Legislature(1995 - 1996)
03/26/1996 08:05 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE March 26, 1996 8:05 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. 345 "An Act relating to the procurement of investment and brokerage services by the Alaska State Pension Investment Board." - PASSED CSHB 345(STA) OUT OF COMMITTEE HOUSE BILL NO. 383 "An Act relating to reimbursement by the state to municipalities and certain established villages for services provided to individuals incapacitated by alcohol; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 371 "An Act relating to the rights of terminally ill persons." - HEARD AND HELD HOUSE JOINT RESOLUTION NO. 47 Supporting continued funding of the Alaska National Guard Youth Corps Challenge Program. - PASSED CSHJR 47(STA) OUT OF COMMITTEE HOUSE BILL NO. 546 "An Act providing for and relating to the issuance of general obligation bonds in the amount of $600,211,000 for the purpose of paying the cost of acquiring, constructing, reconstructing, and equipping public schools and of repair and major maintenance of public school and University of Alaska facilities; and providing for an effective date." - HEARD AND HELD (* First public hearing) PREVIOUS ACTION BILL: HB 345 SHORT TITLE: PENSION INVESTMENT BOARD PROCUREMENTS SPONSOR(S): REPRESENTATIVE(S) FOSTER, Ivan JRN-DATE JRN-PG ACTION 05/10/95 2088 (H) READ THE FIRST TIME - REFERRAL(S) 05/10/95 2088 (H) STATE AFFAIRS, L&C, FINANCE 03/21/96 (H) STA AT 8:00 AM CAPITOL 102 03/21/96 3259 (H) COSPONSOR(S): IVAN 03/26/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 383 SHORT TITLE: REIMBURSE FOR LOCAL SERVICE TO INEBRIATES SPONSOR(S): REPRESENTATIVE(S) IVAN, Brown, Elton, Nicholia JRN-DATE JRN-PG ACTION 12/29/95 2366 (H) PREFILE RELEASED 01/08/96 2366 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2366 (H) CRA, STATE AFFAIRS, FINANCE 01/16/96 (H) CRA AT 1:00 PM CAPITOL 124 01/16/96 (H) MINUTE(CRA) 01/23/96 (H) CRA AT 4:00 PM CAPITOL 124 01/23/96 (H) MINUTE(CRA) 01/25/96 (H) CRA AT 1:00 PM CAPITOL 124 01/25/96 (H) MINUTE(CRA) 02/21/96 2846 (H) COSPONSOR(S): BROWN 02/22/96 (H) CRA AT 1:00 PM CAPITOL 124 02/22/96 (H) MINUTE(CRA) 02/27/96 (H) CRA AT 1:00 PM CAPITOL 124 02/27/96 (H) MINUTE(CRA) 02/28/96 2907 (H) CRA RPT CS(CRA) NT 3DP 2DNP 1NR 02/28/96 2908 (H) DP: ELTON, NICHOLIA, IVAN 02/28/96 2908 (H) DNP: VEZEY, KOTT 02/28/96 2908 (H) NR: AUSTERMAN 02/28/96 2908 (H) 2 FISCAL NOTES (REV, DCRA) 02/28/96 2908 (H) ZERO FISCAL NOTE (DHSS) 02/28/96 2908 (H) REFERRED TO STATE AFFAIRS 02/28/96 2944 (H) COSPONSOR(S): ELTON 03/12/96 3100 (H) COSPONSOR(S): NICHOLIA 03/19/96 (H) STA AT 8:00 AM CAPITOL 102 03/19/96 (H) MINUTE(STA) 03/21/96 (H) STA AT 8:00 AM CAPITOL 102 03/21/96 (H) MINUTE(STA) 03/26/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 371 SHORT TITLE: RIGHTS OF TERMINALLY ILL PERSONS SPONSOR(S): REPRESENTATIVE(S) BROWN, TOOHEY, Finkelstein, Davies JRN-DATE JRN-PG ACTION 12/29/95 2363 (H) PREFILE RELEASED 01/08/96 2363 (H) READ THE FIRST TIME - REFERRAL(S) 01/08/96 2363 (H) HES, STATE AFFAIRS, JUDICIARY 02/06/96 (H) HES AT 3:00 PM CAPITOL 106 02/06/96 (H) MINUTE(HES) 02/13/96 (H) HES AT 3:00 PM CAPITOL 106 02/13/96 (H) MINUTE(HES) 02/20/96 (H) HES AT 3:00 PM CAPITOL 106 02/20/96 (H) MINUTE(HES) 02/21/96 2827 (H) HES RPT CS(HES) 1DP 2DNP 3NR 02/21/96 2827 (H) DP: TOOHEY 02/21/96 2827 (H) DNP: G.DAVIS, ROKEBERG 02/21/96 2827 (H) NR: BUNDE, ROBINSON, BRICE 02/21/96 2827 (H) 2 FISCAL NOTES (2-DHSS) 02/21/96 2827 (H) REFERRED TO STATE AFFAIRS 03/19/96 (H) STA AT 8:00 AM CAPITOL 102 03/19/96 (H) MINUTE(STA) 03/21/96 (H) STA AT 8:00 AM CAPITOL 102 03/21/96 (H) MINUTE(STA) 03/26/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HJR 47 SHORT TITLE: AK NAT'L GUARD YOUTH CORPS CHALLENGE PROG SPONSOR(S): REPRESENTATIVE(S) BRICE, Mulder, Willis, Rokeberg, James JRN-DATE JRN-PG ACTION 04/28/95 1632 (H) READ THE FIRST TIME - REFERRAL(S) 04/28/95 1632 (H) MLV, STATE AFFAIRS, FINANCE 05/01/95 1718 (H) COSPONSOR(S): WILLIS 01/22/96 2511 (H) COSPONSOR(S): ROKEBERG 02/14/96 (H) MLV AT 5:00 PM CAPITOL 17 02/14/96 (H) MINUTE(MLV) 02/15/96 2774 (H) MLV RPT CS(MLV) 6DP 02/15/96 2774 (H) DP: WILLIS, MULDER, FOSTER, IVAN, KOTT 02/15/96 2774 (H) DP: DAVIES 02/15/96 2774 (H) ZERO FISCAL NOTE (GOV) 03/18/96 3186 (H) COSPONSOR(S): JAMES 03/21/96 (H) STA AT 8:00 AM CAPITOL 102 03/21/96 (H) MINUTE(STA) 03/23/96 (H) STA AT 10:00 AM CAPITOL 102 03/23/96 (H) MINUTE(STA) 03/26/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 546 SHORT TITLE: G.O. BONDS: SCHOOLS & UNIV. SPONSOR(S): STATE AFFAIRS JRN-DATE JRN-PG ACTION 03/22/96 3270 (H) READ THE FIRST TIME - REFERRAL(S) 03/22/96 3270 (H) STA, HES, FINANCE 03/26/96 (H) STA AT 8:00 AM CAPITOL 102 WITNESS REGISTER JOHN WALSH, Legislative Assistant to Representative Richard Foster State Capitol, Room 410 Juneau, Alaska 99801-1182 Telephone: (907) 465-3789 POSITION STATEMENT: Provided committee substitute for HB 345. BOB D. STORER, Chief Investment Officer Treasury Division Department of Revenue P.O. Box 110405 Juneau, Alaska 99811-0405 Telephone: (907) 465-4399 POSITION STATEMENT: Provided testimony on HB 345. TIM VOLWILER 8030 North Douglas Highway Juneau, Alaska 99801 Telephone: (907) 463-4825 POSITION STATEMENT: Provided testimony in opposition to HB 345. LOIS IRVIN 167 West Baryview Avenue Homer, Alaska 99603 Telephone: (907) 235-7172 POSITION STATEMENT: Provided testimony in support of HB 345. MICHAEL J. KIRK 1718 Evergreen Avenue Juneau, Alaska 99801 Telephone: (907) 586-4318 POSITION STATEMENT: Provided testimony in support of HB 371. DICK REGAN 825 Gold Belt Avenue Juneau, Alaska 99801 Telephone: (907) 586-4318 POSITION STATEMENT: Provided testimony on HB 371. JAY LIVEY, Deputy Commissioner Office of the Commissioner Department of Health and Social Services P.O. Box 110601 Juneau, Alaska 99811-0601 Telephone: (907) 465-3030 POSITION STATEMENT: Provided testimony in support of HB 371 on behalf of the Administration. SID HEIDERSDORF, Representative Alaskans For Life P.O. Box 020658 Juneau, Alaska 99802 Telephone: (907) 789-9858 POSITION STATEMENT: Provided testimony in opposition to HB 371. REPRESENTATIVE TOM BRICE Alaska State Legislature State Capitol, Room 426 Juneau, Alaska 99801-1182 Telephone: (907) 465-3466 POSITION STATEMENT: Sponsor of HJR 47. REPRESENTATIVE JERRY MACKIE Alaska State Legislature State Capitol, Room 404 Juneau, Alaska 99801-1182 Telephone: (907) 465-4925 POSITION STATEMENT: Provided introduction of HB 546, a bill sponsored by the House State Affairs Committee. ACTION NARRATIVE TAPE 