Legislature(2003 - 2004)

03/17/2003 01:37 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         March 17, 2003                                                                                         
                           1:37 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Thomas Wagoner, Chair                                                                                                   
Senator Robin Taylor, Vice Chair                                                                                                
Senator Gary Stevens                                                                                                            
Senator Georgianna Lincoln                                                                                                      
Senator Kim Elton                                                                                                               
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 38                                                                                                              
"An   Act  relating   to   construction,  plumbing,   mechanical,                                                               
electrical, fire safety, and other  safety codes adopted by state                                                               
agencies  and  municipalities;  and providing  for  an  effective                                                               
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 118                                                                                                             
"An Act relating to the power of boroughs to conduct inspections                                                                
and enforce standards for food and aquatic farm products; and                                                                   
providing for an effective date."                                                                                               
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 136                                                                                                             
"An Act increasing an optional exclusion or exemption from                                                                      
municipal taxation for residential property."                                                                                   
     HEARD AND HELD                                                                                                             
PREVIOUS ACTION                                                                                                               
SB 38 - See Community and Regional Affairs minutes dated 2/26/03                                                                
          and 3/5/03                                                                                                            
SB 118 - No previous action to record.                                                                                          
SB 136 - No previous action to record.                                                                                          
WITNESS REGISTER                                                                                                              
Senator Gene Therriault                                                                                                         
Alaska State Capitol, Room 111                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Sponsor SB 38                                                                                             
Colin Maynard                                                                                                                   
Alaska Professional Design Council                                                                                              
PO Box 100515                                                                                                                   
Anchorage, AK 99501-0515                                                                                                        
POSITION STATEMENT: Spoke in opposition to SB 38                                                                              
Steve Shows                                                                                                                     
Construction Inspector                                                                                                          
No address provided                                                                                                             
POSITION STATEMENT: Testified on SB 38                                                                                        
Zach Warwick                                                                                                                    
Alaska State Capitol, Room 111                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Answered questions on SB 38                                                                               
Ernesta Ballard                                                                                                                 
Commissioner, Department of Environmental Conservation                                                                          
410 Willoughby Suite 303                                                                                                        
Juneau, AK 99801-1795                                                                                                           
POSITION STATEMENT: Testified on SB 118                                                                                       
Kristin Ryan                                                                                                                    
Acting Director, Division of Environmental Health                                                                               
555 Cordova Street                                                                                                              
Anchorage, AK 99501                                                                                                             
POSITION STATEMENT: Testified on SB 118                                                                                       
Mary Jackson                                                                                                                    
Staff to Senator Tom Wagoner                                                                                                    
Alaska State Capitol, Room 427                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Introduced SB 136                                                                                         
Gary Superman                                                                                                                   
Kenai Peninsula Borough Assemblyman                                                                                             
144 North Binkley Street                                                                                                        
Soldotna, AK 99699                                                                                                              
POSITION STATEMENT: Testified on SB 136                                                                                       
Steve Van Sant                                                                                                                  
State Assessor                                                                                                                  
Division of Community & Business Development                                                                                    
550 W. 7 Ave Suite 1770                                                                                                         
Anchorage, AK 99501-3510                                                                                                        
POSITION STATEMENT: Answered questions on SB 136                                                                              
