Legislature(2003 - 2004)

05/13/2003 08:09 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                          May 13, 2003                                                                                          
                           8:09 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Bruce Weyhrauch, Chair                                                                                           
Representative Jim Holm, Vice Chair                                                                                             
Representative Nancy Dahlstrom                                                                                                  
Representative Bob Lynn                                                                                                         
Representative Paul Seaton                                                                                                      
Representative Harry Crawford                                                                                                   
Representative Max Gruenberg                                                                                                    
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 295                                                                                                              
"An  Act relating  to the  publishing and  furnishing of  certain                                                               
public notices  regarding regulations  or rules of  certain state                                                               
agencies; relating  to distribution of the  Alaska Administrative                                                               
Code,  Alaska Administrative  Register,  and  supplements to  the                                                               
code or register; and providing for an effective date."                                                                         
     - MOVED CSHB 295(STA) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 312                                                                                                              
"An Act  giving notice of  and approving  the entry into  and the                                                               
issuance of  certificates of  participation for  a lease-purchase                                                               
agreement  for a  seafood and  food  safety laboratory  facility;                                                               
relating  to the  use of  certain investment  income for  certain                                                               
construction costs; and providing for an effective date."                                                                       
     - HEARD AND HELD                                                                                                           
HOUSE BILL NO. 228                                                                                                              
"An  Act relating  to state  employees who  are called  to active                                                               
duty as reserve  or auxiliary members of the armed  forces of the                                                               
United States; and providing for an effective date."                                                                            
     - MOVED CSHB 228(MLV) OUT OF COMMITTEE                                                                                     
HOUSE BILL NO. 272                                                                                                              
"An Act relating to motor vehicle dealers."                                                                                     
     - HEARD AND HELD                                                                                                           
HOUSE JOINT RESOLUTION NO. 27                                                                                                   
Relating to support for a federal appropriation for expansion of                                                                
the Anchorage Jail.                                                                                                             
     - SCHEDULED BUT NOT HEARD                                                                                                  
HOUSE BILL NO. 149                                                                                                              
"An  Act requiring  nonprofit corporations  under the  Alaska Net                                                               
Income  Tax  Act  to  provide prior  public  notice  of  lobbying                                                               
expenditures  and an  annual report  of lobbying  expenditures to                                                               
the  Department of  Revenue; providing  for a  civil penalty  for                                                               
failure to  provide the  notice; and  providing for  an effective                                                               
     - SCHEDULED BUT NOT HEARD                                                                                                  
PREVIOUS ACTION                                                                                                               
BILL: HB 295                                                                                                                  
SHORT TITLE:REGULATIONS: NOTICE AND DISTRIBUTION                                                                                
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
Jrn-Date   Jrn-Page                     Action                                                                                  
05/01/03     1236       (H)        READ THE FIRST TIME -                                                                        
05/01/03     1236       (H)        TRA, FIN                                                                                     
05/01/03     1236       (H)        FN1: INDETERMINATE(GOV/ALL                                                                   
05/01/03     1236       (H)        GOVERNOR'S TRANSMITTAL LETTER                                                                
05/01/03     1246       (H)        STA REPLACES TRA REFERRAL                                                                    
05/07/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
05/07/03                (H)        Heard & Held                                                                                 
05/07/03                (H)        MINUTE(STA)                                                                                  
05/07/03                (H)        MINUTE(STA)                                                                                  
05/09/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
05/09/03                (H)        Scheduled But Not Heard                                                                      
                                   Meeting postponed to a call                                                                  
                                   of the Chair                                                                                 
05/13/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
BILL: HB 312                                                                                                                  
SHORT TITLE:SEAFOOD AND FOOD SAFETY LABORATORY                                                                                  
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
Jrn-Date   Jrn-Page                     Action                                                                                  
05/08/03     1477       (H)        READ THE FIRST TIME -                                                                        
05/08/03     1477       (H)        STA, FIN                                                                                     
05/08/03     1477       (H)        FN1: (DEC)                                                                                   
05/08/03     1477       (H)        GOV. TRANSMITTAL LETTER                                                                      
05/09/03     1521       (H)        GOV. TRANSMITTAL LETTER                                                                      
05/13/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
BILL: HB 228                                                                                                                  
SHORT TITLE:STATE EMPLOYEES CALLED TO MILITARY DUTY                                                                             
SPONSOR(S): REPRESENTATIVE(s) KERTTULA                                                                                          
Jrn-Date   Jrn-Page                     Action                                                                                  
03/31/03     0712       (H)        READ THE FIRST TIME -                                                                        
03/31/03     0712       (H)        MLV, STA, FIN                                                                                
04/07/03     0831       (H)        COSPONSOR(S): LYNN                                                                           
04/15/03                (H)        MLV AT 3:00 PM CAPITOL 124                                                                   
04/15/03                (H)        Heard & Held                                                                                 
04/15/03                (H)        MINUTE(MLV)                                                                                  
04/16/03     1018       (H)        COSPONSOR(S): GARA                                                                           
04/24/03                (H)        MLV AT 3:00 PM CAPITOL 120                                                                   
04/24/03                (H)        -- Meeting Canceled --                                                                       
05/01/03                (H)        MLV AT 3:00 PM CAPITOL 120                                                                   
05/01/03                (H)        Moved CSHB 228(MLV) Out of                                                                   
                                   Committee -- Recessed to a                                                                   
                                   call of the Chair --                                                                         
05/01/03                (H)        MINUTE(MLV)                                                                                  
05/02/03     1273       (H)        MLV RPT CS(MLV) NT 4DP 2NR                                                                   
05/02/03     1273       (H)        DP: DAHLSTROM, CISSNA,                                                                       
05/02/03     1273       (H)        LYNN; NR: MASEK, WEYHRAUCH                                                                   
05/02/03     1274       (H)        FN1: ZERO(MVA)                                                                               
05/02/03     1274       (H)        FN2: INDETERMINATE(ADM/ALL                                                                   
05/09/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
05/09/03                (H)        Scheduled But Not Heard                                                                      
                                   Meeting postponed to a call                                                                  
                                   of the Chair                                                                                 
05/13/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
BILL: HB 272                                                                                                                  
SHORT TITLE:MOTOR VEHICLE DEALERS                                                                                               
SPONSOR(S): REPRESENTATIVE(s) WEYHRAUCH                                                                                         
Jrn-Date   Jrn-Page                     Action                                                                                  
04/16/03     1009       (H)        READ THE FIRST TIME -                                                                        
04/16/03     1009       (H)        L&C, STA                                                                                     
04/28/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
04/28/03                (H)        Scheduled But Not Heard                                                                      
04/30/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
04/30/03                (H)        Scheduled But Not Heard                                                                      
05/01/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
05/01/03                (H)        Scheduled But Not Heard --                                                                   
                                   Recessed to Mon. 5/5 8:00 AM                                                                 
05/05/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
05/05/03                (H)        Heard & Held                                                                                 
05/05/03                (H)        MINUTE(L&C)                                                                                  
05/07/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
05/07/03                (H)        <Bill Hearing Postponed to                                                                   
                                   Fri. 5/9/3>                                                                                  
05/09/03                (H)        L&C AT 3:15 PM CAPITOL 17                                                                    
05/09/03                (H)        Moved CSHB 272(L&C) Out of                                                                   
05/09/03                (H)        MINUTE(L&C)                                                                                  
05/12/03     1560       (H)        L&C RPT CS(L&C) 6DP 1AM                                                                      
05/12/03     1560       (H)        DP: LYNN, GATTO, CRAWFORD,                                                                   
05/12/03     1560       (H)        ROKEBERG, ANDERSON; AM:                                                                      
05/12/03     1560       (H)        FN1: ZERO(LAW)                                                                               
05/13/03                (H)        STA AT 8:00 AM CAPITOL 102                                                                   
WITNESS REGISTER                                                                                                              
DEBORAH BEHR, Assistant Attorney General                                                                                        
Legislation & Regulations Section                                                                                               
Civil Division (Juneau)                                                                                                         
Department of Law                                                                                                               
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 295 on behalf of the governor.                                                                
ERNESTA BALLARD, Commissioner                                                                                                   
Department of Environmental Conservation                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 312 on behalf of the governor.                                                                
DEVEN MITCHELL, Debt Manager                                                                                                    
Treasury Division                                                                                                               
Department of Revenue                                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Provided information with regard to the                                                                    
fiscal aspects of HB 312.                                                                                                       
KRISTIN RYAN, Acting Director                                                                                                   
Division of Environmental Health                                                                                                
Department of Environmental Conservation                                                                                        
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  During discussion of HB 312, answered                                                                      
DAVID WETZEL, Laboratory Manager                                                                                                
Analytica Alaska                                                                                                                
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified on HB 312.                                                                                       
JULIE DECKER, Executive Director                                                                                                
Southeast Alaska Regional Dive Fisheries Association                                                                            
Wrangell, Alaska                                                                                                                
POSITION STATEMENT:  Testified in support of HB 312.                                                                            
RODGER PAINTER, Vice President                                                                                                  
Alaska Shellfish Growers Association                                                                                            
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Testified in support of HB 312.                                                                             
JULI LUCKY, Staff                                                                                                               
to Representative Beth Kerttula                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 228 on behalf of the sponsor.                                                                 
JOHN CRAMER, Director                                                                                                           
Administrative Services Division                                                                                                
Department of Military & Veterans' Affairs                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  During discussion of HB 228, answered                                                                      
LINDA SYLVESTER, Staff                                                                                                          
to Representative Bruce Weyhrauch                                                                                               
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented CSHB 272(L&C) on behalf of                                                                       
Representative Weyhrauch, sponsor of HB 272.                                                                                    
JIM ARPINO                                                                                                                      
Fairbanks, Alaska                                                                                                               
POSITION  STATEMENT:   Testified  on  behalf  of Affordable  Used                                                               
