Legislature(1995 - 1996)

04/27/1995 08:42 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         April 27, 1995                                        
                           8:42 a.m.                                           
 MEMBERS PRESENT                                                               
 Representative Jeannette James, Chair                                         
 Representative Scott Ogan, Vice Chair                                         
 Representative Ed Willis                                                      
 Representative Caren Robinson                                                 
 Representative Ivan Ivan                                                      
 Representative Joe Green                                                      
 Representative Brian Porter                                                   
 MEMBERS ABSENT                                                                
 COMMITTEE CALENDAR                                                            
 HB 224:         "An Act relating to the state plumbing code."                 
                 PASSED OUT OF COMMITTEE                                       
 HB 210:         "An Act relating to issuance of motor vehicle                 
                 registrations and titles, and to licenses and                 
                 permits to operate a motor vehicle."                          
                 PASSED OUT OF COMMITTEE                                       
 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."                             
                 PASSED OUT OF COMMITTEE                                       
 HB 241:         "An Act relating to the use of a candidate's                  
                 campaign account."                                            
                 HEARD AND HELD                                                
 *HJR 2:         Proposing amendments to the Constitution of the               
                 State of Alaska relating to redistricting and to              
                 the length of a regular session, and establishing             
                 a unicameral legislature; and providing for an                
                 effective date for each amendment.                            
                 SCHEDULED BUT NOT HEARD                                       
 CSSB 80(FIN):   "An Act relating to police protection service areas           
                 in certain unified municipalities; and to police              
                 protection provided by the state in certain                   
                 municipal areas."                                             
                 SCHEDULED BUT NOT HEARD                                       
 *HB 304:        "An Act relating to geographic differentials for              
                 the salaries of certain state employees who are not           
                 members of a collective bargaining unit; relating             
                 to periodic salary surveys and preparation of an              
                 annual pay schedule regarding certain state                   
                 employees; relating to certain state aid                      
                 calculations based on geographic differentials for            
                 state employee salaries; and providing for an                 
                 effective date."                                              
                 SCHEDULED BUT NOT HEARD                                       
 (* First public hearing)                                                      
 WITNESS REGISTER                                                              
 REPRESENTATIVE VIC KOHRING                                                    
 Alaska State Legislature                                                      
 State Capitol, Room 428                                                       
 Juneau, Alaska 99801                                                          
 Telephone: 465-2186                                                           
 POSITION STATEMENT: Sponsor of HB 224                                         
 REPRESENTATIVE AL VEZEY                                                       
 Alaska State Legislature                                                      
 State Capitol, Room 216                                                       
 Juneau, Alaska 99801                                                          
 Telephone: 465-3719                                                           
 POSITION STATEMENT: Sponsor of HB 210                                         
 JUANITA HENSLEY, Chief of Driver Services                                     
 Division of Motor Vehicles                                                    
 Department of Public Safety                                                   
 P.O. Box 20020                                                                
 Juneau, Alaska 99811-0020                                                     
 Telephone: 465-4361                                                           
 POSITION STATEMENT: Supports HB 210                                           
 MARGOT O. KNUTH, Assistant Attorney General                                   
 Criminal Division                                                             
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska 99811-300                                                      
 Telephone: 465-3428                                                           
 POSITION STATEMENT: Supports HB 210                                           
 BOB STALNAKER, Director                                                       
 Division of Retirement and Benefits                                           
 Department of Administration                                                  
 P.O. Box 110203                                                               
 Juneau, Alaska 99811                                                          
 Telephone: 465-4460                                                           
 POSITION STATEMENT: Supports HB 270                                           
 MARK R. LIVINGSTON                                                            
 832 Warren Street                                                             
 Ketchikan, Alaska 99901                                                       
 Telephone: 247-0166                                                           
 POSITION STATEMENT: Supports HB 270                                           
 REPRESENTATIVE CON BUNDE                                                      
 Alaska State Legislature                                                      
 State Capitol, Room 108                                                       
 Juneau, Alaska 99801                                                          
 Telephone: 465-4843                                                           
 POSITION STATEMENT: Sponsor of HB 241                                         
 BROOKE MILES, Juneau Branch Administrator                                     
 Alaska Public Offices Commission                                              
 240 Main Street, Room 201                                                     
 Juneau, Alaska 99801                                                          
 Telephone: (907) 465-4864                                                     
 POSITION STATEMENT: Testified on HB 241                                       
 PREVIOUS ACTION                                                               
 BILL:  HB 224                                                               
 SHORT TITLE: STATE PLUMBING CODE                                              
 SPONSOR(S): REPRESENTATIVE(S) KOHRING,Green                                   
 JRN-DATE     JRN-PG               ACTION                                      
 03/03/95       564    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/03/95       564    (H)   LABOR & COMMERCE                                  
 03/22/95              (H)   L&C AT 03:00 PM CAPITOL 17                        
 03/22/95              (H)   MINUTE(L&C)                                       
 03/27/95              (H)   L&C AT 05:15 PM CAPITOL 17                        
 03/27/95              (H)   MINUTE(L&C)                                       
 03/29/95              (H)   L&C AT 03:00 PM CAPITOL 17                        
 03/29/95              (H)   MINUTE(L&C)                                       
 04/10/95              (H)   L&C AT 03:00 PM CAPITOL 17                        
 04/10/95              (H)   MINUTE(L&C)                                       
 04/12/95      1281    (H)   L&C RPT  CS(L&C) 2DP 4NR                          
 04/12/95      1281    (H)   DP: KOTT, ROKEBERG                                
 04/12/95      1281    (H)   NR: MASEK,KUBINA,ELTON,SANDERS                    
 04/12/95      1281    (H)   ZERO FISCAL NOTE (LABOR)                          
 04/13/95      1327    (H)   STA REFERRAL ADDED                                
 04/20/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/20/95              (H)   MINUTE(STA)                                       
 04/25/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/25/95              (H)   MINUTE(STA)                                       
 04/27/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HB 210                                                                
 SPONSOR(S): REPRESENTATIVE(S) VEZEY                                           
 JRN-DATE     JRN-PG               ACTION                                      
 03/01/95       529    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/01/95       529    (H)   TRANSPORTATION, STATE AFFAIRS                     
