Alaska 99801-2105                                                     
 Telephone: 465-2450                                                           
 POSITION STATEMENT:  Provided information on HB 267                           
 REPRESENTATIVE TERRY MARTIN                                                   
 Alaska State Legislature                                                      
 State Capitol, Room 502                                                       
 Juneau, Alaska 99801                                                          
 Telephone: 465-3783                                                           
 POSITION STATEMENT:  Provided sponsor statement                               
 MIKE DAVIS, Representative                                                    
 Bristol Bay Housing Authority                                                 
 P.O. Box 50                                                                   
 Dillingham, Alaska 99576                                                      
 Telephone: 842-5956                                                           
 POSITION STATEMENT:  Opposed to SB 92                                         
 JAN SIEBERTS, Senior Vice President                                           
 National Bank of Alaska                                                       
 P.O. Box 100600                                                               
 Anchorage, Alaska 99502                                                       
 Telephone: 564-9326                                                           
 POSITION STATEMENT:  Opposed to SB 92                                         
 HEATHER ARNETT, Executive Coordinator                                         
 Association of Alaska Housing Authorities                                     
 520 East 34th Street                                                          
 Anchorage, Alaska 99503                                                       
 Telephone: 562-7119                                                           
 POSITION STATEMENT:  Opposed to SB 92                                         
 WILLIAM HOWE, Deputy Commissioner                                             
 Treasury Division                                                             
 Department of Revenue                                                         
 P.O. Box 110405                                                               
 Juneau, Alaska 99811-0405                                                     
 Telephone: 465-4880                                                           
 POSITION STATEMENT:  Opposed to SB 92                                         
 TOM WILLIAMS, Legislative Assistant                                           
 Senator Steve Frank                                                           
 Alaska State Legislature                                                      
 State Capitol, Room 518                                                       
 Juneau, Alaska 99801                                                          
 Telephone: 465-3709                                                           
 POSITION STATEMENT:  Provided sponsor support for SB 92                       
 PREVIOUS ACTION                                                               
 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                       
 03/30/95              (H)   MINUTE(STA)                                       
 04/04/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/04/95              (H)   MINUTE(STA)                                       
 04/06/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  SB  92                                                                
 SHORT TITLE: AHFC SUBJECT TO EXEC. BUDGET ACT                                 
 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                    
 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                       
 03/30/95              (H)   MINUTE(STA)                                       
 04/04/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/04/95              (H)   MINUTE(STA)                                       
 04/04/95              (H)   MINUTE(STA)                                       
 04/06/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HB 232                                                                
 SHORT TITLE: ECONOMIC DEVELOPMENT TAX CREDIT                                  
 SPONSOR(S): REPRESENTATIVE(S) KOTT                                            
 JRN-DATE     JRN-PG               ACTION                                      
 03/06/95       590    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/06/95       590    (H)   ECD, STA, L&C, FINANCE                            
 03/21/95              (H)   ECD AT 09:00 AM CAPITOL 17                        
 03/21/95              (H)   MINUTE(ECD)                                       
 03/22/95       850    (H)   ECD RPT  CS(ECD) 6DP                              
 03/22/95       850    (H)   DP: KELLY,MOSES,MACLEAN,KOHRING                   
 03/22/95       850    (H)   DP: SANDERS, ROKEBERG                             
 03/22/95       850    (H)   INDETERMINATE FISCAL NOTE (REV)                   
 03/22/95       850    (H)   FISCAL NOTE (DCED)                                
 03/22/95       850    (H)   REFERRED TO STATE AFFAIRS                         
 04/04/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/04/95              (H)   MINUTE(STA)                                       
 04/06/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HB 241                                                                
 SPONSOR(S): REPRESENTATIVE(S) BUNDE,Rokeberg                                  
 JRN-DATE     JRN-PG               ACTION                                      
 03/08/95       642    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/08/95       642    (H)   STATE AFFAIRS, FINANCE                            
 03/10/95       713    (H)   COSPONSOR(S): ROKEBERG                            
 04/06/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HB 218                                                                
 SPONSOR(S): REPRESENTATIVE(S) JAMES BY REQUEST                                
 JRN-DATE     JRN-PG               ACTION                                      
 03/01/95       531    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/01/95       531    (H)   STATE AFFAIRS, TRANSPORTATION,                    
 03/07/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 03/07/95              (H)   MINUTE(STA)                                       
 03/23/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/06/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 ACTION NARRATIVE                                                              
 TAPE 95-44, SIDE A                                                            
 Number 000                                                                    
 The meeting of the House State Affairs Standing Committee was                 
 called to order at 8:12 a.m.  Members present at the call to order            
 were Representatives James, Ogan, Ivan, and Porter.  Representative           
 Green arrived at 8:15 a. m.  Representatives Robinson and Willis              
 arrived at 8:37 a.m.                                                          
 HB 267 - REGULATION REVIEW AND EXPIRATION                                   
 CHAIR JEANNETTE JAMES announced the first bill on the agenda was HB
 267, dealing with regulation review and expiration.  She explained            
 there was a committee substitute in their packets, incorporating              
 changes suggested by the subcommittee that met with the                       
 Administration and committee members.  She mentioned there was also           
 a sectional brief explaining changes from the original bill.  These           
 changes were the result of consultation with the Administration and           
 the public to try and make the bill more functional.  She stated              
 Section 5, subsection A is amended to expire regulations on                   
 December 1, as opposed to the original date of June 30.  This would           
 allow a sufficient amount of time for the agencies to react to an             
 expiration of their regulation by the legislature.  Subsection B is           
 altered to prohibit a regulation from being readopted with the                
 same substantive effect, versus the original wording of same                  
 form.  This clarified the intent of the bill.  Subsection C was               
 amended to clarify the wording of the bill extending the sunset of            
 regulations.  The new wording incorporated into the bill would be             
 Expiration of all regulations of each agency under AS 24.20.402 is            
 postponed for one year except the following.....  The bill would              
 then list those regulations scheduled to expire the following                 
 December 1.  She explained this wording of the bill was necessary             
 to prevent any regulations from being overlooked and accidentally             
 expiring.  Subsection D states that before January 1 of each year,            
 the Administrative Regulatory Review Committee shall submit a                 
 letter to the Governor identifying each regulation the committee              
 intends to list for expiration on the bill to be submitted that               
 session, together with the reasons for failing to postpone the                
 expiration date of those regulations.  She thought this would give            
 the Administration an opportunity to prepare its rebuttal to try              
 and convince the legislature not to expire those regulations, or to           
 amend the listed regulations to comply with the legislatures                  
 wishes.  Subsection E exempts the Board of Fish and the Board of              
 Game from the annual expiration of their regulations.  Section 8 of           
 HB 267 is amended to only require the agencies to submit to the               
 Administrative Regulation Review Committee within 14 days after               
 adoption, repeal, or amendment of a regulation a copy of the                  
 regulation change and any fiscal information prepared under AS                
 44.62.195.  This information is required for submittal under                  
 current law and should not add any extra expense to the agencies.             