96-40, SIDE A Number 0015 The House State Affairs Committee was called to order by Chair Jeannette James at 8:05 a.m. Members present at the call to order were Representatives Ivan, Willis, Porter, Green, Ogan, Robinson and James. No members were absent. HB 345 - PENSION INVESTMENT BOARD PROCUREMENTS CHAIR JEANNETTE JAMES called on John Walsh, Legislative Assistant to Representative Richard Foster, to present the committee substitute (9-LS1179/C). JOHN WALSH, Legislative Assistant to Representative Richard Foster, explained based on the testimony last week (Thursday, March 21, 1996), a committee substitute was drafted (9-LS1179/C). He referred the committee members to page 3, and explained the change split the procurement by contract, and the investment and brokerage services. The testimony indicated last week that the state did not procure brokerage services by contract, therefore, the language needed to be clarified. He called it a technical change. He would be glad to answer any questions from the committee members. Number 0175 REPRESENTATIVE SCOTT OGAN asked Mr. Walsh how much latitude would the board have to determine the requisite skills addressed in the bill? MR. WALSH replied it was the intention of the sponsor to hold any investment to a high standard. There was no intention to lower the standard in any way. However, by putting this into statute, investments in Alaska would be looked at harder. He explained there were investments in Alaska that would not jeopardize the performance of the fund. Furthermore, the securities exchange requirements, background checks, or performance bonds, for example, would not be lowered. He said the bill created a potential for a partnership arrangements with larger firms or joint ventures with Alaskan investment counsellors. He reiterated the sponsor did not intend to jeopardize or diminish the integrity of the fund. Number 0322 REPRESENTATIVE BRIAN PORTER asked Mr. Walsh where the 7 percent figure came from? He further wondered if the committee substitute doubled the brokerage service from 7 percent to 14 percent. He stated the language was unclear. Number 0345 MR. WALSH replied the 7 percent was requested in the beginning as part of the negotiation process. He could not say if it was high or low figure, however. He further explained there was procurement by contract for investment advisory service and the actual acquisition of securities. The first was a professional management service and the second was the actual acquisition of the security. Therefore, the investment was not doubled. Number 0432 REPRESENTATIVE PORTER wondered if the security acquisition ever occurred without the assistance of an investment service. Number 0439 MR. WALSH asked, in other words, could the board buy directly? It was possible, he replied. He did not know if it was or had been done before, however. Number 0454 REPRESENTATIVE OGAN said he also read the new language to indicate that it was doubled to 14 percent. Number 0488 MR. WALSH suggested calling on the Department of Revenue for further clarification. CHAIR JAMES called on Bob Storer, Department of Revenue (DOR). Number 0515 BOB D. STORER, Chief Investment Officer, Treasury Division, Department of Revenue, said he read the new language as two separate distinct services. He did not read it as a double-up. Number 0544 REPRESENTATIVE PORTER further stated he also read it as an "up to" requirement. He asked Mr. Storer, if it would be easier to administer, if the language read "up to" 7 percent rather than "at least" 7 percent? Number 0577 MR. STORER replied it was more complicated than that because the money managers transacted for a multitude of plan sponsors simultaneously. Therefore, the money managers were obligated to execute their trades first, then the DOR's trades. He called it a layered process. The money manager would view this in the aggregate so that at the end of the year, 7 percent of the volume of trade was through Alaska, rather than 7 percent of the DOR's trades. Number 0648 REPRESENTATIVE JOE GREEN asked Mr. Storer to explain the 7 percent figure. Why 7 percent and not 10 percent, for example? Number 0654 MR. STORER replied he did not participate in the discussions surrounding the figure, so he could not answer that question. Number 0663 REPRESENTATIVE CAREN ROBINSON stated prior testimony indicated there was a fear that this bill might jeopardize the integrity of the fund. She asked Mr. Storer if those fears were warranted? Number 0684 MR. STORER explained HB 345 legislated investment policy. Furthermore, any time an investment policy was legislated, there was a negative, because it defined certain acts. He explained the dynamics in the investment world had changed over the years. Legislation, therefore, would inhibit the ability to function in the best interest of the beneficiaries. Number 0751 REPRESENTATIVE ED WILLIS asked if it was possible that the state might have to bail out the fund if decisions were mandated? Number 0780 MR. STORER responded he was not prepared to say if that could happen. There were a number of implications as a result of HB 345, however, because it dictated investment policy. Number 0930 REPRESENTATIVE GREEN wondered if it would be necessary to error above 7 percent because trades could continue right up to the end of the year. Number 0959 MR. STORER replied it was a moving target. Representative Green was correct. The market dictated the activity. He explained one could front load the activity, or force trades with non-specialty firms. Number 1008 CHAIR JAMES explained she was very familiar with fiduciary responsibility. She had taught classes on that very issue because many were not familiar with their responsibilities. However, she felt uncomfortable forcing a certain percentage. On the other hand, she was disappointed that this was an issue being discussed today. The union funds indicated that they invested in Alaska. They were not told to do so, they just did it. She would be more comfortable if the pension board just listened to the presentations from Alaska. She did not want to mandate to interfere with the earning power of the fund, however. Of course, the beneficiaries wanted the board to make the best possible decisions. If she were on the board, she would be scared to death due to the activity of the stock market right now. She was afraid some of the funds were in jeopardy. She called the responsibilities of the board awesome. She reiterated the board needed to be encouraged, as an option, to invest in Alaska. She reiterated