Legislature(1999 - 2000)
08/26/1999 03:05 PM Senate ARR
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
JOINT COMMITTEE ON ADMINISTRATIVE REGULATION REVIEW
August 26, 1999
3:05 p.m.
WORKSESSION
MEMBERS PRESENT
Senator Robin Taylor, Chairman
Representative Jeanette James, Vice-chair
Representative Mary Kapsner
MEMBERS ABSENT
Senator Georgianna Lincoln
Senator Pete Kelly
Representative John Harris
COMMITTEE CALENDAR
Update on Proposed Airport Regulations
WITNESS REGISTER
Mr. Kurt Parkan, Deputy Commissioner
Department of Transportation and Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Answered questions about DOTPF's regulatory
process
Mr. Steve Pavish
Alaska Air Carriers Association
929 E. 81st #108
Anchorage, AK 99518
POSITION STATEMENT: Commented on DOTPF's regulatory process
Mr. John Steiner, Assistant Attorney General
Department of Law
1031 W. 4th Ave. suite 200
Anchorage, AK 99501-1994
POSITION STATEMENT: Commented on the regulatory process
Ms. Kim Ross, Director
Alaska Air Carriers Association
929 E. 81st #108
Anchorage, AK 99518
POSITION STATEMENT: Commented on DOTPF's regulatory process
Terry Elder
Senior Securities Examiner
Division of Banking, Securities & Corporations
P.O. Box 110807
Juneau, AK 99811-0907
POSITION STATEMENT: Discussed new regulations proposed by the
Division of Banking, Securities & Corporations
Vincent Usera
Assistant Attorney General
Department of Law
PO Box 110300
Juneau, AK 99811-0300
POSITION STATEMENT: Discussed new regulations proposed by the
Division of Banking, Securities & Corporations
Janice Adair, Director
Division of Environmental Health
Department of Environmental Conservation
555 Cordova St.
Anchorage, AK 99501
POSITION STATEMENT: Answered questions about DEC's proposed
regulations on fee increases
ACTION NARRATIVE
TAPE 99-02, SIDE A
Number 001
CHAIRMAN ROBIN TAYLOR called the Joint Committee on Administrative
Regulation Review meeting to order at 2:10 p.m. He announced that
the committee would begin with an update on airport regulations.
KIM ROSS, Executive Director of the Alaska Air Carriers'
Association (AACA), made the following comments. The AACA thanks
the committee and other legislators for putting forth so much time
and effort to understand what the 200 pages of proposed regulations
mean to the users across the state. Mr. Pavish retired in May
from the Department of Transportation and Public Facilities (DOTPF)
and has been hired by the AACA to gather comments and help AACA
work through the regulatory process. During the July workshops,
Mr. Pavish worked closely with both entities and his involvement
with AACA has created a win-win situation for all. DOTPF has made
many revisions to its proposed regulations in response to public
comments. Because of the large number of substantive changes that
have been suggested and all of the time and effort that have gone
into the workshops, AACA feels strongly that it needs one
additional 30 day public comment period. AACA has seen evidence of
a more cooperative and receptive attitude from DOTPF but it still
feels the state owes the user groups the opportunity to provide
public input after seeing the final draft.
Number 111
VICE CHAIR JAMES expressed concern that after public testimony is
taken, the regulation drafters may or may not address the concerns
expressed, yet the regulations are not made public again until they
are final. She wholeheartedly agreed that another 30 day comment
period should be provided after the final draft is published.
CHAIRMAN TAYLOR asked Mr. Pavish if the final draft is available
yet.
MR. PAVISH said he did not expect to see a final draft for months
as DOTPF's technical committee is in the process of reviewing the
comments at this time.
REPRESENTATIVE KAPSNER asked if the 30 day comment period would
occur after the final draft is released.
MR. PAVISH said yes and that once DOTPF reviews the comments,
develops alternative language, and publishes a final draft, the
AACA wants to see the draft to ensure that there were no
misunderstandings. He noted that although DOTPF has made a good
faith effort to understand the public's comments to date, the users
want to make sure that that effort continues into the final
regulations.
Number 182
CHAIRMAN TAYLOR asked Mr. Parkan to respond to Mr. Pavish's
comments.