 03/17/95              (H)   TRA AT 01:00 PM CAPITOL 17                        
 03/20/95              (H)   TRA AT 01:00 PM CAPITOL 17                        
 03/20/95              (H)   MINUTE(TRA)                                       
 04/19/95              (H)   TRA AT 01:00 PM CAPITOL 17                        
 04/21/95              (H)   TRA AT 01:00 PM CAPITOL 17                        
 04/21/95              (H)   MINUTE(TRA)                                       
 04/22/95      1445    (H)   TRA RPT  CS(TRA) 1DP 3NR 1AM                      
 04/22/95      1445    (H)   DP: JAMES                                         
 04/22/95      1445    (H)   NR: MACLEAN, BRICE, WILLIAMS                      
 04/22/95      1445    (H)   AM: G.DAVIS                                       
 04/22/95      1446    (H)   ZERO FISCAL NOTE (DPS)                            
 04/25/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/25/95              (H)   MINUTE(STA)                                       
 04/27/95              (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                       
 04/01/95              (H)   STA AT 10:00 AM CAPITOL 102                       
 04/01/95              (H)   MINUTE(STA)                                       
 04/04/95              (H)   STA AT 03:00 PM CAPITOL 120                       
 04/20/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/20/95              (H)   MINUTE(STA)                                       
 04/25/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/25/95              (H)   MINUTE(STA)                                       
 04/27/95              (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                       
 04/06/95              (H)   MINUTE(STA)                                       
 04/11/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/11/95              (H)   MINUTE(STA)                                       
 04/27/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HJR  2                                                                
 SPONSOR(S): REPRESENTATIVE(S) GREEN,Navarre                                   
 JRN-DATE     JRN-PG               ACTION                                      
 01/06/95        16    (H)   PREFILE RELEASED                                  
 01/16/95        16    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/16/95        16    (H)   STA, JUD, FIN                                     
 04/27/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  SB  80                                                                
 SHORT TITLE: MUNICIPAL POLICE SERVICES                                        
 SPONSOR(S): SENATOR(S) RIEGER                                                 
 JRN-DATE     JRN-PG               ACTION                                      
 02/09/95       222    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/09/95       222    (S)   STA, FIN                                          
 03/02/95              (S)   STA AT 03:30 PM BELTZ ROOM 211                    
 03/02/95              (S)   MINUTE(STA)                                       
 03/03/95       468    (S)   STA RPT  1DP 4NR                                  
 03/03/95       468    (S)   ZERO FISCAL NOTE (DPS #1)                         
 03/27/95              (S)   FIN AT 09:00 AM SENATE FINANCE 532                
 03/28/95              (S)   MINUTE(FIN)                                       
 03/30/95       840    (S)   FIN RPT  CS  2DP 4NR 1AM SAME TITLE               
 03/30/95       840    (S)   PREVIOUS ZERO FN (DPS)                            
 04/10/95       956    (S)   RULES TO CALENDAR  4/10/95                        
 04/10/95       960    (S)   READ THE SECOND TIME                              
 04/10/95       960    (S)   FIN  CS ADOPTED UNAN CONSENT                      
 04/10/95       960    (S)   ADVANCED TO THIRD READING UNAN                    
 04/10/95       960    (S)   READ THE THIRD TIME  CSSB 80(FIN)                 
 04/10/95       960    (S)   PASSED Y15 N5                                     
 04/10/95       960    (S)   KELLY  NOTICE OF RECONSIDERATION                  
 03/30/95              (S)   MINUTE(FIN)                                       
 04/10/95              (S)   RLS AT 08:30 AM FAHRENKAMP ROOM 211               
 04/10/95              (S)   MINUTE(RLS)                                       
 04/11/95       980    (S)   RECON TAKEN UP - IN THIRD READING                 
 04/11/95       980    (S)   LETTER OF INTENT OFFERED BY HOFFMAN               
 04/11/95       980    (S)   AM 1 TO LETTER OF INTENT ADPTD                    
                             UNAN CON                                          
 04/11/95       980    (S)   (S) ADOPTED LETTER OF INTENT AS                   
 04/11/95       981    (S)   PASSED ON RECONSIDERATION                         
                             Y14 N5 E1                                         
 04/11/95       984    (S)   TRANSMITTED TO (H)                                
 04/12/95      1277    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/12/95      1277    (H)   STATE AFFAIRS, FINANCE                            
 04/27/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HB 304                                                               
 SHORT TITLE: GEOGRAPHIC PAY DIFFERENTIALS                                     
 SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                  
 JRN-DATE    JRN-PG                ACTION                                      
 04/07/95      1174    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 04/07/95      1174    (H)   STA, L&C, FINANCE                                 
 04/07/95      1174    (H)   GOVERNOR'S TRANSMITTAL LETTER                     
 04/07/95      1174    (H)   2 FISCAL NOTES (ADM, GOV-ALL DEPT)                
 04/20/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/20/95              (H)   MINUTE(STA)                                       
 04/25/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 04/25/95              (H)   MINUTE(STA)                                       
 04/27/95              (H)   STA AT 08:00 AM CAPITOL 102                       
 ACTION NARRATIVE                                                              
 TAPE 95-54, SIDE A                                                            
 Number 000                                                                    
 The meeting of the House State Affairs Standing Committee was                 
 called to order at 8:42 a.m.  Members present at the call to order            
 were Representatives James, Porter, Green, Ivan, Robinson, Willis,            
 and Ogan.                                                                     
 HB 224 - STATE PLUMBING CODE                                                 
 CHAIR JEANNETTE JAMES stated the first bill on the agenda was HB             
 224.  She said she had negotiated with bill sponsor, Representative           
 Vic Kohring, and the Department of Labor and had drafted a proposed           
 committee substitute for HB 224, version D.                                   
 Number 012                                                                    
 REPRESENTATIVE BRIAN PORTER moved the committee adopt as the                  
 working draft, CSHB 224, version D, dated 4-26-95.                            
 CHAIR JAMES asked if there were any objections.                               
 REPRESENTATIVE VIC KOHRING, bill sponsor, stated this committee               
 substitute was supported by the Department of Labor.                          
 CHAIR JAMES asked if there were any objections to passing the                 
 proposed committee substitute out of committee.                               
 REPRESENTATIVE SCOTT OGAN said he would object for the sake of                
 discussion.  He asked what the changes were that were incorporated            
 into the committee substitute.                                                
 Number 033                                                                    
 CHAIR JAMES explained the changes were based on the Labor and                 
 Commerce Committee version of HB 224.  The new language is on page            
 3, lines 11-15, which states the requirements to allow for the use            
 of a single wall heat exchanger.  She stated this was a simple                
 solution and a compromise between all parties involved.  She asked            
 if the objection to passing this committee substitute out of                  
 committee was still maintained.                                               
 REPRESENTATIVE OGAN said it was not.                                          
 CHAIR JAMES stated the proposed committee substitute was the                  
 working draft before the committee for consideration.  She asked if           
 there was any further discussion on the CSHB 224.                             
 Number 056                                                                    
 REPRESENTATIVE IVAN IVAN moved to adopt CSHB 224, version D, and              
 pass it out of committee with individual recommendations and                  
 attached fiscal notes.                                                        
 CHAIR JAMES asked if there were any objections.  Hearing none, the            
 bill passed out of committee.  She announced that the next bill on            
 the agenda was HB 210 by Representative Vezey.                                
 HB 210 - PRIVATE MOTOR VEHICLE LICENSING/TESTING                             
 REPRESENTATIVE AL VEZEY, Sponsor of HB 210, said that HB 210 is a            
 comprehensive bill on which there has been some considerable                  
 research.  He stated this bill has seen a considerable amount of              
 effort and attention from the legislature and the Administration.             
