Legislature(1995 - 1996)

02/08/1996 08:00 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                        February 8, 1996                                       
                           8:00 a.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Jeannette James, Chair                                         
 Representative Scott Ogan, Vice Chair                                         
 Representative Joe Green                                                      
 Representative Ivan Ivan                                                      
 Representative Brian Porter                                                   
 Representative Caren Robinson                                                 
 Representative Ed Willis                                                      
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 All members present.                                                          
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 * HOUSE BILL NO. 433                                                          
 "An Act relating to an exemption to the unauthorized publication or           
 use of communications and the prohibition against eavesdropping for           
 certain law enforcement activities."                                          
                                                                               
      - PASSED OUT OF COMMITTEE                                                
                                                                               
 * HOUSE BILL NO. 22                                                           
 "An Act relating to long-term plans of certain state agencies and             
 recommendations regarding elimination of duplication in state                 
 agency functions."                                                            
                                                                               
      - PASSED OUT OF COMMITTEE                                                
                                                                               
 * HOUSE BILL NO. 457                                                          
 "An Act relating to the unlicensed practice of certain occupations            
 for which licenses are required."                                             
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 * HOUSE BILL NO. 361                                                          
 "An Act relating to municipal capital project matching grants for             
 a municipality organized under federal law as an Indian reserve;              
 and providing for an effective date."                                         
                                                                               
      - PASSED OUT OF COMMITTEE                                                
                                                                               
 * HOUSE BILL NO. 449                                                          
 "An Act relating to the taxation of income."                                  
                                                                               
      - HEARD AND HELD                                                         
                                                                               
 (* First public hearing)                                                      
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 433                                                               
 SHORT TITLE: POLICE CAN INTERCEPT SOME COMMUNICATIONS                         
 SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR                                  
                                                                               
 JRN-DATE      JRN-PG            ACTION                                        
 01/19/96      2485    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/19/96      2485    (H)   STATE AFFAIRS, JUDICIARY, FINANCE                 
 01/19/96      2485    (H)   3 ZERO FISCAL NOTES (2-ADM, DCED)                 
 01/19/96      2485    (H)   3 ZERO FISCAL NOTES (CORR, LAW, DPS)              
 01/19/96      2485    (H)   GOVERNOR'S TRANSMITTAL LETTER                     
 02/06/96              (H)   STA AT 08:00 AM CAPITOL 102                       
 02/06/96              (H)   MINUTE(STA)                                       
 02/08/96              (H)   STA AT 08:00 AM CAPITOL 102                       
                                                                               
 BILL:  HB  22                                                               
 SHORT TITLE: STATE LONG-TERM PLANNING                                         
 SPONSOR(S): REPRESENTATIVE(S) PARNELL, Hanley, Therriault, Green,             
 Bunde, Navarre, Toohey, B.Davis, Porter                                       
                                                                               
 JRN-DATE      JRN-PG            ACTION                                        
 01/06/95        26    (H)   PREFILE RELEASED                                  
 01/16/95        26    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/16/95        26    (H)   STATE AFFAIRS, FINANCE                            
 02/08/96              (H)   STA AT 08:00 AM CAPITOL 102                       
                                                                               
 BILL:  HB 457                                                               
 SHORT TITLE: FINES: UNLICENSED PRACTICE OF OCCUPATION                         
 SPONSOR(S): REPRESENTATIVE(S) JAMES                                           
                                                                               
 JRN-DATE      JRN-PG            ACTION                                        
 01/30/96      2569    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/30/96      2570    (H)   STATE AFFAIRS, JUDICIARY                          
 02/06/96              (H)   STA AT 08:00 AM CAPITOL 102                       
 02/06/96              (H)   MINUTE(STA)                                       
 02/08/96              (H)   STA AT 08:00 AM CAPITOL 102                       
                                                                               
 BILL:  HB 457                                                               
 SHORT TITLE: FINES: UNLICENSED PRACTICE OF OCCUPATION                         
 SPONSOR(S): REPRESENTATIVE(S) JAMES                                           
                                                                               
 JRN-DATE      JRN-PG            ACTION                                        
 01/30/96      2569    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/30/96      2570    (H)   STATE AFFAIRS, JUDICIARY                          
 02/06/96              (H)   STA AT 08:00 AM CAPITOL 102                       
 02/06/96              (H)   MINUTE(STA)                                       
 02/08/96              (H)   STA AT 08:00 AM CAPITOL 102                       
 BILL:  HB 361                                                               
 SHORT TITLE: CAP PROJ MATCHING GRANT FOR INDIAN RESERV                        
 SPONSOR(S): REPRESENTATIVE(S) MACKIE                                          
                                                                               
 JRN-DATE      JRN-PG            ACTION                                        
 12/29/95      2360    (H)   PREFILE RELEASED                                  
 01/08/96      2360    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/08/96      2360    (H)   CRA, STATE AFFAIRS, FINANCE                       
 01/18/96              (H)   CRA AT 01:00 PM CAPITOL 124                       
 01/18/96              (H)   MINUTE(CRA)                                       
 01/19/96      2482    (H)   CRA RPT  6DP 1NR                                  
 01/19/96      2482    (H)   DP: MACKIE, ELTON, AUSTERMAN, KOTT                
 01/19/96      2482    (H)   DP: NICHOLIA, IVAN                                
 01/19/96      2482    (H)   NR: VEZEY                                         
 01/19/96      2482    (H)   2 ZERO FNS (ADM, DCRA)                            
 01/19/96      2482    (H)   REFERRED TO STATE AFFAIRS                         
 02/08/96              (H)   STA AT 08:00 AM CAPITOL 102                       
                                                                               
 BILL:  HB 449                                                               
 SHORT TITLE: INCOME TAX ON INDIVIDUALS & FIDUCIARIES                          
 SPONSOR(S): REPRESENTATIVE(S) MOSES, Finkelstein, Brown                       
                                                                               
 JRN-DATE      JRN-PG            ACTION                                        
 01/24/96      2524    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/24/96      2524    (H)   STATE AFFAIRS, LABOR & COMMERCE,                  
         FINANCE                                                               
 01/31/96      2587    (H)   COSPONSOR(S): BROWN                               
 02/08/96              (H)   STA AT 08:00 AM CAPITOL 102                       
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 DENNIS CASANOVAS, Lieutenant                                                  
 Criminal Investigations Unit                                                  
 Division of Alaska State Troopers                                             
 Department of Public Safety                                                   
 5700 East Tudor Road                                                          
 Anchorage, Alaska 99507-1225                                                  
 Telephone:  (907) 269-5757                                                    
  POSITION STATEMENT:   Provided testimony in support of HB 433.               
                                                                               
 ANNE CARPENETI, Assistant Attorney General                                    
 Central Office                                                                
 Criminal Division                                                             
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska 99811-0300                                                     
 Telephone:  (907) 465-3428                                                    
  POSITION STATEMENT:   Provided testimony on HB 433.                          
                                                                               
 REPRESENTATIVE SEAN PARNELL                                                   
 Alaska State Legislature                                                      
 State Capitol, Room 515                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-2995                                                    
  POSITION STATEMENT:   Sponsor of HB 22.                                      
                                                                               
 WALT WILCOX, Committee Aide                                                   
 House State Affairs Committee                                                 
 State Capitol, Room 102                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3743                                                    
  POSITION STATEMENT:   Provided sponsor statement for HB 457.                 
                                                                               
 CATHERINE REARDON, Director                                                   
 Central Office                                                                
 Division of Occupational Licensing                                            
 Department of Commerce and Economic Development                               
 P.O. Box 110506                                                               
 Juneau, Alaska 99811-0806                                                     
 Telephone:  (907) 465-2534                                                    
  POSITION STATEMENT:   Provided testimony in support of HB 457.               
                                                                               
 MARK JOHNSON, President                                                       
 Center for Employment Education                                               
 1049 E. Whitney Road                                                          
 Anchorage, Alaska 99501                                                       
 Telephone:  (907) 279-8451                                                    
  POSITION STATEMENT:   Provided testimony in support of HB 457.               
                                                                               