KURT PARKAN, Deputy Commissioner of DOTPF, explained that DOTPF
extended the public comment period to July 30 at the request of
ARRC members and others. DOTPF's technical committee is currently
reviewing all of the testimony received and will then redraft the
regulations. The redraft will be given to the policy committee to
finalize. DOTPF then intends to publish the final draft on its
website and to make it available to the public before the
Commissioner signs off on it. The regulations will then be
reviewed by the Department of Law. MR. PARKAN said DOTPF is
interested in having people review the forthcoming final draft,
however he expressed concern that the final regulations must be
considered final at some point.
CHAIRMAN TAYLOR noted that a slight language change could have a
major impact on businesses therefore a 30 day period should be
provided after the final draft regulations are published so that
people can contact the Commissioner about any changes that might be
necessary.
MR. PARKAN said he understands the concern and will look into that
possibility, however he cannot commit to providing an additional
formal public comment period. He pointed out that a review period
does not allow for formal comments, but if major problems are
uncovered during the review period, DOTPF will have to take another
look at the draft regulations. He repeated that at some point
DOTPF has to determine that the regulations are final so that it
can move forward. He also repeated that DOTPF is committed to a
review period but will consider another public comment period.
Number 239
VICE-CHAIR JAMES said that although she believes DOTPF has "bent
over backward" to make changes, the Department of Law could make
substantive changes during its review. She stated that she plans
to request, in writing, that the final draft be written in plain
English. She questioned why any of the users would bother
reviewing the final draft regulations if they are unable to have
any input.
CHAIRMAN TAYLOR said he understood Mr. Parkan to say that DOTPF
will reopen the public comment process if the final regulations
contain a serious error.
VICE-CHAIR JAMES noted she felt comfortable with that.
CHAIRMAN TAYLOR remarked that he also heard Mr. Parkan say that
DOTPF can make no commitment.
Number 281
MR. PARKAN clarified that according to the Department of Law, DOTPF
cannot accept formal comments after the final draft has been
published.
CHAIRMAN TAYLOR maintained that the airport regulation process has
been going on for a long time, and that DOTPF did not bother to
speak to the businesses who were leasing facilities before it
drafted regulations that created a "whole new world" for people to
operate in. Apparently, the process has evolved into a working
group that is actively and affirmatively accomplishing the task.
He encouraged DOTPF to continue that approach to its ultimate goal
by making a commitment to speak to, and review with, the
participants the final draft before the Commissioner signs off on
the regulations.
VICE-CHAIR JAMES asked whether the public comments on the final
draft could be published on DOTPF's website.
MR. PARKAN said the comment period is officially closed therefore
no new comments can be taken in a formal manner. He noted that 800
pages of comments have been taken up to this point.
VICE-CHAIR JAMES clarified that she was referring to comments taken
after the final draft is published on the website.
MR. PARKAN stated taking public comments after the final draft is
released would raise legal questions that he is unable to speak to.
He was unsure about how comments could be posted to the website
because the public would need access to the website to do so.
CHAIRMAN TAYLOR remarked that it would be beneficial to all
concerned for DOTPF to publish the final draft as quickly as
possible and then review the regulations with the working group one
more time so that errors can be found and resolved quickly.
Number 350
MR. PARKAN said they all share the same goal, and to the extent
that DOTPF can stay on the legal side of the matter, he will do
what he can to facilitate the final process. He noted that, at the
least, DOTPF should sit down with the working party and explain
what it did and why. The participants and DOTPF may disagree on
some areas, but in those instances DOTPF should provide a reason.
MS. ROSS commented that AACA has already been through the process
of requesting of DOTPF an opportunity to comment, and whether DOTPF
has good intentions or not, the Department of Law will not allow
DOTPF to accept comments. During the July workshop, DOTPF was told
that if a comment was received one minute past the due date, the
document had to be returned to the sender. She said once the
regulations are promulgated, the user groups will have to pursue
statutory changes on every issue it disagrees with. Ms. Ross noted
that many individuals sent her copies of the comments they
submitted to DOTPF, and every one of those individuals requested an
additional 30 day comment period.