she had strong feeling on both sides of the issue. She stated there were good investments in Alaska such as the gas line. On the other hand, she did not want to mandate a certain percentage and potentially jeopardize the fund. She really wanted a cooperative effort between the fund managers and the state. Number 1227 MR. STORER said he agreed with Chair James. He explained two-way communication was the main issue involved here. He said there had been two presenters before the board from Alaska - a fixed income manager, and a mortgage manager. There was an educational aspect as well. As-long-as the board was communicating and being educated by the investment professionals in Alaska, that would help form the thinking of the board. Number 1295 REPRESENTATIVE WILLIS said the statutes called for the adoption of a policy for investment education for the trustees. He asked if this had been accomplished? Number 1304 MR. STORER replied the trustees met formally between 8 to 10 times each year. A two day meeting was organized in the Spring after the legislative session, devoted purely to education to stay abreast of the investment topics. Furthermore, last Sunday, a meeting was organized by the board to discuss real estate investments. Number 1353 REPRESENTATIVE WILLIS further said the statutes called for an investment advisory council. He wondered if the council had been appointed. Number 1360 MR. STORER replied three members had been appointed to the investment advisory council. The board allowed up to five members, however. There was also a general consultant outside of the council. He explained the council was comprised of members with specific type of expertise. Currently, the council was comprised of experts in the fields of academia, plan sponsorship, and investment management. Number 1394 CHAIR JAMES stated she would like to see the board encourage the people to bring the opportunities to them. She said "funds of money are like magnets." Therefore, if there was an opportunity people would gravitate to it. The message should be loud and clear that the board should be giving consideration to Alaskan investments. Number 1458 MR. WALSH stated testimony last week indicated that other funds in other states and some private funds were required to look at the local market prior to looking at the global market. He said it tied the hands of those board, but it was a commitment. Number 1505 CHAIR JAMES commented the pension fund would not be here today if it were not for legislation. Therefore, the legislature did have the right to make specific demands. It was not out of its bailiwick. The legislature needed to decide if it wanted to send a message, or mandate something. She was not willing to answer that today, however, but was willing to listen. Number 1548 REPRESENTATIVE WILLIS asked Mr. Walsh if the private union funds had a specific percentage they were bound by? Number 1553 MR. WALSH replied he could not remember if they were bound by a specific figure. However, other states such as Oregon and Texas, were bound by a certain percentage. Number 1588 MR. STORER said there was a study done of which about 17 percent of the public funds used this type of investment vehicle. CHAIR JAMES called on the first witness in Juneau, Tim Volwiler. Number 1618 TIM VOLWILER said he was a teacher with 16 years of service. He expressed his opposition to HB 345. He said the economic benefit to the state would come from the retirees actually receiving their money and spending it instate. A study conducted by the Permanent Fund indicated that local businesses benefited when the fund was distributed. Furthermore, he was afraid of any change to the current structure. He stated the board was working well now. It had not been in existence for many years so "lets leave it alone." Currently, there was nothing that prohibited the board from using instate services. He believed in leaving the board to chose as it saw fit. He was also opposed to joint ventures. He said let the free market prevail. The stock market was volatile so any restrictions placed on the board could present a problem. Moreover, he suggested targeting specific funds to encourage economic development rather than the pension fund. As an employee, he felt he earned his salary and his retirement, therefore, "this pot of money should be for those that would retire." The board was established because of the massive losses in the junk bonds. The beneficiaries, therefore, were reluctant to change the board's direction. Number 1840 REPRESENTATIVE GREEN moved that CSHB 345(STA) (9-LS1179/C) be adopted for consideration. Hearing no objection, it was so adopted. Number 1860 CHAIR JAMES said the House State Affairs Committee had heard a great deal of testimony on this issue. The next committee of referral was the House Labor and Commerce Committee. The details could be hammered out there, therefore, she was willing to move the bill forward today. Number 1870 REPRESENTATIVE OGAN said he wanted to discuss a possible amendment. He was concerned about the language on page 3, line 1, "investment services that the board procures by contract, and seven percent of the..." He was concerned it would be read to mean 14 percent rather than 7 percent. He suggested changing the word "and" to "or." Number 1895 CHAIR JAMES stated she was more concerned about the language on page 2, line 31, "services provided by persons located in the state to at least seven percent of the...." She suggested changing the language "at least" to read "up to." The word "or" as Representative Ogan suggested could imply less than 7 percent. Number 1945 REPRESENTATIVE OGAN said he brought it up for discussion only. He agreed with the language "up to" that Chair James suggested. It would give the board the latitude to invest in Alaska while not being a mandate. Number 1956 CHAIR JAMES said a motion was needed to discuss the specifics. Number 1965 REPRESENTATIVE OGAN moved that on page 2, line 31, delete the language "at least" and insert the language "up to." The motion was followed with discussion. Number 2006 REPRESENTATIVE GREEN said he was concerned about micro-managing. He asked what would happen if a good deal came along that did not fit the guidelines? Therefore, he did not support the amendment. Number 2035 REPRESENTATIVE ROBINSON said the language really did not make a lot of difference. Number 2041 REPRESENTATIVE PORTER suggested a friendly amendment to include the language "to a level up to" rather than "up to." Furthermore, he did not agree with a