ACTION NARRATIVE                                                                                                              
TAPE 03-7, SIDE A                                                                                                             
CHAIR  THOMAS WAGONER  called the  Senate Community  and Regional                                                             
Affairs Standing Committee meeting to  order at 1:37 p.m. Present                                                               
were Senators  Taylor, Lincoln, Elton and  Chair Wagoner. Senator                                                               
Gary Stevens arrived momentarily.                                                                                               
The first order of business was SB 38.                                                                                          
                SB  38-ADOPTION OF SAFETY CODES                                                                             
CHAIR THOMAS  WAGONER asked for  a motion to adopt  the committee                                                               
substitute (CS).                                                                                                                
SENATOR ROBIN TAYLOR  made a motion to adopt  Banister 3/17/03 \S                                                               
version CSSB 38 as the working document.                                                                                        
SENATOR GEORGIANNA  LINCOLN asked if  the sponsor would  speak to                                                               
the CS.                                                                                                                         
CHAIR WAGONER  confirmed the  sponsor would speak  to the  CS and                                                               
that there  was a  question and  answer draft  in the  packets as                                                               
SENATOR  GENE THERRIAULT  explained the  \S version  CS addresses                                                               
several  issues   discussed  at  the  previous   hearing.  For  a                                                               
transition term,  the delay  period changed  from three  years to                                                               
two years. This delay would  allow mechanical administrators time                                                               
to receive proper  training when there is a switch  from one code                                                               
to another. Language on page 3,  line 29 clarifies that the delay                                                               
period applies  only when  there is  a switch  to a  complete new                                                               
code. There would be no delay for normal code updates.                                                                          
The larger issue of whether all  the codes should be placed under                                                               
the  oversight of  one agency  is not  addressed. He  came to  no                                                               
conclusion  himself and  was aware  that  the Administration  was                                                               
working with the agencies to come to a resolution.                                                                              
He  remarked  the committee  could  either  wait for  a  decision                                                               
regarding  jurisdiction  or  they  could   move  the  CS  out  of                                                               
committee and allow the Labor  and Commerce Committee to continue                                                               
work on the issue.                                                                                                              
There were no questions asked of Senator Therriault.                                                                            
SENATOR WAGONER announced there  were several individuals waiting                                                               
to  give testimony  and  advised all  previous  testimony was  on                                                               
MR.   COLIN   MAYNARD,   Alaska   Professional   Design   Council                                                               
representative, testified via  teleconference. Although he hadn't                                                               
seen the second CS, he understands  it is similar to the first so                                                               
the  council  would  oppose  adoption.  They  don't  believe  the                                                               
mechanical code  belongs in  the Department  of Labor;  rather it                                                               
belongs with the building and fire codes.                                                                                       
The name  change from Uniform  Code to International Code  by the                                                               
International Conference of Building  Officials (ICBO) has caused                                                               
much  confusion, but  they  are  the same  people  who have  been                                                               
writing the  mechanical code in  Alaska for the last  forty years                                                               
and  the  council sees  no  reason  for  a change.  The  question                                                               
regarding whether the  Department of Public Safety  has the legal                                                               
authority  to adopt  a mechanical  code is  curious because  they                                                               
have been  doing so for as  long as he can  remember. The council                                                               
agrees with the  task force approach to address all  the codes at                                                               
one time rather than in this piece meal process.                                                                                
MR.  STEVE  SHOWS,  a construction  inspector,  testified  he  is                                                               
certified  by   all  uniform   and  international   code  writing                                                               
agencies. He made the following points:                                                                                         
   · Both codes have a bias and they are slightly different, but                                                                
     both are good codes                                                                                                        
   · He agreed with removing the discriminatory language that                                                                   
     would not allow the International Codes to be adopted in                                                                   
   · International Codes have a public safety, health and                                                                       
     welfare bias that is very evident                                                                                          
   · National Fire Protection Association (NFPA) favors industry                                                                
     and trade organizations                                                                                                    
Because  Alaska   has  a  fragmented  approach   to  construction                                                               
regulation, he advised looking to  municipalities where codes are                                                               
seamless,  integrated, work  together and  people communicate  so                                                               