 RANDY WELKER, Legislative Auditor                                             
 Legislative Audit Division                                                    
 Legislative Agencies and Offices                                              
 P.O. Box 113300                                                               
 Juneau, Alaska 99811-3300                                                     
 Telephone:  (907) 465-3830                                                    
  POSITION STATEMENT:   Provided testimony on HB 457.                          
                                                                               
 REPRESENTATIVE JERRY MACKIE                                                   
 Alaska State Legislature                                                      
 State Capitol, Room 404                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-4925                                                    
  POSITION STATEMENT:   Sponsor of HB 361.                                     
                                                                               
 REPRESENTATIVE CARL MOSES                                                     
 Alaska State Legislature                                                      
 State Capitol, Room 204                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-4451                                                    
  POSITION STATEMENT:   Sponsor of HB 449.                                     
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-10, SIDE A                                                            
 Number 0000                                                                   
                                                                               
 The House State Affairs Committee was called to order by Chair                
 Jeannette James at 8:00 a.m.  Members present at the call to order            
 were Representatives James, Ogan, Ivan and Willis.  Members absent            
 were Representatives Green, Porter and Robinson.                              
 HB 433 - POLICE CAN INTERCEPT SOME COMMUNICATIONS                           
                                                                               
 The first order of business to come before the House State Affairs            
 Committee was HB 433.                                                         
                                                                               
 CHAIR JAMES called on the first witness via teleconference in                 
 Fairbanks, Dennis Casanovas, Department of Public Safety.                     
                                                                               
 Number 0222                                                                   
                                                                               
 DENNIS CASANOVAS, Lieutenant, Criminal Investigations Unit, Central           
 Office, Division of Alaska State Troopers, Department of Public               
 Safety, said the department supported HB 433 and the exemptions as            
 amended to AS 42.20.320.  He said it would grant law enforcement              
 officers additional resources to deal with crisis situations, such            
 as barricaded suspects, and hostages.  He stated, currently, law              
 enforcement officers responded to crisis situations without a clear           
 understanding of the number of participants, the identity of the              
 perpetrators, the types of weapons, and the number of hostages.               
 These situations, he asserted, required rapidly changing                      
 circumstances and law enforcement negotiators relied heavily on               
 what information was learned from witnesses and suspects.                     
 Therefore, HB 433 would allow law enforcement officers the ability            
 to intercept communications between a hostage and a suspect.  He              
 also asserted communications would allow law enforcement officers             
 to know in advance if a suspect planned to increase an act of                 
 violence, for example.  The communication would also help identify            
 whether the negotiator was effective in his or her efforts and                
 change tactics accordingly to resolve situations more safely and              
 without further injury to the suspect, hostage, and general public            
 and law enforcement officers.  He cited the Alaska State Troopers             
 responded to approximately four incidents per year when a suspect             
 refused to exit or surrendered creating a threatening situation.              
 In conclusion, he stated, HB 433 would give  Alaska law enforcement           
 officers the equipment to resolve crisis situation in a more                  
 efficient and safe manner.                                                    
                                                                               
 Number 0366                                                                   
                                                                               
 CHAIR JEANNETTE JAMES thanked Mr. Casanovas for his testimony and             
 asked if the committee members had any questions.                             
                                                                               
 Number 0375                                                                   
                                                                               
 REPRESENTATIVE ED WILLIS asked how many other states used this                
 method.                                                                       
                                                                               
 Number 0395                                                                   
                                                                               
 MR. CASANOVAS responded he did not know.                                      
                                                                               
 Number 0415                                                                   
                                                                               
 CHAIR JAMES said she discussed HB 433 with the Department of Public           
 Safety, and was convinced this was a tool they needed in hostage              
 situations.  She also discussed it with Representative Brian                  
 Porter, Chair, House Judiciary Committee, who said he was very                
 interested in this bill.  She asserted she wanted to move HB 433 to           
 the next committee of referral - the Judiciary Committee - to                 
 review the legalities involved, and called for a motion.                      
                                                                               
 Number 0457                                                                   
                                                                               
 REPRESENTATIVE JOE GREEN moved that HB 433 move from the committee.           
                                                                               
 CHAIR JAMES replied the bill had been moved with individual                   
 recommendations and a zero fiscal note.                                       
                                                                               
 Number 0471                                                                   
                                                                               
 REPRESENTATIVE SCOTT OGAN commented this bill was moving fast and             
 would like to add a few comments to the record.                               
                                                                               
 Number 0480                                                                   
                                                                               
 REPRESENTATIVE GREEN withdrew his motion.                                     
                                                                               
 Number 0490                                                                   
                                                                               
 REPRESENTATIVE OGAN said he wanted to hear from somebody in the               
 Attorney's General office to determine if HB 433 exceeded the right           
 to privacy granted in the Alaska State Constitution.  He said he              
 understood the intent of HB 433.  He further stated the Alaska                
 State Constitution and the United States Constitution both included           
 privacy clauses, and he wanted to be sure the bill did not exceed             
 the constitutional authority.                                                 
                                                                               
 CHAIR JAMES replied Anne Carpeneti from the Department of Law was             
 here today to respond.  She said she did not think that kind of               
 testimony was necessary because the next committee of referral -              
 the House Judiciary Committee - would address those concerns.                 
                                                                               
 Number 0545                                                                   
                                                                               
 ANNE CARPENETI, Assistant Attorney General, Central Office,                   
 Criminal Division, Department of Law, responded she did not hear              
 the question.                                                                 
 CHAIR JAMES commented HB 433 allowed the police to intercept the              
 communications in hostage situations and violate their prohibition            
 for eavesdropping.  She said Representative Ogan was concerned it             
 violated privacy granted in the constitution.                                 
                                                                               
 MS. CARPENETI responded HB 433 was not a violation of the right of            
 privacy.  She said these were exceptions to the eavesdropping rule,           
 and exceptions were allowed under the law in certain circumstances,           
 such as emergencies.  In her judgement, she said, these situations            
 would be emergencies justifying the taping of words.                          
                                                                               
 Number 0614                                                                   
                                                                               
 REPRESENTATIVE OGAN wondered if there had been court tests in other           
 states on this type of law.                                                   
                                                                               
 Number 0620                                                                   
                                                                               
 MS. CARPENETI said she was not aware of any court cases in other              
 states, but was sure a test had been done.  She said she would look           
 into it and would be happy to forward that information to him.                
                                                                               
 Number 0630                                                                   
                                                                               
 REPRESENTATIVE OGAN asked Ms. Carpeneti if other states had this              
 type of a statute?                                                            
                                                                               
 MS. CARPENETI replied, yes, other states had this type of a                   
 statute.  She said she would be happy to provide copies of those              
 statutes.  Alaska was not the only state, and HB 433 was similar to           
 a federal statute.                                                            
                                                                               
 Number 0655                                                                   
                                                                               
 REPRESENTATIVE GREEN moved that HB 433 move from the committee with           
 individual recommendations and attached fiscal notes.  Hearing no             
 objection, HB 433 was so moved from the House State Affairs                   
 Committee.                                                                    
                                                                               
 REPRESENTATIVE GREEN said Representative Ogan's points were well              
 made, and as a member of the House Judiciary Committee he would               
 address those issues.                                                         
                                                                               
 CHAIR JAMES suggested to Representative Ogan he participate when              
 the House Judiciary Committee addressed HB 433 and ask the same               
 questions.                                                                    
 HB  22 - STATE LONG-TERM PLANNING                                         
                                                                               
 The next order of business to come before the House State Affairs             
 Committee was HB 22.                                                          
 Number 0710                                                                   
                                                                               
 CHAIR JAMES called on Representative Sean Parnell, sponsor of HB
 22.                                                                           
                                                                               