mandate but agreed more with encouraging a policy to try to get to reach this level. The new language would work towards that purpose. CHAIR JAMES called for a roll call vote. Representatives Ogan, Porter, Robinson, and Willis voted in favor of the friendly amendment. Representatives James, Green and Ivan voted against the friendly amendment. The friendly amendment passed. Number 2122 REPRESENTATIVE ROBINSON stated she did not agree with a mandate. She suggested a resolution or a letter through the House State Affairs Committee voicing its concerns. She would not hold the bill, however. Number 2150 CHAIR JAMES agreed with Representative Robinson. She reiterated she was disappointed that it was even an issue being discussed today. Number 2156 REPRESENTATIVE IVAN moved that CSHB 345(STA) (9-LS1179/C) move from the committee with individual recommendations and attached fiscal notes as amended. Representative Willis objected. A roll call vote was taken. Representatives James, Ogan, Green, Ivan and Porter voted in favor of the motion. Representatives Robinson and Willis voted against the motion. The bill was moved to the next committee of referral. HB 383 - REIMBURSE FOR LOCAL SERVICE TO INEBRIATES The next order of business to come before the House State Affairs Committee was HB 383. CHAIR JAMES called on Representative Ivan Ivan, sponsor of the bill. Number 2240 REPRESENTATIVE IVAN read the following sponsor statement into the record. "Widespread alcohol abuse not only damages Alaska's families and society, but also drains public coffers at an alarming rate. Local governments constantly struggle under the financial burden of their efforts to cope with alcohol problems. "Those problems include the many public inebriates evident in our municipalities. "Under AS 47.37.170, local police take into protective custody a person who appears to be intoxicated and incapacitated in a public place and place that person in an approved public treatment or detention facility. A licensed physician or other qualified health practitioner must then examine the inebriate as soon as possible. If the person if found to be incapacitated by alcohol, he or she is detained for no more than 48 hours in a health facility or for no more than 12 hours in a detention facility. Tremendous costs accrue to municipalities and public health facilities due to this program. "By two methods, House Bill 383 will reduce or eliminate the financial burden that local governments and public health facilities bear each year fulfilling this unfunded mandate. "First, the bill provides for direct state grants to municipalities and traditional village councils to reimburse them for the cost of dealing with inebriates. "Second, the bill gives local governments the power to set taxes on alcoholic beverages at whatever rate they want, regardless of whether or not they tax other sales. "To help defray the state's granting cost as well as closing the fiscal gap, reducing alcohol consumption and fighting crime, the bill raises the alcohol excise tax for the first time since 1983." REPRESENTATIVE IVAN further stated the bills that allowed for the increase in alcohol tax were originally sponsored by Representative Kay Brown, HB 96 and HB 97. He explained they had been incorporated into HB 383 to reimburse the municipalities. He reiterated the bill was trying to address the problems faced by municipalities when taking care of inebriates. It was a direct result of an argument between the community of Dillingham and Bristol Bay in his district of who should take care of the inebriates. Number 2397 CHAIR JAMES announced the House State Affairs Committee would only hear testimony today. There would not be any action taken on the bill, however. CHAIR JAMES called on the first witness via teleconference in Homer, Lois Irvin. Number 2397 LOIS IRVIN explained Homer had been trying to address this issue for the past year. There was a problem surrounding the use of a facility to hold the inebriates. Moreover, according to the bill there was also a funding issue involved. She expressed her support of HB 383. TAPE 96-40, SIDE B Number 0010 REPRESENTATIVE OGAN said alcohol was probably the single biggest problem for municipalities. He had mixed feelings about the bill, however. He did not really want to raise a tax. He wanted to hear from Representative Porter, as the former police chief, and the committee members further. He had been a member of a task force that tried to address this issue in the past. One suggestion was to abolish alcohol. He said that was not going to happen, but it was a strong suggestion indicating a strong problem. Number 0062 CHAIR JAMES said she was concerned because the symptom was being addressed and not the problem. This was a reoccurring issue in the United States. The proportion of alcohol was probably the best thing to adjust. Moreover, the problems of society were based on despair, unemployment, and hopelessness. Therefore, until a sufficient economic base and jobs were available, the problem would not be addressed. Therein lied the problem of government spending. She wondered if money should be appropriated to the core of the problems, or to the programs to help the symptoms. She said she did not have a solution, only a direction, and she was not sure if HB 383 was going in the same direction. Number 0128 REPRESENTATIVE ROBINSON said she supported HB 383, 100 percent. She explained Juneau increased the sales tax on alcohol, and the tax money went directly to the social service programs. She felt that every other community in the state should have the same option without having to fight it in court. Number 0152 REPRESENTATIVE PORTER said he had spent more time in his life considering the solutions to this problem compared to anybody else here. The unfortunate truth, however, was that the drinking problem in Juneau was not any different compared to any other community. If Juneau did not have a drinking problem, he would "sign up on this bill in a heartbeat." However, that was not the case. The only way to solve the problem was to create an attitude that made people want to stop drinking. The sobriety program aimed at the bush addressed this attitude. He explained he was sponsor of a bill that incorporated the sobriety program as part of state policy. There were a multitude of approaches - prohibition, increased taxation - but he was concerned about repeating history. He was reluctant to go down those roads again. Therefore, he would not greatly support HB 383. Number 0250 REPRESENTATIVE GREEN