 He commented they were trying to create an opportunity to privatize           
 a government service.  Approximately 27 other states provide for              
 some form of contracting out of motor vehicle services.  This bill            
 is modeled after the statutes and procedures of several of these              
 states.  He added this bill does not mandate anything, but states             
 the department may.  Because there is no mandate, the Division of             
 Motor Vehicles (DMV) has given this bill a zero fiscal note.  It              
 does lay out a program where the state can contract with parties              
 to:  1) Register vehicles and issue vehicle titles; 2) issue                  
 drivers licenses; 3) issue commercial drivers licenses; or 4) any             
 combination of the above.  The intent of the sponsor is that the              
 cost of this program would be born by the savings in administrative           
 cost and may even see a positive cash flow.  The contractors will             
 not receive any subsidy from the state.  They will not receive any            
 portion of the fees collected for the state, but do have the right            
 to charge a service fee.  He stated this was not that different               
 than the current process.  When an individual purchases a new                 
 automobile, they do not give them the manufacturers statement of              
 origin.  Rather, the individual is charged $35 to go to the DMV and           
 get a registration and title.  He did not expect the service fee              
 would be as high as $35, but stated they did not put a cap on how             
 much could be charged.  He added the state was not providing any              
 equipment or staff for the contractor to use.  He did not expect              
 this program to take off immediately, but did suspect there would             
 be a couple of contract stations by the end of the year, that at a            
 minimum would provide vehicle registration and titling service.  He           
 mentioned there was already at least one professional driving                 
 school in Alaska.  He felt it would be a small step for them to               
 advance to issuing drivers licenses.  Currently, the DMV does not             
 know what it will take to qualify contractors for these functions,            
 as they do not compartmentalize the functions of their personnel.             
 He reiterated they were not requiring the contractor to be                    
 qualified to accomplish all of the DMVs function, as they might               
 only contract to do a part of the process.  He thought there were             
 only two areas of concern for the DMV: 1) They put the wording of             
 the contract into statute.  This was because they had modelled this           
 legislation on the model of other states, where this is working and           
 there is a track record.  Also, he felt this was a new enough idea,           
 that he wanted the Administration to have to work with the                    
 legislature and not just address these contracts by regulation.  He           
 wanted to encourage the DMV to come back to the legislature in a              
 year or two, and see where there were problems that needed to be              
 addressed and improved upon.  He clarified that this bill did allow           
 the department to write regulations; and 2) the DMV was used to               
 adjudicating disputes through an administrative hearing process.              
 He has tried to approach this bill as a contract between two                  
 parties, as a commercial relationship.  Thus, they have set up that           
 disputes will be handled through Alaskas Uniform Arbitration                  
 Statute, Title 09.42.  He advocated this process, as this was a               
 commercial relationship.  The standard in the world of commerce was           
 to have contracts to provide for arbitration.  Additionally,                  
 arbitration is considered to be a faster process than litigation.             
 There are very few appeals, as the courts recognized the rulings of           
 arbitration tribunals and do not like to overturn these decisions.            
 Under the administrative hearing process, one side frequently feels           
 that they did not receive a fair hearing and appeal to the courts.            
 The state has to pay the cost of the trial.  In arbitration, both             
 parties split the cost equally at the beginning.  After the                   
 process, the arbitrator awards all costs to the prevailing party.             
 Thus, if the state is the prevailing party, they will not have to             
 pay anything to settle a dispute.  He felt this was an incentive to           
 find solutions.  He argued that arbitration encourages every other            
 form of dispute resolution, including mediation.  He advocated that           
 they were taking a new approach to how the state does business, and           
 perhaps this approach should offer a new way of how the state                 
 settles disputes.  He commented this was a complex bill, and stated           
 they started out looking at how the Federal Aviation Administration           
 handles licensing of pilots and aircraft, which is completely                 
 accomplished in the private sector.  This research showed there               
 were at least 27 states that contract out these services, of which            
 about 19 contract with the private sector.  He offered to answer              
 any questions.                                                                
 CHAIR JAMES noticed that Juanita Hensley, representing the DMV, was           
 present and asked if the committee wanted to hear her testimony               
 before asking questions of both her and the sponsor.                          
 Number 263                                                                    
 JUANITA HENSLEY, Chief of Driver Services, Division of Motor                  
 Vehicles, stated she had just arrived and apologized for missing              
 the comments of the bill sponsor.  She said the department had                
 worked with the sponsor to develop a draft of the legislation that            
 they thought would accommodate their needs.  She reiterated one               
 area of concern was with the contracts being included in the                  
 statute. She felt that should there be a change in the future, this           
 would require the department to come to the legislature annually to           
 upgrade the contracts.  She added the Department of Law thought the           
 exact wording of the contract did not need to be in statute, but              
 just the intent of the legislature.  The other area of concern to             
 the department was the requirement of arbitration.  They feared               
 that if there was a dispute between the contractor and the                    
 department, then they would have to go to arbitration.  They felt             
 this should be accomplished by administrative hearing, emphasizing            
 this hearing would not be under the guidelines of the                         
 Administrative Procedures Act.  Overall, the department felt they             
 could work with this bill, mentioning they currently had 13                   
 commissioned agents working with them.  These agents were small               
 governmental entities.  This was not a new process for the DMV, but           
 this bill does give them guidelines of how to accomplish this task.           
 She offered to answer any questions.                                          
 Number 325                                                                    
 REPRESENTATIVE CAREN ROBINSON asked if the department was already             
 privatizing aspects of its service, why it was necessary to have              
 this legislation.                                                             
 REPRESENTATIVE VEZEY stated that currently the state was making no            
 effort to privatize any of its functions.  He recognized that there           
 was some effort towards contracting with local government and other           
 governmental entities.  He said they were directing this effort,              
 while allowing for considerable flexibility by saying may and not             
 shall.  These services are not currently in the private sector                
 and they can be.  He said that was the difference.                            
 CHAIR JAMES commented if there was anything that could be done to             
 stop the long lines at the DMV, then it should be considered.  She            
 thought this may accomplish that goal.                                        
 Number 349                                                                    
 REPRESENTATIVE JOE GREEN verified that Ms. Hensley had said that              
 the DMV already had the authority to do this without legislation.             
 He asked her if she thought this would encourage contracting with             
 the private sector or mean a continuation of the existing system.             
 MS. HENSLEY replied this bill would allow the agent to charge a               
 fee.  She thought this may or may not prevent the long lines at the           
 DMV.  Under their existing contracts, they pay the contract agents            
 15 percent of the intake of profits to process the work for the               
 DMV.  This bill would require a renegotiation of these contracts,             
 because this bill requires them to collect a fee and then remit the           
 full fees back to the state.  She suspected that if there was a DMV           
 office in the town an individual was residing in and they could go            
 there and not pay the additional fee, then they would choose to do            
 so.  Should they favor the shorter lines at the contract station,             
 then they could choose that option.  She cited examples of IM                 
 (Inspection/Maintenance) stations in the Anchorage area, that are             
 renewing registrations.  She stated they had paid for the equipment           
 and training necessary to set up.  This is what they would hope to            
 see happen should this bill become law:  If they are going to offer           
 the service, that it not place any more burden on the state.  The             
 department does feel that if there are more contractors, they may             
 need to ask the legislature for additional funding to pay for the             
 oversight of them.  They want to try to continue to provide the               
 public with the service it is used to receiving, and so would not             
 foresee reducing the DMV employees under this bill.                           