 REPRESENTATIVE SEAN PARNELL said this was deja vous for three out           
 of the four member of the House State Affairs Committee because the           
 same bill passed the legislature two years ago.  He said long-range           
 planning had taken on a special meaning in the past few years to              
 include closing the fiscal gap based on the charges of the long-              
 range fiscal planning commission.  He said HB 22 did not                      
 necessarily close the fiscal gap, but rather addressed the                    
 accountability and performance of government for expenditures.  He            
 noted that one of the recommendations of the long-range fiscal                
 planning commission, was to start performance based budgeting.  He            
 further said there was no rational or objective way for the                   
 legislature or the Governor to make budget choices and establish              
 priorities; there was a lack of accountability for funds spent;               
 there was a basic distrust of government; and lastly there was a              
 focus on programs rather than serving the public.  He further said            
 HB 347 passed with wide bi-partisan support last session in both              
 the House of Representatives and the Senate.  However, it was                 
 vetoed by Governor Hickel.  The reason it was vetoed, he said, was            
 because the Commissioners thought the legislature should not be               
 telling the Governor to long-range plan, creating a turf battle.              
 He said the legislative and the executive branch should work                  
 together regarding long-range planning.  Representative Parnell               
 said HB 22 tried to implement performance measures as part of the             
 budget process.  He further stated the departments were notorious             
 for using irrelevant performance measurements.  He said a                     
 department would testify it had fewer state troopers than last                
 year, for example, which was not relevant to the financial                    
 discussion.  The citizens, he alleged, cared about the services,              
 for example, the safety of the Seward Highway, and not the number             
 of state troopers.  Therefore, HB 22 established the framework for            
 long-range strategic planning.  He further said goals and objective           
 performance measures would be established by each department with             
 public input, and the budget submitted to the legislature would               
 include those performance measures.  The process he said was known            
 as performance based budgeting and had been implemented at the                
 federal, city and state government level.  He said Hawaii,                    
 Connecticut, Iowa, Louisiana, North Carolina, Oregon and Texas used           
 performance based budgeting.  He further said Texas was chosen as             
 the model because it was experiencing financial strains and had a             
 natural resource base similar to Alaska.  House Bill 22 would                 
 follow a five point time line.  He said at the beginning of the               
 term the Governor would develop statewide goals to be issued on May           
 1 when the Office of Management and Budget (OMB) would provide                
 economic and population forecasts to the departments.  By July 1              
 OMB would approve each agencies' goals and by October 1 each agency           
 would submit its long-term plan to OMB.  He said the dates                    
 corresponded to the submission of the budget to OMB.  He further              
 said the plans would cover a six year period and would be used by             
 the Governor, the agency and the legislature to develop the                   
 following year's budget.  The bill provided a phase-in period where           
 three departments would be chosen by OMB for the first year of                
 implementation.  He said this was a result of a compromise on HB
 347 (a bill from the 18th Alaska State Legislature) as the                    
 departments felt they needed more time to prepare.  He alleged it             
 would make budget review jobs easier for the legislators.  He noted           
 the legislature in Oregon experienced a decrease in the amount of             
 sub-committees needed.  In conclusion, he said unless long-range              
 planning was tied to the budget it would not be a useful document.            
 He said it was not the all-to-end-all, but rather a tool to make              
 government more accountable to its expenditures.  It was not meant            
 to be an additional job for the department, but rather supplants              
 what they were already doing for the budget.  He lastly said                  
 performance based budgeting was a step towards making the                     
 government work for the people.                                               
                                                                               
 Number 1185                                                                   
                                                                               
 REPRESENTATIVE GREEN asked if performance based budgeting                     
 incorporated zero based budgeting.                                            
                                                                               
 Number 1234                                                                   
                                                                               
 REPRESENTATIVE PARNELL replied the correlation between performance            
 based budgeting and zero based budgeting was that performance based           
 budgeting established priorities.  Therefore, you would start at              
 zero and fund the priorities.                                                 
                                                                               
 Number 1245                                                                   
                                                                               
 REPRESENTATIVE GREEN commented on the zero fiscal note from OMB.              
 He wondered if HB 22 would require additional work from the                   
 departments to warrant a positive fiscal note.                                
                                                                               
 Number 1285                                                                   
                                                                               
 REPRESENTATIVE PARNELL said it was what the departments should be             
 doing anyway.  The departments gave a zero fiscal note for HB 22              
 because they realized it was merely a shift of focus on something             
 they should be doing.                                                         
                                                                               
 Number 1308                                                                   
                                                                               
 CHAIR JAMES said she was excited about this type of approach.  She            
 further said it was frustrating to plan because of the short time             
 spent in the legislature.  She asserted a cooperative effort was              
 needed for success between the Administration and the legislature,            
 and HB 22 tied them together.  She further said it was difficult to           
 cut the budget without taking away programs, and the procedure in             
 HB 22 would allow the legislators to see what should be done.  She            
 also said it was a move in the right direction to return the                  
 public's confidence in state government.                                      
                                                                               
 Number 1390                                                                   
                                                                               
 REPRESENTATIVE PARNELL referred the committee members to page 2 of            
 the handout titled "General Appropriations Act, 1993 State of                 
 Texas, Excerpt from Texas Department of Public Safety."  The                  
 example illustrated the goal, objective, outcome, strategy and                
 measurement from the Department of Public Safety.  He alleged the             
 Alaska budget was not as understandable or readable.                          
                                                                               
 Number 1485                                                                   
                                                                               
 REPRESENTATIVE OGAN said as a freshman legislator he would welcome            
 the change.  He said the budget currently reflected the number of             
 positions and did not describe the nature of the job.                         
                                                                               
 Number 1502                                                                   
                                                                               
 CHAIR JAMES replied the number of positions were even a                       
 disillusionment because not all of the positions were filled.                 
                                                                               
 Number 1515                                                                   
                                                                               
 REPRESENTATIVE GREEN commented the current budget process was                 
 department friendly but not user friendly.  He further said HB 22             
 would create stability because it committed the departments.                  
                                                                               
 Number 1538                                                                   
                                                                               
 REPRESENTATIVE PARNELL said an amendment was needed to HB 22 to               
 change the dates accordingly.                                                 
                                                                               
 Number 1562                                                                   
                                                                               
 REPRESENTATIVE GREEN moved that page 3, line 25 and 26, change the            
 dates from "1996" to "1997."  Hearing no objection, it was so                 
 moved.                                                                        
                                                                               
 CHAIR JAMES asked if there was any further testimony.  No one                 
 responded so she called on a motion.                                          
                                                                               
 Number 1589                                                                   
                                                                               
 REPRESENTATIVE GREEN moved that HB 22 as amended move from the                
 committee with individual recommendations and a zero fiscal note.             
 Hearing no objection, HB 22 was moved from the House State Affairs            
 Committee.                                                                    
 HB 457 - FINES: UNLICENSED PRACTICE OF OCCUPATION                           
 The next order of business to come before the House State Affairs             
 Committee was HB 457.                                                         
                                                                               
 CHAIR JAMES called on Walter Wilcox to read the sponsor statement             
 for HB 457 into the record.                                                   
                                                                               
 Number 1680                                                                   
                                                                               
 WALT WILCOX, Committee Aide, House State Affairs Committee read the           
 following statement into the record.                                          
                                                                               
 "This legislation was requested by LB&A as part of the sunset                 
 audits on various boards.                                                     
                                                                               
 "Current law allows enforcement of practicing certain occupations             
 without a license only through the courts.  This Bill allows the              
 Department to impose a civil penalty if a person practices or                 
 offers to practice an occupation in this State that is regulated              
 under Title Sec.08.01.                                                        
                                                                               
 "The civil penalty may not exceed $5,000.00 for each offense.  The            
 Bill also provides for enforcement mechanisms."                               
                                                                               
 MR. WILCOX invited Catherine Reardon, Department of Commerce and              
 Economic Development, to explain the department's position.                   
                                                                               