 Any other information will be provided only at the request of the             
 committee.  She explained this complies with Representative Gary              
 Davis HB 173, which aims to reduce the amount of extraneous                   
 paperwork being submitted by the agencies to the legislature.  She            
 said that because the Administrative Regulation Review Committee              
 will be only reviewing those regulations brought to its attention             
 by public complaint, this requirement of only submitting the                  
 information at the request of the committee seemed to be reasonable           
 and more cost-effective.  She mentioned the committee also was                
 provided a map from the National Conference of State Legislatures,            
 that detailed the type of legislative review over regulations which           
 were required in each of the 50 states.  She explained the                    
 Administrative Regulation Review Committee in Alaska has not been             
 very active since the ALIVE case of 1980, which took away their               
 authority to demand changes if they perceived a problem in a                  
 regulation.  Thus, their incentive to conduct any review of                   
 regulations has been minimal and the current chair of the                     
 committee, Senator Randy Phillips, has suggested disbanding the               
 committee.  She further stated she had an additional chart, that              
 documented which of those states with legislative oversight of                
 regulations have advisory powers only and which have the authority            
 to make changes.  She said about half of the 50 states have some              
 type of authority to implement changes in regulations.  Four                  
 states, Colorado, Utah, Tennessee, and Idaho have implemented                 
 statutes similar to HB 267.  She stated Colorado has had their law            
 in effect for 15 years.  She mentioned there were people on                   
 teleconference to testify, but wanted to answer any questions from            
 the committee first.                                                          
 REPRESENTATIVE IVAN IVAN stated he had a proposed amendment to HB
 267 to introduce when the time was appropriate.                               
 CHAIR JAMES said a copy of this amendment was on the table for                
 committee members to review and explained this amendment would                
 exclude the Alaska Commercial Fisheries Entry Commission from the             
 expiration of their regulations.  She thought they should take                
 testimony from the public before deciding on whether to adopt this            
 Number 213                                                                    
 MIC MANNS, Representative of Paradise Valley Mining and                       
 Development, offered support for HB 267.  He said the Constitution            
 is very clear in giving the legislature the responsibility of                 
 making laws for the state and not an appointed official of the                
 Governor.  He stated he had personally felt the effect of bad                 
 regulatory decisions from the Department of Natural Resources and             
 the Department of Fish and Game, which had cost his company                   
 millions of dollars.  As an example, one employee in the Department           
 of Fish and Game forced them to build a 7000 foot dike and canal in           
 a creek that did not have any fish in it.  He said the court                  
 documentation of this incident was absolutely proof positive that             
 there was a need for legislative oversight of regulations, in order           
 to correct these deficiencies.  Their company cannot afford to                
 fight an agency with 209 attorneys on staff, he said.  This                   
 incident took over eight years in court and he felt if there had              
 been legislative oversight, it would never have occurred in the               
 first place.  He also cited an incident of land they had staked in            
 the 1960s and 1970s, which the Department of Natural Resources had            
 not yet relinquished title to and have claimed they could not do              
 so, when the state law says they must.  He thought these types of             
 affairs must be put to an end if the state was to ever accomplish             
 economic development and if its citizens were to guarantee a future           
 for their children.  He said it was necessary for the                         
 Administration to comply with laws that were drafted by the people,           
 who had elected the legislature to represent them.  He argued it              
 was not the right of an appointed official in an agency to override           
 the intelligent minds of the elected legislators, who were chosen             
 by the people of Alaska to represent them and make these decisions.           
 He mentioned he had provided written documentation of the incidents           
 to Representative James and would encourage the legislature to                
 realize they are the ones the people were counting on for their               
 future.  He reiterated his support for HB 267.                                
 CHAIR JAMES thanked Mr. Mann for his testimony and documents.  She            
 wanted to point out that HB 267 was only a small part of her                  
 regulation reform efforts and that she would be working over the              
 interim, with a commitment of support from the Administration, on             
 a bill that would improve the process of how regulations are                  
 written in response to legislative intent and make them easier to             
 be implemented by those being regulated.                                      
 MR. MANN mentioned when Larry Galloway was the Deputy Commissioner            
 in an Anchorage office, he had on file over 640 cases in his office           
 that would have never occurred had the legislature had the ability            
 of oversight.  He hoped the legislature would get the message and             
 not allow this to be pushed aside like when Governor Sheffield                
 vetoed it.                                                                    
 Number 297                                                                    
 SHEILA PETERSON, Special Assistant, Office of the Commissioner,               
 Department of Education, said she could understand the                        
 legislatures frustration over how regulations are promulgated in              
 this state.  However, she wanted to bring to the attention of the             
 committee the uniqueness of the Department of Education, with                 
 regard to the adoption of regulations.  She mentioned the State               
 Board of Education is the head of the department.  This board is              
 the policy maker.  This seven member committee is appointed by the            
 Governor and confirmed by the legislature.  These members represent           
 all judicial districts of the state and no more than four may be of           
 the same political party as the Governor.  She felt this board                
 represented a cross-section of the people of Alaska.  She pointed             
 out that the board appoints the commissioner with the approval of             
 the Governor.  She argued that as new regulations are promulgated,            
 all decisions are made in a public forum with public testimony and            
 notice.  As this is a public board, she requested the committee               
 exempt the Board of Education from this legislation.  She stated              
 she was aware that if the committee exempted many different                   
 agencies from this bill, it could become ineffective.  But she felt           
 the Board and Department of Education was unique in its system of             
 promulgating regulations.  She argued the current process of how              
 they promulgated regulations was ideal.  She again requested the              
 committee exempt the Board of Education from HB 267.                          
 CHAIR JAMES asked if the committee had any questions for Ms.                  
 Peterson.  Hearing none, she called on Dale Anderson to testify.              
