Legislature(1995 - 1996)
03/20/1996 01:15 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE March 20, 1996 1:15 p.m. MEMBERS PRESENT Representative Gary Davis, Chairman Representative Beverly Masek, Vice Chair Representative Jerry Sanders Representative Bill Williams Representative Don Long MEMBERS ABSENT Representative Jeanette James Representative Tom Brice OTHER HOUSE MEMBERS PRESENT Representative Norman Rokeberg COMMITTEE CALENDAR *HOUSE BILL NO. 496 "An Act relating to transportation of members of the Alaska National Guard by the Alaska marine highway system." - MOVED OUT OF COMMITTEE *HOUSE BILL NO. 518 "An Act exempting certain persons engaged in selling or servicing certain vehicles from overtime wage requirements." - HEARD AND HELD *HOUSE BILL NO. 543 "An Act establishing a preference when entering into state airport land leases." - HEARD AND HELD *HOUSE BILL NO. 24 "An Act relating to the offense of operating a motor vehicle, aircraft, or watercraft while intoxicated; relating to presumptions arising from the amount of alcohol in a person's breath or blood; and providing for an effective date." - HEARD AND HELD *HOUSE BILL NO. 436 "An Act relating to purchase and sale of mobile homes by mobile home dealers or agents; to mobile home titles; and providing for an effective date." - BILL POSTPONED (* First public hearing) PREVIOUS ACTION BILL: HB 496 SHORT TITLE: FERRY TRANSPORTATION FOR NAT GUARD MEMBER SPONSOR(S): SP CMTE MILITARY & VETERANS AFFAIRS JRN-DATE JRN-PG ACTION 02/12/96 2723 (H) READ THE FIRST TIME - REFERRAL(S) 02/12/96 2723 (H) MLV, TRANSPORTATION 03/06/96 (H) MLV AT 5:00 PM CAPITOL 17 03/11/96 3060 (H) MLV RPT 4DP 1AM 03/11/96 3060 (H) DP: MULDER, KOTT, IVAN, FOSTER 03/11/96 3060 (H) AM: DAVIES 03/11/96 3060 (H) FISCAL NOTE (DOT) 03/20/96 (H) TRA AT 1:00 PM CAPITOL 17 BILL: HB 518 SHORT TITLE: OVERTIME COMP FOR VEHICLE SALES PEOPLE SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 02/15/96 2776 (H) READ THE FIRST TIME - REFERRAL(S) 02/15/96 2776 (H) TRANSPORTATION, LABOR & COMMERCE 02/28/96 (H) TRA AT 1:00 PM CAPITOL 17 02/28/96 (H) MINUTE(TRA) 03/20/96 (H) TRA AT 1:00 PM CAPITOL 17 BILL: HB 543 SHORT TITLE: STATE AIRPORT LAND LEASE PREFERENCE SPONSOR(S): TRANSPORTATION JRN-DATE JRN-PG ACTION 03/14/96 3149 (H) READ THE FIRST TIME - REFERRAL(S) 03/14/96 3149 (H) TRANSPORTATION 03/20/96 (H) TRA AT 1:00 PM CAPITOL 17 BILL: HB 24 SHORT TITLE: LOWER ALCOHOL LIMIT TO 0.08 FOR OMVI'S SPONSOR(S): REPRESENTATIVE(S) THERRIAULT,ELTON,Davies,Bunde JRN-DATE JRN-PG ACTION 01/06/95 26 (H) PREFILE RELEASED 01/16/95 26 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 27 (H) TRA, JUD, FIN 01/18/95 74 (H) COSPONSOR(S): DAVIES 01/19/95 88 (H) COSPONSOR(S): BUNDE 03/20/96 (H) TRA AT 1:00 PM CAPITOL 17 BILL: HB 436 SHORT TITLE: MOBILE HOME DEALERS & TITLES SPONSOR(S): REPRESENTATIVE(S) MARTIN JRN-DATE JRN-PG ACTION 01/19/96 2489 (H) READ THE FIRST TIME - REFERRAL(S) 01/19/96 2489 (H) TRANSPORTATION, L&C, FINANCE 03/20/96 (H) TRA AT 1:00 PM CAPITOL 17 03/27/96 (H) TRA AT 1:00 PM CAPITOL 17 WITNESS REGISTER GEORGE DOZIER, Junior, Legislative Aide for Representative Kott Alaska State Legislature State Capitol, Room 432 Juneau, AK 99801 Telephone: (907) 465-6882 POSITION STATEMENT: Testified on HB 496 and HB 518 STEVE ALLWINE, Representative Alaska Auto Dealers 8725 Mallard Street Juneau, Alaska 99803 Telephone: (907) 789-1386 POSITION STATEMENT: Testified on HB 518 DEAN BAKER, Apprentice Alaska Auto Dealers 8725 Mallard Street Juneau, Alaska 99803 Telephone: (907) 789-1386 POSITION STATEMENT: Testified on HB 518 JAMES D. HINES, Technician Alaska Auto Dealer Association 8725 Mallard Street Juneau, Alaska 99803 Telephone: (907) 789-1386 POSITION STATEMENT: Testified on HB 518 ED FLANAGAN, Deputy Commissioner Office of the Commissioner Department of Labor P.O. Box 21149 Juneau, Alaska 99802-1149 Telephone: (907) 465-2700 POSITION STATEMENT: Testified on HB 518 JOSHUA DONALDSON, Legislative Aide To Representative Therrriault Alaska State Legislature State Capitol, Room 421 Juneau, AK 99801 Telephone: (907) 465-4797 POSITION STATEMENT: Testified on HB 24 JUANITA HENSLEY, Chief Driver Services Division of Motor Vehicles Department of Public Safety P.O. Box 20020 Juneau, Alaska 99811-0020 POSITION STATEMENT: Testified on HB 24 LENNI GORSUH, Lobbyist Miller Brewing Company 213 3rd Street Juneau, Alaska 99801 Telephone: (907) 463-3531 POSITION STATEMENT: Testified on HB 24 KURT PARKAN, Deputy Commissioner Office of the Commissioner Department of Transportation and Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 Telephone: (907) 465-6977 POSITION STATEMENT: Testified on HB 543 HOWARD FOWLER, General Manager NATAK Aviation P.O. Box 190022 Anchorage, Alaska 99507 Telephone: (907) 277-4703 POSITION STATEMENT: Testified on HB 543 RICHARD JENSEN, Former Airport Manager 2020 Abbott Road, Number 3 Anchorage, Alaska 99507 Telephone: (907) 349-7191 POSITION STATEMENT: Testified on HB 543 CHARLES COLE, Attorney Representing Fairbanks Air Taxi Charters 406 Cushman Street Fairbanks, Alaska 99701 Telephone: (907) 452-1124 POSITION STATEMENT: Testified on HB 543 JACK BIRMINGHAM 6160 South Airpack Drive Anchorage, Alaska 99502 Telephone: (907) 248-4422 POSITION STATEMENT: Testified on HB 543 PHIL LIVINGSTON, Chair Legislative Committee Vice-President Alaska Airmen's Association P.O. Box 580 Girwood, Alaska 99587 Telephone: (907) 783-3163 POSITION STATEMENT: Testified on HB 543 BILL INGALDSON, Attorney 711 H Street, Suite 500 Anchorage, Alaska 99501 Telephone: (907) 258-8750 POSITION STATEMENT: Testified on HB 543 DAVE KLOSTERMAN, Member Lake Hood Leaseholders Association 4501 Aircraft Drive Anchorage, Alaska 99502 Telephone: (907) 243-3127 POSITION STATEMENT: Testified on HB 543 ACTION NARRATIVE TAPE 96-12, SIDE A Number 000 The House Transportation Standing Committee was called to order by Chairman Gary Davis at 1:15 p.m. Members present at the call to order were Representatives G. Davis, Masek, Long, and Williams. A quorum was present. This meeting was teleconferenced to Anchorage and Fairbanks. CHAIRMAN GARY DAVIS announced that the agenda was HB 496, HB 518, HB 24 and HB 543. He said HB 436 would be rescheduled. HB 496 - FERRY TRANSPORTATION FOR NAT GUARD MEMBER CHAIRMAN GARY DAVIS announced that the first item was HB 496, an act relating to transportation of members of the Alaska National Guard by the Alaska marine highway system. Number 0100 GEORGE DOZIER, Junior, Legislative Aide for Representative Kott, said HB 496 provides free transportation to Alaska National Guard members when traveling to and from their duties as guard members on a space available basis. He said this is seen as one way of assisting individual who are assisting the state of Alaska as well as being a recruitment tool. He said there are a lot of individuals, who are not on the surface highway, but on the marine highway, who have no way of getting to and from National Guard drills. He said HB 496 would allow them to participate in these exercises. Number 0199 CHAIRMAN GARY DAVIS said HB 496 appears to be a small part in which the legislature can assist Alaska National Guard members. Number 0223 REPRESENTATIVE BILL WILLIAMS made a motion to move HB 496 out of committee with attached fiscal note and individual recommendations. Hearing no objections HB 496 was moved from the House