 Number 1731                                                                   
                                                                               
 CATHERINE REARDON, Director, Central Office, Division of                      
 Occupational Licensing, Department of Commerce and Economic                   
 Development, thanked Representative James for introducing the bill,           
 and further stated the department supported HB 457.  The bill, she            
 said, would give the division another tool to bring individuals               
 into compliance with the occupational licensing laws.  She stated             
 it would be helpful for occupations such as opticians, and                    
 commented it was the optician sunset audit that suggested such a              
 bill.  She said the department would first try to bring the                   
 individuals into voluntary compliance through a letter noting the             
 potential financial fine.  The bill she said gave the division up-            
 to $5,000, but, she asserted, the division would not be fining                
 individuals $5,000 for relatively minor violations.  She reiterated           
 that was an "up-to" figure.  She referred the committee members to            
 page 1, line 11, "The department shall set the amount of the                  
 penalty after taking into account appropriate factors, including              
 the seriousness of the violation, the economic benefit resulting              
 from the violation, the history of violations..."  The bill she               
 said directed the division to act reasonably depending on the                 
 action.  However, if someone continued to practice without a                  
 license then the department could ratchet-up the fines.  She                  
 further said the department operated under the Administrative                 
 Procedures Act (APA) which required a hearing before a fine was               
 issued.  She said the bill did not allow capricious fines.  Ms.               
 Reardon said it was frustrating for small business owners to see              
 the competition not pay for a license.  She alleged HB 457 would              
 alleviate the court system with citations of unlicensed activity.             
                                                                               
 Number 1870                                                                   
                                                                               
 REPRESENTATIVE GREEN mentioned a conversation between himself and             
 Ms. Reardon regarding another bill where the cost was born by the             
 litigants.  He said that bill would net zero but a positive fiscal            
 note would need to be shown.  He questioned why HB 457 indicated a            
 zero fiscal note.                                                             
                                                                               
 Number 1898                                                                   
                                                                               
 MS. REARDON said she recalled the conversation.  She said if money            
 needed to be collected, for example it would need to be reflected             
 in the fiscal note.  However, HB 457 did not require additional               
 money.  She said she would use her licensing examiners and                    
 Attorneys General for the hearings.  She stated the department                
 might see a revenue, but she did not include the estimate in the              
 fiscal note because she simply was not sure how much would be                 
 generated.  Ms. Reardon did not want to guarantee a certain amount            
 in fines in the event she did not reach it.  She reiterated she did           
 not have any new expenditures.  She referred to the other bill                
 Representative Green mentioned and stated per diem and travel was             
 needed in addition.  She said she was not trying to be                        
 inconsistent.                                                                 
                                                                               
 REPRESENTATIVE GREEN cited she would issue fines.                             
                                                                               
 MS. REARDON replied she would send a letter indicating a fine, but            
 she would not pay anyone new to do that task.                                 
                                                                               
 REPRESENTATIVE GREEN said he did not see the difference.                      
                                                                               
 Number 1994                                                                   
                                                                               
 CHAIR JAMES said she understood Ms. Reardon.  A fiscal note                   
 indicated money that was not authorized.  Ms. Reardon said she was            
 not going to spend any money that was not already authorized and              
 use the existing parameters.  For example, the bill might require             
 more stamps, but Ms. Reardon already had a budget for stamps and              
 the bill would not increase her budget for stamps.                            
                                                                               
 Number 2025                                                                   
                                                                               
 REPRESENTATIVE GREEN said he agreed if it was true.  He alleged it            
 was not the same because the fiscal note suggested she would not              
 spend anything and he asserted there were more steps required that            
 would cost money.                                                             
                                                                               
 Number 2035                                                                   
 MS. REARDON replied, yes, the activities would require staff time,            
 but she was going to cutoff other activities to provide the                   
 required time.  She cited her staff would cutback time expended               
 trying to prove criminal intent and instead prepare for the                   
 hearing.  She said she would talk to Representative Green regarding           
 the other fiscal note.                                                        
                                                                               
 Number 2065                                                                   
                                                                               
 CHAIR JAMES said a positive fiscal note sometimes showed money                
 saved and closed the gap.  She also said sometimes a positive                 
 fiscal note was issued to off-set an expense in which case the                
 legislature was authorizing the money to be spent.  In this case,             
 there might be some revenue generated of which would go to the                
 general fund.                                                                 
                                                                               
 REPRESENTATIVE GREEN asserted it should be shown as a fiscal note.            
                                                                               
 CHAIR JAMES said Ms. Reardon did not have a clue how much revenue             
 would be generated in fines.                                                  
                                                                               
 REPRESENTATIVE GREEN asked if she had a clue regarding the other              
 issue also.  He said he did not want to belabor it here.                      
                                                                               
 CHAIR JAMES replied she was happy with the attached fiscal note,              
 and the other bill needed to be discussed outside of the meeting.             
                                                                               
 REPRESENTATIVE GREEN agreed it should be discussed elsewhere, but             
 asserted there was a direct correlation.                                      
                                                                               
 Number 2115                                                                   
                                                                               
 REPRESENTATIVE OGAN wondered if boards had quasi-judicial power to            
 impose fines for practicing without a license.                                
                                                                               
 MS. REARDON replied boards had the authority to fine incompetent              
 activity which was already licensed activity.  However, the Board             
 of Registration for Architects, Engineers and Land Surveyors had              
 the authority to fine up-to $5,000 for unlicensed activity.                   
                                                                               
 Number 2147                                                                   
                                                                               
 REPRESENTATIVE OGAN said this was a policy shift giving the                   
 Department of Commerce and Economic Development more quasi-judicial           
 powers through the ability to judge, for example.                             
                                                                               
 Number 2168                                                                   
                                                                               
 MS. REARDON responded it was not a new function for the department.           
 She said in the division there were 20 licensing boards and 14                
 programs that ran without boards.  Therefore, the department had              
 the final authority to sign-off on recommendations.  It was not a             
 new procedure but rather a new range of offenses that could trigger           
 the procedure.                                                                
                                                                               
 Number 2208                                                                   
                                                                               
 CHAIR JAMES said the public complained about unlicensed activity              
 and did not feel they had an avenue to fix the problem.  She cited            
 business licenses were a problem.  There was a requirement to                 
 obtain a business license and many people operate without one.                
 This bill, however, did not include business licenses - only                  
 occupational licenses.                                                        
                                                                               
 Number 2252                                                                   
                                                                               
 MS. REARDON said the intent of the bill was to only include                   
 occupational licenses, but there was the possibility of reading the           
 bill to include business licenses as well.                                    
                                                                               
 Number 2266                                                                   
                                                                               
 MR. WILCOX asked Ms. Reardon to read the list of the current                  
 occupations impacted by HB 457.                                               
                                                                               
 Number 2280                                                                   
                                                                               
 MS. REARDON said HB 457 referred to AS 08.01 as the centralized               
 licensing statute.  It included all the programs the division                 
 administered and no others.  It did not include drivers licensing,            
 for example.  There were 34 program areas.                                    
                                                                               
 MR. WILCOX asked her to list the program areas to clarify the                 
 business licensing issue.                                                     
                                                                               
 CHAIR JAMES said it was a good thing to put on the record.                    
                                                                               
 Number 2315                                                                   
                                                                               
 MS. REARDON read into the record AS 08.01.010 which listed the                
 following occupations the statute applied to.                                 
                                                                               
 Board of Public Accountancy; State Board of Registration for                  
 Architects, Engineers and Land Surveyors; Athletic Commission -               
 boxers and wrestlers; Board of Barbers and Hairdressers; Big Game             
 Commercial Services Board - now a division function; Board of                 
 Certified Real Estate Appraisers; Board of Chiropractic Examiners;            
 Board of Clinical Social Work Examiners; Board of Dental Examiners;           
 Board of Dispensing Opticians; Board of Marine Pilots; Board of               
 Marital and Family Therapy; State Medical Board; Board of Nursing;            
 Board of Examiners in Optometry; Board of Pharmacy; State Physical            
 Therapy and Occupational Therapy Board; Board of Psychologist and             
 Psychological Associate Examiners; Real Estate Commission; Board of           
 Veterinary Examiners; regulation of acupuncturists under AS 08.06;            
 regulation of audiologists under AS 08.11; regulation of business             
 licenses under AS 43.70; regulation of collection agencies under AS           
 08.24; regulation of concert promoters under AS 08.92; regulation             
 of construction contractors under AS 08.18; regulation of                     
 electrical mechanical administrators under AS 08.40; regulation of            
 professional geologists under AS 08.02.011; regulation of hearing             
 aid dealers under AS 08.55; regulation of morticians under AS                 
 08.42; regulation of the practice of naturopathy under AS 08.45;              
 and regulation of nursing home administrators under AS 08.70.                 
                                                                               