wondered what ever happened to the antabuse program? He asked if it was rendered unconstitutional? Number 0266 REPRESENTATIVE PORTER replied it was being used more frequently in sentencing practices now. Number 0279 REPRESENTATIVE IVAN said society was just scratching the surface of this problem. He explained, there were two other bills in the process, and a resolution, to look at establishing a statewide task force to address the issue further. CHAIR JAMES announced the bill would be held for a while in the committee. HB 371 - RIGHTS OF TERMINALLY ILL PERSONS The next order of business to come before the House State Affairs Committee was HB 371. CHAIR JAMES announced the House State Affairs Committee would only be hearing from those that were not able to testify on Thursday, March 21, 1996. CHAIR JAMES called on the first witness in Juneau, Michael Kirk. Number 0361 MICHAEL KIRK said those that heard him testify on the pension fund last week might wish today that he was terminally ill, and those that heard him testify today on the rights of the terminally ill might wish he were pensioned and retired. He stated, amongst the Eskimo people, the elders sacrificed their lives by their own free will through the cold and hunger. They were not considered suicidal but honored for their actions. The majority of people who requested to end their lives were doing so for their family and community. He said according to Scripture, greater love had no man than he or she sacrificed his life for the life of another. The truth was elusive to human beings, so he wondered when the experts lectured, what was the truth? He explained, soldiers, policemen, and firemen freely and willingly sacrificed their lives for others. Furthermore, fathers, mothers, siblings and even pets sacrificed their lives for others. According to health care practitioners, more money was spent on the last few days of the terminally ill, against their will, than what was spent on keeping the person healthy. He wondered if it was possible that the experts had another purpose than love, justice and truth. He maintained that purpose was possibly to impose their will onto the rest so that we could not exercise our free will. Please consider that today, he said. He thanked the committee members for their time. Number 0588 REPRESENTATIVE PORTER complimented Mr. Kirk on his testimony. He said it was a pure joy to listen to. He did not necessarily agree with everything he said, however. Number 0599 CHAIR JAMES said to Mr. Kirk he did a very good job of telling the committee members how he felt "from the bottom of your toes to the top of your head." She agreed with Mr. Kirk that religion was a personal contact with a higher power. It should not be imposed on others, however. The responsibility of the legislators was to balance the decisions of society and the constituents. It was difficult to vote against one's personal belief, and if it was impossible then one should not be a legislator. It was impossible to insulate a person from their religion, however. Number 0676 REPRESENTATIVE GREEN complimented Mr. Kirk on the use of the English language. CHAIR JAMES called on the next witness in Juneau, Dick Regan. Number 0698 DICK REGAN said he had long supported the concept of HB 371. He was anxious to see the bill move forward to the next committee of referral. He himself was a victim of an inoperable terminal illness. It was incidental to his interest in the bill, however. He believed it was a well drafted bill. It was conservatively drafted. The bill provided for the state regulations that were addressed in the opinion of the Ninth Circuit Court of Appeals. He thanked the committee members for their consideration of this issue. He reiterated he would like to see the bill moved to the next committee of referral. CHAIR JAMES called on the next witness in Juneau, Jay Livey, Department of Health and Social Services. Number 0811 JAY LIVEY, Deputy Commissioner, Office of the Commissioner, Department of Health and Social Services, presented a statement from the Administration. "The Administration supports HB 371 because an individual's decision to end one's life due to a terminal illness is intensely personal and one in which the government should not be involved." CHAIR JAMES called on the next witness in Juneau, Sid Heidersdorf. Number 0840 SID HEIDERSDORF, Representative, Alaskans For Life, said the organization was opposed to HB 371. He explained he had been to four hearing on this issue now, and quit a few people had testified that they were opposed to suicide, but were in favor of "death with dignity." He found that astonishing and disturbing because it was still suicide, a person was intentionally taking his own life or asking someone to assist him. This was indeed a physician assisted suicide bill. The recent decision by the court was not the last word, he suspected it would go to the Supreme Court. He asked the committee members to not "jump on the train" because maybe it was heading off the cliff. He asked the committee members to do what was right and not what might happen in the courts. He questioned the polls and the support of HB 371 due to the wording of the questions asked. Furthermore, the law was a teacher. He wondered what this law taught society? He replied it would teach society that suicide was morally acceptable. Suicide was a problem amongst the youth already. He called the bill terrible public policy. The supporters of HB 371 testified that they did not want other people's morals forced upon them. However, he believed this bill would affect the value system of society by involving the medical profession, health institutions and pharmacies. It was a terrible mistake to involve the doctors in killing in addition to healing. They should be limited to healing. This law would give physicians great power. He cited the country of Holland whereby the physicians were exercising their power and not the individuals. Moreover, this bill was one step from euthanasia. He called this entire issue a "slippery slope." He equated it to the Nazi concentration camps because the same logic was used. He believed those that were terminally ill deserved to have their pain managed and receive compassionate care. The law should be asking how the final days could be made better and not how to end one's life. He was offended by the term "death with dignity." It implied those that died without killing themselves died without any dignity. He asked the committee members to reject HB 371 not because of what it might