Cars, a company  in both Fairbanks and Anchorage,  Alaska, to ask                                                               
the committee's help in keeping the free trade of used vehicles.                                                                
TERI PETRAM                                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:   Testifying  on behalf  of Lyberger's  Car &                                                               
Truck Sales, LLC,  asked the committee to remove Section  1 of HB
272 or modify its language.                                                                                                     
ACTION NARRATIVE                                                                                                              
TAPE 03-61, SIDE A                                                                                                            
Number 0001                                                                                                                     
CHAIR  BRUCE WEYHRAUCH  called the  House State  Affairs Standing                                                             
Committee meeting  to order at  8:09 a.m.   Representatives Holm,                                                               
Seaton, Dahlstrom, Lynn, Crawford,  and Weyhrauch were present at                                                               
the  call to  order.   Representative  Gruenberg  arrived as  the                                                               
meeting was in progress.                                                                                                        
HB 295-REGULATIONS: NOTICE AND DISTRIBUTION                                                                                   
CHAIR WEYHRAUCH announced that the  first order of business would                                                               
be HOUSE  BILL NO. 295,  "An Act  relating to the  publishing and                                                               
furnishing  of certain  public notices  regarding regulations  or                                                               
rules of certain state agencies;  relating to distribution of the                                                               
Alaska Administrative  Code, Alaska Administrative  Register, and                                                               
supplements  to  the  code  or register;  and  providing  for  an                                                               
effective date."                                                                                                                
Number 0340                                                                                                                     
DEBORAH   BEHR,  Assistant   Attorney   General,  Legislation   &                                                               
Regulations Section, Civil Division  (Juneau), Department of Law,                                                               
highlighted that there will be  some cost savings associated with                                                               
HB 295, as reflected in the  fiscal note.  The legislation allows                                                               
all agencies to  use an abbreviated newspaper  notice rather than                                                               
the detailed  notice.  Furthermore,  the legislation  allows [the                                                               
department]  to  furnish,  upon request,  electronic  notice  for                                                               
certain  [documents].   The legislation  also allows  the on-line                                                               
public notice system as the  primary means for giving information                                                               
for  certain  "business and  commerce  programs."   Finally,  the                                                               
legislation would  require that local governmental  entities that                                                               
want copies  of regulations have  to request  a copy and  pay for                                                               
the  cost of  it.   The cost  to local  governmental entities  is                                                               
estimated  to  be less  than  $600.    Ms.  Behr noted  that  the                                                               
aforementioned   information   is   already  available   on   the                                                               
Department of Law's homepage.                                                                                                   
MS. BEHR, in response to  Chair Weyhrauch, explained that the on-                                                               
line  public  notice  system  is  geared  toward  businesses  and                                                               
industries and thus  if there was the need to  go to court, there                                                               
would  be  no dispute  that  these  folks  have computers.    She                                                               
pointed  out that  the  longevity bonus  and  the permanent  fund                                                               
dividend aren't  on the on-line  public notice system  because it                                                               
would be difficult to ascertain  that those groups have access to                                                               
a computer.   Therefore, the legislation is a  pilot project that                                                               
is limited to business and commerce programs.                                                                                   
Number 0615                                                                                                                     
CHAIR WEYHRAUCH  turned to  Section 13  regarding the  failure to                                                               
furnish notice.   He related his understanding that  if the state                                                               
is found  to have failed  to furnish  notice, the state  would be                                                               
held harmless.                                                                                                                  
MS. BEHR  pointed out that the  provision in Section 13  has been                                                               
in  existing law  since the  Administrative Procedures  Act (APA)                                                               
was enacted.   She explained that if an  individual requests that                                                               
a state  agency mail him/her  a notice  of a regulation,  but for                                                               
some reason the  individual doesn't receive the notice.   In that                                                               
case, the  entire regulation project  doesn't fail  because there                                                               
was general notice  from the newspaper and/or  the on-line public                                                               
notice system.  Therefore, the  language refers to the individual                                                               
not receiving the notice that he/she requested.                                                                                 
Number 0733                                                                                                                     
REPRESENTATIVE SEATON  said that he  doesn't have a  problem with                                                               
the change in the  way in which the notice is  done.  However, he                                                               
asked if anything  in this legislation reduces  or eliminates the                                                               
notice requirement for regulations.                                                                                             
MS. BEHR  replied no and  specified that this  legislation merely                                                               
makes  the on-line  public  notice system  the  primary means  of                                                               
notice  for those  business programs  previously described.   The                                                               
same information will  continue to be provided,  although it will                                                               
be in a different format.   In further response to Representative                                                               
Seaton,  Ms.  Behr confirmed  that  nothing  in this  legislation                                                               
changes  the length  of notice.   Currently,  a commissioner  can                                                               
adopt a regulation 30 days after giving notice in the newspaper.                                                                
Number 0830                                                                                                                     
REPRESENTATIVE  HOLM  turned  to  the change  in  Section  3  and                                                               
inquired as to  why the language "each judicial  district of" was                                                               
MS.  BEHR explained  that if  notice is  given in  one newspaper,                                                               
then [the notice has to be  given in] one judicial district.  She                                                               
further  explained that  she would  advise [the  Alaska Teachers'                                                               
Retirement Board]  that it has  to choose a newspaper  of general                                                               
circulation  that's available  throughout the  state.   She noted                                                               
that  the  teachers' retirement  law  in  this  state has  to  be                                                               
uniform,  and  therefore  one newspaper  of  general  circulation                                                               
would be chosen for the notice.   From her 11 years of regulation                                                               
experience,  she  related  that  most people  find  their  notice                                                               
through   individual  mailings   or  professional   associations.                                                               
Generally,  newspaper notice  isn't the  best notice  for people,                                                               
although it helps with regard to legal notice.                                                                                  
CHAIR  WEYHRAUCH  asked if  there  would  be any  deference  with                                                               
having notices published only in the Anchorage newspaper.                                                                       
MS. BEHR  explained that the  "newspaper of  general circulation"                                                               
is a  floating standard,  and therefore  the courts  would review                                                               
what is  appropriate under  the circumstances.   For  example, if                                                               
the notice was  regarding Sitka or Juneau  fishing, the newspaper                                                               
of  general  circulation  may  be  the  Juneau  newspaper.    She                                                               
clarified that nothing  in this legislation or  current law would                                                               
result in  [using] one newspaper.   In further response  to Chair                                                               
Weyhrauch  regarding  a  definition   of  "newspaper  of  general                                                               
circulation", Ms. Behr  said that there is case law.   There have                                                               
been cases  in the  zoning area,  although there  has not  been a                                                               
test  case   on  "newspaper  of   general  circulation"   in  the                                                               
regulations area.  She agreed  with Chair Weyhrauch in that there                                                               
is some discretion  given to the agency with regard  to where the                                                               
notice is published.                                                                                                            
Number 1012                                                                                                                     
REPRESENTATIVE LYNN  inquired as  to the section  of HB  295 that                                                               
relates to the longevity bonus.                                                                                                 
MS.  BEHR  clarified that  nothing  in  the legislation  directly                                                               
impacts  the longevity  bonus program.   She  explained that  the                                                               
longevity bonus program  isn't a program that would  be chosen to                                                               
go to electronic  [notices] because she didn't  believe she could                                                               
go  to  a judge  and  say  that everyone  in  the  program has  a                                                               
REPRESENTATIVE SEATON turned to the  matter of the web site being                                                               
available for documentation of notice.   He asked if the log site                                                               
is archived every day or is a printed copy kept as a record.                                                                    
MS.  BEHR answered  that the  Office of  the Lieutenant  Governor                                                               
operates the  Alaska On-Line Public  Notice System, which  has an                                                               
archival feature.   However, if HB 295 passes, Ms.  Behr said she                                                               
will give training  to state agencies specifying  that they print                                                               
off the notices and do an affidavit at that time.                                                                               
Number 1120                                                                                                                     
REPRESENTATIVE CRAWFORD remarked that  he liked the streamlining,                                                               
although he  has a  lot of  trepidation that  there will  be less                                                               
notice for oil  and gas and pipeline regulation.   He charged the                                                               
department to  do its best  to ensure that people  receive notice                                                               
as they should.                                                                                                                 
CHAIR WEYHRAUCH  commented that people  have used  newspapers for                                                               
public  notice  information and  advise  for  centuries.   Public                                                               
notice  is a  critical component  of the  public's right  to know                                                               
what government is doing.   He indicated his belief that everyone                                                               
in the  legislature desires public notice  regarding government's                                                               
MS. BEHR said that's true and  noted that the statutes are framed                                                               
in that  manner.   Any important  action requires  public notice,                                                               
she said.                                                                                                                       
REPRESENTATIVE SEATON  moved to  report HB  295 out  of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
REPRESENTATIVE GRUENBERG  objected and  offered [Amendment  1] as                                                               
follows [original punctuation provided]:                                                                                        
      Delete section 27(page 12, line 29 through page 13,                                                                       
     lines 5)                                                                                                                   
REPRESENTATIVE GRUENBERG explained that  Section 27 addresses the                                                               
setting  of  rates  for  service   providers  and  thus  involves                                                               
[regulations related to] adult  public assistance, temporary cash                                                               
assistance,  and  services  for  needy families.    He  expressed                                                               
concern  that   there  will  be   less  public  notice   for  the                                                               
aforementioned types of regulations that impact many people.                                                                    
MS. BEHR,  in response to  Chair Weyhrauch, said that  she didn't                                                               
now  whether such  an  amendment would  change  the fiscal  note,                                                               
although   she  didn't   anticipate  that   it  would   have  any                                                               
significant  impact.   Ms. Behr  explained that  [Section 27]  is                                                               
only related  to rate  setting of  facilities, such  as hospitals                                                               
and nursing homes.  The  Medicaid rate executive director assured                                                               
her  that   these  programs  have  ready   access  to  computers.                                                               
Historically, those  who attend  the public hearings  and comment                                                               
on rate setting are facility representatives.                                                                                   
REPRESENTATIVE GRUENBERG asked if  any representatives of clients                                                               
or client groups have shown any interest in these rates.                                                                        
MS. BEHR replied yes and informed  the committee that in the past                                                               
Alaska Legal  Services has  been a  strong advocate  for indigent                                                               
people.    However, she  couldn't  recall  whether [Alaska  Legal                                                               
Services]  has  been  involved  at the  level  of  rate  setting,                                                               
