Legislature(1995 - 1996)
04/27/1995 08:42 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 None 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 SHORT TITLE: PRIVATE MOTOR VEHICLE LICENSING/TESTING 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 SHORT TITLE: NO PERSONAL USE OF CAMPAIGN ACCOUNT 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 SHORT TITLE: UNICAMERAL LEGISLATURE/SESSION LIMIT 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 CONSENT 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 AMENDED 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 agents. 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 fixed. 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 contract. 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 itself. 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 committee. 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 Administration. 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 candidates. 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 legislator. 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 funds. 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 candidate. 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. ADJOURNMENT 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.