 Number 426                                                                    
 REPRESENTATIVE GREEN asked if there could not be a flexibility in             
 the fee structure to allow the contract agent to charge their fee             
 in addition to those funds that would normally go to the state;               
 thus making this effectively revenue neutral to the state.  He                
 recognized Ms. Hensleys concern about the need for additional                 
 oversight of the contract agents, but asked if any additional costs           
 as a result of this would not be made up by a reduction in the                
 administrative processing work of the DMV.                                    
 MS. HENSLEY thought this could be possible, but said the goal of              
 the department was to reduce those long lines and still provide the           
 same level of service.  To do this, they would still need to keep             
 the same number of employees.                                                 
 Number 452                                                                    
 REPRESENTATIVE VEZEY stated one of the problems that arose in                 
 discussing this bill with the DMV was the rather complex system of            
 checking information when processing vehicle registration, titles,            
 and drivers licenses.  It may be that this process is the                     
 bottleneck that may be preventing the department from providing               
 better service.  He thought it may be necessary to revisit this               
 legislation in the future to find that balance between control                
 versus services.  The problem in working with this legislation has            
 been to allow for this control to remain in place, while allowing             
 for an expansion of service.                                                  
 REPRESENTATIVE ED WILLIS asked if this bill would put another layer           
 between the citizens and their elected officials.  He asked how the           
 legislature could address problems that may arise with the contract           
 REPRESENTATIVE VEZEY replied that this would only happen if the               
 citizen voluntarily chose this option.  He reminded the committee             
 that this was the way that pilot licenses were handled, as well as            
 fishing and hunting licenses.  Thus, he did not think this idea was           
 unusual.  He stated he felt it was likely that an individual would            
 have to pay a premium to go to a private vendor and avoid the long            
 lines at the local DMV office.                                                
 CHAIR JAMES commented this might open options for service that                
 would be available on a schedule other than 8 a.m. to 5 p.m.  She             
 pointed out that the DMV office in Fairbanks was closed during the            
 noon hour.  She said if you were in line at this time, you faced              
 the risk of having to come back, claiming she had personally had              
 this happen in the past.                                                      
 Number 515                                                                    
 MS. HENSLEY said she was surprised to hear this, because the only             
 offices that are closed between 12 p.m. and 1 p.m. are the one-               
 person offices.  She also pointed out that they did have offices in           
 the Anchorage area that were open Tuesday through Saturday to try             
 to accommodate the needs of the public.  She reiterated the DMV was           
 trying hard to find ways to be more efficient and responsive.                 
 CHAIR JAMES stated that what was distressing to her and the public            
 was that the DMV is the department that brings in more money than             
 it spends, yet the service seems to be less than what it should be            
 for the money received.                                                       
 MS. HENSLEY replied that the budget of the DMV is only one-fourth             
 of that which it earns in income.                                             
 REPRESENTATIVE VEZEY stated he felt that the initial demand for               
 these contract agents would come from commercial users, who look              
 not only at the cost of fees, but also the cost of payroll for the            
 individual standing in line at the DMV.  This could be a way for              
 them to improve the efficiency of their own internal organization             
 by tying in with a contract agent of the DMV.                                 
 Number 539                                                                    
 MARGOT KNUTH, Assistant Attorney General, Criminal Division,                  
 Department of Law, was concerned that HB 210 in the new proposed              
 statute, 28.12.120, specifies the required contract language to be            
 used by the DMV.  She said as a general rule, when you specify the            
 language of a contract in a statute, then you cannot change the               
 contract without amending the statute.  Thus, the preferred                   
 practice is to establish the terms of the contract in statute, but            
 not the exact language.  This provides flexibility should something           
 be overlooked or another statute changes that has an impact on this           
 one.  She thought this would seriously tie the hands of the                   
 Administration, who would be required to come back to the                     
 legislature to effect any changes in the contracts.  Thus, her                
 recommendation was that this statute not specify the language of              
 the contracts, but the terms the legislature feels are necessary to           
 have included in these contracts.                                             
 REPRESENTATIVE VEZEY answered that the contracts that they have put           
 together, state that they will comply with state and federal law              
 and regulations.  He stated they wanted the Administration to have            
 a reason to come back to the legislature, should there be a problem           
 that needs to be addressed.  He was concerned that should they turn           
 all authority over to the Administration, then they will be in the            
 same problems expressed about regulations, which are that neither             
 the legislature or the Administration is accountable.  By putting             
 the contracts in statute, they hope to encourage the                          
 Administration, legislature, and public to get together in the                
 event a problem arises.                                                       
 REPRESENTATIVE ROBINSON asked if there would not have to be                   
 additional regulations drafted even with this tight contract.                 
 Number 579                                                                    
 REPRESENTATIVE VEZEY replied that he felt this statute was very               
 complete.  He stated the DMV had testified in the Transportation              
 Committee that they did not see that regulations would be required,           
 as the bill is very complete.  They had asked for the authority to            
 write regulations, should something come up in the future.                    
 REPRESENTATIVE OGAN expressed reservation about putting the                   
 regulations in statute.  He thought that maybe it would be wise to            
 put some type of sunset on this provision of the bill.  He also               
 asked if this would not load up the legislature with contract                 
 negotiations.  His experience had been that contracts were                    
 something that were negotiated on a case-by-case basis.                       
 Number 598                                                                    
 REPRESENTATIVE VEZEY explained this was not a mandate to do                   
 anything, but just allows the department to consider this as an               
 option.  Should there be enough public demand, then the legislature           
 can tighten up the language to make it more mandatory.  He thought            
 that Representative Ogans concerns were addressed in this bill.               
 He also stated that if the legislature wanted to be more responsive           
 and accountable, then it had to accept more responsibility for                
 their work product.                                                           
 REPRESENTATIVE GREEN agreed there was a dilemma with the amount of            
 regulations currently on the books, but also found the DMV to be a            
 very responsive agency.  He stated his concern was that if                    
 something was found to need addressing in July, then it could not             
 be addressed by the legislature until the next session.  He thought           
 that regulations were theoretically based on statute and if given             
 an outline to follow by the legislature, they should adhere to                
 those guidelines.  If they dont, the legislature could then                   
 address the concerns they have without having to address these                
 contracts on a yearly basis.  He thought the legislatures plate               
 was full already.                                                             
 CHAIR JAMES commented the solution to this problem was to have                
 oversight of regulations, which she thought could very simply be              
 accomplished.  She said this was a whole other subject.                       