although  she  said it  has  been  very  active  in the  area  of                                                               
REPRESENTATIVE GRUENBERG  expressed concern if there  is a change                                                               
in a  facility in one part  of the state and  the [public notice]                                                               
is  provided  in  a  newspaper  in  another  location.    In  the                                                               
aforementioned situation,  the client groups may  not receive the                                                               
CHAIR WEYHRAUCH  recalled that in  such a situation,  the failure                                                               
of the  agency to  provide notice to  an interest  group wouldn't                                                               
void the action the administrative agency took.                                                                                 
MS.  BEHR  agreed  and  pointed out  that  most  interest  groups                                                               
receive  notice  in  several  forms,  such  as  direct  mailings.                                                               
Furthermore, most of  the departments do a good  job on advocacy,                                                               
such  as having  town  hall meetings  or  meetings with  interest                                                               
groups.  Also,  the hospital association is a  strong advocate of                                                               
this.  Again,  all that [Section 27] does is  make on-line public                                                               
notice the primary means of receiving notice.                                                                                   
REPRESENTATIVE GRUENBERG  asked if Ms.  Behr could say  that none                                                               
of the  client groups of  which she  is aware would  be adversely                                                               
impacted if Section 27 was left in HB 295.                                                                                      
MS. BEHR replied  that she didn't believe anyone  could say that.                                                               
In her experience,  especially in the health  and social services                                                               
area, people  who need  the services  are so  busy trying  to get                                                               
their lives together that they  aren't the group that comments on                                                               
Number 1591                                                                                                                     
REPRESENTATIVE   GRUENBERG  maintained   his   motion  to   adopt                                                               
Amendment 1.                                                                                                                    
REPRESENTATIVE HOLM objected.                                                                                                   
REPRESENTATIVE LYNN  objected and  said he couldn't  imagine that                                                               
anyone  [Section 27]  would apply  to would  fail to  receive the                                                               
notice they  should have.   He expressed  the need  to streamline                                                               
[the public notice process].                                                                                                    
CHAIR WEYHRAUCH turned  attention to the new  language in Section                                                               
27  on page  13, lines  2-5.   He  asked if  that language  means                                                               
requirement for publication on the state's web page.                                                                            
MS.   BEHR  pointed   out   that  the   qualifier   is  the   [AS                                                               
44.62].190(a)(7).    She  informed  the committee  that  the  APA                                                               
contains an  odd provision.   For example,  if there is  a mining                                                               
journal, it  may be  the newspaper of  general circulation.   She                                                               
mentioned that this is a provision of law that's rarely used.                                                                   
Number 1735                                                                                                                     
REPRESENTATIVE  SEATON surmised  that regulations  to which  this                                                               
pertains  don't have  anything to  do with  the services  for the                                                               
facilities but the rates of reimbursement to the facilities.                                                                    
MS.  BEHR related  her  understanding that  it's  limited by  the                                                               
sites that  are specified.   She noted  that much care  was taken                                                               
not  to  move  into  the eligibility  of  welfare  or  individual                                                               
services because not  everyone in the state has  a home computer.                                                               
The  legislation is  designed  to  speak to  business-to-business                                                               
commerce, which includes hospitals.                                                                                             
CHAIR WEYHRAUCH  reminded the  committee of  the motion  to adopt                                                               
Amendment 1 and the objections to it.                                                                                           
A  roll   call  vote  was   taken.     Representatives  Crawford,                                                               
Gruenberg, Seaton, and  Weyhrauch voted in favor  of Amendment 1.                                                               
Representatives  Lynn,  Holm,  and Dahlstrom  voted  against  it.                                                               
Therefore, Amendment 1 was adopted by a vote of 4-3.                                                                            
Number 1845                                                                                                                     
REPRESENTATIVE SEATON moved to report  HB 295, as amended, out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  295(STA)  was                                                               
reported from the House State Affairs Standing Committee.                                                                       
HB 312-SEAFOOD AND FOOD SAFETY LABORATORY                                                                                     
CHAIR WEYHRAUCH announced  that the next order  of business would                                                               
be HOUSE  BILL NO. 312,  "An Act  giving notice of  and approving                                                               
the entry into and the  issuance of certificates of participation                                                               
for  a lease-purchase  agreement for  a seafood  and food  safety                                                               
laboratory facility;  relating to  the use of  certain investment                                                               
income  for  certain construction  costs;  and  providing for  an                                                               
effective date."                                                                                                                
Number 1925                                                                                                                     
REPRESENTATIVE  SEATON  moved  to  adopt CSHB  312,  Version  23-                                                               
GH1134\D,  Bannister, 5/12/03,  as the  working document.   There                                                               
being no objection, Version D was before the committee.                                                                         
Number 1950                                                                                                                     
ERNESTA  BALLARD,   Commissioner,  Department   of  Environmental                                                               
Conservation  (DEC), explained  that  Version  D merely  provides                                                               
clarity in the  title to make it clear that  the laboratory would                                                               
be operated by the department.   Ms. Ballard paraphrased from the                                                               
following written testimony [original punctuation provided]:                                                                    
     Imagine  it is  5:00 p.m.  on Friday,  you are  a dairy                                                                    
     processor  and  your  pasteurization  equipment  breaks                                                                    
     down.  The  scenario is not uncommon.   To fulfill your                                                                    
     school  and military  contracts,  FDA  requires that  a                                                                    
     State   lab  certify   your   equipment  is   operating                                                                    
     correctly  again and  test the  product  to make  sure.                                                                    
     Milk can't  wait until Monday morning.  The Seafood and                                                                    
     Food  Safety Laboratory  staff are  there to  make sure                                                                    
     your product  is safe for  consumption and makes  it to                                                                    
     market  while  it's  fresh.    Ours  is  the  only  lab                                                                    
     certified in  Alaska to test  dairy products  to ensure                                                                    
     successful pasteurization  so they  can be sold  to the                                                                    
     military and schools.                                                                                                      
     HB 312  provides the funding  mechanism to build  a new                                                                    
     Seafood and  Food Safety Lab.   The expense  is already                                                                    
     in our proposed  capital budget.  The  facility we have                                                                    
     leased for 34  years will not be  available after 2006.                                                                    
     It is  overcrowded and not fully  compliant with safety                                                                    
     codes  and   laboratory  design  standards.     It  was                                                                    
     developed  in Palmer  when the  principal lab  business                                                                    
     was   agriculture  and   dairy.      In  recent   years                                                                    
     entrepreneurs in  coastal Alaska have developed  a wide                                                                    
     variety  of  value  added  seafood  products  adding  a                                                                    
     significant and  time sensitive  testing responsibility                                                                    
     for  our  lab.    Our  proposed  new  lab  will  be  in                                                                    
     Anchorage  where valuable  hours can  be saved  between                                                                    
     sample  collection and  test results  for raw  and live                                                                    
     seafood industries.                                                                                                        
     A core  function of government  is protection  of human                                                                    
     health  and  the  environment.     Government  must  be                                                                    
     prepared  to  respond  to  unanticipated  outbreaks  of                                                                    
     disease  or  the  presence of  contamination  in  food,                                                                    
     water and animals.  The  Alaska seafood and food safety                                                                    
     laboratory fulfills  these functions.  We  analyze raw,                                                                    
     finished, and  value-added food products  for bacteria,                                                                    
     chemicals, and toxic contaminants.                                                                                         
     The laboratory protects  Alaskans by monitoring animals                                                                  
     for  zoonotic  diseases--transferred  from  animals  to                                                                    
     humans-such as Brucellosis.   Lab technicians test food                                                                    
     products for  Botulism, Salmonella, Listeria  and fecal                                                                    
     coliforms  and  also  test public  drinking  water  for                                                                    
     Giardia, a  common contaminant found in  surface water,                                                                    
     and Cryptosporidium.                                                                                                     
     The   laboratory  supports   the  seafood,   dairy  and                                                                    
     shellfish industries.   To successfully market Alaska's                                                                    
     high quality shellfish and seafood,  the public must be                                                                    
     assured  they  are  safe.    Federal  requirements  for                                                                    
     shellfish are very strict because  the health risks are                                                                    
     great.  Through monitoring  and testing the lab assures                                                                    
     the  safety  of  Alaska's growing  shellfish  industry,                                                                    
     including geoducks,  mussels and oysters.   Through new                                                                    
     PSP  sampling  and  testing  procedures,  live  geoduck                                                                    
     sales  have  begun  to  enable  the  industry  to  ship                                                                    
     approximately 50-60 percent of  its geoduck quota live,                                                                    
     increasing  its  value  from  three  fold.    When  the                                                                    
     industry reaches its goal of  85 percent live shipment,                                                                    
     the industry's  value will be worth  approximately $2.5                                                                    
     A  perfect  example  of  how  this  lab  has  and  will                                                                    
     continue to  help Alaska's economy  grow is  the farmed                                                                    
     oyster industry.   As  I'm sure  you all  know, Alaskan                                                                    
     oysters  are top  quality and  easily merit  their good                                                                    
     wholesale  price.   In the  recent past,  this industry                                                                    
     did not exist.   DEC lab staff are some  of the experts                                                                    
     who  helped  oyster  farmers get  started.    With  our                                                                    
     assistance,   farmers  set   up  operations   that  met                                                                    
     National Shellfish  Sanitation standards which  must be                                                                    
     met to sell raw product.   Those standards require that                                                                    
     DEC sample the growing water  to ensure it is free from                                                                    
     contamination.   As the industry  grew, it  became more                                                                    
     difficult for  our staff to travel  to remote locations                                                                    
     for the  collection of water  samples.  We  developed a                                                                    
     method  for  harvesters  to  collect  their  own  water                                                                    
     samples thereby increasing  the opportunity for growing                                                                    
     areas to be approved.                                                                                                      
     The laboratory  is also  providing proof  that Alaska's                                                                    
     commercial fish species are of  the highest quality and                                                                    
     free of contaminants  by monitoring commercially caught                                                                    
     species  for   pollutants.    Over  600   samples  were                                                                    
     collected last  year and the results  will be available                                                                    
     next month.                                                                                                                
     The  laboratory  supports   Alaska's  private  labs  by                                                                    
     certifying  them to  conduct  drinking water  analysis.                                                                    
     We train  190 private lab staff  a year on how  to test                                                                    
     drinking water  according to EPA standards,  and assist                                                                    
     private  laboratories  in obtaining  certification  and                                                                    