CHAIRMAN TAYLOR asked what the cost will be to provide an
additional comment period.
MR. PARKAN estimated that the public notices will cost $10,000, and
there will be administrative travel costs. He recalled that last
year when DOTPF was at its final draft stage, it met with the AACA
in a formal group setting. DOTPF was able to discuss and work
through the changes made at that time. He thought a similar
activity could take place at this point. He asked whether the AACA
considers its request for an additional 30 day comment period to be
its final request for input.
CHAIRMAN TAYLOR said that will be difficult to determine until AACA
sees the final regulations.
Number 350
MR. PARKAN noted that while DOTPF strives for consensus, there may
be some areas in which the users and DOTPF do not agree, therefore
all parties will not be satisfied. Mr. Parkan said DOTPF will go
as far as it can legally to get a sense of its success in
responding to the requested changes without having to go through an
expensive and protracted formal comment period.
MS. ROSS added that other groups, such as the Alaska Airmen's
Association, the Alaska Transport Association, the nationwide
pilots' association, the seaplane pilots' association, and at least
12 individual carriers have asked for the same reasonable comment
period. She assured members that AACA has no intention of drawing
the process out; it just wants to make sure that DOTPF is listening
to the users.
MR. PAVISH clarified that during the "comfort" review meetings,
once the direction changes from informing participants to
discussing the changes with participants, DOTPF would begin to
cross the line with the Administrative Procedures Act. That is why
the AACA is opposed to that approach and is requesting one more
formal comment period. He added that public comment periods can be
costly but he estimated one could be done for $5,000 or $6,000. He
stated that all participants feel that closure is possible but they
want the opportunity to look at the final regulations one more time
so they can rest easy.
REPRESENTATIVE KAPSNER thought that $10,000 is a reasonable cost to
ensure that Alaska's leasing regulations are meeting the needs of
the carriers.
CHAIRMAN TAYLOR recommended that DOTPF grant an additional 30 day
public comment period upon submitting its final draft regulations.
He noted he will make a formal motion to that effect at the next
ARRC meeting.
There being no further testimony on the proposed airport
regulations, CHAIRMAN TAYLOR asked Mr. Dale Schwartz to testify.
DALE SCHWARTZ made the following comments via teleconference from
Kenai. He is requesting an extension of the public comment period
on regulations being promulgated by the Department of Environmental
Conservation (DEC). He stated the comment period was too short and
occurred during the middle of the summer. He expressed concern that
the comment period is not designed to have any impact as DEC's
notice implies that the public can comment but the comments will
not necessarily matter. He noted that he asked Ms. Adair to extend
the comment period, but questioned her response when she said
because of legislative budget cuts, fees were being increased to
run the program. He stated that the method DEC used to raise the
fees has not been equitable. Those fees tripled a few years ago
and will now be doubled.
Number 515
VICE-CHAIRMAN JAMES commented that she has heard similar complaints
that the public notice does imply that public comments will not
necessarily have any impact.
CHAIRMAN TAYLOR noted that Ms. Adair would be speaking to the
committee shortly but, in the meantime, he would take testimony
from Terry Elder.
TERRY ELDER, Director of the Division of Banking, Securities and
Corporations in the Department of Commerce and Economic
Development, said he would be discussing the Division's regulatory
project with Vincent Usera, the Division's senior securities
examiner.
MR. ELDER stated that during the past two legislative sessions, HB
486 and HB 83 were introduced. HB 83, which amended the Alaska
Securities Act, was enacted. The Division needed to revise its
regulations to comply with HB 83, as well as to comply with federal
law. In addition, a number of the proposed regulations deal with
securities and are from the North American Securities
Administrators' Association. When HB 486 failed to pass two years
ago, the Division went ahead and publicly noticed the draft
regulations it was projecting for the future to give interested
parties a "heads up." Once HB 83 passed, the full regulatory
process began.
CHAIRMAN TAYLOR said that Alaska went through a Ponzi scheme
investigation in the not too distant past. He asked if the new
regulations will enable the state to prevent such an occurrence in
the future.