 Number 624                                                                    
 MS. KNUTH answered the problem with a contract that states must               
 read as follows, is if there is a problem discovered when the                 
 legislature was not in session, she did not know how it could be              
 addressed until the legislature convenes.  She said the language of           
 the contracts look good, but she could not say if they were                   
 comprehensive.  She said until you start using these contracts, you           
 cannot know what problems may arise.                                          
 CHAIR JAMES stated her inclination was to ask what damage would be            
 done.  Wouldnt it only be that you would be delayed from entering             
 into a contract until the following legislative session.  Those               
 people who had already entered into a contract would be bound by              
 the terms of those contracts.  Should a change be necessary, then             
 the only damage would be that the DMV could not enter into any new            
 contracts until the next legislative session.                                 
 Number 645                                                                    
 MS. KNUTH stated their concern was more that if there was a                   
 provision that was not addressed, that it could lead to litigation.           
 Should there need to be something addressed, she thought one of the           
 two parties would possibly face an economic loss.  She did not                
 think it would be a case of not entering into a contract, but                 
 rather making do with the existing provisions and then making up              
 for any deficiencies in litigation.                                           
 MS. HENSLEY said the department would echo the concerns of the                
 Department of Law.  Should they enter into a contract that changes,           
 then under this law they would have to go back to terminate that              
 contract.  Once the contracts were terminated, then the contractor            
 would have the right to go to arbitration to get the issue                    
 resolved.  She thought this would be costly and time-consuming to             
 the department.                                                               
 CHAIR JAMES stated her experience with contracts suggested that               
 when they realize there is something missing in the agreement, they           
 do an addendum, but do not throw out the whole contract.  Thus, she           
 fails to see the scenario they suggest.  She thought that only the            
 amendment would be on hold, and this could happen currently,                  
 without the language of this bill.                                            
 MS. KNUTH said this was the problem with the specific language                
 being in statute.  This doesnt allow the Administration the                   
 flexibility to negotiate should any changes be necessary.                     
 CHAIR JAMES stated she understood those concerns, but asked if they           
 wanted to have the freedom to have a contract with one agent that             
 was different from the one they have with another.  She thought               
 this could create a problem, and that was what having the contract            
 in statute prevented.                                                         
 MS. KNUTH did not foresee having different contracts with different           
 agents, but was thinking in terms of refinement that may be needed            
 with all of their contracts.                                                  
 CHAIR JAMES stated that it sounded as if they were saying that they           
 had not really looked at this language well enough to know what was           
 necessary to be in the language of the statute.                               
 MS. KNUTH said she had looked at this language, but felt that until           
 the situation was implemented, you may not know of all of the                 
 changes that may be needed.  She said there could be a change in              
 federal or state law that could mean a change would be necessary in           
 the contracts.  She felt the use of the legislature to micro-manage           
 something as technical as this was inappropriate, when what was               
 needed was the policy considerations and guidelines.                          
 Number 690                                                                    
 REPRESENTATIVE ROBINSON asked if there was a way this language                
 could be refined to allow for addendums to contracts.                         
 REPRESENTATIVE VEZEY answered that the contracts were worded that             
 a contract agent must follow state and federal law.  Should the law           
 change, the contracts change to reflect this change of law.  He               
 stated they were not locked into a prior law.  The basic nature of            
 a contract, he said, was that two people could agree to anything.             
 With this language, they were trying to set up the grounds for                
 termination of the contract by the state and the commitments of the           
 contractor to comply with the law.                                            
 TAPE 95-54, SIDE B                                                            
 Number 000                                                                    
 REPRESENTATIVE GREEN agrees with the idea to legislatively fix                
 something that has runamuck, he still agrees with the idea of                 
 having departmental regulations that are under the guidelines of              
 the legislature.  He was concerned that should the legislature                
 continue to pass legislation, where the legislature dictates all              
 things and by-passes the regulatory process, then this was                    
 overkill.  He felt this was a case where the legislature was trying           
 to micro-manage things that is should not be.  He stated the                  
 legislature should just be giving guidelines for these contracts.             
 If these contracts do not comply with these guidelines, then the              
 legislature should address this with the agencies to get them                 
 Number 070                                                                    
 REPRESENTATIVE OGAN stated there were statutes that set forth the             
 legal form, stating the documents should read substantially as                
 follows or substantially in a similar form.  He thought maybe it              
 would be appropriate to have a conceptual amendment that would                
 change the verbiage on page 7, line 12, to read The contract                  
 required under AS 28.12.110(b) for third party agents must read               
 substantially as follows.  Combining this with some legislative               
 oversight as necessary, he felt would solve the problem.  He                  
 thought that maybe these contracts could be reviewed by the sponsor           
 and be a win-win situation for everyone.                                      
 Number 102                                                                    
 REPRESENTATIVE VEZEY said there were three contracts, depending on            
 the type of service the agent wants to engage in.  They are all               
 worded very similar, stating that the third party agent agrees to             
 comply with all applicable statutes and administrative regulations            
 of the state of Alaska and all applicable federal laws, including             
 regulations of the Federal Highway Administration, and with all               
 applicable municipal ordinances.  Thus, should the state wish to              
 arbitrarily change a contract condition, then they have the ability           
 to write a regulation.  The contractor has no choice but to follow            
 that regulation.  He thought they had given the department a                  
 tremendous amount of responsibility.  He reiterated the contract              
 changes anytime the law changes.                                              
 REPRESENTATIVE PORTER stated he did not know of any other contracts           
 that were in statute.  He asked why it was appropriate to put this            
 contract in statute, even with the verbiage of these terms, as                
 opposed to the suggested verbiage of what terms should be in the              
 REPRESENTATIVE VEZEY answered the reason was that the state had               
 such a poor record of privatization.  He felt if they were going to           
 push the Administration towards privatization, then it would be               
 necessary to use a few more tools than had been used in the past.             
 REPRESENTATIVE PORTER did not disagree, but felt it was ironic that           
 this involved the one agency that had taken some steps to privatize           
 REPRESENTATIVE VEZEY replied that this was correct and he was not             
 sure how they happened to focus on this particular agency.  He                
 stated they had tried to look toward other areas that had been                
 successful in privatization in government and the one area that               
 stood out was the Federal Aviation Administration.  Much of that              
 service has successfully been privatized and is so commonplace that           
 people do not even think about it.                                            
 Number 166                                                                    
 CHAIR JAMES commented this bill is really plowing new ground and              
 not really wanting to be facetious, but the concerns she is hearing           
 from the Department of Law is the type she would expect to hear               
 from attorneys.  She stated she had just finished reading The                 
 Death of Common Sense and suggested that anyone who had not read              
 this, do so.  This book tells how precise government has tried to             
 be over the past 30-40 years.  Being so precise creates loopholes.            