     approval to perform federally regulated tests.                                                                             
     We cannot  depend on  private laboratories  to maintain                                                                    
     testing  and  analytical  capabilities  for  situations                                                                    
     when there is  no profit margin.   When private markets                                                                    
     develop,  our laboratories  get  out  of the  business.                                                                    
     For  example, the  Seafood and  Food Safety  Laboratory                                                                    
     does  not  test  drinking   water  for  fecal  coliform                                                                    
     because private  labs are  capable of  conducting those                                                                    
     tests.   The  DEC laboratory  only conducts  tests that                                                                    
     are federally  required to  be done by  a State  lab or                                                                    
     are not provided elsewhere in the state.                                                                                   
     The  health of  Alaskans  and the  success of  Alaska's                                                                    
     seafood,   shellfish,   and    dairy   industries   are                                                                    
     contingent upon  the smooth and continued  operation of                                                                    
     the seafood  and food safety  laboratory.   Through our                                                                    
     testing,   monitoring,  and   technical  support,   the                                                                    
     laboratory  assures  the  health of  Alaskans  and  our                                                                    
     environment,  and  supports   the  development  of  our                                                                    
     abundant resources.                                                                                                        
CHAIR  WEYHRAUCH  asked  if  the   estimated  lease  total  lease                                                               
payments  of $20,862,400  includes  the lease-purchase  payments,                                                               
construction, acquisition, and other costs.                                                                                     
Number 2400                                                                                                                     
DEVEN MITCHELL,  Debt Manager,  Treasury Division,  Department of                                                               
Revenue, specified  that the  $20,862,400 is  an estimate  of the                                                               
total  principal  and  interest  that  would  be  repaid  on  the                                                               
Certificates  of Participation  (COP).   The  COP  is subject  to                                                               
appropriation and backed obligation by  the state.  Mr. Mitchell,                                                               
in  response to  Chair  Weyhrauch, said  that the  lease-purchase                                                               
agreement  will include  the cost  of construction,  acquisition,                                                               
and  equipment.   In  further response  to  Chair Weyhrauch,  Mr.                                                               
Mitchell  specified  that  the  $20,862,400  is  just  the  lease                                                               
payment.  When the legislation  was drafted the anticipated lease                                                               
payments were  about $1,391,000  annually.   The $140,000  is the                                                               
investment earnings on the proceeds  of the money borrowed and it                                                               
will  be used  for the  facility  itself.   Therefore, the  total                                                               
construction cost is $14,285,000.   He confirmed that this is not                                                               
a private activity bond rather it's for a governmental purpose.                                                                 
Number 2525                                                                                                                     
REPRESENTATIVE GRUENBERG  directed attention  to page 2,  line 5,                                                               
refers to  "lease-purchase".  However, the  intent language isn't                                                               
limited to lease-purchase.  He  questioned whether there needs to                                                               
be a bit more flexibility.                                                                                                      
MR.  MITCHELL   explained  that  folks   have  tried  to   be  as                                                               
conservative as  possible with the  structuring of  the financing                                                               
for this project.  The  technique in which [the department] tries                                                               
to anticipate  investment earnings  is called net  funding rather                                                               
than  gross funding  in which  the department  could've requested                                                               
authorization  for the  full amount  anticipated for  the project                                                               
and  any  earnings  could provide  additional  flexibility.    In                                                               
today's budget  circumstances, there has been  a concerted effort                                                               
to [be  fiscally conservative],  and therefore  any unanticipated                                                               
costs  will  require coming  to  the  legislature for  additional                                                               
REPRESENTATIVE GRUENBERG  asked if the additional  approval would                                                               
have  to be  done through  additional authorizing  legislation or                                                               
can it be done through the appropriations process.                                                                              
MR.  MITCHELL answered  that if  there were  funds available,  it                                                               
could  be done  through  the appropriations  process.   If  there                                                               
weren't additional investment earnings or  there was a desire not                                                               
to  use general  fund,  some  additional borrowing  authorization                                                               
would be required.   However, he said that it would  have to be a                                                               
very  catastrophic  event  that  would  result  in  this  project                                                               
needing more fiscal authorization.                                                                                              
COMMISSIONER BALLARD informed the  committee that the project has                                                               
reached a design  stage in which the drawings are  referred to as                                                               
70 percent  complete drawings.   The site already has  a building                                                               
pad  with  utilities stubbed  to  it.    Therefore, some  of  the                                                               
construction risk has  already been absorbed in  the design phase                                                               
of this  project, which  has been underway  for seven  years now.                                                               
Commissioner  Ballard specified  that  the site  is  next to  the                                                               
Public Health  laboratory that was  constructed a few  years; the                                                               
Public Health  laboratory used  COPs as  its financing  method as                                                               
REPRESENTATIVE SEATON  noted his support of  this legislation and                                                               
the cost  containment that  has been  utilized with  the project.                                                               
He asked if  the Water Quality laboratory in Homer  will have the                                                               
capability   to   perform   water  quality   sampling   for   the                                                               
[aquaculture] in Kachemak Bay.                                                                                                  
Number 2700                                                                                                                     
KRISTIN RYAN, Acting Director,  Division of Environmental Health,                                                               
Department   of  Environmental   Conservation,  replied   no  and                                                               
explained that  laboratory has  to be certified  by the  Food and                                                               
Drug  Administration (FDA)  to test  the growing  waters for  the                                                               
oysters and shellfish.                                                                                                          
REPRESENTATIVE SEATON  noted that  grants have been  received for                                                               
the Water  Quality laboratory in  Homer.  When the  laboratory is                                                               
running, is there a plan to have it certified, he asked.                                                                        
MS.  RYAN  said  that  the   [division]  hasn't  been  approached                                                               
regarding interest in certification.   Upon such an expression of                                                               
interest, the division  would be happy to work  the laboratory to                                                               
try to have the certification set up.                                                                                           
Number 2757                                                                                                                     
DAVID  WETZEL, Laboratory  Manager,  Analytica Alaska,  explained                                                               
that Analytica Alaska is a  small laboratory in Southeast Alaska.                                                               
Mr.  Wetzel   related  that  in   general  Analytica   Alaska  is                                                               
supportive of  the construction of  this laboratory.   Mr. Wetzel                                                               
informed  the  committee  that certification  of  drinking  water                                                               
testing  and chemical  testing provided  by the  Food and  Safety                                                               
laboratory  in  Palmer and  the  Chemistry  laboratory in  Juneau                                                               
impact Analytica  Alaska tremendously.   He explained  that there                                                               
is concern  with regard to  the transfer  of that service  to the                                                               
laboratory   in   Palmer.     These   certifications,   including                                                               
underground  storage  tank  and contaminated  site  testing,  are                                                               
critical  for Analytica  Alaska to  continue its  business.   Mr.                                                               
Wetzel pointed out that  currently the microbiology certification                                                               
officer is  housed in  the Food and  Safety laboratory  in Palmer                                                               
while  the  chemistry  certification  officer is  housed  in  the                                                               
chemistry laboratory  in Juneau.   With  the possible  closure of                                                               
the  Juneau laboratory,  Analytica Alaska  is concerned  with the                                                               
continuation  of the  certification service  and the  location of                                                               
its staff.                                                                                                                      
MS. RYAN assured Mr. Wetzel  that [the division] will continue to                                                               
certify  private   laboratories  to   test  drinking   water  for                                                               
microbiology  and chemical  analysis  of  public water  supplies.                                                               
The microbiologist will continue to  be housed in the new seafood                                                               
and food  safety laboratory.  The  chemical certification officer                                                               
will remain in the Juneau area.                                                                                                 
Number 2827                                                                                                                     
MR. WETZEL  said he  was happy to  hear Commissioner  Ballard say                                                               
that the  state will not  compete with private laboratories.   He                                                               
asked if any of the actual  testing services will be moved to the                                                               
new facility in Palmer or will  some of those testing services be                                                               
doled out to the private sector.                                                                                                
MS. RYAN  specified that the  services provided at  the chemistry                                                               
laboratory won't move to the  Palmer facility or the microbiology                                                               
laboratory  either.    The services  provided  at  the  [state's]                                                               
current  chemistry laboratory  are  already  provided by  private                                                               
laboratories such  as Mr. Wetzel's.   There are no plans  to move                                                               
any  testing  [from  the state's  chemistry  laboratory]  to  the                                                               
proposed laboratory.                                                                                                            
REPRESENTATIVE HOLM asked  if there is any  predicted increase in                                                               
employment due to this change or is this merely a consolidation.                                                                
[Not on  tape, but reconstructed  from the  committee secretary's                                                               
log notes,  was the  following:   MS. RYAN  said that  she didn't                                                               
foresee any increases.]                                                                                                         
TAPE 03-61, SIDE B                                                                                                            
MR. WETZEL  remarked that  this proposed  laboratory is  a needed                                                               
facility  that  supports some  of  the  needs [Analytica  Alaska]                                                               
Number 2958                                                                                                                     
JULIE DECKER, Executive Director,  Southeast Alaska Regional Dive                                                               
Fisheries  Association SARDFA,  testified in  support of  HB 312.                                                               
She  noted   that  she  had  submitted   written  testimony,  and                                                               
therefore  would touch  on a  couple of  the main  reasons SARDFA                                                               
supports  the   proposed  laboratory.    Firstly,   the  proposed                                                               
laboratory  is closer  which is  critical for  the time-sensitive                                                               
water samples  out of Southeast Alaska.   Furthermore, increasing                                                               
the  value  of the  geoduck  fishery  hinges upon  the  paralytic                                                               
shellfish  poison  (PSP) testing  of  the  animal and  thus  this                                                               
proposed laboratory  would be a critical  component to increasing                                                               
the value of this resource.   Ms. Decker concluded by saying that                                                               
the  Palmer  laboratory  staff  that will  now  be  relocated  to                                                               
Anchorage have been an excellent and efficient group.                                                                           
Number 2883                                                                                                                     
RODGER   PAINTER,  Vice   President,  Alaska   Shellfish  Growers                                                               
Association, announced  the association's strong support  for the                                                               
construction of  the proposed laboratory.   Mr.  Painter reviewed                                                               
the difficulties  in using  the present  facility.   For example,                                                               
there is  a 30-hour window from  the time the sample  is taken to                                                               
the time  it needs to be  delivered to the laboratory.   The time                                                               
it takes  to move packages  from the Anchorage airport  to Palmer                                                               
and  Wasilla is  lacking  and that  last leg  of  the journey  is                                                               