MR. ELDER replied that no statute or regulation can prevent a crook
from pulling a scam. The best way to prevent such scams is to have
a strong enforcement arm. He noted the Ponzi scheme utilized an
exemption from registration. He looked at similar exemptions in
other states to see if a regulation could control the use of that
exemption. The new regulation project does include a limitation on
the use of that exemption from registration.
CHAIRMAN TAYLOR said he is hopeful that the new regulations contain
a definition that could be of benefit to prevent future scams.
[PORTION OF TAPE INAUDIBLE DUE TO STATIC]
MR. ELDER said a limitation was adopted in this regulation project
so that once an issuer has 30 shareholders or owners of interest in
the security, the exemption can no longer be utilized.
TAPE 99-5, SIDE B
CHAIRMAN TAYLOR said although the activity in the Ponzi scheme was
illegal, the Division had the opportunity to do a more careful
examination on the reading of the exemption.
MR. ELDER concluded by saying the changes made to the Division's
regulations are substantive, and some of those regulations will
become effective on October 1 in order to comply with MISMIA. The
regulations were split into sections so that the Department of Law
could first review the regulations that have the October 1
deadline. Those pertain to fees, examination requirements, and
registration requirements.
CHAIRMAN TAYLOR thanked Mr. Elder and Mr. Usera.
MR. RICHARD GOULD commented via teleconference that the new
regulations will allow investors to raise capital a lot easier.
The regulations will cut a lot of red tape for those selling stock
in-state. He thanked all those involved in the passage of HB 83
for their efforts.
CHAIRMAN TAYLOR asked Mr. Gould if he is having any trouble with
the current exemption he is working under.
MR. GOULD said only with the restriction of talking about selling
stock to anyone out-of-state.
REPRESENTATIVE KAPSNER asked if that restriction is
unconstitutional under the Commerce Clause.
MR. GOULD said he is restricted because he is under an exemption.
He asked whether the public comment period is over.
MR. USERA said the public comment period and Department of Law
review for Project 1 have been completed. The public comment
period for Project 2 is closed, however it could be reopened if
requested.
MR. GOULD asked if the language on page 37, subsection (H) includes
the Alaska Bidco (ph) Act.
MR. ELDER replied that it is likely that Bidco (ph) would be
considered to be an institutional investor and that an exemption
exists for institutional investors under (B)(4). He noted it is
not specifically listed in statute, however he has no doubt that
the Division would consider Bidco (ph) to be an institutional
investor.
MR. ELDER thanked Mr. Gould for his comments and stated the
Division has attempted to make it easier for legitimate businesses
to raise capital but it also wants to be the worst "nightmare" for
anyone who tries to cheat Alaskans.
JANICE ADAIR, Director of the Division of Environmental Health,
Department of Environmental Conservation (DEC), said that she would
focus her testimony on the answers she provided to the questions
posed to her by Sue Mossgrove, Committee Aide.
MS. ADAIR noted that Ms. Mossgrove asked how DEC determined the new
fees. Ms. Adair said that calculation was included in DEC's public
notice mailing. An average annual salary for the professional and
clerical staff was determined. That number was divided by the
average number of hours per year that a person would work on
inspections to calculate an hourly rate. Using information from
DEC's database, she determined the average number of hours the
Division spends on permitting and inspections, even though the fees
cover other costs. The hourly rate was multiplied by the time DEC
spends on each permit and inspection to determine the fee. The
facilities covered by the fees are any business that sells or
serves food to the public outside the Municipality of Anchorage,
which has its own program. A whole laundry list of exemptions
exists.
MS. ADAIR said the second question pertained to under which
circumstances an operator might pay more than one fee. If an
operator has two distinct operations within an establishment, they
will pay a fee for each operation.
MS. ADAIR indicated that Ms. Mossgrove asked what the relationship
is between the budget cut and the increase in fees. MS. ADAIR
explained that when she was before both DEC Finance subcommittees,
quite a bit of discussion ensued about moving the food inspection
program to municipalities. In most other states, county
governments operate retail food inspection programs. There was a
desire to make Alaska's inspection program more self sufficient
through fees so that the discussion with municipalities might be
more successful. The Senate Finance subcommittee took general
funds in the amount of $887,000 and changed them to general fund
program receipts. The House Finance subcommittee changed that
amount to designated program receipts. The conference committee
then cut the general fund program receipt authority by $548,000.