Standing Committee on Transportation. HB 518 - OVERTIME COMP FOR VEHICLE SALES PEOPLE Number 0286 CHAIRMAN GARY DAVIS announced that the next item on the agenda was HB 518, an act exempting certain persons engaged in selling or servicing certain vehicles from overtime wage requirements. GEORGE DOZIER, Junior, Legislative Aide for Representative Kott, said that HB 518 modifies the Alaska Wage and Hour Act, specifically those provisions which mandate the payment of overtime. He said the overtime requirement has a number of exemptions already in place and HB 518 adds another one. He said this exemption would apply to employers that operate non- manufacturing establishments which are primarily engaged in the business of selling vehicles to purchasers. He said the affected employees would be salesmen, partsmen or mechanics who primarily engage in selling or servicing automobiles, trucks or farm implements. Number 0384 STEVE ALLWINE, Representing, Alaska Auto Dealers, said HB 518 will bring the state of Alaska in line with the federal overtime exemption for the automotive industry, this makes HB 518 a narrow piece of legislation which his organization feels is appropriate. He said his organization's interest in HB 518 is in the area of technicians and whether they should be paid as hourly employees or as flat rate personnel. He said the industry standard for technicians, whether body or mechanical, is dependent on the flat rate. He said this means that a specific repair is based on a published time, determined by the time it would take to complete the repair under normal circumstances. The technician performs the specific repair and is either faster or slower than the published time. In either situation the employee is compensated at the published time. MR. ALLWINE said as the employee's skills increase his or her efficiency also increases and the result is a significant increase in income. Efficiency is also increased because technicians know that by improving their education and skills they become more effective and are rewarded for those efforts. In Alaska, technicians are rewarded for improving their skills but never reach the income potential of their counterparts, in other states, because the hours are limited to an eight hour day. He said the employees do not have the opportunity to pick up more time because of the overtime situation. He said, in other states, employees have the opportunity to dictate and work additional hours if they choose. MR. ALLWINE said at the national and state level there is a shortage of qualified technicians. He said the shortage offers an excellent opportunity for local employment. He said opportunities for training are limited and his organization is forced to "home grow" most of the personnel. He said current employees express opposition to the current overtime laws because they restrict that additional earning opportunity. He said, in other areas of the country, technicians have the opportunity to earn as much income as they desire by flexibility in hours. He said, in the state, the current circumstances hinder the ability to attract and retain qualified technicians. He said, due to the significant training and investment, it is in everyone's best interest to retain personnel. Number 0661 MR. ALLWINE said HB 518 will help reduce the loss of quality employees to employers outside of Alaska. He said, to the customers, the benefits of using publishing times and paying for repairs based on flat rate, a more accurate estimation can be made of the repair. He said HB 518 will allow the technicians to complete a job that otherwise would be carried over into the next days business. He said HB 518 also provides continuity. If there is a dealer or a service facility that works two shifts of technicians, a technician might start the job with the second technician completing the job. MR. ALLWINE said HB 518 takes the pressure off the work for the quick completion of jobs within the eight hour work period. The bill allows flexibility in scheduling work loads, eliminates peaks and valleys and increases employee moral by giving the employees an opportunity to enjoy a higher earning capacity. He said his organization would appreciate positive legislative support for HB 518. Number 0693 CHAIRMAN GARY DAVIS said HB 518 brings the state in line with other federal law and asked how many other sections of regulated employment are still out of line with federal law in the Alaska statutes. Number 0716 MR. ALLWINE said he did not know. Number 0750 DEAN BAKER, Alaska Auto Dealers, said he is in an apprenticeship with a local car dealer. He said he would be able to make more money by putting more effort into it. He said being limited to 40 hours per week would not give him the incentive to learn additional skills. He said he currently works on an hourly rate, but when he goes flat rate, he wants the opportunity to make more money. Number 0800 CHAIRMAN GARY DAVIS clarified that Mr. Baker currently works an eight hour shift and then asked how often Mr. Baker had to leave work uncompleted. Number 0819 MR. BAKER said he frequently has to leave work unfinished. He said that if he had the opportunity to make more money he would stay longer and complete the job. Number 0844 JAMES D HINES, Technician, Alaska Auto Dealer Association, was next to testify. He said he supported HB 518 because if it does not pass his overtime will be cut, his wages will decrease and he prefers earning more money. Number 0881 REPRESENTATIVE BEVERLY MASEK asked what the situation has been in the past and what the present situation is. Number 0893 MR. HINES said his work place does not force him to work overtime, he has chosen to work extra hours on his own. He said, he is afraid that if HB 518 passes, his overtime will be cut when they hire more help in order to get jobs done in the eight hour time frame. Number 0930 REPRESENTATIVE MASEK asked if needing to get the job done in eight hours affected his quality of work. MR. HINES said it did not affect his quality of work because if a job is done in an unsatisfactory manner he needs to redo it. He said he would not get paid for that work. He said he must do the job correctly the first time or else he is in trouble. Number 0962 REPRESENTATIVE WILLIAMS clarified that if HB 518 goes through it would hurt Mr. Hines. MR. HINES said if HB 518 cuts the overtime by making an eight hour day, it would hurt him. REPRESENTATIVE WILLIAMS said, it was his understanding, that HB 518 cut overtime compensation. MR. HINES said he wants HB 518 to pass so that he can get his overtime. REPRESENTATIVE WILLIAMS clarified that Mr. Hines supported HB 518. Number 1006 REPRESENTATIVE DON LONG referred to Alaska Statute 23.10.060 regarding the payment of overtime. He said HB 518 will no longer allow certain employees the right to receive overtime. MR. HINES said he would support straight time with no overtime. Number 1043 REPRESENTATIVE LONG said HB 518 does not address flat rate, it just exempts overtime for automotive partsmen and mechanics, et cetera, by putting them in a supervisory category which exempts them from overtime. Number 1090 ED FLANAGAN, Deputy Commissioner, Office of the Commissioner, Department of Labor (DOL), was next to testify. He said the DOL is opposed to HB 518, as they are opposed to most exemptions which take away the very basic