 She stated the mention of the regulation of business licenses under           
 AS 08.01 was for administrative reasons such as the collection of             
 fees.  She asked the committee members if the bill should apply to            
 business licensing also.                                                      
                                                                               
 Number 2433                                                                   
                                                                               
 CHAIR JAMES replied as sponsor of HB 457 it was not the intent to             
 include business licensing.  She said it was drafted after the                
 request of the Legislative Budget and Audit Committee's                       
 recommendations.  She further said an occupational license was the            
 business license.                                                             
                                                                               
 Number 2464                                                                   
                                                                               
 MS. REARDON responded every business was required to have a                   
 business license and some also were required to have an occupation            
 license.  She cited for an example, a doctor had to have a medical            
 occupation license and a business license if running a private                
 business.                                                                     
                                                                               
 Number 2476                                                                   
                                                                               
 CHAIR JAMES said she was interested in a separate bill to address             
 the business license enforcement.  She stated it was important to             
 meet the needs of the state to enforce everyone to obtain a                   
 business license.  She also said it was not her intention to                  
 include that in HB 457 and it needed to be addressed in a separate            
 bill because it had an entirely different constituency.  She also             
 said the House Judiciary Committee, the next committee of referral,           
 would look at the bill to determine if additional language was                
 needed to address the business licensing issue.                               
                                                                               
 CHAIR JAMES called on the next witness via teleconference in                  
 Anchorage, Mark Johnson.                                                      
                                                                               
 Number 0053                                                                   
                                                                               
 MARK JOHNSON, President, Center for Employment Education, said he             
 supported HB 457.  He suggested expanding the bill to cover other             
 areas as well.  He cited in 1994 his company established the first            
 truck driving training school in Alaska.  His company was certified           
 nationally and in August of 1995 the doors opened under the                   
 applicable exemptions in the laws.  He said it took several months            
 to meet the requirements for the post secondary education and the             
 division of motor vehicle divisions.  After one year, he said, the            
 center operated at a considerable loss.  He cited the center spent            
 $470,000 to certify the program and make it operational.  He stated           
 he understood it was not uncommon for business to lose money in the           
 first years.  He further said upon review the center started                  
 looking at the competition when it was discovered many of the other           
 businesses were not licensed properly under the laws.  A formal               
 complaint was issued to the director of public safety and to the              
 Alaska Commission on Postsecondary Education (ACPE).  The response            
 was the training was insignificant therefore it did not fall under            
 the rules of the postsecondary education commission.  He said the             
 problem was two-fold as the other companies were training drivers             
 and renting trucks for the CDL test, while the statutes required              
 the renter was licensed to operate the equipment.                             
                                                                               
 Number 0286                                                                   
                                                                               
 CHAIR JAMES wondered if the students that attended the Center for             
 Employment Education received Alaska state student loans.                     
                                                                               
 MR. JOHNSON replied, yes.                                                     
                                                                               
 CHAIR JAMES asked if the other schools had students attending that            
 received the Alaska state student loan.                                       
                                                                               
 MR. JOHNSON replied, no, because they did not have authorized                 
 approved programs.  He cited the responses from his enquiry.  A               
 response from Fairbanks said during the check-in procedure a                  
 routine check was done to determine if the person renting the                 
 equipment was licensed.  At times the check-in required an                    
 equipment familiarization process but alleged it was not a training           
 course.  He also cited a letter from Soldotna which stated the                
 company rented vehicles for individuals to take their CDL test.               
 The letter also asked him to mind his own business so he could do             
 his job.  Mr. Johnson further said the center was most concerned              
 about an individual in Anchorage that registered over 700 tests for           
 the CDL at the Department of Motor Vehicles (DMV).  He alleged the            
 individual charged $250 per rental which equated to a great deal of           
 money for an unlicensed activity.                                             
                                                                               
 CHAIR JAMES asked Mr. Johnson to wrap-up his testimony.  She                  
 further said his concerns were valid and needed to be addressed,              
 however, they did not fit into HB 457.                                        
                                                                               
 MR. JOHNSON said, in conclusion, there was a serious problem with             
 respect to drivers training in Alaska.  The current regulations               
 were not working.                                                             
                                                                               
 Number 0495                                                                   
 CHAIR JAMES said she appreciated his concerns.  She said HB 457               
 went next to the House Judiciary Committee.  She reiterated the               
 bill did not cover the issues he shared with the committee members,           
 and suggested special legislation as it affected public safety.               
                                                                               
 Number 0530                                                                   
                                                                               
 MR. WILCOX suggested in section (b) to add a line to explain the              
 section did not apply to business licensing.                                  
                                                                               
 Number 0542                                                                   
                                                                               
 CHAIR JAMES suggested a conceptual amendment.                                 
                                                                               
 Number 0549                                                                   
                                                                               
 REPRESENTATIVE IVAN moved to adopt a conceptual amendment.                    
                                                                               
 Number 0557                                                                   
                                                                               
 REPRESENTATIVE OGAN said he did not understand the amendment and              
 asked for clarification.                                                      
                                                                               
 Number 0560                                                                   
                                                                               
 CHAIR JAMES replied, the list of regulations and boards Ms. Reardon           
 read earlier could be misconstrued to include the general business            
 license that was bought for $50.  The bill was not intended to                
 cover that provision.  Therefore, to make it perfectly clear a line           
 should be drafted and included in HB 457.                                     
                                                                               
 Number 0591                                                                   
                                                                               
 REPRESENTATIVE OGAN wondered if it was referenced to in the                   
 statute.                                                                      
                                                                               
 CHAIR JAMES replied, "no," and asked Ms. Reardon to respond.                  
                                                                               
 Number 0598                                                                   
                                                                               
 MS. REARDON said HB 457 put the provision in Title 8 which included           
 the list of boards and regulations she read earlier.  She said a              
 sentence to clarify this issue to eliminate the possibility a                 
 business license would be included because statutes were referred             
 to each other in the bill.                                                    
                                                                               
 REPRESENTATIVE OGAN said he understood.                                       
                                                                               
 CHAIR JAMES said hearing no objection to the motion to accept the             
 conceptual amendment, it was so moved.                                        
                                                                               
 Number 0640                                                                   
 REPRESENTATIVE OGAN enquired about the $5,000 offense penalty.                
                                                                               
 Number 0645                                                                   
                                                                               
 MS. REARDON replied it was from the Board of Registration for                 
 Architects, Engineers and Land Surveyors, the board that already              
 had the authority to fine unlicensed activity.  She said it was               
 also based on the recommendation of the Legislative Budget and                
 Audit Committee's suggestion for all the boards and regulations to            
 have the same authority.                                                      
                                                                               
 Number 0663                                                                   
                                                                               
 CHAIR JAMES replied some of the issues were health related.                   
 Therefore, a deterrent was needed as the issues were large enough.            
 She further commented a procedure outline was needed to establish             
 the amount of the fine.                                                       
                                                                               
 Number 0683                                                                   
                                                                               
 MS. REARDON responded it was a good idea.  She further said the               
 hearing officer usually determined the amount of the fine after               
 listening to the evidence.  She alleged the upper amount was seldom           
 delivered, and maybe regulations would clarify the issue.                     
                                                                               
 Number 0703                                                                   
                                                                               
 CHAIR JAMES said regulations would clarify, and furthermore,                  
 regulations went through a public process to include the input of             
 the public.  She further said she was not sure if regulation                  
 enforcement should be included in the bill and wondered if it was             
 presumed.                                                                     
                                                                               
 Number 0731                                                                   
                                                                               
 REPRESENTATIVE OGAN said when he served on the Big Game Commercial            
 Services he cited there was a $5,000 criminal offense penalty.  He            
 said $5,000 was too high for a civil penalty under this scenario.             
 He also said he questioned the due process of an administrative               
 hearing.  He cited a driving ticket example, whereby a ticket was             
 issued and went to court following due process.  He again stated              
 $5,000 was a severe fine.                                                     
                                                                               