 Number 348                                                                    
 DALE ANDERSON, Representative for the Commercial Fisheries Entry              
 Commission, requested an exemption for their group from the                   
 expiration of their regulations.  He was concerned HB 267 would               
 affect the economics of their organization adversely, saying he had           
 mentioned this at an earlier meeting.  He was also concerned about            
 the effects this would have on the commissions adjudicatory                   
 powers.  He stated one of the main functions of the commission was            
 to settle disputes with denied applicants.  He thought HB 267 could           
 threaten the integrity of the body of law they had developed over             
 the past 20 years.  He argued the commission was originally                   
 developed as a result of a vote of the people and public input was            
 foremost in their minds as a body.  He pointed out the commission             
 does not even limit a fishery without the request of the public.              
 He further mentioned that all of the steps of their process for               
 gathering public input are established by regulation and so would             
 be subject to expiration under HB 267.  He also feared that any               
 length of time without regulations in effect could allow people to            
 enter a fishery who were not worthy.  He reiterated his request for           
 an exemption from the expiration of their regulations.                        
 Number 457                                                                    
 DEBORAH BEHR, Regulations Attorney for the Department of Law, said            
 she wanted to address the proposed committee substitute for HB 267.           
 She wanted to clarify that single people were not writing                     
 regulations.  She also thought the Administrative Regulation Review           
 Committee could take a more active role in the regulatory process             
 by performing regulatory audits.  She argued there were still legal           
 problems regarding the Constitutions separation of powers clause              
 in that she felt this bill would not allow the Governor the                   
 opportunity to veto.  She argued this was a violation of the ALIVE            
 case of 1980.  She pointed out that Idaho, who has this law in                
 effect, can annul regulations by resolution, without a                        
 constitutional problem.  Their courts have ruled this is                      
 constitutional.  Thus, she was concerned there were only three                
 states remaining with this law in effect, which had unresolved                
 constitutional issues such as ours.  She stated she was also                  
 concerned the bill had no protection for the system, should the               
 legislature fail to pass a bill.  She was also concerned about a              
 violation of the Constitutions single-subject rule, in that she               
 compared the bill to be drafted under HB 267 as being similar to              
 the revisors bill.  She said the revisors bill was an exception               
 to the single-subject rule and she did not think it was intended to           
 have other similar bills allowed.  She said Alaskas courts have               
 not liked bills that deal with more than one subject.  Thus, she              
 felt with these unresolved legal issues, there would be a cloud               
 over the validity of all regulations.  On page 4, lines 19-23, she            
 expressed concern over the section that allowed the Administrative            
 Regulation Review Committee to file an objection with the                     
 Lieutenant Governors Office on a regulation, which then shifts the            
 burden of proof to the agency to prove that a regulation is valid             
 and meets legislative intent.  She stated her problem was that                
 prior court decisions had not allowed the legislature to delegate             
 its rule-making authority to a subcommittee of itself.  She stated            
 the Department of Law would be recommending a veto of this bill to            
 the Governors Office.  She stated should the committee decide to              
 pass the bill, she had some technical concerns to mention.  On page           
 3, line 8, she had some concern about the wording same substantive            
 effect.  She thought this would be a possible source of                       
 litigation, as there was no definition of same substantive                    
 effect.  On page 3, line 2, she suggested the legislature should              
 consider looking only at incremental changes on an annual basis,              
 and not at every regulation.  She mentioned two of the states do              
 this.  She also suggested tying the sunset of regulations for                 
 boards and commissions with the sunset of the boards themselves.              
 On page 3, line 21, she suggested a slight modification to read               
 regulations required for compliance with federal law.  On page 4,             
 line 27, she thought it might be a better suggestion to have this             
 section read 14 days after filing of a regulation, rather than the            
 original reading of 14 days after adoption.  She stated she looked            
 at HB 267 to try and see if there were any added costs to state               
 government, because of this bill.  Thus, she warned about the                 
 committees zeroing out of fiscal notes.  She thought there would              
 also be costs for the extra meeting of boards in order to comply              
 with requirements of this bill.  She offered to answer questions              
 from the committee.                                                           
 Number 645                                                                    
 REPRESENTATIVE SCOTT OGAN asked Ms. Behr if she thought there would           
 be problems for the Big Game Commercial Services Board under this             
 MS. BEHR thought there would be.  She suggested a better way of               
 handling this situation would be to change the statute and not                
 expire the regulations.  She claimed the Governor vetoes very few             
 regulations.  Thus, she thought the existing system was working               
 just fine.                                                                    
 REPRESENTATIVE OGAN asked if she thought this board should be                 
 exempted from the expiration provisions of this bill.                         
 MS. BEHR thought it should be and compared it to the Board of Fish            
 and the Board of Game.                                                        
 CHAIR JAMES commented she was hearing a tendency in the testimony             
 that the legislature was stupid and not capable of handling these             
 tough decisions.  She thought the legislature had a good historical           
 record of making sound decisions and wanted it on the record to               
 reflect that.  She said it sounded as if the legislature was being            
 impugned by the testimony.                                                    
 MS. BEHR apologized, saying she did not intend it to sound that               
 way.  She simply wanted to mention there could be an emergency                
 situation if the legislature failed to pass the bill by its                   
 constitutionally mandated adjournment date.                                   
 Number 678                                                                    
 BOB BARTHOLEMEW, Deputy Director, Income and Excise Audit Division,           
 Department of Revenue, stated the majority of their statutes                  
 contained the statement those statutes would be implemented by                
 regulations promulgated by the Department of Revenue.  In                     
 discussion with the commissioner, he said he was asked to point out           
 the large amount of resources and time going into the development             
 of regulations.  Their concern was that if these regulations were             
 to expire, this effort would have to be redone at great expense.              
 He said he wanted to point out that the collection of revenue by              
 the state would not work without the regulations.  He urged the               
 committee to focus on the problem regulations and not to establish            
 such a broad sweeping review of regulations.                                  
 TAPE 95-44, SIDE B                                                            
 Number 000                                                                    
 CHAIR JAMES mentioned that HB 267 contained a provision requiring             
 the Administrative Regulation Review Committee to submit to the               
 Governor a list of all of those regulations they intend to sunset             
 by January 1.  She pointed out that the agencies then had until               
 December 1 to amend the regulations to comply with the wishes of              
 the legislature.  She stated she understood the time and effort               
 that have gone into the writing of regulations, having followed the           
 process, but she felt that the legislature was a competent enough             
 body to do a good review and that their fears were unjustified.               
 She did not foresee the legislature allowing the types of disasters           
 to occur that they were predicting.  She thought the time frame and           
 provisions of the bill were enough to make it work fine.                      