lead to, but because of what it was. In conclusion, he read from a booklet in defense of euthanasia titled The Destruction of Life Devoid of Value, "the situation of imminent death is not being changed only the cause of death is being replaced by another cause which has the advantage of being painless. Legally speaking, this is no killing, only the changing of the cause of unavoidable death. In truth it is a pure healing action, the elimination of pain is also healing. This we have to conclude we are not dealing here with an established exception of the law, not to kill. We are not dealing here will an unlawful killing, but with an unprohibited human action carried out as a blessing for the suffering as a pain relief for the nearly dead since it is not done for the purpose of killing them, but to relieve suffering." The language he quoted was used as a rational for the basis of the Nazi killing programs. He said, "those who do not know history are forced to relive it." Number 1730 CHAIR JAMES announced the House State Affairs Committee would not be taking any action on this bill today. The issue would not go away, however. She felt society was already sliding down the slippery slope. Therefore, the legislature needed to determine how to slide down it with the least disastrous results. She believed the issue needed more time. She suggested talking to the people further before taking any action. Number 1779 REPRESENTATIVE PORTER asked Mr. Heider what his view was on the practice of the cessation of artificial life support? Number 1799 MR. HEIDER replied the organization believed that extraordinary means were not required. If the on-going practice of a community considered the use of artificial lungs, for example, as extraordinary care, then it was not required. He said that was dying from the disease which was vastly different than involving the health care profession in ending a person's life. Number 1860 REPRESENTATIVE OGAN thanked Mr. Heider for his testimony. He explained his wife had been a health care professional for many years. She had held the hand of more than one person who expired. He said there would be an exodus of health care workers from the field, if they were forced to participate in this type of activity. It took a very special person to have a job that dealt with death. He had the highest respect for those that dealt with it. He felt, philosophically, that society placed a low value on life and cited abortion as an example. He said, it further degraded human life, if it was decided it was appropriate to take the life of someone that had a few less days than the rest of us. We were all terminal. Furthermore, he was concerned about the message this bill was sending to society. It was the highest calling as a legislature to protect the sanctity of life. Number 2032 MR. HEIDER said the bill, of course, provided for a conscientious objection as a safeguard. He encouraged the committee members to read the handout titled, "International Anti-Euthanasia Task Force" fact sheet. He said the safeguards according to the fact sheet became meaningless in Holland. Number 2116 REPRESENTATIVE ROBINSON asked Chair James what the plan was for the bill? CHAIR JAMES replied she did not have an immediate plan. She was not ready to deal with the issue today, however, because there were many unanswered questions. HJR 47 - AK NAT'L GUARD YOUTH CORPS CHALLENGE PROG The next order of business to come before the House State Affairs Committee was HJR 47. CHAIR JAMES called on Representative Tom Brice, sponsor of HJR 47. Number 2216 REPRESENTATIVE TOM BRICE explained HJR 47 showed legislative support for the Alaska National Guard Youth Corps ChalleNGe Program. It was funded 100 percent by the federal government and just received a budget cut of $600,000. The cut would dramatically reduce its ability to continue to help as many youth as it had in the past. Therefore, HJR 47 asked that Congress continue the funding. He explained the ChalleNGe Program was designed for the youth at-risk, the youth that had dropped out of school, and the youth that had been identified as a criminal risk and offered them a 22 month course to allow them to develop or to complete their General Education Degree (GED). The program gave them a small stipend at the end to be used for furthering their education. He cited there was about an 85 percent success rate. In conclusion, he called HJR 47 a timely resolution; it was time to consider the actions in Washington D.C. Moreover, it was a program that addressed the problems of juvenile justice in a broad fashion. He would be happy to answer any questions of the committee members. TAPE 96-41, SIDE A Number 0013 REPRESENTATIVE OGAN said he was very impressed with the program. He said one of his legislative assistants had a child in the program which turned his behavior around. He said this program was a proactive approach rather than a reactive approach. He announced he would sign on as a cosponsor. REPRESENTATIVE BRICE replied, "thank you." CHAIR JAMES called on the first witness via teleconference in Anchorage, Carla Pettigrew. Number 0110 CARLA PETTIGREW explained her son was in the program, Andy Penman. She said Andy used drugs and did not stay in school. Andy agreed to enter the program. She was very proud of him today, he was a very successful human being upon leaving the program. He obtained his GED and his life skills improved tremendously. He was currently employed by a hotel in Anchorage. His self-confidence also increased as a result of the program. He turned into a leader instead of remaining a follower. She asserted without the program she strongly believed her son would have been a ward of the state at some point. She contributed the success of the program to its military structure and its ability to bring out the best of an individual. She strongly supported HJR 47. CHAIR JAMES called on the next witness via teleconference in Anchorage, Andy Penman. Number 0359 ANDY PENMAN said the Alaska National Guard Youth Corps ChallENge Program had taught him more about life compared to any other place. It also taught him initiative, self-confidence, and respect for others. The program made him think about a lot of things. He explained the first stage, hard core, was spent in the woods. The second stage was in the classroom. He participated on a drill team that won second place in a competition. Furthermore, a bond was established with the other classmates that could not be broken by anything. The awards he won meant a lot to him, but he