critical.    Having the  laboratory  located  in Anchorage  would                                                               
alleviate   the   difficulties    that   have   manifested   with                                                               
transporting  packages  from  the Anchorage  airport  to  Palmer.                                                               
Additionally,  Mr. Painter  informed  the committee  that he  has                                                               
been  a purchaser  of  geoducks  and the  timely  testing of  the                                                               
product  is extremely  critical because  the product  has a  very                                                               
short self-life.   He echoed the earlier comments  that the value                                                               
of  the product  triples when  it's  shipped live.   Mr.  Painter                                                               
invited any member  who doubted the need for a  new laboratory to                                                               
come  to  the  Palmer  laboratory,   which  he  characterized  as                                                               
hopelessly outdated 15 years ago when he visited the laboratory.                                                                
CHAIR WEYHRAUCH, upon determining that  no one else had signed up                                                               
to testify, announced that public testimony would be closed.                                                                    
MS.  RYAN, in  response  Representative  Gruenberg, informed  the                                                               
committee that the current facility  closes in 2006, which is the                                                               
deadline.  If this legislation  proceeds quickly, ground could be                                                               
broken next year.                                                                                                               
CHAIR WEYHRAUCH  informed the  committee that  he has  a question                                                               
about  HB 312  in  to  the governor's  office,  and therefore  he                                                               
announced that HB 312 would be held over.                                                                                       
HB 228-STATE EMPLOYEES CALLED TO MILITARY DUTY                                                                                
CHAIR WEYHRAUCH announced  that the next order  of business would                                                               
be HOUSE  BILL NO. 228, "An  Act relating to state  employees who                                                               
are called to active duty as  reserve or auxiliary members of the                                                               
armed  forces  of  the  United   States;  and  providing  for  an                                                               
effective date."  [Before the committee is CSHB 228(MLV).]                                                                      
Number 2578                                                                                                                     
JULI LUCKY,  Staff to Representative Beth  Kerttula, Alaska State                                                               
Legislature,  testified on  behalf  of the  sponsor.   Ms.  Lucky                                                               
explained that  HB 228  will give the  governor the  authority to                                                               
extend benefits  and pay  to state employees  that are  called to                                                               
active  duty or  on orders.   The  state employees  would receive                                                               
less pay while working for the  military service.  She offered to                                                               
answer any questions.                                                                                                           
REPRESENTATIVE SEATON  pointed out that the  legislation includes                                                               
a retroactive  provision back  to September  2001.   However, the                                                               
fiscal note  seems to indicate that  no one was called  to active                                                               
MS. LUCKY related her understanding  that eight [state employees]                                                               
could be eligible.  She  explained that the legislation gives the                                                               
governor the  authority to issue the  administrative order, which                                                               
has tremendous latitude.  The fiscal note is indeterminate.                                                                     
REPRESENTATIVE SEATON surmised then  that the authorization would                                                               
be the difference between the  [state employee's] regular pay and                                                               
his/her  military pay,  which  is  a known  quantity  as are  the                                                               
benefits.   However,  there is  no knowledge  with regard  to the                                                               
maximum  authorization amount.   He  asked if  the aforementioned                                                               
merely hasn't been calculated.                                                                                                  
MS.  LUCKY  pointed  out  that   the  Department  of  Military  &                                                               
Veterans' Affairs  prepared the fiscal  note.  Ms.  Lucky related                                                               
that the  sponsor feels that when  people are hired and  a budget                                                               
is created,  the departments have  already incurred  those costs.                                                               
Therefore, the only time that  additional costs would be incurred                                                               
if someone  had to  fill the  position of  an employee  called to                                                               
active duty.                                                                                                                    
REPRESENTATIVE  SEATON asked  if people  have been  pulled in  to                                                               
fill  the  employees'  positions  over the  several  year  period                                                               
specified in the legislation.                                                                                                   
MS. LUCKY  said she  understood that when  people were  called to                                                               
duty  during  the  retroactive  period  the  employees  were,  on                                                               
average,  only  gone   for  around  three  months.     Ms.  Lucky                                                               
acknowledged  that the  retroactive provision  has been  an issue                                                               
for the administration.   She explained that  those covered under                                                               
the retroactive provision  are looking for the known  net loss in                                                               
their retirement  benefits and accrual  of time.   Obviously, the                                                               
[state]  wouldn't extend  the pay  and health  benefits to  these                                                               
people at this time.  These  individuals are looking for the time                                                               
that they  were called to  duty to count toward  their retirement                                                               
and retirement benefit credit.                                                                                                  
Number 2360                                                                                                                     
REPRESENTATIVE   DAHLSTROM  asked   if  this   legislation  would                                                               
basically  bring  the  state  into  compliance  with  what  other                                                               
businesses  are  required to  do  when  employees are  called  to                                                               
active duty.                                                                                                                    
MS. LUCKY  answered that  the state  meets the  requirements now.                                                               
However,  since [the  terrorist  attacks of  September 11,  2001]                                                               
businesses and  employers have tried  to provide  their employees                                                               
with no  net loss.   The  thought is  that if  one is  willing to                                                               
fight for  the country, that  individual's family  shouldn't lose                                                               
health  benefits and  the  individual  shouldn't lose  retirement                                                               
benefits  or  pay  while  on  active  duty.    She  informed  the                                                               
committee  that   the  states   that  have   some  sort   of  pay                                                               
differential  or  medical  coverage  to make  up  the  difference                                                               
[between  the  individuals regular  pay  and  benefits and  those                                                               
received  from the  military]  are as  follows:   Tennessee,  New                                                               
York,  Florida,  Virginia,   California,  Delaware,  Kansas,  New                                                               
Jersey, Ohio, Okalahoma, West  Virginia, Washington, and Wyoming.                                                               
She noted that some of the  private companies that are doing this                                                               
are as follows:   American Express, Boeing, Co.,  Coca Cola, Ford                                                               
Motor Co., Hewlett Packard, Sara Lee,  UPS, and Xerox.  Ms. Lucky                                                               
specified that  the benefits would  only go to  those individuals                                                               
who would make  less while on active  duty than if at  home.  The                                                               
past testimony has  related that the average  deployment is three                                                               
months and  dependents don't receive benefits  until the deployed                                                               
individual  has been  gone for  about  180 days.   The  sponsor's                                                               
intent is  to allow the governor  to say that those  fighting for                                                               
the  country  shouldn't  have   to  suffer  additional  financial                                                               
hardships while serving.                                                                                                        
REPRESENTATIVE DAHLSTROM related her  understanding that when men                                                               
and women are called to active duty there is no choice.                                                                         
MS.  LUCKY  said  that  she  believes HB  228  would  cover  both                                                               
voluntary and involuntary service.                                                                                              
Number 2210                                                                                                                     
REPRESENTATIVE  HOLM remarked  that he  has no  problem with  the                                                               
idea behind this  legislation.  However, he  noted his discomfort                                                               
with  a fiscal  note that  doesn't have  limits.   Representative                                                               
Holm  questioned whether  it's  good policy  to pass  legislation                                                               
when there is no way to know if it can be funded or not.                                                                        
REPRESENTATIVE  GRUENBERG  characterized  HB  228 as  a  type  of                                                               
unfunded  mandate.   Representative  Gruenberg  said he  believes                                                               
it's  time for  the  federal  government to  review  the cost  of                                                               
serving and  who should  bear that  cost and  whether this  is an                                                               
unfunded  mandate.   Perhaps  the state  should  ask Congress  to                                                               
consider this part  of the cost of waging war  and perhaps Alaska                                                               
should be  the first state  to speak  up for those  who sacrifice                                                               
not  only  their lives  but  also  their entire  family  savings.                                                               
Representative Gruenberg said he would  like to know whether it's                                                               
appropriate to insert such language in this legislation.                                                                        
REPRESENTATIVE   LYNN   agreed  with   Representative   Gruenberg                                                               
regarding  this  legislation  being  an unfunded  mandate.    The                                                               
families of  those serving are  often the  ones who bear  a large                                                               
part  of  the  burden.   Representative  Lynn  suggested  that  a                                                               
resolution  on this  matter would  probably be  appropriate.   He                                                               
offered  to   work  with  Representative  Gruenberg   on  such  a                                                               
Number 1913                                                                                                                     
CHAIR  WEYHRAUCH inquired  as to  how many  individuals would  be                                                               
impacted by this legislation now.                                                                                               
MS.  LUCKY said  that last  year eight  state employees  would've                                                               
CHAIR WEYHRAUCH inquired  as to the policy  justification to have                                                               
this retroactive and he asked  if the legislation would be harmed                                                               
if the retroactive provision wasn't included.                                                                                   
MS. LUCKY reiterated that the  retroactive provision was included                                                               
to help  those called  to duty during  [the terrorist  attacks of                                                               
September  11, 2001]  and  the subsequent  events.   The  sponsor                                                               
intended for those  individuals to recoup some  of the retirement                                                               
benefits that were  lost.  The retroactive provision  has been an                                                               
item of discussion and is left to the committee's discretion.                                                                   
CHAIR WEYHRAUCH  related his  understanding that  the retroactive                                                               
provision would bestow health benefits on one of the eight.                                                                     
MS.  LUCKY  explained that  the  legislation  is permissive,  and                                                               
therefore   it   would   depend   upon  the   language   of   the                                                               
administrative order.                                                                                                           
CHAIR  WEYHRAUCH inquired  as  to how  health  benefits would  be                                                               
given retroactively.                                                                                                            
MS. LUCKY said that in  her opinion, the health benefits wouldn't                                                               
be  something that  [an administrative  order] would  give.   The                                                               
intent  is to  allow the  governor to  put out  an administrative                                                               
order that  would allow people  who might  not have been  able to                                                               
qualify or vest in their  retirement to receive credited time for                                                               
the time  they were away.   It  wasn't [the sponsor's]  intent to                                                               
give these people back pay or health benefits.                                                                                  
Number 1775                                                                                                                     
REPRESENTATIVE DAHLSTROM pointed out that  if a family member had                                                               
surgery  during  the time  [when  the  individual was  called  to                                                               
active  duty],   with  the  passage   of  this   legislation  the                                                               
individual  would  be able  to  submit  the  costs for  that  and                                                               
recover those costs.   Representative Dahlstrom characterized the                                                               
aforementioned as a good thing.                                                                                                 
CHAIR WEYHRAUCH asked if the  military would have health benefits                                                               
that the individual called to duty could obtain.                                                                                
MS. LUCKY related her understanding  that the individual would be                                                               
covered by  those health benefits  and after 180 days  the health                                                               