 MR. BARTHOLEMEW agreed the legislature was competent, but thought             
 there was a legitimate concern of the legislature failing to extend           
 regulations by the passage of a bill.                                         
 REPRESENTATIVE OGAN commented the legislature made reasonably good            
 decisions on occasion, but thought they were sometimes motivated by           
 political considerations and not the merit of the legislation.  He            
 thought the regulation boards were set up to be more focused on a             
 particular subject, rather than being a quasi-expert on many                  
 issues.  He thought the volume of issues they have to deal with               
 sometimes preclude legislators from focusing on a particular issue            
 as much as they may need to.                                                  
 Number 138                                                                    
 REPRESENTATIVE BRIAN PORTER expressed appreciation for the concerns           
 of Mr. Ogan.  He said that was why the regulatory boards and                  
 process were set up.  He argued though, that if the process were              
 working, the legislature would not be addressing this issue.  He              
 recognized this bill allowed all regulations to be potentially up             
 for review, but pointed out the legislature would only be reviewing           
 those brought to its attention by public complaint.  He said the              
 legislature would thus limit its attention to those which were                
 difficult to comply with and had strayed from legislative intent.             
 He stated whether the legislature made a good or a bad decision was           
 a matter of perspective, but it was still the will of the                     
 legislature and should not be thwarted by an individual in an                 
 agency, who found themselves with the power to write regulations as           
 they individually felt like it.  He said that had happened in the             
 past and that was what this bill was aiming to prevent.                       
 Number 175                                                                    
 ELMER LINDSTROM, Special Assistant, Office of the Commissioner,               
 Department of Health and Social Services, reiterated the comments             
 of Ms. Behr, that an amendment was needed to exempt regulations               
 needed to comply with federal mandates and not just required by               
 federal mandates.  He thought that when you take many issues, that            
 are controversial individually, and place them in the same bill,              
 there is a very strong likelihood that you will not get a consensus           
 of the legislature and the bill extending the expiration of                   
 regulations may not pass.  This is a real fear to the agencies.               
 Number 215                                                                    
 CHAIR JAMES thought it was a matter of accountability, and if the             
 legislature made that mistake, they would be held responsible.  She           
 said under the current system, there is no one to hold accountable.           
 She said that was why the members of the public she had talked to             
 were so supportive of this bill.  Currently, if the public                    
 complained to the legislature about a regulation, they were told              
 the Administration writes regulations.  If they took their                    
 complaints to the Administration about regulations, they were                 
 informed the agencies only write regulations to comply with                   
 legislative statutes.  Thus, the public felt like there was no one            
 to hold accountable and blame for bad regulations.  She said HB 267           
 would put the blame on the legislature and give the public some               
 recourse if they did not like the regulatory process.  She stated             
 the legislature was constitutionally mandated to provide the laws             
 for this state and should be held responsible.                                
 Number 229                                                                    
 SHARON BARTON, Director of Administrative Services, Department of             
 Administration, commented she had recently come across a memo from            
 1979 dealing with regulation reform.  She mentioned the issues they           
 were dealing with then, were essentially the same as the ones being           
 discussed now.  Thus, she said, although the Administration had               
 legal problems and concerns about implementation of this bill, they           
 agreed it was time to try to find a solution.  She thought there              
 were essentially three areas needing to be addressed: 1) Bad                  
 regulations; 2) bad regulatory process; and 3) bad implementation             
 of regulations.  She thought this was a large area to deal with.              
 She expressed her appreciation of the willingness of Chair James to           
 listen to the concerns of the Administration in dealing with this             
 CHAIR JAMES stated there was actually a fourth problem and that was           
 bad statutes.  She thought if this bill went into effect, it would            
 help the legislature to find bad statutes and fix them.  She                  
 reiterated the issue was one of accountability and that the                   
 legislature gave the Administration the authority to write                    
 regulations, without saving some oversight ability for itself.  She           
 felt this was a bad decision.  She said although she also shared              
 concerns about making sure everything was constitutional and legal,           
 she thought sometimes legislators needed to take responsibility and           
 see if there was a legal challenge.  She vowed to work extensively            
 with the Administration over the interim to try and develop a                 
 regulatory process that was more efficient and user-friendly.  She            
 asked Tamara Cook, legal drafter for HB 267, to come forward to               
 answer questions from the committee and thanked her for                       
 Number 286                                                                    
 TAMARA COOK, Director, Legislative Legal Services, said she was               
 willing to answer questions from the committee.                               
 REPRESENTATIVE PORTER asked if she thought it was necessary to                
 change the language of HB 267 to exempt regulations necessary to              
 comply with federal regulations.                                              
 MS. COOK stated she was not convinced it would make any difference.           
 She thought it was a question of whether the legislature wanted to            
 exempt just regulations that were required in a particular form by            
 federal law, while reserving the right of the legislature to review           
 regulations that were mandated for compliance with federal law, but           
 with which the state had several options to achieve compliance.               
 She said most of the time, the state would be given considerable              
 flexibility.  Thus, she thought it was a policy call of the                   
 legislature and felt the existing language allowed for additional             
 flexibility.  She also wasnt sure the language suggested by Ms.               
 Behr would preclude the legislature from reviewing a particular set           
 of regulations, although she thought it would probably place a                
 larger number of regulations outside of its jurisdiction for                  
 review.  She said she had no problem making the change if it was              
 the will of the committee.                                                    
 Number 329                                                                    
 REPRESENTATIVE PORTER stated this was exactly his concern, that the           
 legislature would be placing regulations outside of its                       
 jurisdiction for review by adopting the language suggested by Ms.             
 Behr, that it really wanted within its ability to review.  He                 
 agreed the legislature would not want to review regulations meeting           
 the minimum standard of federal law, but would want to review                 
 regulations that exceeded that standard.                                      
 MS. COOK thought there could be great argument as to what defined             
 the mandatory minimum requirement for compliance with federal law,            
 depending on ones perspective.  She stated her hunch was that the             
 existing language was probably just as good as that suggested by              
 Ms. Behr.                                                                     
 Number 347                                                                    
 REPRESENTATIVE JOE GREEN asked if Ms. Cook thought this bill would            
 violate the single-subject rule of Alaskas Constitution.                      
 MS. COOK thought HB 267 complied with the single-subject rule,                
 according to case law to date.  She said that to overturn this bill           
 as violating the single-subject rule, the courts would have to be             
 stricter in their interpretation than they had been to date.  She             
 stated there was an expression of annoyance by the court of the               
 broad flexibility given to the legislature regarding the                      
 single-subject rule, but to date they have not taken a strict                 
 enough interpretation to cause this bill to be out of compliance.             