 REPRESENTATIVE OGAN moved that on page 1, line 10, change the                 
 amount of "$5,000" to "$500."                                                 
                                                                               
 REPRESENTATIVE WILLIS asked if the fines would be greater under the           
 existing laws based on Representative Ogan's motion.                          
                                                                               
 Number 0800                                                                   
                                                                               
 MS. REARDON responded in court an upper limit of $5,000 was issued            
 under a misdemeanor generally.  She further stated some of the                
 licenses cost $700 every two years.  Therefore, she was concerned             
 about individuals profiting by failing to obtain a license.  She              
 suggested a higher offense might serve as a deterrent.                        
                                                                               
 Number 0839                                                                   
                                                                               
 REPRESENTATIVE OGAN said if the limit of $5,000 was for a criminal            
 penalty in court, it should not be the same for a civil penalty.              
 He agreed the limit should be expensive and was willing to                    
 negotiate on the amount.                                                      
                                                                               
 Number 0874                                                                   
                                                                               
 REPRESENTATIVE GREEN said the committee members were hung-up on an            
 automatic $5,000 fine rather than an "up-to" $5,000 fine.  He                 
 further said the circumstances would predicate the amount of the              
 fine.  Representative Green said there was a presumption of                   
 incompetence if a person failed to obtain a license and there                 
 should be a worthwhile potential penalty.                                     
                                                                               
 Number 0942                                                                   
                                                                               
 CHAIR JAMES called on the next witness via telephone, Randy Welker.           
                                                                               
 Number 0950                                                                   
                                                                               
 CHAIR JAMES explained to Mr. Welker the amendment made to HB 457 to           
 not include business licenses.  She asked Mr. Welker his opinion              
 regarding the change of the penalty from $5,000 to $500.                      
                                                                               
 REPRESENTATIVE IVAN said he was comfortable with the maximum $5,000           
 limit.  He cited there were provisions in the bill to let the                 
 department set the fines accordingly.                                         
                                                                               
 Number 1007                                                                   
                                                                               
 RANDY WELKER, Legislative Auditor, Legislative Audit Division,                
 Legislative Agencies and Offices, said the nature of the potential            
 violations were important to consider.  He cited a physician                  
 running a medical office without the proper license needed to be              
 stopped immediately using a $5,000 penalty.  He alleged it was a              
 tool used to stop the behavior immediately instead of pursuing a              
 criminal procedure which took time.                                           
                                                                               
 Number 1085                                                                   
                                                                               
 CHAIR JAMES reiterated her suggestion of establishing a regulation            
 to schedule the fees.                                                         
                                                                               
 Number 1107                                                                   
                                                                               
 MR. WELKER said it was reasonable to expect the department would              
 adopt regulations to guide the boards and the hearing officers.               
                                                                               
 Number 1122                                                                   
                                                                               
 CHAIR JAMES said the regulations would be more representative of              
 the applicability of each case because it would include the general           
 public.                                                                       
                                                                               
 Number 1136                                                                   
                                                                               
 MR. WELKER replied he agreed with Chair James as long as the                  
 legislation language was flexible regarding the up-to limit.                  
                                                                               
 Number 1145                                                                   
                                                                               
 REPRESENTATIVE OGAN said he was concerned about the agency acting             
 like a judge.  He said the legislation was allowing the agency to             
 act in the same manner as if it were a criminal offense.                      
 Representative Ogan said a $5,000 limit was appropriate for a                 
 criminal offense, and reiterated his philosophical difference                 
 regarding the due process and the lack of the separation of powers.           
 He asked Mr. Welker, if an administrative solution was not                    
 possible, was the next step a criminal trial.                                 
                                                                               
 Number 1212                                                                   
                                                                               
 MR. WELKER replied that was a possibility, and the concern was the            
 issue of time and deterrence until a criminal proceeding took                 
 place.                                                                        
                                                                               
 Number 1241                                                                   
                                                                               
 CHAIR JAMES referred Representative Ogan to page 2, line 8, "A                
 person aggrieved by the imposing of a civil penalty under this                
 section may file an appeal with the superior court for judicial               
 review of the penalty under AS 44.62.560."  She further commented             
 the Administrative Procedures Act (APA) outlined the exact appeal             
 process which included due process.  She said there was the                   
 opportunity for a hearing to present a case along with an appeal.             
                                                                               
 Number 1295                                                                   
                                                                               
 REPRESENTATIVE OGAN said it took time because of the due process              
 involved.  He said it should be a stop gap to a court proceeding.             
 He amended his previous amendment from "$500" to "$2,500."  He said           
 it was half-way between nothing and the maximum for a criminal                
 violation.                                                                    
                                                                               
 Number 1350                                                                   
                                                                               
 CHAIR JAMES asked if there were any objections to Representative              
 Ogan's amendment.                                                             
                                                                               
 Number 1360                                                                   
                                                                               
 REPRESENTATIVE GREEN replied he was concerned about adding a                  
 variety of "up-to" limits.  He said one "up-to" was enough and let            
 the department decide the offense.  He suggested the limit stay at            
 $5,000.                                                                       
                                                                               
 Number 1402                                                                   
                                                                               
 CHAIR JAMES responded she did not want to arbitrarily change the              
 amount otherwise the committee members should look at each board              
 and regulation and decide what amount was appropriate.  She                   
 suggested leaving it at $5,000 - the suggestion of the auditor.               
                                                                               
 Number 1438                                                                   
                                                                               
 REPRESENTATIVE OGAN replied the auditor did not set the policy in             
 this state, the legislature did.                                              
                                                                               
 Number 1481                                                                   
                                                                               
 CHAIR JAMES reiterated the motion to change page 1, line 10 from              
 "$5,000" to "$2,500."  There was an objection, so a roll call vote            
 was taken.  Representatives James, Green, Ivan and Willis voted               
 against the amendment.  Representative Ogan voted in favor of the             
 amendment.  So, the amendment failed.                                         
                                                                               
 CHAIR JAMES commented again regarding the parameters of the                   
 penalties imposed, and wondered if it should be included in the               
 bill.                                                                         
                                                                               
 Number 1510                                                                   
                                                                               
 REPRESENTATIVE GREEN said it was not necessary, but if it added               
 clarity it was worthwhile.                                                    
                                                                               
 Number 1525                                                                   
                                                                               
 CHAIR JAMES suggested a committee substitute to be discussed at the           
 next committee meeting.                                                       
 HB 361 - CAP PROJ MATCHING GRANT FOR INDIAN RESERV                          
                                                                               
 The next order of business to come before the House State Affairs             
 Committee was HB 361.                                                         
                                                                               
 Number 1584                                                                   
                                                                               
 CHAIR JAMES called on Representative Jerry Mackie, sponsor of HB
 361.                                                                          
                                                                               
 REPRESENTATIVE JERRY MACKIE read the following statement into the             
 record.                                                                       
                                                                               
 "I introduced this legislation at the request of the Metlakatla               
 Indian Community when their FY 96 Municipal Assistance Matching               
 Grant Program appropriation was eliminated from last year's budget.           
 Metlakatla qualified for this program under the Department of                 
 Administration regulations definition for "municipality."  However,           
 legal analysis found that the statute definition was not written              
 specific enough to include the Metlakatla Indian Community in this            
 program.  Since the statute definition supersedes the regulatory              
 definition the appropriation was eliminated.                                  
                                                                               
 "HB 361 AMENDS AS 37.06 (Capital Project Matching Grants Programs)            
 by adding a new section that includes a municipality organized                
 under federal law as an Indian reserve.  This bill has been drafted           
 to specifically include the Metlakatla Indian Community within the            
 Municipal Assistance Matching Grant Program.  This legislation also           
 provides that Metlakatla may not receive a grant under the                  
 Unincorporated Community Capital Project Matching Grant Program.              
                                                                               
 "The community of Metlakatla is definitely more reflective of a               
 municipal government and fits more appropriately into the Municipal           
 Capital Matching Grant Program.  The community has a mayor, city              
 council, school board, constitution, law and order codes, policy              
 department, court system, etc..                                               
                                                                               