 She stated as an example, the 36,000 pages of the regulations of              
 the Internal Revenue Service.  The more it is attempting to try to            
 cover every detail of a situation, the more the likelihood is that            
 someone will discover a loophole.  It was her experience that the             
 KISS (Keep it simple stupid) method works better.  She stated this            
 dispute will always take place with the legal profession, as that             
 is their job.  She thought there needed to be some common ground,             
 between being too cautious and careless.  She thought that, should            
 this common ground be found, there would be less litigation as a              
 result.  She argued that the language in this bill finds that                 
 common ground, and the only thing that will happen should these               
 contracts be insufficient, is that the Administration will be                 
 before the legislature next year without having finished the                  
 contractual agreements.  This would be the stop-gap.  Should this             
 happen, that they have to come before the legislature the following           
 year, then she asks what would be lost.  She agrees there is a                
 place to write regulations and a place to write statutes.                     
 Currently, there is a problem with finding the balance of this                
 relationship between the statute writers and the regulation                   
 writers.  She agreed this may be overkill, but sometimes it is                
 necessary to overcorrect to find the proper balance.                          
 Number 212                                                                    
 REPRESENTATIVE GREEN understood the frustration being felt with the           
 regulatory process, but he wondered if the compromise suggested by            
 Representative Ogan was not a better idea.  Should they set the               
 guidelines of the contracts, while allowing for some flexibility,             
 they could then revisit them next year and make changes if the                
 Administration did not follow legislative intent.  He added this              
 would allow for legislative review, while removing the handcuffs of           
 the precise language.                                                         
 Number 239                                                                    
 MS. KNUTH stated if the sin of attorneys is trying to be precise,             
 then this bill is guilty of that sin as well.  It is setting out              
 with total precision of what that contract is going to say.  By               
 keeping it simple, the legislature would set out just the                     
 parameters of the contract, but not the exact language.  This will            
 just help those seeking to find the loopholes in the contracts.               
 Thus, she agreed with the comments of Representative Green.                   
 CHAIR JAMES asked if the existing language, as indicated by the               
 sponsor, does not already allow for changes in state or federal               
 law.  She thought this language was pretty comprehensive.                     
 MS. KNUTH answered by stating an example on page 8, line 27, of an            
 agreement where the third party agent agrees to provide as required           
 by AS 28.12.150.  She asked who would know in the future that this            
 statute was the only applicable requirement for insurance.  Should            
 there be another unspecified statute that is applicable, then the             
 vendor could say they do not have to comply.  Another possibility             
 would be that the revisor of statutes changes this statute to                 
 another number, which is then unspecified in this contract.  These            
 were the reasons this language was too restrictive in allowing the            
 department to solve any future problems that may arise.                       
 Number 273                                                                    
 REPRESENTATIVE VEZEY said he had no problem with some                         
 wordsmithing on the language of this contract, but suggested that             
 any concern of the Department of Law could be addressed by deleting           
 subparagraph 2.  He stated they had already said the agent would be           
 required to comply with all applicable laws, and so it was not                
 necessary to specify the requirement to comply with insurance laws            
 under statute AS 28.12.150.  His interpretation of this meant that            
 the contractor was required to comply with any insurance                      
 requirements and not just those of AS 28.12.150.  He reiterated               
 that the wording of this contract is very specific that the agent             
 is required to comply with the law, and so if the law changes, the            
 contract changes.                                                             
 Number 292                                                                    
 REPRESENTATIVE PORTER feels she picked a good example, since having           
 heard this bill before in the Transportation Committee, she just              
 found an example of a paragraph that could be removed from this               
 bill.  He stated this was a close call, since he agrees that there            
 is a real need for regulation reform and that some agencies                   
 runamuck, but felt this was the wrong agency they were picking                
 on.  He also thought this was a situation of micro-managing, which            
 the legislature says they do not like to do.  Thus, he would                  
 support the idea of adding the wording substantial similarity to              
 the wording of the bill.                                                      
 CHAIR JAMES asked if he would make this in the form of a motion, as           
 a conceptual amendment.                                                       
 REPRESENTATIVE PORTER moved that on page 7, line 13, the verbiage             
 be amended to read for a third party agent must substantially read            
 as follows, and that this language be adopted at the appropriate              
 places throughout the bill.                                                   
 CHAIR JAMES asked if there was any discussion on that amendment.              
 REPRESENTATIVE VEZEY stated for the record that this amendment                
 would also apply to page 10, line 15 and page 13, line 14.                    
 CHAIR JAMES asked if there was any objection to this amendment.               
 Hearing none, the amendment passed.  She asked if there was any               
 other discussion.                                                             
 REPRESENTATIVE GREEN moved to pass CSHB 210(TRA) as amended with              
 individual recommendations and a zero fiscal note.                            
 CHAIR JAMES asked if there were any objections.  Hearing none, the            
 bill passed out of committee.                                                 
 HB 270 - RETIREMENT INCENTIVE PROGRAM                                       
 Number 359                                                                    
 CHAIR JAMES announced that they had a rather full schedule and it             
 seemed obvious they would not be able to hear all of the bills at             
 this meeting.  She was looking for a time to schedule another                 
 meeting to complete their calendar of bills, noting that all                  
 committee hearings were scheduled to close by the following day.              
 She suggested she may try to hold a meeting at the call of the                
 Chair, if that was possible.                                                  
 REPRESENTATIVE PORTER, Chair, Subcommittee on HB 270, stated that             
 subcommittee met and received information from the Administration             
 on the specific concerns they had and were furnished with examples            
 of how the system would be applied.  He felt that all of the                  
 questions from the subcommittee were answered to their                        
 satisfaction.  He stated he was satisfied by the answers from the             
 Administration, that the bill and their application of the bill,              
 would result in this program only being administered to divisions             
 and individuals where they can establish, at that time, that there            
 will be a cost savings.  He was still concerned that there was no             
 guarantee that the budget of that unit will decrease the next year            
 by that amount.  He said this was the historic problem with former            
 retirement incentive programs (RIP) and he did not have an answer             
 for that concern.  He suggested that seeing that the budget                   
 decrease was the responsibility of the legislature and trying to              
 come up with solutions towards that goal is everyones job.  He                
 recommended passage of the bill out of committee.                             
 CHAIR JAMES mentioned her amendment for HB 270, version A/1, which            
 she prepared at the request of people from Kodiak.  It was her                
 understanding that the Administration had no problem with this                
 amendment.  She asked that the representatives from the                       
 Administration address this amendment, as well as the bill, when              
 making their presentation.                                                    
 Number 430                                                                    
 BOB STALNAKER, Director, Division of Retirement Benefits,                     
 Department of Administration, stated that having reviewed the                 
 proposed amendment, their concern was of timing and being able to             
 meet the needs of employers as they set these time frames.  He                
 thought this amendment would accommodate these concerns.  He stated           
 he had some suggestions regarding the dates proposed in the                   
 amendment, which would make it more likely that the Administration            
 could respond appropriately to employers as they set these dates.             