The net effect was that DEC's program receipt authority was
increased by $339,000 which is what the fee increase represents.
MS. ADAIR said the final question asked about the facilities that
will not be inspected. She explained that inspections are one part
of a food safety program and not the most important part. DEC
spends more time on training, education and technical assistance.
DEC considers the fees to be program fees rather than inspection
fees. Also, DEC responds to some facilities on a complaint-only
basis. That pool of facilities is getting larger. DEC tries to
inspect as many places as possible while staff is traveling in
remote communities. DEC does not want to write any business off
from the start and then send a bill after the business has been
inspected because it is difficult for those businesses to plan that
way. Although DEC does not plan to do routine inspections, all of
its other services are available and inspections will be done if a
complaint is received.
MS. ADAIR noted that Ms. Mossgrove's final question was the number
of each type of facility. The number of facilities in each
category was included in the public comment information (page 3).
She stated that number changes as businesses start up and close.
Number 413
REPRESENTATIVE KAPSNER asked how often a DEC inspector visits
places like Bethel or King Salmon.
MS. ADAIR said DEC visits those locations quite often. DEC does
have difficulty getting to places like the lodges outside of King
Salmon that operate for only three months out of the year.
REPRESENTATIVE KAPSNER remarked that she is shocked at the cost of
the fees. She noted that all of the restaurants in Bethel have
water shipped in and stored in holding tanks, and sewage shipped
out. Their expenses are a lot higher than in any other location in
the state. Bethel has also been hit by cuts to the Power Cost
Equalization Program. Some small stands only operate on the 4th of
July therefore the fee will be a substantial expense to them. She
expressed concern that many businesses will be forced to close this
winter.
CHAIRMAN TAYLOR said that 13 or 14 years ago, he suggested that the
ferry system be given program receipt authority so that it could
raise revenues through fees and since that time, more departments
have wanted that authority so that they do not have to rely on the
general fund as much. DEC has used this approach more than any
other department.
MS. ADAIR said she disagrees that fees are the solution and they
are not her first choice. She noted that by statute DEC cannot
charge fees that are higher than the cost of providing a service.
CHAIRMAN TAYLOR likened that restriction to the spending limit on
the Legislature.
MS. ADAIR said her Division probably charges more fees than any
other division, and that she takes complaints about those fees very
seriously. She tries to show people how the fees were determined
and wants to provide the best service possible for the fee charged.
CHAIRMAN TAYLOR said he appreciates Ms. Adair's concern yet the
Legislature and the Administration, not wanting to account for
those monies because that would increase the general fund numbers,
created a category called "other money." As a consequence, that
money does not show up on the general fund budget, which if federal
funds and all other sources were included, could amount to $5
billion. He expressed frustration that Commissioner Brown went to
the press with a lot of rhetoric about the consequences of DEC's
budget cut when the cut was $330,000 out of $47 million.
Commissioner Brown also said that 4,000 restaurants will no longer
be inspected so the Legislature should be blamed if people get
sick. He asked why DEC's request for four people would have cost
$330,000, yet when that money was not made available, 7 employees
were cut.
MS. ADAIR explained the increment was for $330,000 but only
$222,000 was for personal services which was for four employees.
The $339,000 cut was specific to the food service budget. Her
first approach was to determine which employees' costs added up to
that amount and to lay them off. Initially she held the meat
inspection program which was held 50 percent harmless by the
federal government. When she saw the number of offices that would
have to be closed, she became uncomfortable so she decided to give
the meat inspection program back to the federal government. The
USDA must provide a meat inspection program if it is not provided
by the state, and it is the only food inspection program with that
federal requirement. As a result, DEC is able to do more of the
food safety services that no one else will do. One benefit of
having a USDA meat inspection program in Alaska is that producers
can ship their products out of state. She noted that 25 states do
not have their own meat inspection programs. Ms. Adair said that
she believes her decision to relinquish DEC's meat inspection
program to the USDA was best for the public health of the people of
the state.
Number 264
CHAIRMAN TAYLOR said Commissioner Brown told the Anchorage Daily
News that DEC's relinquishment of the meat inspection program is a
real shame and that local processors are already complaining about
unresponsive federal regulators.