 CHAIR JAMES mentioned there was a memo in the committee packets               
 from Ms. Cook regarding this issue, if any of the members wished to           
 read it.                                                                      
 REPRESENTATIVE GREEN stated he wanted it in the record for that               
 reason, as earlier testimony from Ms. Behr seemed to contradict               
 these statements.                                                             
 CHAIR JAMES asked if there were any other questions from the                  
 committee for Ms. Cook.  Hearing none, she thanked Ms. Cook for her           
 REPRESENTATIVE CAREN ROBINSON asked if it was Chair James                     
 intention to pass HB 267 out of committee that day.                           
 CHAIR JAMES replied it was and that she also intended to hear the             
 committees wishes regarding the proposed amendment of                         
 Representative Ivan.                                                          
 Number 395                                                                    
 REPRESENTATIVE PORTER moved for the committee to adopt CSHB 267               
 version F as the working draft for discussion.                                
 CHAIR JAMES asked if there was any objection.  Hearing none, the              
 committee substitute was adopted.                                             
 REPRESENTATIVE IVAN IVAN moved for the committee to adopt his                 
 amendment, exempting the Alaska Commercial Fisheries Entry                    
 Commission, for CSHB 267.                                                     
 CHAIR JAMES asked if there was any objection to passing this                  
 amendment.  Hearing none, the amendment for CSHB 267 was adopted.             
 REPRESENTATIVE OGAN requested the Big Game Commercial Services                
 Board also be exempted from the expiration of their regulations.              
 CHAIR JAMES stated her preference that the committee not exempt any           
 more entities from HB 267, but said she would leave that to the               
 wishes of the committee.  She pointed out that she would be doing             
 an extensive study of the regulatory process with the                         
 Administration over the interim, and that it could be reviewed then           
 which agencies should be exempted from this bill.  She wanted to              
 reiterate she thought there was sufficient time included in this              
 bill to allow the agencies to properly react should their                     
 regulations be allowed to expire by the legislature.  She said                
 Representative Ogan was free to seek the approval of the committee            
 for exempting the Big Game Commercial Services board, but her                 
 desire was that they not exempt any more groups.                              
 REPRESENTATIVE ED WILLIS clarified whether she meant she was                  
 planning to work on HB 267 over the interim or a different bill.              
 CHAIR JAMES stated she was referring to HB 105, which dealt with a            
 comprehensive overhaul of the regulatory process.  She planned to             
 work with the Administration and the public to decide on how best             
 to accomplish a complete overhaul of the regulatory process to make           
 it more efficient and user friendly.  She explained this bill was             
 meant to be an alternative to HJR 1, which recently passed the                
 House of Representatives 34 to 4 and would allow the legislature to           
 annul a regulation by resolution.  HJR 1 would require a                      
 constitutional amendment to effect that change of law.                        
 Number 447                                                                    
 REPRESENTATIVE OGAN moved to exempt the Big Game Commercial                   
 Services board from the expiration of their regulations under HB
 CHAIR JAMES asked if there were any objections.                               
 REPRESENTATIVE PORTER objected.                                               
 REPRESENTATIVE OGAN explained he wanted to exempt this board,                 
 because the current process was established after considerable                
 public input following a lawsuit over the former system.  He said             
 the system was under intense scrutiny by the Attorney Generals                
 office and was thus in a delicate balance between the courts and              
 the public.  He was fearful if this board fell under the                      
 jurisdiction of HB 267, it could end up in the courts again.                  
 Number 473                                                                    
 REPRESENTATIVE PORTER stated with due respect to the Attorney                 
 Generals office, this was the same office that had said the bill              
 passed by the legislature last year, appropriating funds from the             
 Constitutional Budget Reserve, was constitutional and a court                 
 decided otherwise.  Thus, he said there were no guarantees based              
 upon the information coming from the Department of Law.  He said he           
 could make a similar argument regarding boards he had served on,              
 but thought that they had to make that leap of faith to decide the            
 legislature was responsible enough to take care of business and               
 only identify those regulations for sunset that had serious                   
 problems that havent been able to be worked out with the                      
 Administration.  He said he was ready to make that leap of faith              
 and wanted the legislature to have some clout when making these               
 recommendations to the Administration.                                        
 REPRESENTATIVE OGAN withdrew his motion.                                      
 Number 486                                                                    
 REPRESENTATIVE ROBINSON moved to exempt the Department of Education           
 from the expiration of their regulations under HB 267.  She thought           
 they had a good public process and pointed out school starts before           
 the legislature convenes.  She thought they were another group that           
 the legislature should not be tying its hands.                                
 CHAIR JAMES responded that it was a matter of who was in charge.              
 She thought the legislature was the one charged to make laws in               
 this state and personally thought the fears being raised were                 
 REPRESENTATIVE ROBINSON replied it was also the responsibility of             
 the legislature to know what regulations they were putting into               
 effect when they pass legislation.  She argued the legislature had            
 given the authority to the Board of Education to write regulations            
 and should trust them to make those decisions.  She did not want              
 the school district to have to wait until the legislative session             
 to allow schools to implement their policies.  She understood that            
 by passing this bill, the legislature would be doing this.                    
 Number 518                                                                    
 CHAIR JAMES said this was not true and pointed out that any                   
 regulations promulgated after January 1, 1995, would not expire               
 until December 1, 1996.  She stated there would be a legislative              
 session in  between to have the legislature decide whether to                 
 extend the expiration.  She thought there was plenty of time                  
 between January 1 and December 1 of the following year to allow the           
 agencies to amend their regulations as necessary to meet the                  
 legislatures recommendations.  She reiterated the motion was to               
 exempt the Board of Education from HB 267 and asked if there was              
 any objection.                                                                
 REPRESENTATIVE PORTER objected.                                               
 CHAIR JAMES called for a roll call vote.  Representatives Willis              
 and Robinson voted in favor.  Representatives Porter, Ivan, Green,            
 Ogan, and James voted in opposition.                                          
 Number 531                                                                    
 REPRESENTATIVE PORTER moved to pass CSHB 267 version F out of                 
 committee as amended with individual recommendations and attached             
 fiscal notes.                                                                 
 CHAIR JAMES asked if there were any objections.                               
 REPRESENTATIVE ROBINSON objected.  She stated she could appreciate            
 the fact there was a need for regulatory reform, but felt this                
 legislature was continuing to pass a series of regulation reform              
 bills, but that they had not clearly defined what the problem was.            
 Thus, she felt they may just be putting a band-aid over the                   
 problem, rather than really solving the problem.  She stated she              
 was hoping to put all of the regulation reform bills into the                 
 interim for study, rather than just passing bills through the                 
 legislature that may not address the problem.                                 