 On the amended portion of the bill, on page 8, he suggested that              
 the date be changed from October 1 to October 31, because under               
 Alaskas retirement statutes, a person is appointed to retirement              
 the first day of the month following their application.  Thus, by             
 setting the date of October 1, the individual would have to wait a            
 whole month, until November 1, before they could be appointed for             
 retirement.  Thus, former RIP bills have specified the end of the             
 month.  Still referring to the amendment, on line 10, where it                
 states 30 days after their establishment, they suggested changing             
 that to 60 days.  That would require the applicant to notify the              
 Administration at least two months in advance of a window period,             
 to give them time to gather information and discuss employee                  
 benefits.  Referring to the bill, he suggested changing the date on           
 page 5, line 25, from July 1 to June 30.  This was because in the             
 teacher retirement system, their service goes through June 30 and             
 they retire July 1.  Then they could apply on June 30 and retire on           
 July 1.                                                                       
 CHAIR JAMES said they had already heard the presentation from the             
 Administration at an earlier meeting and suggested they hear from             
 those individuals on teleconference.                                          
 Number 456                                                                    
 MARK LIVINGSTON, in Ketchikan, expressed his support for HB 270.              
 He felt this would help the local school district with their                  
 budgeting problems.  He cited several examples of areas where the             
 school district had already made cuts.  He saw this bill as                   
 beneficial by replacing retiring teachers with new ones at a lower            
 pay rate.  This would save the school districts a substantial                 
 amount of money.  He stated the Ketchikan School District was                 
 facing a $200 thousand plus deficit for the next year with the                
 funding unit at $61 thousand.  There was some discussion of cutting           
 this unit rate to $59 thousand, placing a further strain on the               
 system.  According to the Ketchikan School District Manager, there            
 are currently about 40 teachers in the district eligible to retire.           
 Should this bill pass, the school district could save from $67,452            
 to $85,716 for each retiring teacher over a three year period.  He            
 quoted an article from U.S. News and World Report, that 75 percent            
 of the largest U.S. companies had offered some type of earlier                
 retirement incentive program.  He thought these types of programs             
 were one of the more viable methods of saving money and thanked the           
 committee for hearing his testimony.                                          
 MR. STALNAKER mentioned there was one other date he suggested                 
 amending.  This was on page 4, line 20, and he suggested changing             
 the date from July 1 to June 30.  Should the state use this in next           
 year's budget and the budget cut was effective on July 1, then                
 individuals would be in essence terminated before they could take             
 advantage of the retirement incentive program on August 1.                    
 Number 512                                                                    
 REPRESENTATIVE PORTER moved to adopt amendment A/1, dated 4-22-95,            
 to HB 270, while also asking for a friendly amendment to this                 
 amendment to change line 8 to read October 31, instead of October             
 1 and on line 10 to reference 60 days, rather than 30 days.                   
 CHAIR JAMES asked if there was any objection to that amendment.               
 Hearing none, the amendment was adopted.                                      
 REPRESENTATIVE PORTER moved to adopt amendment #2, to alter page 4,           
 line 20, of HB 270, July 1 to read June 30 and on page 5, line 25,            
 July 1 would also be amended to read June 30.                                 
 CHAIR JAMES asked if there was any objection to those amendments.             
 Hearing none, they were adopted.  She asked if there was any other            
 discussion on this bill, before they considered passing it out of             
 Number 530                                                                    
 REPRESENTATIVE OGAN had asked in the subcommittee if this bill                
 would be cost-effective not only in the short term, but the long              
 term as well.  There had been only one subcommittee meeting and he            
 felt he had not had his question satisfactorily answered.                     
 CHAIR JAMES asked if he had not received copies of the                        
 documentation from the Administration.  She asked Representative              
 Porter to respond to this question.                                           
 Number 541                                                                    
 REPRESENTATIVE PORTER stated he had instructed that all members of            
 the committee would receive copies of the documentation, including            
 flow charts, of how the bill would work.  Additionally, there had             
 been copies of the audit reports of the two previous RIP bills.               
 Having reviewed this information, he had reached the conclusion               
 that this bill was an improvement over the past RIP bills,                    
 especially in the way it was intended to be implemented.  He felt             
 Representative Ogan was correct that there was no documentation of            
 long term savings as there was no way to establish this                       
 information.  How this is implemented as a cost savings is up to              
 the coordinated efforts of both the legislature and the                       
 Number 560                                                                    
 CHAIR JAMES expressed some of her concerns and attitudes to the               
 committee.  She had reservation of using RIP bills to save money.             
 She stated that industry does not do this to save money, but for              
 employee morale and to make it easier to determine who stays and              
 who goes when downsizing is necessary.  She felt this was the                 
 current situation of the state at this point.  She argued that                
 although the state has been reducing the size of its work force,              
 the legislature had not done a good job of reviewing the statutes             
 and reducing the functions that these people are performing.                  
 Because this has not been accomplished, there will be fewer people            
 performing the same amount of work.  She felt this would have an              
 affect on the morale of the people who work for the state.  She               
 thought that by improving the feeling of those individuals working            
 for the state, it would make them more willing to assist in                   
 reducing the cost of state government.  She thought it was likely             
 that there could be some money saved in the school districts, but             
 had some concerns about replacing experienced teachers with new               
 ones.  Her own school district had expressed concern about                    
 replacing experienced teachers with first year applicants.  Her               
 district was taking a neutral position on this bill, feeling there            
 were employees who were waiting to retire, until there was another            
 RIP bill that was more advantageous.  She expressed concern that              
 having a series of RIP bills was like having a store that always              
 had sales.  Items are priced and then sold at half-price, causing             
 people to think they are getting a good deal.  Should you want a              
 good relationship in any kind of any employee situation, then you             
 need to set a plan that works and you need to stick with it.  In              
 the past, it was necessary to raise the salaries of governmental              
 employees to compete with those of the pipeline and other private             
 sector industry.  Now that there is less funding available, the               
 dilemma is how to get back down to a salary that is reasonable to             
 pay.  She did not know that this bill would accomplish this goal,             
 but was willing to pass it out of committee, because she thought it           
 did have some merit.  To do this, she said she had to put a lot of            
 faith in the Administration, that the things they have promised to            
 do, will be done for the efforts and conclusions they have                    
 indicated and that they will be selective and responsive to achieve           
 the results desired.  She called for a motion from the committee to           
 pass this bill out of committee.                                              
 Number 614                                                                    
 REPRESENTATIVE PORTER added there was a reporting mechanism                   
 included in this bill and moved to pass CSHB 270 as amended with              
 individual recommendations and attached fiscal notes.                         
 CHAIR JAMES asked if there was any objection.  Hearing none, the              
 bill passed out of committee.                                                 
 HB 241 - NO PERSONAL USE OF CAMPAIGN ACCOUNT                                 
 CHAIR JAMES announced the next meeting would be held at the call of          
 the Chair, if she could arrange a time to get the committee                   
 together.  She stated the next bill on the agenda was HB 241.                 