benefits  would be  available to  the dependents.   However,  the                                                               
problem is  that the  [dependents] would  only receive  the state                                                               
benefits  through the  month the  individual called  to duty  was                                                               
working unless the individual had  enough leave to cover the time                                                               
he/she was gone.   Therefore, the dependents  wouldn't be covered                                                               
under the individual called to duty.                                                                                            
Number 1705                                                                                                                     
REPRESENTATIVE SEATON  asked if the eight  individuals this would                                                               
address were volunteers to duty or were called to duty.                                                                         
MS. LUCKY said that she didn't have that information.                                                                           
Number 1660                                                                                                                     
JOHN   CRAMER,   Director,  Administrative   Services   Division,                                                               
Department  of   Military  &  Veterans'  Affairs,   responded  to                                                               
Representative Seaton's  question by saying that  he believes the                                                               
eight individuals were called to duty.                                                                                          
CHAIR  WEYHRAUCH  pointed  out   that  in  the  PERS  information                                                               
handbook it addresses  the call to active duty  by specifying the                                                               
following:  "If you are  called to active duty either voluntarily                                                               
or involuntarily during  your active PERS service  and you return                                                               
to the same  PERS employer within 90 days  of honorable discharge                                                               
from active duty, your military  service is considered membership                                                               
service time.   You will need  to submit a written  request along                                                               
with  a copy  of  your  military discharge  papers  to have  this                                                               
service time credited.   There is no cost for  this service."  He                                                               
inquired as  to how that  worked with what is  being accomplished                                                               
in this legislation.                                                                                                            
MS. LUCKY said she could get an answer for the committee.                                                                       
MS. CRAMER said he couldn't  comment and deferred to the Division                                                               
of Retirement and Benefits.                                                                                                     
REPRESENTATIVE LYNN  indicated that  one of  the basic  issues is                                                               
with regard to  the dependents who experience a  gap in coverage.                                                               
The  person  recalled  to  active  duty  receives  military  pay,                                                               
health, and benefits.  This  lapse in coverage for the dependents                                                               
isn't helpful for morale.                                                                                                       
REPRESENTATIVE  SEATON surmised  from the  excerpt from  the PERS                                                               
information  handbook   that  the  retirement  benefits   of  [an                                                               
individual called  to active duty]  is covered if they  return to                                                               
state service  and apply  [to receive] it.   Therefore,  it seems                                                               
the retirement  benefit is already  addressed.  He noted  that he                                                               
has problems with retroactive clause.                                                                                           
Number 1486                                                                                                                     
REPRESENTATIVE   DAHLSTROM  said   that   she   shared  some   of                                                               
Representative Seaton's concerns regarding  the fiscal impacts of                                                               
this.   However, she  said that  she has  such great  respect for                                                               
those willing to  put their lives on the line  that perhaps there                                                               
are some costs  that [the state] does need to  incur and thus she                                                               
is comfortable with the legislation.                                                                                            
REPRESENTATIVE SEATON  commented that  he doesn't have  a problem                                                               
with  the   legislation.    However,   every  time  there   is  a                                                               
retroactive clause it seems to create a "sticky wicket."                                                                        
REPRESENTATIVE   CRAWFORD  turned   to  Representative   Seaton's                                                               
"sticky wicket"  remark and said  that [some of]  the retroactive                                                               
dates changed  court orders or  cases, which isn't the  case with                                                               
this  legislation.   It seems  that legislation  very similar  to                                                               
this was  passed out of  this committee;  he inquired as  to what                                                               
happened with that legislation.                                                                                                 
MS.  LUCKY confirmed  that there  was [similar]  legislation last                                                               
year in  both the House  and the  Senate.  The  legislation [from                                                               
last  year] ended  up permanently  residing in  the Senate  State                                                               
Affairs Standing Committee.                                                                                                     
Number 1221                                                                                                                     
REPRESENTATIVE  SEATON  asked if  the  health  benefits of  these                                                               
[eight] individuals is  restored [for that time  of active duty],                                                               
would  it  mean  that  [the  state]  would  pay  for  the  health                                                               
insurance premiums  that those  folks may or  may not  have used.                                                               
He expressed concern that this  retroactivity allows the governor                                                               
to  give these  individuals  pay  for the  time  gone from  state                                                               
service.     Therefore,  he  moved   that  the   committee  adopt                                                               
Conceptual Amendment 1 as follows:                                                                                              
     Page 2, line 20, after "2001"                                                                                              
          Insert "for health and accrual of retirement                                                                          
     benefit qualifications only"                                                                                               
REPRESENTATIVE  GRUENBERG objected  and expressed  his desire  to                                                               
meet on this  topic this afternoon when perhaps  someone from the                                                               
Division  of   Retirement  and   Benefits  could   be  available.                                                               
Therefore, he  requested that Conceptual  Amendment 1 be  held on                                                               
the table until that time.                                                                                                      
REPRESENTATIVE  CRAWFORD  noted   his  opposition  to  Conceptual                                                               
Amendment 1  because he  believes the  intent is  to make  up the                                                               
difference  in people's  pay if  called  to active  duty.   Those                                                               
individuals shouldn't be made to  suffer for doing their duty for                                                               
the country.   He remarked that  the believes the intent  of this                                                               
legislation is the right intent.                                                                                                
REPRESENTATIVE DAHLSTROM  said that she  would like to  leave the                                                               
legislation as it stands.                                                                                                       
REPRESENTATIVE LYNN echoed Representative Dahlstrom's sentiment.                                                                
A roll  call vote was  taken.  Representatives Holm,  Seaton, and                                                               
Weyhrauch   voted   in   favor   of   Conceptual   Amendment   1.                                                               
Representatives  Dahlstrom, Lynn,  Crawford, and  Gruenberg voted                                                               
against it.   Therefore, Conceptual Amendment 1 failed  by a vote                                                               
of 3-4.                                                                                                                         
Number 0858                                                                                                                     
REPRESENTATIVE  DAHLSTROM moved  to report  CSHB 228(MLV)  out of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal  notes.   There  being  no  objection, CSHB  228(MLV)  was                                                               
reported from the House State Affairs Standing Committee.                                                                       
HB 272-MOTOR VEHICLE DEALERS                                                                                                  
Number 0750                                                                                                                     
CHAIR WEYHRAUCH  announced that  the last  order of  business was                                                               
HOUSE BILL NO.  272, "An Act relating to  motor vehicle dealers."                                                               
[Before the committee was CSHB 272(L&C).]                                                                                       
Number 0730                                                                                                                     
LINDA SYLVESTER, Staff to  Representative Bruce Weyhrauch, Alaska                                                               
State Legislature, sponsor of HB  272, explained that Sections 2-                                                               
8 of CSHB  272(L&C) include technical and  grammatical changes to                                                               
an  omnibus bill  that passed  the legislature  last year,  which                                                               
dealt  with automobile  dealers and  manufacturers and  contained                                                               
some consumer protection benefits, as well.                                                                                     
MS. SYLVESTER said  that Section 1 is  the "primary controversial                                                               
issue involved in  the bill."  She noted  that, currently, Alaska                                                               
statute  prohibits the  sale of  any  current-model used  vehicle                                                               
being sold.   She  said, "Whatever  you do, Section  1 has  to be                                                               
altered,  because  every  used-car  ...  and  new-car  dealer  is                                                               
operating  outside of  the law,  currently ...."   Ms.  Sylvester                                                               
read  highlights  of  the  changes  made to  Section  1  for  the                                                               
MS. SYLVESTER said  that used car fleets, such  as Avis, purchase                                                               
used vehicles, rent  them, and often "turn them  over within nine                                                               
months."   She indicated that although  current statute disallows                                                               
that, the  proposed legislation  would allow it.   She  said that                                                               
the  focus  [of  this  legislation]   is  on  the  "grey-market";                                                               
"vehicles that are  bound for the Canadian market  that are being                                                               
picked up in  Canada through fraudulent means and  turned over to                                                               
auctions, or  are acquired in  other ways in the  United States."                                                               
She explained  that these  grey-market vehicles  are for  sale in                                                               
Alaska  and  have  "different impediments."    She  revealed  the                                                               
following examples:                                                                                                             
     Many  manufacturers don't  honor the  vehicle warranty.                                                                    
     The   vehicles   also   have  been   modified.      The                                                                    
     modifications  have been  standardized over  the years.                                                                    
     For  example, running  lights are  now  dealt with  and                                                                    
     these vehicles  ... are  almost interchangeable  in the                                                                    
     U.S.  and Canadian  markets; however,  the odometer  is                                                                    
     changed.     And  that  is  a   very  serious  consumer                                                                    
     protection  issue.   And the  other thing  is ...  that                                                                    
     they ... come into the  American market in violation of                                                                    
     the  franchise  agreement  ... that  the  manufacturers                                                                    
     have with the franchised dealers of the new vehicles.                                                                      
Number 0421                                                                                                                     
CHAIR  WEYHRAUCH   announced  that  he  would   now  hear  public                                                               
Number 0400                                                                                                                     
JIM  ARPINO, testifying  on  behalf of  Affordable  Used Cars,  a                                                               
company  in  both  Fairbanks  and  Anchorage,  Alaska,  told  the                                                               
committee that  he caught  the last plane  out of  Fairbanks last                                                               
night  with  essentially only  the  clothes  on  his back.    His                                                               
impetus for  such action, he  explained, was to "shed  some light                                                               
on  this  bill  -  [HB]  272  -  specifically  Section  1."    He                                                               
reiterated  Ms. Sylvester's  notation that  there is  currently a                                                               
statute that states that no  dealer can sell a current-model used                                                               
vehicle.  He  said that everybody understands that  this makes no                                                               
sense.   He said that  the AG's  office has publicly  stated that                                                               
this [law]  is not enforceable.   He  said the question  is, "How                                                               
can it  be enforced?"   Section  1, he  remarked, was  drafted to                                                               
"help, or  amend the  currant law."   If [HB  272] is  passed, he                                                               
opined, the new law will actually be worse.                                                                                     
MR.   ARPINO  explained   that   the  current   law  is   equally                                                               
unenforceable  to everyone.   Conversely,  he  said, the  changes                                                               
proposed in Section 1 would  definitely [negatively] impact used-                                                               
car dealers  in the state  of Alaska.   Mr. Arpino  described the                                                               
difference between  new and  used vehicles as  follows:   "If you                                                               
want a new  vehicle, you go to  a new car store.   If your budget                                                               
or preference wants a used vehicle,  you go to a used-car dealer,                                                               