protection of overtime after 40 hours. He said the long-standing, pre-statehood policy, the state Wage and Hour Act, which protects these basic rights. He said the state act is not congruent with federal Fair Labor Standards Act, but added that the federal government is not necessarily the repository of all wisdom on what is a proper law. MR. FLANAGAN said it is true as Mr. Allwine said, that a similar or verbatim exemption is in the federal law. He said this exemption is not consistent throughout the nation and added that only four states have specific exemptions for the class of worker who are service advisors. He said 16 states, "Washington D.C., the Virgin Islands, and Puerto Rico don't." He clarified that HB 518 applies to partsmen as well as service advisors. He said there is a current lawsuit where several of "those workers" have come forward to receive their overtime pay and added that DOL has ruled that it is their right under the law. He said the suit probably has something to do with support for HB 518. Number 1179 MR. FLANAGAN clarified that HB 518 only grants this exemption to auto dealers, to sellers and non-manufacturing industries, giving them a competitive advantage over the service stations who are not affiliated with an auto sales arrangement. Number 1205 MR. FLANAGAN said there are current flat rate situations despite the legal issue of flat rates. He said employers require mechanics to be available, without pay, at the work site for hours in excess of the hours they are compensated, if there is no work to be done. He said this is not always the case, but it is not uncommon. He said diagnostic and warranty work may require mechanics to work without pay and said auto dealers promote "freebies" that are not covered under the book rate. He said a difficult repair, not as a result of the mechanic, might require excess hours of work without compensation and in a case where something comes back and needs to be redone, the mechanic works for free. He said a flat rate could be structured which would have the basic guarantees of minimum wage and overtime. He said this illegal flat rate used by service stations includes other work, such as pumping gas and cleaning vehicles, which is not compensated under the flat rate. Number 1270 MR. FLANAGAN said the basic public policy in the state of Alaska is that time worked is time paid. He said individual workers should not be able to abrogate the state's Wage and Hour Act. Number 1288 CHAIRMAN GARY DAVIS asked if HB 518 specifically brings the state law in line with federal law. Number 1297 MR. FLANAGAN said there is a provision in the federal Fair Labor Standards Act, the federal counterpart to the Alaska Wage and Hour Act which has, virtually verbatim, the same exception. Number 1311 REPRESENTATIVE LONG asked for more information regarding the illegal use of the flat rate. MR. FLANAGAN said the flat rate can occur within the law if employees are properly compensated for eight hours. He said, in the service advisor's lawsuit under the Wage and Hour Act, the employees worked 50 hour per week for a flat salary. He said these service advisors are not properly salaried employees. The three provisions for salaried employees include executive, administrative and supervisory. Number 1356 REPRESENTATIVE LONG asked if HB 518 would put the flat rate into place. Number 1380 MR. FLANAGAN said the flat rate would no longer violate the law if HB 518 went into affect. He said the employees, classified under HB 518, could work as much as they wanted to, paid or unpaid, if the employer charged by the book rate. He said the employees would be removed from the overtime protection. He said, he believed, that there were more employers favoring HB 518, than employees. Number 1391 CHAIRMAN GARY DAVIS asked if those, working on a book rate, were salaried employees. He also asked, if it was the employer or the employee who sets the book rate and if it takes longer than the listed hours to do a job, would the employee be compensated for this time. Number 1422 MR. FLANAGAN said the book rate lists the amount of hours the repair will take and then the shop rate is totalled into that many hours were the mechanics portion of the shop rate calculated by shop policy. Number 1445 REPRESENTATIVE WILLIAMS referred to the testimony and the letters in support of HB 518. He expressed confusion over this support when people would lose their ability to receive overtime. CHAIRMAN GARY DAVIS asked Mr. Allwine to explain the situation where employees would be putting in extra time. Number 1514 MR. ALLWINE said the employees would put in extra time by personal choice. He said if you bring your car in for a specific repair, in most cases the shop will go to a published manual such as Milton or Chilton which will list a time for the repair for example, two hours for the job. If the certified or journeyman technician can do the job in less than two hours he is still paid for two hours according to this flat rate. He said someone who doesn't have a lot of experience might take two and half hours, but he is only paid for two hours. He said there are ways around that circumstance, such as paying apprentices on a flat, hourly wage. If those apprentices work extended hours they are paid overtime for that time. Number 1710 MR. ALLWINE referred to the lawsuit regarding service advisors, and he said that his organization has no interest in the service advisor's interest in HB 518. He said the personnel and the dealers were concerned because the federal exemption also includes parts people and they don't feel that exemption is appropriate. He said their only interest in HB 518 is the technician issue and flat rate versus an hourly rate with the overtime provision. MR. ALLWINE said if a journeyman technician makes his living as a journeyman technician he works through the day, putting in his eight hours. He said the objective, during those eight hours, is to bill out as many hours as is humanly possible. If the journeyman technician can bill out 16 hours, he makes 16 hours. He said, the problem is, if the journeyman technician wants to come in early and pick up a couple of extra hours, he cannot do that without the employer approving this extra time and paying him the overtime. MR. ALLWINE said if HB 518 is enacted or modified so that it specifically deals with the technicians, you are giving them the ability to work according to the schedule that they want. He said, if there is no work, people will not stay at the shop. He said journeyman technicians do not sweep floors, and added that they have thousands of dollars in tools. He said HB 518 does not address service stations and other places. He said his association is not trying to do something which creates a problem for their employees. Number 1710 MR. ALLWINE referred to his experience and said that if he worked hard and did the job right, he could make more money. He said this incentive is good and an incentive that you don't get on time and a half. He said the income flat rate technicians are able to get cannot be matched. Number 1732 REPRESENTATIVE JERRY SANDERS asked how many people work 8 hours and get 16 hours of book rate done. Number 1746 MR. ALLWINE said journeyman technicians will be able to receive over eight hours of pay 90 percent of the time for eight hours of work. REPRESENTATIVE