 Number 560                                                                    
 CHAIR JAMES responded that she agreed with Representative Robinson,           
 but pointed out that each of the bills that are in the legislature            
 address a different aspect of a large problem, which together will            
 help to accomplish an overall solution.  She also pointed out that            
 HB 267 does start the process of repealing regulations, if that is            
 the decision of the legislature.  She stated it gives the authority           
 to the legislature to actually start repealing unnecessary or                 
 unfair regulations.  She thought this bill would start a process              
 that would allow the legislature to locate bad statutes and repeal            
 them side by side with bad regulations.  She did not think the                
 fears of a total disruption of the state were real, pointing out              
 this was not the case in those states with this law in effect.  She           
 said it did clarify though, that it was the responsibility of the             
 legislature to make laws for the state and be accountable for the             
 REPRESENTATIVE ROBINSON was also concerned about passing a bill               
 that was likely to be vetoed by the Governor.                                 
 CHAIR JAMES stated she shared Representative Robinsons concerns,              
 but felt this issue was so important that the legislature needed to           
 proceed and take that risk.                                                   
 REPRESENTATIVE ROBINSON suggested that the legislature could slow             
 down the process, by passing less legislation into law.  She                  
 thought maybe bills should be sent to the budget regulation review            
 police before being heard on the House floor.  She thought the                
 legislature should try to get ahead of the game, instead of always            
 trying to react after the fact.                                               
 CHAIR JAMES answered that when the train is going down the hill,              
 it is really hard to stop it.  She thought HB 267 was starting to             
 apply the brakes.  She asked if there were any other comments from            
 the committee, or if they were ready to vote.                                 
 Number 598                                                                    
 REPRESENTATIVE PORTER mentioned there had been testimony from the             
 Administration, that in reviewing historical documentation of                 
 regulation reform, they had discovered the same problems were cited           
 in 1979, as are currently being discussed.  He pointed out that the           
 reason the legislature was still discussing these issues, was that            
 the legislature just studied the issue and did not pass their                 
 regulation reform bill then.  Thus, he thought it was necessary the           
 legislature try to deal with the problem, rather than just                    
 discussing it.  He said he recognized HB 267 did not address all of           
 the problems individually that had been mentioned, but he did not             
 think one bill could accomplish that task.  He cited several                  
 examples of runaway regulations, that indicated the need for some             
 type of review of the regulatory process.  He argued this oversight           
 could not be accomplished with any degree of success, without the             
 potential to do something about it.  He  thought this bill would              
 provide the leverage needed to do that.  He argued that possibly              
 the Administration would have a better idea of what legislative               
 intent was if they did not keep vetoing legislative intent                    
 REPRESENTATIVE GREEN expressed his favor for the concept, but also            
 had some concerns about this bill.  On page 4, he was concerned               
 that if a regulation came up for expiration and the legislature               
 failed to pass a bill to postpone that expiration, the state might            
 be caught in a compromising position where regulations have been              
 allowed to expire without a solution necessarily being found.  He             
 was concerned about passing this bill out of committee, as the next           
 committee may not be as thorough about reviewing the true intent of           
 this bill.  Thus, he suggested possibly holding this bill in this             
 committee to try and develop a better bill.                                   
 CHAIR JAMES pointed out that if the legislature failed to pass a              
 bill extending the sunset of regulations, every single regulation             
 would expire.  She asked if he thought the legislature would allow            
 that situation to occur.                                                      
 REPRESENTATIVE GREEN argued it was improper to give that authority            
 to the Administrative Regulation Review Committee, to say that a              
 regulation is to sunset, when it might just need a small tweak to             
 fix it.  He was concerned that such a regulation could be allowed             
 to sunset and then not be allowed to be adopted in substantially              
 the same form.  He was concerned that members of this committee               
 might just develop an attitude problem and be able to abuse their             
 CHAIR JAMES explained this bill was being passed by a statute,                
 which had three readings and committee referrals.  She argued the             
 Administrative Regulation Review Committee was just introducing the           
 bill and would not be in the position to abuse their power as he              
 feared.  She asked if he believed that all 60 members of the                  
 legislature would not allow a bill to be passed, when the result              
 would be that all regulations would expire on December 1.                     
 REPRESENTATIVE GREEN thought that by blackmailing a bill to avoid             
 having all regulations expire was improper.  He was concerned about           
 rushing a bill through the process that may not be exactly what               
 they wanted to do.                                                            
 Number 660                                                                    
 REPRESENTATIVE WILLIS thought the concept was good, but said he               
 shared some of the same concerns as Representative Green.  He                 
 thought Chair James had stated earlier that she wanted to send the            
 best possible bill they could out of this committee.  He also                 
 expressed his hopes that they might hold this bill as a project for           
 the interim.  He emphasized he did not oppose this approach, but              
 thought maybe this committee could develop a better bill if they              
 held it.                                                                      
 REPRESENTATIVE ROBINSON asked if anyone had raised the question of            
 how this bill would affect the business climate of this state.  She           
 said she had been told other states had this law and wondered how             
 it was working for their business community.                                  
 CHAIR JAMES said she had talked to Colorado and Utah, who had this            
 law in effect and that Denver and Salt Lake City were some of the             
 fastest growing business centers on the West Coast.  She said many            
 of the businesses were unaware that it was happening, as the amount           
 of regulations that expired were so few and insignificant.  She               
 commented they had had this law in effect for 15 years and stated             
 most of the language for HB 267 came from the Colorado law as a               
 Number 697                                                                    
 REPRESENTATIVE PORTER mentioned that at the Alaska State Chamber of           
 Commerce breakfast earlier that morning, he described HB 267 and              
 they were elated.  They strongly favored this legislation.                    
 REPRESENTATIVE ROBINSON argued the State Chamber had been in favor            
 of all of the regulation reform bills proceeding through the                  
 REPRESENTATIVE PORTER stated she had asked how the business                   
 community felt about this bill and the Alaska State Chamber of                
 Commerce represented the business community of this state.                    
 REPRESENTATIVE ROBINSON said she was not sure that the State                  
 Chamber had thoroughly thought out all aspects of the various                 
 regulation reform bills, before expressing their support for them.            