valued what he learned more. Number 0580 REPRESENTATIVE PORTER said he was familiar with the program. It might not be the appropriate approach for everyone, but it was appropriate for many. It had produced singularly exceptional results. He suggested, for inspiration, to see the kids before and after the program. After the program, the kids were together, inspired and motivated. The program provided the same results as basic training; the feeling of an accomplishment in the end. Number 0679 REPRESENTATIVE GREEN explained he had seen the kids before and after the program. The transformation was incredible. Some even lost their addictions during the program. Number 0748 REPRESENTATIVE BRICE suggested amending the language on page 1, line 5, to read "nearly 200" based on recent information he just received from his staff. REPRESENTATIVE GREEN moved that on page 1, line 5, delete the language "more than 136" and insert the language "nearly 200." (Amendment 1) Hearing no objection, it was so moved. Number 0800 REPRESENTATIVE ROBINSON moved that CSHJR 47(STA) (9-LS1035/C) be adopted for consideration. Hearing no objection, it was so adopted. Number 0834 REPRESENTATIVE ROBINSON moved that CSHJR 47(STA) (9-LS1035/C) move from the committee with individual recommendations and attached fiscal notes, as amended. Hearing no objection, it was so moved from House State Affairs Committee. HB 546 - G.O. BONDS: SCHOOLS & UNIV. The next order of business to come before the House State Affairs Committee was HB 546. CHAIR JAMES announced HB 546 was a House State Affairs Committee bill, but it was similar to a bill by Representative Jerry Mackie, so he would present the introduction. Number 0884 REPRESENTATIVE JERRY MACKIE explained several weeks ago he introduced HB 507 on the last day of the deadline because bonding was important to consider for school construction issues. It was discovered since then that there simply was not enough money in the capital budget to fund maintenance for public schools. Therefore, a creative approach was needed. He asked Chair James to agree to work with him to address this issue. He said a committee backing was needed to get the attention that this issue was warranted. He referred the committee members to the handout titled, "Legislative Proposal Relating to Statewide School Major Maintenance and Construction" He explained it was prepared by the Southeast Regional Resource Center (SERRC), an education group that provided technical and professional assistance to school districts around the state. The resource center outlined the critical needs in the state and the possible ways to accomplish this. He referred the committee members to page 2, and read some of the recommended criteria, "health and life safety of students, structural preservation...." The current process of the Department of Education (DOE) was flawed according to any school district, unless it was number one on the list. The urban communities did not provide equity and parity to those areas, and it was heavily weighted to the rural areas. House Bill 546 contained DOE's entire list for 1996, word for word; and dollar for dollar. It was a place to start. However, he felt there was not equity in this bill for Southcentral, Anchorage, Kenai Peninsula, or Mat-Su communities. There was about $80 million to $90 million for the Fairbanks region. The bill was heavily weighted to the rural areas. According to the DOE, that was where most of the maintenance and new construction was needed. He introduced the bill knowing and understanding that there was not equity, but it was a place to start. He suggested looking at criteria such as what was offered by SERRC to determine how to equalize the bill. He explained he sent a letter to the caucus leaders in the various regions of concern to ask them what it would take to achieve equity. He said to move through the legislature a bill needed to be equitable to all areas of the state. Furthermore, before the people would approve a bond initiative it would have to have fairness and equity as well. He said, "please do not be alarmed at the current structure of the list now." He would be the first to admit it needed a lot of work. He suggested looking at the Anchorage School District and its current bond debt program as a possible solution. Furthermore, there were many rural schools that did not need to be on the list because some were more critical than others. That was the case throughout the state. He reiterated a criteria was needed to determine which schools were more critical than others. He said he was wide open to come up with a solution. He said this was a billion dollar problem, including the University of Alaska facilities, so it would be hard to scratch the surface, unless a creative approach was taken such as bonding. The current market for bonds was favorable. Interest rates were low, the debt was consistently going down, so the time was now to look at bonding. The Administration also felt it was an excellent time. In conclusion, there was a big maintenance problem throughout the state that needed to be addressed, or it would cost the state more money in the future to repair if it was left unattended now. Number 1345 REPRESENTATIVE ROBINSON agreed with the direction of HB 546, 100 percent. She was concerned about the maintenance and school needs that were left unattended. She wondered what would happen to the existing groups that were already in the capital budget. Would they move forward, or be taken out of the budget? Number 1370 REPRESENTATIVE MACKIE said there were one or two schools budgeted for new construction, and four or five budgeted for major maintenance. They were included in the bill because they were high on the Administration's priority list. That money, perhaps, could be taken from the capital budget. If there was bi-partisan support for this bill those schools would not need to be a part of the capital budget because they would participate under the criteria ranking as all the other schools in the state. Number 1404 REPRESENTATIVE ROBINSON wondered what would happen if the bond issue was not supported by the people. How would that affect the schools in the current capital budget? She was looking out for the schools in her district. Number 1445 REPRESENTATIVE MACKIE said he would be concerned also if that was the situation in his district as well. The initiative would go to the ballot in November and become effective next year. Therefore, the current schools in the capital budget would probably not be affected. He