SANDERS asked if it was for 16 hours of pay. MR. ALLWINE said it was true some of the time. REPRESENTATIVE SANDERS said, in an overtime situation, an employee is going to get $120 worth of work done and asked what the problem was with paying that employee time and a half. He said it appeared that the journeyman technician would be earning beyond that amount. Number 1782 MR. ALLWINE said the interpretation by the DOL is not consistent and has created a guessing game by what that overtime calculation would be. He heard that a technician is paid $25 an hour if he works his eight hours. He said that if he produces ten hours worth of work within that eight hours then that lump sum, divided by eight hours becomes the figure used for overtime calculation. He said, as an employer, this overtime figure becomes significant when the customer is not being charged extra to compensate for the associated overtime costs. Number 1851 CHAIRMAN GARY DAVIS asked if the employer was restricted from charging more than the book rate. Number 1858 MR. ALLWINE said automotive repair shops are ethically required to charge the book rate. He said that there might be people who charge more, but most don't. He said you are at the mercy of the customer who might not return if you overcharge. Number 1878 MR. FLANAGAN said the book rate just lists the numbers of hours, he said the shop rate will vary from dealer to dealer. He said the shop rate throughout the community will probably be consistent. He said, it has been his experience, that the employee receives a third of the shop rate. He said it seems like there would be room for an overtime multiplier if they did get overtime. Number 1920 REPRESENTATIVE WILLIAMS asked for details about the book rate and how it is set up. Number 1923 MR. ALLWINE said all the manufacturer's have published specific repair book times, in addition there are other book rates which include Motor's and Chilton's. He said these book rates are pretty consistent. He said there was a comment about doing work and not being compensated for it and said this is not an accurate statement. He said, if the technician is working on electrical or diagnostic time, the industry standard cost is time and materials. He said there are specific rules which compensate the employees for that time which is compensated even if the technician says there is no problem. Number 1981 REPRESENTATIVE SANDERS repeated his question as to the work technicians perform in an eight hour day. Number 1996 MR. ALLWINE said he could not give concrete numbers, but did say that a significant majority of the journeymen technicians bill out more than eight hours in a given eight hour day. REPRESENTATIVE SANDERS asked him to guess an average as 50 percent, 100 percent more. Number 2019 MR. ALLWINE said he did not know how to respond to the question and be accurate. Number 2028 MR. FLANAGAN referred to Mr. Allwine's comment that the manufacturers allow some payment for diagnostic time on warrantee work. He said there is a lot of non-warrantee work that is done in the shops. He said the possession of thousands of dollars of tools does not put them on an independent contractor status. He said the technician might get a tool allowance, but they provide their own tools. He said these technicians are entitled to the very basic protection of overtime pay over 40 hours of work. Number 2051 CHAIRMAN GARY DAVIS said HB 518 was a House Labor and Commerce bill and asked Mr. Allwine if his organization requested this bill. MR. ALLWINE said his organization did not. MR. DOZIER said that he didn't know who had made the request for HB 518. Number 2069 CHAIRMAN GARY DAVIS referred to the many letters of support for HB 518 and said it might be possible to narrow the scope and the way in which the employee is paid, whether by a book rate or hourly. He said HB 518 will be held over until the sponsor, the Labor and Commerce Committee, could address some of the House Transportation Committee questions. HB 24 - LOWER ALCOHOL LIMIT TO 0.08 FOR OMVI'S Number 2174 CHAIRMAN GARY DAVIS said the next item on the agenda was HB 24, an act relating to the offense of operating a motor vehicle, aircraft, or watercraft while intoxicated; relating to presumptions arising from the amount of alcohol in a person's breath or blood; and providing for an effective date. He said the committee would only hear testimony on this bill today due to a request from the sponsor, Representative Therriault. JOSHUA DONALDSON, Legislative Aide to Representative Therrriault, read from the sponsor statement, "HB 24 lowers the legal definition of intoxication for the crime of driving while intoxicated from .10 percent to .08 percent blood alcohol level. This initiative would make it illegal to operate a motor vehicle, aircraft, or watercraft with a blood alcohol level of greater than .08 percent. Several studies have demonstrated that measurable impairment to operate a motor vehicle begins in most drivers at or below .05 percent blood alcohol level, at that all drivers are impaired at a blood alcohol level of .08 percent. Number 2211 Similar legislation has been passed in several other states and is being considered by many others. A blood alcohol threshold of .08 percent already exists throughout Canada, as in all of Europe. With alcoholism and alcohol related fatalities already taking a tremendous toll in Alaska, a reduced threshold will not only increase the odds of obtaining convictions for drunk driving, but will also increase driving safety. A study by the state of California showed that traffic fatalities were reduced by 12 percent after the implementation of .08 DWI laws. Number 2234 In December of 1993, the Supreme Court ruled in Haynes versus the Department of Public Safety that due to the margin of error inherent to the Intoximeter 3000 of .01, the actual level at which an operator of a motor vehicle should be convicted of drunk driving is .11. This clearly suggests an even greater need for .08 percent legislation." Number 2253 CHAIRMAN GARY DAVIS asked if all the fiscal notes have been collected and asked specifically if there was a fiscal note from the Department of Corrections. Number 2264 MR. DONALDSON said a fiscal note has not been received from the Department of Corrections. He said the sponsor could request one. CHAIRMAN GARY DAVIS said perhaps the department did not see a need for one. Number 2279 JUANITA HENSLEY, Chief, Driver Services, Division of Motor Vehicles (DMV), Department of Public Safety (DPS), said that HB 24 is the type of legislation that the DPS has supported for a number of years. She said it is felt that anytime you can reduce the number of drunk driving fatalities and injury accidents it benefits the state from a societal standpoint as well as reducing associated costs. Number 2319 MS. HENSLEY referred to a packet titled, "Strategies for Dealing with Persistent Drinking Driver," which was a report done in February 1995, by the Transportation Research Board. She said it was an independent research report including various specialists and their recommendations. She said the .08 percent blood alcohol level is supported by the Alaska Peace Officers Association, Transportation Research Board, the National Highway Traffic Safety Administration, the Mothers Against Drunk Drivers, et cetera. Number 2362 REPRESENTATIVE SANDERS