or seek it in the newspaper  from a private individual, or you go                                                               
to a used-car department in a new  car store."  But the one thing                                                               
that everybody knows,  he said, is that the used  vehicle is most                                                               
likely cheaper.  The  choice of whether to buy new  or used - and                                                               
there is  nothing really in between  - is up to  the customer, he                                                               
said.   He told the  committee that he  has never had  a customer                                                               
come to a  Affordable Used Cars lot thinking he/she  was buying a                                                               
new vehicle.   He said  the company  has zero complaints  in that                                                               
department,  a  fact to  which  he  said  the AG's  office  could                                                               
probably attest.                                                                                                                
Number 0169                                                                                                                     
MR. ARPINO  listed the following  sources from  which [Affordable                                                               
Used Cars]  purchases used vehicles  for resale:   auto auctions;                                                               
trade-ins  from  individuals;  other dealers,  including  new-car                                                               
dealers; and  banks and credit  unions.   Of those, he  said, the                                                               
most frequent source  is the auto auction, which he  noted is for                                                               
dealers only.   At the auctions, he said, "no  matter who you are                                                               
or who  we buy from,  the vehicles  at these auctions  are used."                                                               
He  added, "We  don't  even  have new  vehicles  available to  us                                                               
through the course  of doing business, because  we're not new-car                                                               
dealers."   To  illustrate his  point, Mr.  Arpino said,  "If I'm                                                               
looking at  a 2003  vehicle to  purchase it, it's  going to  be a                                                               
used one."                                                                                                                      
MR.  ARPINO  said that  Affordable  Used  Cars in  Fairbanks  and                                                               
Anchorage currently  has approximately  over 800 vehicles  on the                                                               
lot  for sale.   Out  of those,  as of  yesterday, only  five are                                                               
current-year, or  "2003-used vehicles."   He said a  person could                                                               
question  why  he  is  before  the  committee  if  such  a  small                                                               
percentage of the  business [would be affected].   The answer, he                                                               
offered, is  that as the year  goes on, those 2003  vehicles will                                                               
become  available to  his company  in large  numbers.   He stated                                                               
that he wants  to buy those vehicles, resell them  to the public,                                                               
and attempt to make a profit, because "that's what we do."                                                                      
TAPE 03-62, SIDE A                                                                                                            
Number 0001                                                                                                                     
MR. ARPINO [noted that the  amended Section 1 would allow dealers                                                               
to buy used vehicles from individuals].   He said that that helps                                                               
a  little,  but  suggested  that  it's just  common  sense.    He                                                               
reiterated, "That's what  we do."  He pointed out  that Section 1                                                               
also states  that dealers can buy  rental cars that have  been in                                                               
service  for  six months,  which  sounds  generous, but  in  most                                                               
cases, the rental cars  in Alaska show up in May  and are sold in                                                               
September after the tourists leave.   Some of those vehicles will                                                               
be sold  directly to dealers,  but most of  them will be  sold at                                                               
auto auctions.  He asked, "At  that point, how are we supposed to                                                               
know how long they've been in service?"                                                                                         
MR. ARPINO posited  that an auto auction is a  great place to buy                                                               
a  vehicle for  resale, and  is "a  great place  to see  American                                                               
capitalism at work."  He continued as follows:                                                                                  
     When you  purchase a vehicle at  these dealer-only auto                                                                    
     auctions, you  get a  title for  that vehicle  when you                                                                    
     pay  for  it.    It's  that simple.    You  ship  these                                                                    
     vehicles to Alaska  for resale on our lots  in hopes of                                                                    
     a profit.                                                                                                                  
MR. ARPINO  stated that he doesn't  want to be an  Alaskan dealer                                                               
at these auctions and see good  used vehicles go by that could be                                                               
sold  due  to an  "Alaskan-only  law"  forbidding [dealers]  from                                                               
buying and selling these vehicles.                                                                                              
Number 0158                                                                                                                     
MR.  ARPINO  remarked that  Section  1  is really  about  selling                                                               
imported  vehicles in  Alaska.   He  noted that  it is  currently                                                               
legal  to buy  a  vehicle  that has  been  imported from  another                                                               
country, as  long as it's  done properly.   He said  that dealers                                                               
have  nothing  to do  with  the  actual process  of  importation.                                                               
Dealers receive the  U.S. titles from the  auction companies, and                                                               
at that  point, the vehicles  have already been imported  and are                                                               
already "American vehicles with U.S.  clean titles."  He told the                                                               
committee that the registered import  agents handle the paperwork                                                               
and the "speedo" (ph) changeover.   Those agents are regulated by                                                               
[U.S.]  Customs   and  the   [National  Highway   Traffic  Safety                                                               
Administration (NHTSA)].   Mr. Arpino  indicated that  [NHTSA] is                                                               
part of  the [U.S.] Department of  Transportation, in Washington,                                                               
D.C.  He said, "They seem  to have no problem with this activity.                                                               
Any questions pertaining to imported  vehicles should be directed                                                               
to them, for I am not an  authority on this matter, nor is anyone                                                               
who is not a registered  import agent or working or administering                                                               
the process."                                                                                                                   
MR. ARPINO asked the committee  members for their help in keeping                                                               
the  free trade  of used  vehicles, "regardless  of (indisc.)  in                                                               
Alaska,"  by deleting  Section 1,  or at  least holding  the bill                                                               
until all  the facts are before  the committee.  He  continued as                                                               
     This bill says nothing about  Canadian vehicles - not a                                                                    
     peep.  It's  only about restriction, and this  is not a                                                                    
     state  issue.   This is  a  federal trade  issue.   ...                                                                    
     Dealers are not importers, and  I think that might have                                                                    
     a lot to do with the complications.                                                                                        
MR.  ARPINO   distributed  a  handout  [labeled,   "The  Detailed                                                               
Registered  Importer  Process"  and available  in  the  committee                                                               
packet],  which   shows  the  lengthy   process  involved.     He                                                               
emphasized that the chance of  odometer fraud "appears very, very                                                               
unlikely."    He  indicated  that  questions  in  regard  to  the                                                               
importer process  should be  directed to  those involved  in that                                                               
process.   He  concluded,  "So, the  vehicles  that we're  buying                                                               
currently are good used vehicles for the Alaskan public."                                                                       
Number 0447                                                                                                                     
REPRESENTATIVE  HOLM  asked Mr.  Arpino  how  he relates  to  the                                                               
dealers  in  "our  area,"  with  regard  to  "the  accusation  of                                                               
predatory pricing, et cetera."                                                                                                  
Number 0490                                                                                                                     
MR. ARPINO  replied that the  accusation of predatory  pricing is                                                               
not accurate,  because the vehicles  are not "apples  to apples,"                                                               
but are  instead "apples to  oranges."  He reiterated  that there                                                               
is  no misunderstanding  between dealers  and consumers  that the                                                               
vehicles  are used.    He  noted that  people  don't get  certain                                                               
things  when  buying  a  used  vehicle  from  a  dealership,  for                                                               
example,  a nice  show room,  a parts  department, and  a service                                                               
department.   He  said that  that  is the  risk that  [consumers]                                                               
MR.  ARPINO  said  that  if   those  consumers  were  to  have  a                                                               
legitimate problem, they would contact  the AG's office, which he                                                               
said  has "no  bones  about straightening  businesses  out."   He                                                               
praised the  Anchorage attorney  general's office,  in particular                                                               
noting that Ed Sniffen has  been helpful in "getting everybody on                                                               
the  same sheet  of paper,  with the  exception of  this Canadian                                                               
issue."  He reiterated that that  issue is not a state issue, but                                                               
a federal  one.  He  noted that, at  this point, the  bill states                                                               
that "this  particular vehicle" cannot be  imported, because it's                                                               
coming  from Canada.    He  asked, "Are  we  going  to then  stop                                                               
importing  vehicles  from   Germany?    Are  we   going  to  stop                                                               
motorcycles, refrigerators?  Where does it stop?"                                                                               
MR. ARPINO  revealed that his  current relationship  with dealers                                                               
is a  good one.   He noted  that he is  currently on  "the board"                                                               
with Mr.  Allwine, and he  sees many things  eye-to-eye; however,                                                               
on  this particular  issue, he  said  his view  differs from  Mr.                                                               
Allwine's.  Overall, he said,  the relationship between used- and                                                               
new- [car] dealers is a good one.                                                                                               
Number 0677                                                                                                                     
REPRESENTATIVE CRAWFORD asked if  the bill, as currently written,                                                               
makes  it illegal  for everybody  to sell  current-model Canadian                                                               
MR. ARPINO stated his belief that  there are not a lot of new-car                                                               
franchises  buying  previously  imported  vehicles,  although  he                                                               
noted that there used  to be a lot in the  past, but now "they're                                                               
staying  away from  it, because  it  helps this  bill process,  I                                                               
believe, pass."   He said his interpretation of the  bill is that                                                               
"it would limit the ability for  us to go to auctions, because it                                                               
doesn't  specifically say  in  there."   He  noted that  imported                                                               
vehicles from Canada  are "running through" auctions.   He added,                                                               
"We are not  involved in the importation of  those vehicles; they                                                               
are  just  available for  us  to  purchase."    The only  way  to                                                               
determine if  a vehicle has  been imported,  he said, is  to look                                                               
for an authorized import sticker on  the door.  He explained that                                                               
it is  important to make  certain that sticker is  there, because                                                               
that  shows that  the vehicle  was imported  properly [into]  the                                                               
U.S.,  and it  provides  information regarding  who imported  the                                                               
vehicle,  when it  was imported,  and  whether it  meets all  the                                                               
requirements.   At that point,  he said, the seller  provides the                                                               
free-and-clear title.                                                                                                           
Number 0876                                                                                                                     
TERI  PETRAM, testifying  on  behalf of  Lyberger's  Car &  Truck                                                               
Sales, LLC, paraphrased her written testimony as follows:                                                                       
     In testimony heard by those  supporting HB 272, Section                                                                    
     1,  several concerns  were mentioned  in regard  to the                                                                    
     importation  of Canadian  vehicles  for  resale.   It's                                                                    
     odd,  though, that  the  word Canadian  is  not in  the                                                                    
     bill,  except  debate  from supporting  parties  always                                                                    
     leads  there.    So, while  Lyberger's  isn't  actually                                                                    
     importing  the vehicles  themselves,  I'm  going to  go                                                                    
     ahead and address a few of those issues for you:                                                                           
     One   was  odometer   discrepancies;  two   was  voided                                                                    
     manufacturers  warranties; three  was the  availability                                                                    
     of  independent  mechanics  and  technology  to  repair                                                                    
     newer vehicles;  four was recall notifications  sent to                                                                    