 She stated she did not doubt their sincerity in wanting regulatory            
 change, but did not know if they had thoroughly thought out the               
 issues involved.                                                              
 REPRESENTATIVE PORTER mentioned there had been a fear expressed by            
 some of the agencies that this would create an instability in the             
 regulatory climate.  He argued the cloud was already there, as the            
 agencies could modify regulations with much more ease than the                
 legislature.  He also pointed out the legislature can amend the               
 statutes whenever it decides, thus altering the accompanying                  
 regulations.  Thus, he did not feel this bill would change the                
 business climate from its current situation.  He also stated the              
 legislature could pass a statute with a two-thirds margin of                  
 support, to have it completely subverted by a few people sitting in           
 an agency who disagreed.  This he thought was wrong and he thought            
 this bill would help to correct it.                                           
 TAPE 95-45, SIDE A                                                            
 Number 000                                                                    
 CHAIR JAMES thought the decision the committee had to make, was               
 whether they thought the legislature should have oversight over the           
 regulatory process.  She mentioned there were only two ways to                
 accomplish this, and that was a constitutional amendment, allowing            
 the legislature to annul a regulation by resolution as suggested by           
 HJR 1, and the other was this bill.  She did not believe the                  
 argument was whether this would create chaos in the business                  
 climate of the state, or if this would create incompetence in the             
 regulatory system, but whether the legislature should have some               
 type of oversight.  She thought they needed to have oversight and             
 there were only these two methods to accomplish it.  She thought              
 there was a need for legislative oversight and that was why she               
 supported this bill.                                                          
 Number 038                                                                    
 REPRESENTATIVE GREEN disagreed that it was just a question of                 
 legislative oversight.  He stated he would like legislative                   
 oversight, but not just under this bill the way it was written.               
 Thats why he wanted to have a more extensive review of this bill              
 in this committee.  He said he was not suggesting to defeat the               
 bill in this committee, just to review some of the issues that had            
 been raised more thoroughly.                                                  
 REPRESENTATIVE OGAN expressed his discontent with the bill.  He               
 agreed that there was a need for legislative oversight, but was not           
 sure of the wording of this bill.                                             
 CHAIR JAMES said she wanted to vote on this bill, either up or                
 down.  She called for a roll-call vote.  Representatives James,               
 Porter, Ivan, and Ogan voted in favor in favor of passing CSHB
 267(STA) out of committee.  Representatives Green, Robinson, and              
 Willis voted in opposition.  Chair James announced the bill passed            
 on to the next committee of referral.                                         
 SB 92 - AHFC SUBJECT TO EXEC. BUDGET ACT                                     
 Number 116                                                                   
 CHAIR JAMES stated the next bill on the agenda was SB 92.  She                
 called for Representative Terry Martin, Chair of the sponsoring               
 Legislative Budget and Audit committee, to testify on behalf of the           
 REPRESENTATIVE TERRY MARTIN, Chair, Legislative Budget and Audit              
 Committee, stated his major problem with the Alaska Housing and               
 Finance Committee began about a year ago.  He thought it became               
 apparent at that time, that the legislature may have created a                
 monster that needed some oversight, especially considering they               
 had been given so much authority over state funds.  He pointed out            
 that many things in this year's capital budget, that were formerly            
 under the Department of Community and Regional Affairs, were now              
 under the Alaska Housing and Finance Corporation.  He stated there            
 was a real constitutional concern as to what degree the legislature           
 could delegate its authority to appropriate funds to a corporation            
 and mentioned the legislature had given a tremendous amount of                
 authority to the AHFC.  He stated an example of this authority                
 without oversight, is the recent report coming from the Institute             
 of Social and Economic Research.  This report indicated that the              
 state was receiving a return of less than $0.14 out of every dollar           
 spent on the weatherization program of the AHFC.  He stated the               
 program takes as much as 81 years to receive its investment from              
 the savings in energy loss.  He asked the committee what they                 
 thought the legislature would do if this knowledge became public              
 information.  He said it was going to become public at that point,            
 because its just one example of why they need oversight.  He stated           
 the problem was that the legislature was blamed from the mistaken             
 policies of the AHFC, when they had no means of oversight of the              
 activities of the corporations spending.  He argued there was no              
 accountability for the policies of the AHFC under the current                 
 system.  He also pointed out that the concern over tampering with             
 the AHFCs bonding authority was not real, as the legislature                  
 oversees the activities of other public corporations with bonding             
 authority as well.  He cited the Alaska Industrial Development and            
 Export Authority, the Permanent Fund corporation, and the Alaska              
 Railroad as examples.  He argued this oversight would not hurt the            
 bonding authority of the AHFC, but rather may help to keep                    
 credibility for their bonding authority great, by them knowing                
 that the legislature will protect and insure that the bonding                 
 authority is not misused.  He thought this oversight was necessary            
 to help insure that the funds and assets of the corporation were              
 not misused.  He reiterated that if the legislature was to be held            
 accountable for the mistaken policies of the AHFC, then it was                
 necessary that it have some means of oversight over the                       
 corporation.  He stated that his aide, John Bitney, and Tom                   
 Williams, legislative aide to Senator Steve Frank, could answer               
 questions from the committee, regarding the bills effect on the               
 bonding authority of the AHFC.                                                
 CHAIR JAMES stated she would like to take testimony from those on             
 teleconference before hearing from Mr. Bitney or Mr. Williams.                
 Number 241                                                                    
 MIKE DAVIS, Representative, Bristol Bay Housing Authority, stated             
 their housing authority works in approximately 20 communities with            
 about 400 homes in the Bristol Bay community.  He said they worked            
 extensively with the AHFC to provide homes in communities                     
 throughout bush Alaska.  They receive about $1.6 million from the             
 federal government and matching funds from the AHFC, which allows             
 them to make improvements to approximately 76 homes in the region.            
 He argued to put the projects together, in their short construction           
 season, requires readily available financing.  He stated they share           
 the concerns already expressed, that by allowing the AHFC to fall             
 under the Executive Budget Act will cause additional delays to                
 projects.  The result will be that less homes will be built.  He              
 thought that by allowing SB 92 to pass, the legislature will be in            
 the business of micro-managing the corporation, causing additional            
 bureaucracy and regulations, which he did not think was their                 
 intent.  He shared the concerns that this bill will stifle the                
 corporation from being able to respond to market conditions and               
 create a situation that will delay projects across the state.  He             
 suggested the legislature craft the language of the bill to allow             
 them oversight, while still maintaining the ability of the AHFC to            
 respond to the market conditions of the state.                                
 Number 290                                                                    
 JAN SIEBERTS, Senior Vice President, National Bank of Alaska,                 
 stated there was a group of people who wished to testify, but had             
 to leave for work.  He stated they thought the AHFC was an                    
 important financial asset to this state, and felt they were overall           
 doing a good job.  He argued the housing industry was important to            
 this state for the creation of jobs and said they estimated $150              
 million in new home construction last year.  He stated that                   
 developing new housing for lower income families was getting more             
 difficult, because of the increase in cost.  He thought that if               
 they had to go to the legislature for approval with each of their             
 transactions with the AHFC, the situation would get too complex.              