asked if she had any figures to show what percentage of car accidents involve people who are between .08 percent and .1 percent. Number 2373 MS. HENSLEY said she did not have those figures on hand, but would get them and make them available to him. She said there are Alaskan figures for all types of accidents that occur in the state. She said there is a data base, called the Fatal Accident Reporting System (FARS), which has all the fatal accidents that occur in states throughout the nation. She said all the factors are measured and put into that data base. She said all accident reports are sent to the Department of Transportation (DOT) and are statistics that are kept through the Highway Analysis System (HAS) system. Number 2404 REPRESENTATIVE WILLIAMS referred to a time when the state did "move it down once." He said if you watched the police reports, throughout the state, DWIs did not stop. He asked if DPS was thinking of increasing the fine. He said, currently, people are fined, they get out and the next weekend they are driving under the influence again. He said these people are not afraid of the laws. He suggested that the penalty be increased. Number 2458 MS. HENSLEY said that last year the legislature passed a felony drunk driving law which makes the third offense, within a five year period, a felony. TAPE 96-12, SIDE B Number 0000 MS. HENSLEY said, in 1983, the legal limit was set at .10 percent or greater. She said in 1983, the legislature proposed the Administrative License Revocation Act which has an inherent deterrent affect. She said in 1984 there was a total of, a little over, 7,700 arrest statewide whereas last year there was barely 5,000. She said these changes have made an impact. She said decreases have occurred in the size of the State Trooper force, but added that the municipality and cities have increased in their force in some areas, particularly in Juneau and Anchorage. She said driving under the influence is an issue that the state has tried to address. She said the DPS supports stronger measures to help the public. She said society, as a whole, must realize that alcohol and a car does not mix. Number 0060 MS. HENSLEY said in the United States, on an average, there is over 56,000 people killed per year in automobile accidents a majority of which are alcohol related. Number 0068 REPRESENTATIVE SANDERS said he agreed that alcohol and driving do not mix. He said he was not in the legislature when they voted for the .10 percent but he did vote for making the third conviction a felony. He said he would be glad to vote for stiffer penalties. He questioned the inconvenience to the overall public, who never has had a car accident and has two or three drinks falling between the .08 percent and .10 percent. He wondered if the inconvenience is offset by the savings the state will receive. He said the people who fall between .08 percent and .10 percent are the real problem. He said the problem is the people who fall between 1.7 percent and 2.4 percent. He said that problem should be addressed and the focus should be away from social drinkers. Number 0117 MS. HENSLEY said, as part of her work, she has had to deal with this issue for 16 years. She said, during that time, she has seen many of the same names coming across her desk. She said there are a lot of alcohol problems and many people lose their license as a result. She said some individuals have lost their license until the year 2060 because they continue to drive. She said the average blood alcohol in Alaska is .19, which is nearly twice the limit. Number 0157 MS. HENSLEY mentioned the Supreme Court case, Haynes versus the state of Alaska, which determined that the state must consider the margin of error of the Intoximeter instrument. She said that margin of error has been placed at .01 percent. If the state has an arrest that is a .10, the person is not considered intoxicated until that person is .11 percent. She said this issue must be addressed and asked that HB 24 be amended to allow the inherent margin of error to be taken into consideration. She said the test at the time should be valid, as long as the machine is calibrated according to the standard criteria set in the law. Number 0193 REPRESENTATIVE SANDERS clarified that the margin of error worked both ways. He then asked if someone with a blood alcohol level of .07 percent, with a reading of .08 percent, could be in as much trouble as someone with a blood alcohol level of 3.6 percent. Number 0215 CHAIRMAN GARY DAVIS said that would be true if the margin of error was .01 percent. He then asked how long the .10 percent has been in effect and how long the .04 percent for commercial drivers has been in effect. Number 0224 MS. HENSLEY said the effective date of the .10 percent in law was October 18, 1983 and the effect date of the .04 percent in law was April 1, 1992. Number 0261 LENNI GORSUH, Lobbyist, Miller Brewing Company, was next to testify. She said most of the concern, her company has, was expressed by Representatives Williams and Sanders. She said the company believes that most of the fatal crashes are most often caused by people well above .10 percent and that it is the problem drinkers which legislation must address, rather than the social drinkers. She referred to a chart which gives an indication of where the fatal crashes occur depending on the blood alcohol content. She said the figures listed on the chart would concur with the figures by Ms. Hensley. Number 0301 MS. GORSUH said her company thinks the most effective deterrent to drunk driving consists of stricter law enforcement, expanded consumer awareness and increased severity of the penalties levied for drunk driving. She said her company has supported this type of activity. She said people need to know that if they drive drunk, they will be caught, arrested and prosecuted. HB 543 - STATE AIRPORT LAND LEASE PREFERENCE Number 0330 CHAIRMAN GARY DAVIS said the next item on the agenda was HB 543, an act establishing a preference when entering into state airport land leases, sponsored by the House Transportation Committee. CHAIRMAN GARY DAVIS said HB 543 said this bill was requested because current regulations, as well as amended regulations, which have a detrimental affect on those people leasing airport lands. He said HB 543 gives a preference to those people who have leased airport lands and have made a substantial investment in those leases. He said those assets might be in jeopardy when a lease comes up for renewal. He said, currently, at the end of a 25 year lease where assets have been added to that lease, for example the construction of a $100,000 hangar, the lease is put out to bid and the person who invested in that lease might stand to lose their investment. He concluded that HB 543 gives preference in renewing the lease and said there is a constitutional issue related to HB 543. Number 0448 REPRESENTATIVE NORMAN ROKEBERG proposed three separate amendments to HB 543. He said he had spent over 25 years as a commercial real estate broker, primarily leasing commercial office space and ground in the Anchorage area as well as in the rest of the state. He said the airport land lease has been an issue for a long time and that it was brought to his attention again by the Alaska Air Carriers Association (AACA) who have asked for some statutory changes. Number 0526 