     subsequent  owners;   and  five  was  the   selling  of                                                                    
     [vehicles damaged by flood, for example] ....                                                                              
     Let me point  out that these are  all legitimate issues                                                                    
     facing  consumers  today,  on both  U.S.  and  Canadian                                                                    
     vehicles   -  they're   not  characteristics   of  only                                                                    
     Canadian imports  - and we  agree that  the enforcement                                                                    
     of the existing laws - that  are already on the books -                                                                    
     that address them should be made.                                                                                          
     None of  these "Canadian  vehicle issues"  - and  I say                                                                    
     that  in  quotes  because  they're  not  just  Canadian                                                                    
     vehicle issues - are being  addressed or put to rest by                                                                    
     allowing section  one to pass as  written.  Importation                                                                    
     of Canadian  vehicles will continue.   Used-car dealers                                                                    
     will  still buy  2001  and 2002  Canadian vehicles  and                                                                    
     resell them in Alaska.   Why?, because it is legal, and                                                                    
     it  makes  good  business  sense, and  the  supply  and                                                                    
     demand is  there to support  it.  New car  dealers will                                                                    
     still  buy current-model  Canadian  vehicles when  they                                                                    
     can't  get  a particular  type  of  vehicle from  their                                                                    
     manufacturer,  and  they'll  still sell  them  here  in                                                                    
     So,  the  fact  is,  each of  those  issues  that  were                                                                    
     brought up  are already addressed in  Alaska Statutes -                                                                    
     it's Section  3, [AS] 45.50.147,  I believe -  and [in]                                                                    
     business   advisories  from   the  Attorney   General's                                                                    
     office, and  they're already regulated by  the National                                                                    
     Highway Transportation Safety  Administration, the U.S.                                                                    
     Department  of Transportation,  the U.S.  Environmental                                                                    
     Protection Agency,  [and] U.S.  Customs, and  they must                                                                    
     comply  with federal  motor  vehicle safety  standards.                                                                    
     The issues are already handled in other areas.                                                                             
     Apparently, there  seems to  be a  sympathetic attitude                                                                    
     towards  local franchised  dealers  and the  investment                                                                    
     they have  made with their respective  franchises.  The                                                                    
     picture  being  painted  is  that  there's  no  way  of                                                                    
     competing with  the prices of Canadian  vehicles, aside                                                                    
     from having  a showroom, ... [a]  parts department, ...                                                                    
     and  other   convenient  factors  that   customers  can                                                                    
     appreciate.   The exchange rate  from Canada to  the US                                                                    
     is favorable,  but franchised  dealers have  access to:                                                                    
     factory  subsidized  interest  rates  -  you  see  zero                                                                    
     percent  advertised  all  the  time,  [and]  it's  very                                                                    
     difficult for us to compete  with that, because we have                                                                    
     local  lenders;  factory rebates  -  in  excess of  ...                                                                    
     $3000-$4,000  on  some  vehicles; holdback  and  dealer                                                                    
     only incentives  for moving specific vehicles;  and ...                                                                    
     factory-backed    advertising   -    you   see    Ford,                                                                    
     [Chevrolet], [or]  Dodge commercials on  television all                                                                    
     the time that your  local dealer didn't necessarily pay                                                                    
     for.  Once you compare  the facts, new-car dealers have                                                                    
     as good  a bottom-line  price as used-car  dealers, but                                                                    
     are  unwilling  to  accept   the  same  smaller  profit                                                                    
     The  only   objective  Section  1  will   meet  is  the                                                                    
     elimination of  competition from used-car  dealers with                                                                    
     new-car dealers.  We, used-car  dealers, will no longer                                                                    
     be able to bid against  our fellow dealers for current-                                                                    
     model  vehicles   at  various   auctions,  or   in  any                                                                    
     situation  that's   not  a  private  owner   or  rental                                                                    
     vehicle, because we won't be able to sell them.                                                                            
     In the  last four  to five  years, used-car  dealers in                                                                    
     Alaska have evolved  from the dirt lot  with 20-30 cars                                                                    
     for under $10,000, to paved,  well-lit lots with 100 or                                                                    
     200 high-quality  vehicles.   We've sliced out  a chunk                                                                    
     of  the  new-car  dealers' pie,  and  that's  why  they                                                                    
     support ... Section  [1].  If their  past customers had                                                                    
     been  treated  well  the last  few  decades,  maybe  we                                                                    
     wouldn't be so successful.                                                                                                 
     So  you might  wonder why  ... [we  aren't] happy  with                                                                    
     cars from  rental fleets,  also.   Well, let's  look at                                                                    
     the  type of  inventory  that a  rental fleet  carries:                                                                    
     ...  sedans,   minivans,  and  a  few   sport  [utility                                                                    
     vehicles].   When was  the last time  you saw  a rental                                                                    
     fleet  of  Eddie  Bauer  Ford  Expeditions,  or  three-                                                                    
     quarter-ton crew cab diesels?                                                                                              
CHAIR WEYHRAUCH informed Ms. Petram that the bells calling the                                                                  
representatives onto the House floor had just rung.  He stated                                                                  
his desire to hear Mr. Lyberger's testimony, as well.                                                                           
MS. PETRAM continued paraphrasing her written testimony, as                                                                     
     Those are  the vehicles Alaskan buyers  are looking for                                                                    
     - they  want the trucks  and the bigger  sport [utility                                                                    
     vehicles], not the sedans and minivans.                                                                                    
     [Used-car]  dealers also  use  local  lenders.   Ninety                                                                    
     percent of the  time we use Alaska  USA [Federal Credit                                                                    
     Union], Denali  [Alaskan Federal Credit  Union], Credit                                                                    
     Union 1,  [or] Alaska  State Employees  [Federal Credit                                                                    
     Union].    New-car  dealers,  when   they  sell  a  new                                                                    
     vehicle,  ... primarily  use ...  out-of-state factory-                                                                    
     lending institutions -  like [General Motors Acceptance                                                                    
     Corporation],   Ford  Motor   [Company]  Credit,   [or]                                                                    
     Chrysler  Credit  -  with subsidized  rates  [of]  zero                                                                    
     percent [or] 2.9 percent, [for example].                                                                                   
     Again, a  "2003" is obviously a  more expensive vehicle                                                                    
     than a "2001."  When  you limit the used-car dealers to                                                                    
     just a  few current-model  vehicles that they  can sell                                                                    
     and arrange financing for,  you're also hurting Alaskan                                                                    
     banks and  credit unions' portfolios.   They're missing                                                                    
     out  on  the  high-dollar   2003  loans.    Right  now,                                                                    
     Alaska's credit  unions have some  of the  lowest rates                                                                    
     in  the  country, like  4.99  percent  with Alaska  USA                                                                    
     [Federal Credit  Union], and  support from  their local                                                                    
     dealers is a big factor in keeping the rates low.                                                                          
     Just this  year - January  ... [through] ...  [part of]                                                                    
     May  -  our  dealership  alone  sent  the  local  banks                                                                    
     $12,925,991  in high-quality  loans.   And  I say  high                                                                    
     quality, because  usually you have to  have good credit                                                                    
     to buy  a $30,000 truck.   Since the "2003s"  cost more                                                                    
     than  the older  models, it  is  safe to  say ...  that                                                                    
     about 50 percent  of that money was  on current models.                                                                    
     So, that's  [$6,500,000] of lending money  that went to                                                                    
     local institutions that won't be there.                                                                                    
CHAIR WEYHRAUCH ascertained that Mr. Lyberger was able to come                                                                  
back later in the day to give his testimony.  He then asked Ms.                                                                 
Petram to wrap up her testimony.                                                                                                
MS. PETRAM continued paraphrasing her written testimony as                                                                      
     It's  not  just  us.     There's  also  other  dealers:                                                                    
     Affordable, Quality, Budget,  Phil Hawes, [and] Variety                                                                    
     - that's  just to name a  few.  So, there's  that chunk                                                                    
     of money that [is] coming from those dealers, also.                                                                        
     Also,  when   an  Alaskan  bank  has   a  current-model                                                                    
     repossession  that they  want to  recoup some  of their                                                                    
     losses  on -  like a  first-payment default  ... -  how                                                                    
     many dealers  will they be able  to ask to bid  on that                                                                    
     vehicle?   Say, for  example, a Cadillac  or a  Mazda -                                                                    
     there's  only one  in Anchorage.   So,  basically, they                                                                    
     have  to  take what  that  dealer  gives them  for  the                                                                    
     vehicle;  they can't  send it  out to  bid and  get the                                                                    
     most money back on their loss.                                                                                             
     Used dealers also spend millions  of dollars with local                                                                    
     independent  mechanics and  parts suppliers.   New  car                                                                    
     dealers get  all their parts  from the factory,  or ...                                                                    
     [a] large portion of ... [them].                                                                                           
     So,  how  exactly does  Section  1  help the  State  of                                                                    
     Alaska or its  people?  Aside from taking  a huge chunk                                                                    
     of  money  away  from local  Alaskan  businesses  [and]                                                                    
     lending  institutions, it  ensures the  $1,995 and  the                                                                    
     $2,995  additional  dealer   mark-up  ...  or  addendum                                                                    
     sticker ... on new vehicles  will stay.  It also forces                                                                    
     any intelligent car buyer looking  for a good deal on a                                                                    
     late-model vehicle  to spend  their money out  of state                                                                    
     and have the vehicle  shipped from Washington or Idaho,                                                                    
     or   any  other   state  without   a  law   prohibiting                                                                    
     competition.  Every  $1,000 that a customer  saves on a                                                                    
     vehicle  is $20  disposable  income -  every month,  in                                                                    
     their pocket  - to spend  on whatever else  they choose                                                                    
     ....   So, I  thought we were  trying to  stimulate the                                                                    
     economy and  increase consumer spending in  Alaska, not                                                                    
     stifle it.                                                                                                                 
     So, in  conclusion, after browsing through  the already                                                                    
     existing Alaska  Statutes in the handout  that Jim gave                                                                    
     you, you have  to ask yourself what the  real intent of                                                                    
     Section  1  is, and  [if  it's]  fair  and just.    And                                                                    
     wouldn't  your constituents  appreciate  the chance  to                                                                    
     make  their  own  decision  on   where  they'll  buy  a                                                                    
     current-model vehicle?                                                                                                     
     I would submit that Section  1 needs to be removed from                                                                    
     HB 272 or rewritten without the words "current model".                                                                     
[HB 272 was held over.]                                                                                                         
Number 1519                                                                                                                     
The House State Affairs Standing Committee meeting was recessed                                                                 
at 10:03 a.m. to a call of the chair.  [The meeting was                                                                         
reconvened May 14, 2003.]                                                                                                     

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