said he was looking at the bigger problem throughout the state, but he reiterated he understood the position of Representative Robinson. It would have to be dealt with appropriately. Number 1473 REPRESENTATIVE ROBINSON wondered about the new needs in the communities that had not been forwarded to the Department of Education. Number 1497 REPRESENTATIVE MACKIE said the reality was that the $1 billion in need would probably turn into $2 billion in need, if it appeared the bill was to move forward. He believed the most critical needs were identified in the bill right now, however, because it was hard to believe that the DOE would not know about the critical needs in the communities. It was such a big issue in the state right now due to a lack of attention from previous Administrations, that the bonding approach was the only way to address the problems. Number 1583 REPRESENTATIVE GREEN stated there were some schools in Anchorage that should be on the list in HB 546. The kids were skirting around puddles on the floor from leaking roofs in some schools, for example. He asked Representative Mackie if the British Petroleum Settlement had been used up? He also wondered if the money had been misappropriated. He stated he championed the idea of the bill. Number 1617 REPRESENTATIVE MACKIE replied a number of the Majority's schools were taken care of during the settlement four years ago. It did take care of a lot of the problems, but there were still major maintenance problems and new construction needs. He cited a school in Craig that was built for 110 students of which 400 students were attending the school. That was just one example of the many. Every district could point to a problem that existed. Number 1674 REPRESENTATIVE GREEN wondered if Representative Mackie knew the amount that was allocated to the schools from the settlement. He further wondered if there was a chance that the money would be siphoned off. Number 1692 REPRESENTATIVE MACKIE said the amount was approximately $200 million in the form of direct grants to the districts for their construction projects. The money did take care of the identified projects. He did not see how it could have be misappropriated, however, because the problems were so critical. Number 1738 REPRESENTATIVE PORTER said he took offense that the majority benefited from the settlement money while the minority did not. He asserted that was not the case. Furthermore, direct grants probably could not be mismanaged assuming it was justifiable in the first place. However, if the University of Alaska was included in the bond project, specific language was needed. He explained money had been appropriated before to the university for a specific purpose but was never used for that purpose. He asked Representative Mackie what would the debt service requirement be for the state? Number 1800 REPRESENTATIVE MACKIE said the DOE was reluctant to provide that information because it was currently working on a bond proposal for the Administration for prisons. He explained it would depend on the final number for the schools which ranged from $8 million to $30 million depending on the number of schools. More information would be available at the next scheduled hearing. Number 1845 CHAIR JAMES said it was obvious after numerous discussions with individuals regarding this issue that many of the larger districts probably had not submitted projects knowing full well that they would not be funded. She suggested an allocation process based on an estimated need for each district. She said in the Fairbanks area that would be difficult, however, because it was an active community. Moreover, in 1993, $20 million of the approximately $173 million spent on schools, went to the Fairbanks Northstar Borough School District along with a bonding package of which the state would pay 70 percent of a bond. The school district in Fairbanks went to the people twice with bond projects and each time it was turned down. It was called the "$65 million high school" discussion in 1993. A future vote was in the works in May of this year. She felt it would be passed or the money would be lost to another district. She agreed the DOE process was not equitable. She believed in more local control. Number 2080 REPRESENTATIVE MACKIE stated he did mean any disrespect regarding his comment about the Majority. The urban areas did not receive the money nor was the DOE's list followed. It was widely acknowledged it was not a fair process. Therefore, the committee process was selected to ensure a fair process. Furthermore, he did not believe the DOE's process was flawed or unfair. The department looked at the current needs. He felt an allocation system to the various school districts was unfair because most rural communities did not have the ability to bond. The only solution he could think of was a critical needs analysis using an objective criteria rather than a political criteria. He did not have all the answers, however, but stated the best way was to include all the regions. He explained the Department of Education was required by law to defend its list in HB 546. The dollar amount could be used, according to the DOE, and the legislature could determine the disparity allocating the additional money needed, for example. Number 2253 CHAIR JAMES said everything that had been applied to the state for was in the list in HB 546. That, however, was not all the needs. She reiterated there were some areas that probably did not submit anything because they felt like there was not a need. Number 2267 REPRESENTATIVE IVAN said he was confused about the final list of the DOE. He explained there was a prior list. He asked for clarification. Number 2281 CHAIR JAMES replied she had been trying to determine that herself. Moreover, she felt this would have to be a political decision because every decision made in Juneau was a political decision. It was a dream to assume that any other type of decision would be made. There was a political reality to this issue. Number 2327 REPRESENTATIVE MACKIE said he did not disagree with Chair James. He said the areas that were not equalized needed to be addressed in HB 546 politically, and not according to the DOE's list. He felt it was necessary to look at the list and use the numbers while looking at the other inequities around the state to come up with a package that would pass the legislature and the voters. The only way to reach that was through equity. Number 2350 ADJOURNMENT CHAIR JAMES adjourned the House State Affairs Committee meeting at 10:23 a.m.