 He said they could not accomplish many of their projects without              
 the assistance of the AHFC and would hate to see the AHFC                     
 micro-managed to the point that these projects would be delayed for           
 two to three years.                                                           
 CHAIR JAMES asked if Mike Davis was still on teleconference from              
 Dillingham and stated Representative Ivan had some questions for              
 Number 346                                                                    
 REPRESENTATIVE IVAN stated he could understand Mr. Davis comments             
 about the existing relationship he had with the AHFC.  He asked if            
 Mr. Davis had any recommendations if this bill was too restrictive.           
 He asked if it would help if there were some type of ceiling on               
 dollar amounts allowed before requiring legislative oversight.                
 MR. DAVIS replied the dollar amounts they would need would not be             
 the same as those of the larger communities.  He thought what was             
 needed was the ability for the corporation to have the flexibility            
 to respond to market conditions.                                              
 REPRESENTATIVE IVAN stated he was looking for some type of dollar             
 amount ceiling that would exempt them from the effects of                     
 legislative oversight.                                                        
 MR. DAVIS said he could not give an answer to that question.                  
 Number 388                                                                    
 HEATHER ARNETT, Executive Coordinator, Association of Alaska                  
 Housing Authorities, commented this bill was unclear whether there            
 would be a requirement of legislative approval on a project by                
 project basis.  If this was the case, she thought there could be              
 some problems arise.  She thought private investors might be more             
 hesitant to invest in urban and rural Alaska if this legislative              
 approval were required.                                                       
 WILLIAM HOWE, Deputy Commissioner, Division of Treasury, Department           
 of Revenue, stated the department has spent the last week to see              
 what amendments could be made to SB 92 to make it more functional.            
 Their suggestions were: 1) To clarify that the AHFC has the ability           
 to issue bonds and make mortgage loans; 2) the AHFC can continue to           
 operate its loan programs where no state subsidy exists; and 3)               
 multi-family loans and projects not to exceed $10 million                     
 individually, which may require grants, tax credits, or utilization           
 of arbitrage earnings will be permitted.  He stated the Department            
 of Revenue felt with these amendments SB 92 is workable and will              
 maintain the intent of the sponsors.                                          
 Number 491                                                                    
 REPRESENTATIVE GREEN asked what percentage of the AHFCs loan                  
 portfolio does the suggested $10 million cap represent annually.              
 MR. HOWE thought this cap would represent a small percentage of the           
 overall portfolio which was in excess of $3 billion.  He stated               
 that last year, the corporation proceeded with about $40 million              
 worth of multi-family housing projects.  He emphasized that this              
 was a small, but important percentage of the overall portfolio.               
 CHAIR JAMES called for Tom Williams, Legislative Assistant, Senator           
 Steve Frank, to give a quick wrap-up on behalf of the bill sponsor.           
 She asked him to explain to the committee how they were planning to           
 deal with the concerns raised in the front section of the budget.             
 Number 507                                                                    
 TOM WILLIAMS, Legislative Assistant, Senator Steve Frank,                     
 reiterated that the bill sponsor had no desire to impede any of the           
 AHFCs traditional programs, that they have operated well for many             
 years.  He stated their concern was to insure there was a mechanism           
 to allow the legislature to exercise oversight, should they tend to           
 divert from their traditional programs.  He said it was the intent            
 to address the corporations flexibility issue in the front section            
 of the budget to grant the AHFC that general authority.  He argued            
 that by passing the bill without any exemptions, it would bring the           
 entire operation of the AHFC under the Executive Budget Act, while            
 providing for a provision in the budget allowing the AHFC to go               
 forward with its traditional programs, as long as they do not                 
 deviate from their basic plan as presented.  Should they divert               
 from the stated plan, this bill provides for a mechanism for the              
 legislature to review questionable programs.  He stated with regard           
 to Mr. Howes proposed amendments, he thought that if they could               
 develop language to exclude certain programs, that certainly                  
 language could be crafted broad enough to allow the AHFC their                
 needed flexibility.  With regard to a specific dollar amount cap,             
 he thought this cap may need to change annually, as the                       
 corporations needs and programs change.  He thought this                      
 flexibility could be achieved better in the budget, as compared to            
 being written in statute.                                                     
 CHAIR JAMES asked if the process for working with arbitrage funds             
 would be interfered with under this bill.                                     
 MR. WILLIAMS thought the intent was that they would present a                 
 general plan for how to spend its arbitrage earnings over the next            
 year, and as long as they do not deviate, there should not be a               
 problem.  Should they deviate from their generally stated plan,               
 they would then have to come back to the legislature to explain the           
 need for their change of course.  He reiterated that the                      
 Legislative Budget and Audit committee would allow for prompt                 
 legislative response, thus alleviating the concern of missed                  
 Number 552                                                                    
 REPRESENTATIVE GREEN asked if the sponsor would have any problem              
 with developing language to incorporate Mr. Howes proposed                    
 amendments to SB 92.                                                          
 MR. WILLIAMS stated the preferred approach would be to not exclude            
 certain functions of the AHFC.  He said they had asked the                    
 Executive Director of the AHFC to help craft the language he would            
 need to have flexibility to respond to market conditions, so that             
 it could be put into the budget.  He stated he thought there was a            
 fear the legislature would be trying to micro-manage the AHFC,                
 which he argued did not make sense.                                           
 REPRESENTATIVE GREEN said the goal of the House majority was to try           
 and limit government interference in business and thought this bill           
 was providing for government interference in the AHFC.  He stated             
 that without the proposed exclusions, he had some strong                      
 reservations about how this bill was written.                                 
 CHAIR JAMES pointed out that the AHFC was a government corporation.           
 REPRESENTATIVE GREEN agreed they were government, but thought that            
 overall, they had done a decent job of running their own affairs.             
 He thought any aggressive loan institution could document through             
 their history examples of poor decisions.                                     
 REPRESENTATIVE PORTER said he shared the concerns expressed by                
 Representative Green.  He stated he was as concerned as everyone              
 else about the effect of the 5 percent housing loan and the                   
 proposed new office building for the AHFC, but argued this bill was           
 potential overkill.  He was concerned about the potential of                  
 members of the LB&A, during the interim, to allow personal                    
 considerations to interfere with the process.  He suggested                   
 following a pattern similar to the oversight over the AIDEA board.            
 CHAIR JAMES stated they were out of time and were needed in                   
 session.  She adjourned the meeting at 10:23 a.m.                             

Document Name Date/Time Subjects