REPRESENTATIVE ROKEBERG said HB 543 would apply to both rural and international airports and that his amendments would only apply to existing leases, not for future leases. He said there is one exception to this, a revisionary interest clause for improvements in any future leases. He said this clause has to do with leasehold improvements which include the buildings, the tarmac pavement, the understructure subsurface area, field distributions and storage tanks, essentially any improvement made by a lessee or tenant on the land. He said there have been substantial problems in the past because there has been either a failure on the state to include a reversionary clause in the lease document or there has been a lack of clarity within the document. He said the disposition of improvements, at the expiration of the lease, is in question. He said there are regulations that currently exist, but they are not administered evenly. Number 0613 CHAIRMAN GARY DAVIS clarified that a revisionary interest clause means that the improvements revert back to the owner at the end of the lease. Number 0619 REPRESENTATIVE ROKEBERG said improvements can revert back to the owner and said this relates to Amendment 2. He said this amendment states that "leases made prior to the effective date the lessees shall have the right to elect to abandon, remove, or sell to a succeeding tenant all or some of the leasehold improvements installed and paid for by the lessee." He said Amendment 2 would occur in a bargain for a leasehold situation, the improvements would either revert to the tenant or revert back to the landholder depending on the agreement. He said the bureaucracy is not working with the private sector of this state to promote and foster aviation in the business community. Number 0716 REPRESENTATIVE ROKEBERG said the renewal provisions, which are located in Section 1 of HB 543, relates to Amendment 1 which grants a right of renewal to the existing tenants only. He said the state should be in a position to bargain for new tenants and new business coming in to the airport. He said new statutes will have some bearing on future negotiations, and added that the bureaucracy is having an affect on the business community. He said the renewal option only affects current leases and stipulates that the terms, conditions and rents of the new extended period have to be mutually agreed upon in a reasonable amount of time. He said if the terms, conditions and rents are not agreed upon within a reasonable amount of time, there is a provision for a three member arbitration panel which would determine the fair market value rent and other terms or additions for that particular lease in order to resolve the conflict between the state and tenant. REPRESENTATIVE ROKEBERG said additional language was added at the bottom of Amendment 1, which allows the state to deny renewal or extension of the lease if the state can prove that it is in its best interest or consistent with the airport master plan that they don't renew it. Number 0778 REPRESENTATIVE ROKEBERG said Amendment 1 and HB 543 both include language, "offering under a long term lease scenario." He said he felt five years or longer is a long term lease. He said a person with a 35 year lease should have the right to extend that lease for five years. He said, currently, the statute limits the length of a ground lease or land lease in the state of Alaska to 55 years and added that he supports this concept. He said it is his intention that the lease term and extension periods be limited to 55 years. He said an additional amendment might be needed to add this provision. Number 0854 REPRESENTATIVE ROKEBERG repeated that his intent was to ameliorate business problems that are occurring in industry and affecting the state's business community. Number 0865 REPRESENTATIVE ROKEBERG said Amendment 3 provides findings and a statement of purpose for HB 543. He said the sections need to be renumbered, he said subsection 2 includes (c) and should include (d) below. He said he would amend this amendment. He said the findings are intended to overcome any potential constitutional challenge to this legislation by laying out the reason for the statutory change. Number 0926 KURT PARKAN, Deputy Commissioner, Office of the Commissioner, Department of Transportation and Public Facilities, (DOT/PF) was next to testify. He said the Administration supports changing the language in the statute to allow the right of first refusal for an existing tenant to enter into a new lease. He said the biggest concern is making HB 543 legally defensible. He said DOT/PF has drafted up a bill which addresses the same concerns and adequately addresses the legal concerns as well. He said in reviewing HB 543 and the comments that Terry Banister (ph.) had submitted, findings were included in the Administration's legislation to meet the constitutional challenges. Number 1042 MR. PARKAN said the state wants to create an environment that is good for the aviation business and that the state wants to do what they can to assist the current tenants. He said he just received the amendments proposed by Representative Rokeberg so he could not comment on them. He said the expert on statewide aviation leasing policy is in Washington D.C. trying to put together a state position opposing proposed Federal Aviation Administration (FAA) regulation regarding a ten seat rule for certified airports. Number 1096 CHAIRMAN GARY DAVIS referred to the right to refusal provision and asked him about the legalities in including this provision. Number 1116 MR. PARKAN said the state would prefer to give the existing tenant the right for refusal, giving a preference to a new lease. CHAIRMAN GARY DAVIS said it appeared the Administration's bill and HB 543 looked at the same thing. Number 1146 REPRESENTATIVE ROKEBERG said he chose not to use the concept of the first right of refusal in his amendments because this concept in law requires a bonified third party to come forward for the lease. He said if an existing tenant wanted to renew his lease and the state replied that the lease needed to be put up for bid, another bid was put up which the existing tenant could match. He said if there is knowledge that a first right of refusal exists, a bonified third party might not come forward. He said first right of refusals are not currently in practice, they have been replaced with first rights of offer. He said his amendment gives the existing tenant the first right of offer and does not require a third party to come forward. Number 1249 REPRESENTATIVE WILLIAMS asked if the committee members have received a copy of the Administration bill draft. Number 1256 CHAIRMAN GARY DAVIS said it was located in the committee packet. He added that he had no pride of authorship, but felt the best version should go forward for the protection and passage by everyone. Number 1280 MR. PARKAN echoed Chairman Davis' comment. He said the Administration bill is a draft of a transmittal letter as well as the legislation itself. He said it include sections of which are also included in the proposed amendments. CHAIRMAN GARY DAVIS said he wanted to hear testimony on HB 543 and was not sure it would be moved today as there might need to be additional work done on this bill. Number 1309 REPRESENTATIVE WILLIAMS asked about the proposed Amendment 1, page