MS. ADAIR said DEC has received complaints. There were transition
pains, and the USDA has very peculiar rules regarding transition.
She noted in a perfect world she would not have wanted to
relinquish the program because food safety is a continuum and DEC
will no longer have information about meat recalls.
CHAIRMAN TAYLOR asked if the USDA uses the same standards as DEC
did.
MS. ADAIR said that is correct, however DEC had some testing
requirements that the USDA does not require.
REPRESENTATIVE KAPSNER expressed concern that the businesses in
rural Alaska are being hit from both sides and that she feels
obligated to protect them. She asked if the fees are set in stone
or if there is anyway to work together to make them more
reasonable.
MS. ADAIR replied that fees must be the same across the state. If
local governments were to pick up the programs, they could charge
different fees in their areas. Her only option, if DEC does not
raise the additional funds through fees, will be further reductions
to the food safety program because the money must be collected
before it can be spent.
REPRESENTATIVE KAPSNER asked if the City of Bethel or City of Aniak
could administer a food safety program if they wished to do so.
MS. ADAIR said they could, and that DEC has a process for
delegation of that program. She noted that most communities do not
have the economy of scale to take on their own programs. The
Municipality of Anchorage's fees are similar to DEC's, yet the
Municipality only collects about 50 percent of its costs through
fees. She added that the program requires some scientific
expertise so it is difficult for small communities to run a food
safety program. She told Representative Kapsner that she
understands the dilemma for businesses in rural areas, however she
is unable to solve the problem on her own.
Number 172
REPRESENTATIVE KAPSNER asked why it takes 2+ hours to issue a
permit.
MS. ADAIR said DEC looks at the facility and its compliance record,
and whether any remodeling has occurred. The 2+ hour time frame is
an average. If a restaurant has had compliance problems in the
past, DEC is likely to inspect the facility.
CHAIRMAN TAYLOR asked if the Legislature increased DEC's program
receipt authority last year.
MS. ADAIR explained the net result was an increase.
CHAIRMAN TAYLOR asked if DEC laid off employees to make up for the
lost revenue.
MS. ADAIR stated the budget that both the House and Senate approved
for DEC's food safety program was $3,481,200. That amount was the
same for FY 99. The difference between the House and Senate
budgets was the mix of funding within that amount. In FY 99,
$982,000 of the $3,481,200 was from program receipts. The amount
approved in total program receipt authority by both the House and
Senate for FY 00 was $1,870,000, an increase of about $887,000. At
the same time, there was an accompanying reduction in general funds
in the same amount. The Conference Committee then reduced the
program receipt amount by $339,000. As a result, the food safety
program budget was reduced by $339,000 leaving a total budget
amount of $3,100,000.
Number 078
VICE-CHAIRMAN JAMES asked what amount of federal funds DEC gave up.
MS. ADAIR said about $300,000.
VICE-CHAIRMAN JAMES noted the food safety program budget is over
$600,000 short when the federal and state fund decreases are
combined.
MS. ADAIR said that is correct, however the Conference Committee
allowed DEC to collect those federal funds, therefore that
reduction is not reflected in DEC's authorized budget.
VICE-CHAIRMAN JAMES said the $3.1 million is $300,000 less because
it does not include the $300,000 in federal funds. She asked if
the meat inspection program cost $600,000.
MS. ADAIR said the meat inspection program was the bulk of it,
however other funds had to be cut. She noted the general fund
match for those federal funds did not equal $339,000.
VICE-CHAIRMAN JAMES asked if the increase in fees did not make up
the difference so DEC was forced to make cuts.
MS. ADAIR said that is correct, even with the increase in program
receipts.
VICE-CHAIRMAN JAMES indicated that DEC's reduction in overall
spending is $600,000 because it gave up $300,000 of federal funds
and took a general fund budget cut of $300,000. DEC then added
fees. She asked what amount DEC's budget is down.
MS. ADAIR said the total fees DEC hopes to collect is included in
its FY 00 authorized budget of $3.1 million. DEC has been given
authority to increase its program receipt collections and
expenditures by $548,000. That has nothing to do with the cut and
DEC is not trying to make up the cut by increasing fees. DEC cut
the program and laid people off and is now attempting to collect
the program receipt increase.