 "There are two zero fiscal notes accompanying this legislation from           
 the Department of Community and Regional Affairs and the Department           
 of Administration."                                                           
                                                                               
 REPRESENTATIVE MACKIE mentioned to the committee members a section            
 analysis, a letter from the indian community, a legal analysis and            
 a statute were included in the package of information.  He said HB
 361 clarified the intent that the Metlakatla community qualified              
 for the capital matching grant program.  The qualification issue              
 was raised by Senator Rick Halford last year because of the                   
 community title.  He said the Metlakatla community was a federal              
 indian reservation, but voted in state elections, which qualified             
 the community for municipal assistance.  Therefore, HB 361                    
 clarified the statute the Metlakatla community qualified for the              
 money.  He further said it was discovered the Metlakatla Indian               
 Community qualified for both an unorganized grant and municipal               
 assistance.  Therefore, HB 361 took away the unorganized portion of           
 the grant.  He also said in response to discussion regarding                  
 sovereignty, the bill did not affect that issue.  He referred the             
 committee members to page 1, line 6, "Municipalities organized                
 under federal law," which stated an indian reserve qualified only             
 if it existed as a municipality before enactment of 43 U.S.C.                 
 1618(a).  He said Metlakatla was the only one in the state affected           
 and a definition was needed.  The definition used in HB 361 was               
 consistently used in other statutes dealing with municipal                    
 assistance and revenue sharing.                                               
                                                                               
 CHAIR JAMES recognized Kim Helmer, Department of Community and                
 Regional Affairs, in the audience to answer any questions.                    
                                                                               
 Number 1870                                                                   
                                                                               
 REPRESENTATIVE GREEN mentioned HB 361 would only apply to the                 
 Metlakatla Indian Reservation, and wondered if there were four                
 different reservations in Alaska.                                             
                                                                               
 REPRESENTATIVE MACKIE replied as defined in HB 361, Metlakatla was            
 the only indian reservation in the state of Alaska.   He said there           
 were four areas of the state that had indian trust land and was not           
 effected by HB 361.  House Bill 361 only dealt with the capital               
 matching grant program and only included communities organized                
 under federal law.  He said he was trying to expedite the bill so             
 the Metlakatla community would be treated fairly in the budget                
 process this year.                                                            
                                                                               
 Number 1888                                                                   
                                                                               
 REPRESENTATIVE OGAN said Representative Mackie briefed him on HB
 361 yesterday.  He further said there were sovereignty issues that            
 had yet to be resolved in the state, and commented the intent of HB
 361 was to not include sovereign communities.                                 
                                                                               
 REPRESENTATIVE MACKIE replied the bill required the indian reserve            
 to be a municipality and organized under federal law which existed            
 before enactment of 43 U.S.C. 1618(a).  The Metlakatla community              
 was the only one that existed before the enactment of 43 U.S.C.               
 1618(a) and only dealt with it in reference to the capital matching           
 grant program.  The reason it was stated specifically was because             
 of a discrepancy due to an oversite.                                          
                                                                               
 Number 2073                                                                   
                                                                               
 REPRESENTATIVE WILLIS moved that HB 361 move from the committee               
 with individual recommendations and zero fiscal notes.  Hearing no            
 objection, HB 361 was moved from the House State Affairs Committee.           
 HB 449 - INCOME TAX ON INDIVIDUALS & FIDUCIARIES                            
                                                                               
 The next order of business to come before the House State Affairs             
 Committee was HB 449.                                                         
                                                                               
 Number 2144                                                                   
                                                                               
 CHAIR JAMES called on Representative Carl Moses, sponsor of HB 449.           
 REPRESENTATIVE CARL MOSES read the following sponsor statement into           
 record.                                                                       
                                                                               
 "Thank you Madame Chair for hearing house bill 449, a bill that               
 would establish a state personal income tax.                                  
                                                                               
 "With all the talk these days about the state's fiscal gap,                   
 estimated to be roughly half a billion dollars alone, it's time to          
 start the debate on raising new revenues to help address the                
 shortfall.                                                                    
                                                                               
 "That's why I introduced house bill 449."                                     
                                                                               
 "A personal income tax was generally considered the fairest tax,              
 and, because federal law allows deducting state income taxes from           
 the federal income tax, it should not create an unreasonable burde        
 on Alaska taxpayers.                                                          
                                                                               
 "A personal income tax would transfer money to the state that would           
 otherwise go to the feds, and it would return to the state some of            
 the money nonresidents earn in Alaska.                                      
                                                                               
 "In 1994 alone, over 77,000 nonresidents earned approximately $866            
 million in the state."                                                        
                                                                               
 REPRESENTATIVE MOSES commented most of the nonresidents did not               
 even buy a tube of toothpaste, for example, unless they absolutely            
 had to.  He also said with the tobacco tax bill floating around,              
 the nonresidents would probably bring their own cigarettes to save            
 money.  He continued to read the sponsor statement into the record.           
                                                                               
 "It's time some of that money was returned to the state.                    
                                                                               
 "Based on Alaska's personal income tax in place from 1949 to 1961,            
 house bill 449 would levy a flat tax on all residents and                   
 nonresidents earning income in Alaska based on a percentage of what           
 they pay the federal government.                                              
                                                                               
 "Starting in 1997, the tax would be five percent of a taxpayer's              
 federal income tax liability if that is not more than $20,000, and          
 10 percent if the taxpayer's federal income tax liability is over             
 $20,000.                                                                      
                                                                               
 "Under my proposal, the tax rate would go up five percent in 1998,            
 and would level off in 1999 after another five percent increase.              
                                                                               
 "Taxing a flat percentage rate of the federal tax liability is not          
 new to Alaska.                                                                
                                                                               
 "Such taxes were in effect at varying rates, between 10 percent and           
 16 percent, from 1949 to 1963, and again in 1965.                             
                                                                               
 "How much revenue would this bill generate?                                   
                                                                               
 REPRESENTATIVE MOSES said the estimate so far from the Department             
 of Revenue was $22.4 million the first year.  He continued to read            
 the sponsor statement into the record.                                        
                                                                               
 "nonresidents would pay just over half of that, or $11.3 million.           
                                                                               
 REPRESENTATIVE MOSES stated again that was one-half of what would             
 be paid by nonresidents, or money that the state was not receiving            
 now.  He further said it was only fair the nonresidence paid for              
 the services they received while in Alaska.  He cited in his                  
 community the police force doubled because of the transient and               
 seasonal workers.  He continued to read the sponsor statement into            
 the record.                                                                   
                                                                               
 "Is this a big enough amount?"                                                
                                                                               
 TAPE 96-11, SIDE A                                                            
 Number 0000                                                                   
                                                                               
 REPRESENTATIVE MOSES replied it was not a big amount compared to              
 the fiscal gap.  He continued to read the sponsor statement into              
 the record.                                                                   
                                                                               
 "Why doesn't my bill raise the $200 million that some have                    
 estimated an income tax to generate?                                          
                                                                               
 "Two reasons.                                                                 
                                                                               
 "First, the tax rate in house bill 449 is lower, at least for the             
 first two years, than the tax rate in the bill on which the higher            
 revenue estimate was based.                                                   
                                                                               
 "The $200 million estimate was for a bill, introduced three years             
 ago, that would have imposed a 15 percent tax rate on a taxpayer's          
 federal income tax liability.                                                 
                                                                               
 "Second, my bill provides a real and personal property tax credit           
 a taxpayer may claim."                                                        
                                                                               