one, line five, after the word, "lease" and asked him to explain this section. He asked how this proposed amendment would affect him if he wanted to build a building that would last 55 years and only a five year lease would be granted. Number 1374 REPRESENTATIVE ROKEBERG said that part of Amendment 1 is only addressing renewals of leases. He said the language could be clarified in Amendment 1 and added that most of the airport leases are 30 to 35 years. He said this provision was added so that if you were close to retirement and only wanted to extend it by five years you could do so. He said the 55 year limit is a statutory limit. CHAIRMAN GARY DAVIS said the 55 year maximum limit might be the intent of some of the parties. Number 1445 HOWARD FOWLER, Alaskan Air Carriers Association (AACA), said he has been dealing with the issues of dispositions of improvements on expiring leases and the requirement in the lease contract of investments on a sliding scale for the length of the lease. He said if a lease is renewed and there is an operating business which doesn't need any more capital improvements, the requirement that more money should be invested is unnecessary. Number 1520 CHAIRMAN GARY DAVIS asked him if the lease was located at the Anchorage International Airport. MR. FOWLER said his company is called Natak Aviation and they have a 200 by 200 foot lot with a helicopter hangar on it at Lake Hood. He said the lease expired last July and he requested that either the lease be extended on the basis of additional improvements exceeding those initially required or that he lease on a month by month basis until "sane" policy is involved and he can sign a longer lease contract. Number 1571 CHAIRMAN GARY DAVIS said it appeared that the people who write the leases have the authority to add and subtract different provisions of the leases. He said the committee would contact him regarding this issue. Number 1609 REPRESENTATIVE ROKEBERG said, in terms of Mr. Fowler's situation, the language in HB 543 and the amendments do not speak to the investment, but the arbitration amendment would be able to help him resolve his differences. He said, currently, Mr. Fowler is at the mercy of the state, and added that to have someone invest over the course of a 25 year lease is ridiculous. CHAIRMAN GARY DAVIS asked Mr. Fowler what he had done regarding his lease issue. MR. FOWLER said he wrote a letter, dated November 29, 1995, to the local leasing officer with letters sent to Commissioner Perkins, the Governor and some other interested people. He said he has received no reply on this issue other than receiving an invitation to bid on a neighboring lease. Number 1741 RICHARD JENSEN said he was the former airport manager 20 years ago when most of the leases, which are now currently expiring, were made. He said, at the time, the state was happy to have those entrepreneurs, who were willing to risk their resources and offer services to both the traveling public and the tourists. He said the comment on revisionist provisions made by Representative Rokeberg is pertinent to current and future leases and that the bureaucracy involved was a morass. He commented that there was and is no leasing criteria and policy. Number 1851 MR. JENSEN said it was a "jake legged" operation in that when he was the airport manager, the division was doing the leasing and he did the enforcing. He said the airport had little input as to who or where people were getting their leases. Number 1887 MR. JENSEN said in reviewing some of these charges and the basis for them, there are two separated classes of airports in Alaska and that HB 543 doesn't differentiate between these two income sources. He said the two international airports, in Anchorage and Fairbanks, operate separately from all other airports in the state. He said the international airports are a separate entity created by an early statute and are self supporting. He said these airports have their own bond rating and its own bonding authority. He said the revenue from these two airports requires these bonds. He said, by grouping all these same airports under the same leasing regulations might need to be reviewed in context of ownership lease, use and operation airports and facilities will provide revenues sufficient to comply with all the covenants of the bond revenues. He said there must be more than one bond resolution because the international enterprise fund is separate. He said lease terms and lease charges there might be a basis for a differential in those regulations and or charges. Number 2070 CHAIRMAN GARY DAVIS said the DOT/PF has been struggling with regulations that will affect the international and the rural airports. Number 2100 CHARLES COLE said that several years ago he was asked by the Lake Hood airport lessees to represent them in connection with problems that are currently being addressed in HB 543. He said some of these operators had their leases expiring and they were concerned about their renewal rights. He said Governor Knowles appointed a well-balanced, multi-member committee to conduct hearings on the problems raised by the airport lessees. He said this committee made recommendations in the form of a majority and minority report through the commissioner about addressing and resolving these problems. He said the AACA, generally, accepted the recommendations made by the majority members of that committee. He said no action has been taken by the commissioner on those recommendations. He said, as a result, those concerns are now being raised to the legislature. Number 2231 MR. JENSEN said he did not have a copy of the proposed amendments to HB 543. He said it is important that the legislature make findings in connection with HB 543 in order to support legal issues which might be raised in connection with the constitutionality of the bill. He said he has not reviewed the findings included in the proposed amendment or in the Administration bill, but he said both of those are probably satisfactory. Number 2313 MR. JENSEN said he would agree with Representative Rokeberg that existing lessees should be given the opportunity to renew their leases. He said it would be a mistake to have a right of refusal for the reasons Representative Rokeberg mentioned. Number 2369 MR. JENSEN said the Lake Hood operators and many other airport lessees favor a reversionary clause, so that they can continue to own the improvements which they made on the property during the lease. He said most of these existing tenants, 25 years ago, were told that they would have the right to renew these leases. He said these leases were signed in good faith and the lessees accepted the word of the state. He said these leases are now expiring without any statutory rights to extend the leases. Number 2452 MR. JENSEN said the problem is more than simply just losing property, constructed on the lease premise, but loss of an entire business. TAPE 96-13, SIDE A Number 0000 MR. JENSEN said the loss of a business is a serious problem. He referred to the concept of not allowing lessees to renew the lease because of it not being in the states best interest. He said he was hesitant about giving too much discretion to the state regarding airport leasing and questioned what construed the state's best interest and also questioned airport policy. He said those provisions, in