VICE CHAIRMAN JAMES asked if DEC has increased its fees but will
not be able to do the job.
MS. ADAIR said DEC will not be able to provide the same level of
services because there was a cut to the program.
CHAIRMAN TAYLOR asked what program cuts were made, other than the
relinquishment of the meat inspection program.
MS. ADAIR replied the food safety program was one budget component
that included seafood, meat, and retail food inspection. When she
looked at how to allocate resources, she looked at the relative
risks to public health that a type of food operation poses, which
DEC has categorized. The highest risks are smoked seafood and
canned food. The lowest risk food service operations are fresh
frozen seafood and espresso carts. DEC planned to inspect the low-
risk facilities once per year, of which there are about 4,000. It
is now likely that those facilities will be inspected every few
years, which is the additional program cut that took place.
CHAIRMAN TAYLOR asked how much money was saved through the layoff
of the inspectors who were involved in the low-risk inspections.
MS. ADAIR said DEC had five meat inspectors and one vacant
position. DEC lost four meat inspectors. A fifth part-time meat
inspector position was fully funded to inspect other foods. The
inspector position in the Tok and Dutch Harbor offices were
eliminated and a vacant position in Fairbanks was eliminated.
REPRESENTATIVE KAPSNER asked Ms. Adair to clarify DEC's budget
increase.
MS. ADAIR explained that the food safety program's total budget was
reduced by $300,000 so its budget is $3.1 million. In addition,
the source of the funds changed. Revenues generated from fees
increased, while general funds decreased. She noted that DEC is
proposing to increase fees that will allow it to collect the full
expenditure authority that it has for fees. The program services
will be less, however.
VICE-CHAIRMAN JAMES repeated that DEC is now charging higher fees
to provide fewer services.
MS. ADAIR said the only other option is to cut the program even
more by not increasing fees which she does not think serves the
public's interest at all.
VICE-CHAIRMAN JAMES said it depends on whether the fees are being
used on expenditures that are not directly related to them.
MS. ADAIR replied that everyone who pays the fees gets the benefits
of the services that the food safety program provides.
VICE-CHAIRMAN JAMES asked if the fees collected for the food safety
program are making up any other deficits. MS. ADAIR said the fees
are not making up any deficit at all. The legislature gave DEC
authority to raise its program receipts by $548,000 which is still
a reduction of $339,000 over its FY 99 authorized budget. DEC is
only attempting to collect the full amount of its program receipt
authority.
VICTOR GUNN, legislative aide to Senator Pete Kelly, made the
following comments via teleconference from Fairbanks. An owner of
a large multi-outlet food operation in Fairbanks wanted to let the
committee know that the fee increases will ultimately be passed on
to the consumer, and that their internal safety procedures and
inspections constitute about 10 pages of their corporate
inspections and DEC does quite a bit less in that regard. The
owner also noted that an increased corporate tax will be reflected
in prices to the customer also. He asked from which pot of money
DEC pays for food inspections and administrators to travel to
seminars out of state.
MS. ADAIR replied that typically DEC gets money from the U.S. Food
and Drug Administration to do that, otherwise DEC uses general
funds because DEC is not allowed to use the cost of travel in its
fee calculations.
MR. GUNN asked if the purchase of equipment such as computers is
also paid for with general funds.
MS. ADAIR stated the program receipts portion of the budget makes
up about 50 percent, so it depends on how one looks at it.
MR. GUNN noted the public sees DEC purchase Ford Expeditions for
staff to drive while fees are being increased and questions what is
going on.
MS. ADAIR thought those vehicles are emergency response vehicles
paid for out of the 470 account.
CHAIRMAN TAYLOR expressed concern that the Legislature and the
Administration continue an increasing addiction to fees. The food
inspection program fees were doubled several years ago and will now
triple.
VICE-CHAIRMAN JAMES added it is called "targeted taxing."
CHAIRMAN TAYLOR said dentists complained to him after they got
tired of paying a significant fee for inspection of x-ray equipment
when the equipment was never examined. The machines were inspected
by the manufacturers because of product liability concerns or the
dentists paid for inspections to prevent malpractice lawsuits. He
also noted that food inspections in Ketchikan used to be
unannounced and would occur every four or five months.
