Legislature(2003 - 2004)
05/13/2003 08:09 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ 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
date."
- 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 -
REFERRALS
05/01/03 1236 (H) TRA, FIN
05/01/03 1236 (H) FN1: INDETERMINATE(GOV/ALL
DEPTS)
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 -
REFERRALS
05/08/03 1477 (H) STA, FIN
05/08/03 1477 (H) FN1: (DEC)
05/08/03 1477 (H) GOV. TRANSMITTAL LETTER
FORTHCOMING
05/09/03 1521 (H) GOV. TRANSMITTAL LETTER
RECEIVED
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 -
REFERRALS
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,
GRUENBERG,
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
DEPTS)
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 -
REFERRALS
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
Committee
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,
DAHLSTROM,
05/12/03 1560 (H) ROKEBERG, ANDERSON; AM:
GUTTENBERG
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
questions.
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
questions.
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
eliminated.
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
computer.
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
doings.
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
notes.
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
eligibility.
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
notice.
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
regulations.
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
million.
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
approval.
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
well.
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]
can't.
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
duty.
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
resolution.
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
qualified.
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
committee.
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
testimony.
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
follows:
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]
take.
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
cars.
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
Alaska.
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
margin.
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
follows:
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
follows:
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.]
ADJOURNMENT
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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