 REPRESENTATIVE MOSES commented that was the reason nonresidents               
 would pay over 50 percent the first year because it was a long-shot           
 that nonresidents owned real or personal property to receive the              
 tax credit.  He also said the earlier bill did not address this               
 issue.  He cited he would like to see this extended to the small              
 business owners to help compete with the national chains.  He felt            
 they needed a break.  The national chains were good for the                   
 consumer, he alleged, but only in the short-run.  He further                  
 stated, for more information on how much HB 449 might generate, how           
 much it might cost to administer, and some of the technical aspects           
 of the measure, he deferred to the Department of Revenue.  He said            
 there were other tax proposals such as a sin tax that was                     
 uncontrolled due to the large number of nonresidents.  He                     
 reiterated over 50 percent in the first year would be paid by                 
 nonresident workers.  He also cited there were thousands of part-             
 time residents, such as fishermen, of which the industry was                  
 oriented towards Seattle.  Consequently, they were contributing to            
 the state of Washington rather than the state of Alaska.                      
 Representative Moses commented the trickle down approach was not              
 working so again wondered why an income tax did not exist.  He said           
 proposing such a bill affected him personally and cited $1,000                
 worth of damage was done to his store because of the marine fuel              
 tax.  He further said a large portion of his customers in Unalaska            
 were nonresidents.  Therefore, HB 449 was a detriment to his                  
 business, and he would probably loose votes.  In conclusion, he               
 said he would be happy to answer any questions.                               
                                                                               
 Number 0522                                                                   
                                                                               
 REPRESENTATIVE GREEN cited a cabin fire example where so much fuel            
 had been added requiring a fire extinguisher to sequester the fire            
 back into the fireplace.  He said it was the wrong direction to use           
 gasoline now to try to control the government.  He stated he                  
 championed Representative Moses' idea to take advantage of the                
 nonresidents.  He cited the slope workers who made a lot of money             
 and lived in another state.  Representative Green said an avenue              
 was needed to prevent that because the state provided services for            
 the period of time they were here.  He further said it was often              
 more service per capita than required from the full-time residents.           
 However, adding an income tax was not responsible until state                 
 spending was under control.  He said he was not in favor of HB 449            
 at this time.                                                                 
                                                                               
 Number 0680                                                                   
                                                                               
 REPRESENTATIVE WILLIS commended Representative Moses for                      
 introducing HB 449.  He said it took a lot of courage.  He stated             
 he did not want to see a piece-meal revenue enhancement approach.             
 He wondered, as Representative Moses was part of the majority, if             
 the majority was establishing an overall plan that addressed budget           
 cuts and encompassed revenue enhancements such as an income tax.              
                                                                               
 Number 0795                                                                   
                                                                               
 REPRESENTATIVE MOSES replied the most comprehensive and fairest tax           
 was the personal income tax, and hoped it would be part of the                
 over-all plan.  He felt he was in the extreme minority right now              
 proposing such a bill.  Representative Moses stated the budget cuts           
 could cause a minor or major recession in the state.  He also said            
 the state did not know about the federal budget cuts and how it               
 would affect Alaska.  He further stated the entire fishing industry           
 was in the doldrums.  He alleged the state was still benefiting               
 from the large capital expenditures in fiscal year 1994.  He                  
 reiterated there would probably be a big recession in Anchorage               
 because it was the service center.  A tax did not always help the             
 economy, he said, but it would contribute millions of dollars to              
 the state by requiring nonresidents to contribute.  He also cited             
 foreigners and some full-time residents sent every nickel made to             
 a foreign country because they had it so good here in Alaska which            
 did not trickle down into the economy.  This, he asserted, was a              
 serious problem.                                                              
                                                                               
 Number 0959                                                                   
                                                                               
 REPRESENTATIVE OGAN said he admired Representative Moses' courage             
 to introduce HB 449.  He stated appropriate cuts needed to be made            
 before introducing new taxes.  He said his constituents felt there            
 would be no motivation to cut the budget if new money was generated           
 by taxes.  He said the people believed there was a bloated state              
 government and the legislature was not interested in controlling it           
 but only new revenue sources.  He agreed with the arguments                   
 regarding nonresidents.  He said it could be argued in the case of            
 oil workers that the employer paid a disproportionate amount of               
 state taxes.  He said the fairest tax was a sales tax because it              
 taxed the workers and non-workers according to spending.  He also             
 said it did not penalize against spending or saving as an income              
 tax would.  He said he did not support HB 449 and would not vote it           
 out of the committee.                                                         
                                                                               
 Number 1071                                                                   
                                                                               
 CHAIR JAMES said ultimately a state income tax was needed, and the            
 income tax was the fairest tax imposed.  A sales tax, she stated,             
 should be reserved for the municipalities and local governments to            
 receive money.  She said everybody wanted to make exemptions to the           
 sales tax law creating an accounting nightmare born by the business           
 person.  She also said she was concerned about the timing.  She               
 said state spending must be reduced, but at the same time there               
 were many capital needs in Alaska that should not be ignored.  She            
 further said nonresidents were not treating residents fairly and              
 most believed a tax should be collected from them.                            
 Philosophically, she believed an income tax would create a more               
 interested and scrutinizing public.  She said she did not feel the            
 threat between cutting and spending.  She did not want to cut, to             
 simply cut, but a serious evaluation was needed to determine that             
 which validated continued funding.  She also said Representative              
 Moses was brave to introduce HB 449.  She asserted it was time to             
 start talking about it nonetheless.  In conclusion, she said she              
 would like to hear from the Department of Revenue.                            
                                                                               
 Number 1272                                                                   
                                                                               
 REPRESENTATIVE IVAN said he had observed first hand the nonresident           
 and seasonal workers in Unalaska, and understood the concerns of              
 Representative Moses.  He said Alaska was so big that it required             
 a unique approach to solve the problems.  In conclusion, he stated            
 he agreed with some of Representative Moses' philosophy.                      
                                                                               
 Number 1355                                                                   
                                                                               
 CHAIR JAMES said politicians liked to spend money, and her fear of            
 adding money to the pot would not allow the budget to be                      
 scrutinized.  She suggested finding the level of spending and use             
 the reserves to take care of the gap.  She alleged there was not a            
 gap if all the earnings were included such as the permanent fund              
 earnings.  However, touching the permanent fund was political                 
 suicide.  In conclusion, she said, as economic activity increased,            
 the only way to factor in the added necessary government services             
 was to tap into the income to provide for those needed services.              
 She did not know when that would be needed but it was good to talk            
 about it now.                                                                 
                                                                               
 Number 1455                                                                   
                                                                               
 REPRESENTATIVE MOSES said there would be drilling in the Arctic               
 National Wildlife Refuge (ANWR) if the state did not have $18                 
 billion dollars in the bank.  He further said Congress did not have           
 sympathy for the state of Alaska because there was not a tax in               
 some form.  He further said there was a chance the state's highway            
 fund would decreased from $200 million to $50 million.  He said if            
 he was a Congressman from the lower forty-eight he would be very              
 envious of Alaska and vote to restrict any appropriations.  He                
 alleged the majority of the states were jealous of Alaska.                    
 Representative Moses also said the candidates had psyched the                 
 public into thinking the solution was to cut the budget and no                
 taxes were needed.  The public was gullible, he asserted.  He also            
 said the legislature did not cut the budget appropriately.  He said           
 he campaigned in 1992 on the fact an income tax was needed.                   
                                                                               
 Number 1548                                                                   
                                                                               
 CHAIR JAMES reiterated she wanted to hear from the Department of              
 Revenue.  She stated she was not ready to pass HB 449 from the                
 committee, but this was an opportune time to discuss the issue of             
 an income tax.                                                                
 Number 1583                                                                   
                                                                               
 CHAIR JAMES further said HB 390 was referred to the House State               
 Affairs Committee and was requested to move to the next committee             
 of referral - the House Special Committee on Fisheries.  She asked            
 if there were any objections.                                                 
                                                                               
 Number 1603                                                                   
                                                                               
 REPRESENTATIVE OGAN objected.                                                 
                                                                               
 CHAIR JAMES said she would not waive the bill due to the objection.           
                                                                               
 MR. WILCOX enquired about the status of HJR 51.                               
                                                                               
 CHAIR JAMES said Representative Robinson objected to moving HJR 51            
 forward.                                                                      
                                                                               
 Number 1624                                                                   
                                                                               
 REPRESENTATIVE WILLIS also objected to moving HJR 51 to the next              
 committee of referral.                                                        
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 CHAIR JAMES adjourned the House State Affairs Committee at 10:05              
 a.m.                                                                          
                                                                               
                                                                               

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