 Number 656                                                                    
 REPRESENTATIVE CON BUNDE mentioned he had prepared a proposed                 
 committee substitute to address some of the concerns raised by the            
 committee at a previous meeting.  These concerns dealt with                   
 defining what was meant by a charity and personal income.  He                 
 directed their attention to Section F of the committee substitute,            
 which clarified that this bill was intended for state offices only            
 and that charitable organizations were defined by the Internal                
 Revenue Service definition.                                                   
 Number 670                                                                    
 CHAIR JAMES stated that in the past, there were items which could             
 be considered campaign expenses that were really personal in                  
 nature.  Should these be audited by the IRS, they may be required             
 to count those as personal expenses.  She cited examples as car               
 repairs and baby-sitting.  These could be considered personal                 
 income, but they are allowed to fund these out of their campaign              
 accounts by simply reporting it.  She asked if this situation would           
 change under this bill.                                                       
 REPRESENTATIVE BUNDE replied it did not, adding this was between              
 the legislator, their constituents, and the IRS.                              
 CHAIR JAMES asked if this applied to individuals that were no                 
 longer candidates for public office, or if it applied to all                  
 REPRESENTATIVE BUNDE answered a candidate could still take money              
 from their campaign account and put it into their personal account,           
 as long as they report it as under existing Alaska Public Offices             
 Commission (APOC) regulations.  Having heard the concerns                     
 expressed, he felt that any payment made from the campaign account,           
 as long as it was reported, would be left to the discretion of the            
 Number 693                                                                    
 REPRESENTATIVE GREEN asked if a legislator bought an item, such as            
 a printer and computer to handle constituent mail and which may not           
 depreciate rapidly, it could be argued that at the time of leaving            
 office this item was worth less than $1,000, but at the time of               
 acquisition it was worth more than $1,000.  He asked how this bill            
 would affect this situation.                                                  
 TAPE 95-55, SIDE A                                                            
 Number 000                                                                    
 REPRESENTATIVE BUNDE replied that at the year-end report for the              
 year it was acquired, this would be required to be reported.  When            
 that individual is no longer a candidate, they are no longer                  
 required to make these year-end reports.                                      
 REPRESENTATIVE GREEN asked if this could be a loophole.                       
 REPRESENTATIVE BUNDE said he did not think so, because if that                
 individual disposes of an item, then this is required to be                   
 reported.  He reiterated that this bill was just trying to bring              
 the sunshine in on the process.  He thought the public would be               
 the best judge of how a legislator handles their affairs.                     
 Number 032                                                                    
 REPRESENTATIVE PORTER stated he was reading Section E of the bill.            
 Currently, a legislator has the option of taking their office money           
 as income and pay taxes on it or not.  Should they take campaign              
 money and transfer it to their office account, as he said most                
 legislators have to do to print two constituent newsletters, then             
 they can currently take this as personal income and either pay                
 taxes on it or not.  He asked if this bill would require a                    
 legislator to report on expenses out of that account.                         
 REPRESENTATIVE BUNDE stated that this bill would require that                 
 campaign money that went into the office account would have to be             
 reported with an APOC report as campaign spending.                            
 REPRESENTATIVE PORTER verified that the existing process would                
 remain intact without any additional reports being necessary.  He             
 stated that being honest, he chose this option, because as a former           
 and current public official, whose life has been under public view,           
 he liked to take any option available to make any aspect of his               
 life private.  Thus, he would prefer to keep his own records of his           
 office account.                                                               
 Number 069                                                                    
 CHAIR JAMES said the statement included in AS 15.13.105, dealing              
 with the use of the balance of a state candidates campaign account            
 disposition of assets, indicates that this occurs at some point of            
 finality.  However, it continues to say that a candidate for state            
 office, may not take money from the surplus balance of the                    
 candidates campaign account as personal income.  She could foresee            
 a situation where an individual may have to quit their job to run             
 for public office.  They may need to take money out of their                  
 campaign account for personal use during the campaign.  She asked             
 if this could be done under this bill.                                        
 REPRESENTATIVE BUNDE replied it could be done, as long as it was              
 reported to the APOC.                                                         
 CHAIR JAMES said this statement did not say that.  It stated that             
 a candidate for state office may not take money from the surplus              
 balance of a candidates campaign account, as personal income, and             
 every time an APOC report is made, the balance of your campaign               
 account is considered surplus balance.                                        
 REPRESENTATIVE BUNDE responded that Brooke Miles from the APOC was            
 available to testify and he would defer that question for her to              
 answer.  He reminded the committee that this bill only dealt with             
 candidates who were no longer running for office.  He commented               
 that a candidate still planning to run for office, by definition              
 does not have a surplus of money in their campaign account.                   
 CHAIR JAMES disagreed.  She pointed out that any money left in the            
 account at the time of filing an APOC report is considered surplus            
 REPRESENTATIVE BUNDE clarified that it was not a surplus for the              
 purposes of campaigning.  Those funds would not be there if they              
 were not intended to be used for a campaign.                                  
 CHAIR JAMES thought this wording needed to be clarified, because              
 the current APOC reports refer to this money as a surplus.                    
 REPRESENTATIVE BUNDE asked to have Brooke Miles comment, because              
 the intent was to have this apply when a person was no longer a               
 Number 124                                                                    
 BROOKE MILES, Juneau Branch Administrator, Alaska Public Offices              
 Commission, suggested that the APOC would consider it a surplus               
 balance only when the candidate was closing their campaign account.           
 This could happen when they were closing one account to open                  
 another for a new campaign, or if they were no longer running for             
 public office.  She thought maybe this could be solved by an                  
 amendment to Section A, which says a candidate who is closing a               
 campaign account may not take income from their campaign account              
 as personal income.                                                           
 CHAIR JAMES stated it would be hard to fix this bill to her                   
 satisfaction, as she was opposed to the bill.  Should it pass over            
 her objections, she would at least like it to be as least                     
 objectionable as possible.                                                    
 REPRESENTATIVE GREEN asked if this would supersede those statutes             
 dealing with the filing process on a surplus balance.                         
 MS. MILES responded that this would provide guidelines, but added             
 that the current process was in commission regulations, not                   
 statute.  It is interpreted to mean the surplus monies when a                 
 candidate is closing a campaign account.                                      
 REPRESENTATIVE PORTER asked Ms. Miles if she had heard his example            
 of transferring monies from a campaign account to an office account           
 for purposes of printing a newsletter.  If this bill were law,                
 would this be a violation of APOC code?                                       
 MS. MILES answered it would not be a violation, but the legislator            
 would be required to report how this money was used.                          
 REPRESENTATIVE PORTER stated that was his concern.                            
 CHAIR JAMES said they would have to adjourn this meeting, because             
 the Speaker was requesting their presence on the House chambers               
 floor.  She adjourned the meeting at 10:28 a.m.  She stated this              
 meeting would be continued at the call of the Chair.                          

Document Name Date/Time Subjects