addition to the one mentioned by Representative Rokeberg should be eliminated. Number 0131 MR. JENSEN said, in regards to comments by Mr. Fowler regarding the leasing as shown in some proposed notice of lease option, if someone makes an improvement of $125,000 plus then they can have the lease for 25 years. He cited an example where someone put a $4.5 million hangar and said that person would have to pay one- twenty-fifth of the $4.5 million improvement to the state every year as opposed to someone putting $200,000 improvement would only have to pay one-twenty-fifth of that. Number 0312 MR. JENSEN said another state policy is to require, for lease renewal or extension, improvements on the premises. He said some of these premises are mature and have been there for 25 years and there is no more room for improvements or the company might not have economic justification for improvements. He said he had concerns in new leases where the improvements would revert to the state. He said the state should get the full value of what it gives to the lessee which would be raw land located on state ground near an airport. CHAIRMAN GARY DAVIS said he would send him information regarding the proposed Administration bill. Number 0447 JACK BIRMINGHAM, employee, Air Aviation, and member of the AACA, said he agreed with the testimony by Mr. Cole. He said, in one form or another, commercial airport tenants have been in hearing after hearing occurring before 1986, trying to resolve many of these same issues and that now legislative help has been requested. He said the short answer is located in a Michael Barton memorandum dated August 26, 1994. MR. BIRMINGHAM suggested the committee move HB 543. He said the Administration's bill has two faults, the findings provision only includes commercial properties and does not include non-commercial tenants and added that the worst experiences involve these non- commercial tenants. He said the other issue is the rights of first refusal on new terms and conditions and said this could be anything. Number 0571 MR. BIRMINGHAM said most of these constitutional concerns have been highly overstated and said the legislature should draft a bill that makes sense and fits the circumstances. He said only two leaseholds have gone to bid at the insistence of the state and most people have justifiably assumed that there was a reasonable renewal preference and a reasonable right of extension which is true and can be found in historical records. He mentioned that the DOT/PF changed this policy in 1990 or 1991. He said the government could grant extensions if, during the middle of your 25 year lease term, you wanted to extend the lease out. Number 0653 MR. BIRMINGHAM said the proposed Amendments 1 and 2 appear to be in the right vein. He said he would like a working group to be formed on HB 543 so that it can be done correctly. He said value of new improvements does not include the value of maintenance on existing improvements. He said these structures are well maintained. He said if you tell the tenant that ten years down the road, his lease is going to terminate or that there will be uncertainty regarding its renewal, the maintenance level will decline. Number 0734 PHIL LIVINGSTON, Chair, Legislative Committee, Vice-President of Alaska Airlines Association, was next to testify. He said he agreed with the testimony of Mr. Birmingham and Mr. Cole. He said this has been a long standing problem and nothing has been resolved. He said he just received the proposed amendments and said Representative Rokeberg knows about leasing. He said the Administration's bill does not refer directly to private hangars, or private ownership. He said a solid bankable renewal preference is needed in order for businesses to continue with certainty over a long period of time. He said HB 543 should handle all leases, not just existing leases, because the same problems will exist for new leases. He said his organization is trying to encourage the aviation industry and said that lack of certainty and short term leases will not do this. Number 0827 MR. LIVINGSTON said, as far as improvements are concerned, people need to have a long term assurance that they won't have their investments confiscated at the end of that term. He said transfer of private ownership is done through a sale. He said, under a first right of refusal and/or a bid process, the state takes the leverage the owner will have to make a successful sale. Number 0859 MR. LIVINGSTON said the state is in the business of land leasing and they should value the ground rents and leave the improvements on the property (indiscernible) as opposed to a matter of state policy. He said some of the improvements on Lake Hood are simply not substantial because the businesses do not require substantial improvements. He said the businesses are substantial and are not considered in the real estate question. He said some of the businesses are worth millions of dollars whereas their investments only total $10,000. Number 0910 MR. PARKAN said DOT/PF had sent a draft copy of their bill to the AACA, Airmen's Association and had received Mr. Livingston's comments on it today. He said DOT/PF has no problem with the commercial or non-commercial and said it was not their intention to exclude it. He said the Administration has altered their draft to include language which refers to the non-commercial and commercial. He said he would share this with the committee and with all interested parties. Number 0952 BILL INGALDSON, Attorney, representing the neighbor of Mr. Fowler, was next to testify. He said his client has been trying to renew his lease for two years and it is currently in a hold over status. He echoed the comments of Mr. Cole. He said in regards to the proposed Amendment 1, the last section on page one, line 9, after "land" it refers to the "terms, conditions and rents shall be agreed upon prior to the expiration of the lease". He requested additional language be added to the proposed amendment, "present lessees who are in a holdover status". He said his client will not be affected by HB 543. Number 1043 REPRESENTATIVE ROKEBERG noted that Amendment 1 would now include, "in a holdover periodic tendency". Number 1043 DAVE KLOSTERMAN said everyone is interested in achieving solutions to these problems. He echoed Mr. Ingaldson's comments that people in holdover status be included until policy is derived from legislative efforts. He mentioned that there is a growing group of lessees who are in a holdover position. He said he would be interested in being part of the group to help work on this issue. Number 1190 CHAIRMAN GARY DAVIS agreed that everyone would like to solve this problem. MR. INGALDSON said his clients have received notice that his lease is being put up for public bid, he asked that the commissioner postpone this public bid as legislation will change his client's interest. CHAIRMAN GARY DAVIS said due notice has been given and said that he will work on a committee substitute. Number 1200 REPRESENTATIVE MASEK said she has been involved with this issue since October of 1995. She said it is unfortunate that it has taken until this point for the Administration to come forward. ADJOURNMENT As there was no further business to come before the House Transportation Standing Committee, Chairman Gary Davis adjourned the meeting at 3:10 p.m.