MS. ADAIR said that unannounced inspections still occur.
CHAIRMAN TAYLOR maintained that the level of public health
protection the state should provide is a policy call. He said he
thinks the fees are outrageous compared to what they were a few
years ago, and that a lot of the outrage over the fee increase is
being driven by the political rhetoric rather than by a
professional who can explain what is occurring and why.
VICE-CHAIRMAN JAMES indicated that she has always had a problem
with fees because they are a burden to the people who provide the
service rather than the beneficiaries, the public. Rules and
regulations need to be set so that businesses operate in a certain
way but people who want to have clean air to breathe, clean water
to drink, and clean food to eat need to understand that they have
to pay for that.
REPRESENTATIVE KAPSNER asked Vice-Chairman James whether she was
saying she wanted a sales tax, income tax, or a "yes" vote on the
advisory vote.
VICE-CHAIRMAN JAMES said she was saying that if the general fund is
not big enough to provide the services we want, we need to get more
of it and she does not have a specific choice of how we get it.
She repeated her concern that the costs should not be borne by the
business people who have already invested their money to provide
the services people want and need.
CHAIRMAN TAYLOR maintained that he gets the feeling that the
Administration is going to cut programs in the most painful places
that it can and then go to the press with the dilemma. They will
then raise fees in order to support their political agenda.
MS. ADAIR said that was not the case in the fee increase for the
food safety program.
CHAIRMAN TAYLOR said the timing was coincidental and he does not
think the publicity and increase was done with any malice, it just
happened. He then expressed concern that DOTPF employees have met
to discuss the ferry system 25 times in Ketchikan over the last two
years yet they never used the ferry to get there. He thanked Ms.
Adair for her participation in the meeting.
MS. ADAIR acknowledged that the budget cut did allow her to combine
program management positions. Up until July 1, both the seafood
inspection program and the retail food program had managers. The
two positions were combined and she is already seeing benefits in
terms of coordination.
VICE CHAIRMAN JAMES said she believes there are a lot of ways that
state government could be made more efficient at less cost, but,
because of inner-agency problems, that can't be done unless budgets
are reduced. The problem is not unique to Alaska; it is endemic in
every government entity in the United States.
CHAIRMAN TAYLOR noted that Mr. Ayers wrote a memo to state
employees that restricts and prevents state employees from talking
directly to legislators about ways to save money. He noted the
other 49 states have had extensive experience with privatization.
DALE SCHWARTZ, testifying from Dot Lake via teleconference, asked
whether food inspection fees could be based on the square footage
of a restaurant, or on the seating capacity. He expressed concern
that smaller businesses will not be able to pass the cost increase
on to the customer because they have a limited number of them.
MS. ADAIR said she did look at that possibility, however DEC does
not have the information it needs to know where the break points
should be. She added that she mailed Mr. Schwartz a letter on that
subject the previous day.
MR. SCHWARTZ noted that the fees have increased from $65 to over
$300 in three years and that not enough adjustment was done by DEC.
MS. ADAIR said it will take a substantial amount of time, possibly
one year, for DEC to gather the data it needs to create different
categories and look at that possibility. She said creating another
category creates as much angst among the public as raising the fee.
CHAIRMAN TAYLOR asked if that information could be acquired on the
application form.
MS. ADAIR replied DEC does ask for that information but the
information supplied is often incorrect.
CHAIRMAN TAYLOR thanked all for participating and informed
committee members that the people who wanted to discuss the
hospital regulations had to leave.
SUE MOSSGROVE informed committee members that each member was given
a written update from Jay Livey as to the subcommittee's work. The
subcommittee will be meeting the following day and will be
attending the ASHA meeting on September 13 in Fairbanks.
CHAIRMAN TAYLOR asked what the position of House members is on SJR
3.
VICE-CHAIRMAN JAMES said she does not know why it did not pass this
year but would look into it.
There being no further business, CHAIRMAN TAYLOR adjourned the
meeting at 4:25 p.m.
| Document Name | Date/Time | Subjects |
|---|