the building construction  industry and the health  and safety of                                                               
residents is at the forefront. Keep  in mind; the purpose is fair                                                               
and impartial regulation and public safety.                                                                                     
For  over 15  years, organizations  convinced the  Legislature to                                                               
keep  the 1979  plumbing code  as the  State document  regulating                                                               
that activity  and trade. It  cost the  State 10s of  millions of                                                               
dollars a year  to administer the outdated  code that financially                                                               
benefited those who sold and installed expensive materials.                                                                     
There was no further testimony.                                                                                                 
SENATOR LINCOLN  asked what position Fairbanks  held regarding SB                                                               
MR.  ZACH  WARWICK,  staff to  Senator  Therriault,  advised  the                                                               
building officials continue to oppose the legislation.                                                                          
SENATOR  LINCOLN  asked  for  information  regarding  their  main                                                               
MR. WARWICK explained they opposed  the time lag and because they                                                               
have  gone through  the  process  to update  their  codes to  the                                                               
International Codes, SB  38 would require the  municipality to do                                                               
additional work.                                                                                                                
SENATOR LINCOLN  asked how much  time that additional  work would                                                               
MR.  WARWICK said  it depends  on  which code  the Department  of                                                               
Labor adopts. The  links between the International  Fire Code and                                                               
International  Building   Code  would  need  to   be  updated  to                                                               
synchronize with  the Uniform Code  if that code is  adopted, but                                                               
no additional  work would be  required if the  International Code                                                               
is adopted.                                                                                                                     
SENATOR LINCOLN  asked if the  two year delay wouldn't  allow for                                                               
such updates.                                                                                                                   
MR.  WARWICK  explained   there  would  be  no   delay  when  the                                                               
Department of Labor initially adopts  a particular code. If there                                                               
were code switches in the future, there would be a delay.                                                                       
SENATOR LINCOLN  remarked NANA/Colt Engineering was  also opposed                                                               
to bill because of the shift  from one department to another. She                                                               
asked if  the sponsor  had spoken  to the  firm to  address their                                                               
MR. WARWICK  reported he spoke  with Mr. Moore several  times. He                                                               
added there  are opposing  views on this  issue and  probably the                                                               
only agreement is that the codes could possibly be in one place.                                                                
SENATOR  LINCOLN   referred  to  the  sponsor's   statement  that                                                               
jurisdiction  hasn't   been  resolved.  She  asked   the  Chair's                                                               
CHAIR  WAGONER  replied he  would  like  the Labor  and  Commerce                                                               
Committee to  work on that  aspect of the legislation.  Since the                                                               
last  hearing he  has given  some  thought to  putting the  codes                                                               
together under  the jurisdiction of the  Division of Occupational                                                               
MR. WARWICK  said it is  his understanding that  division doesn't                                                               
have the  technical knowledge; they deal  primarily with training                                                               
and licensing of  the trades. They can authorize a  class under a                                                               
code, but  they don't deal  with the exact  codes. Administration                                                               
officials have  advised him  they are  arranging for  people from                                                               
the  Fire Marshall's  office,  the Department  of  Labor and  the                                                               
Governor's  office to  meet and  discuss where  the codes  should                                                               
reside. It's difficult  to find a third  neutral department where                                                               
the codes could be placed.                                                                                                      
SENATOR KIM  ELTON asked  for clarification  that in  addition to                                                               
the  building  officials the  Fairbanks  Mayor  and City  Council                                                               
continues to oppose the bill.                                                                                                   
MR. WARWICK  thought the Fairbanks  officials that  wrote letters                                                               
in opposition to  the legislation were speaking on  behalf of the                                                               
building officials.                                                                                                             
SENATOR  ELTON   noted  the  committee   didn't  know   what  the                                                               
Administration's position  was and  there were  still substantive                                                               
questions and issues associated  with the legislation. The Alaska                                                               
Professional Design Council  raised a number of  questions and he                                                               
was  uncomfortable moving  the bill  prior to  receiving feedback                                                               
from the Administration and addressing those issues.                                                                            
SENATOR TAYLOR agreed  to the extent that the  critical aspect of                                                               
the  legislation is  jurisdiction. The  critical policy  call for                                                               
the Legislature  is to decide  where the codes should  be housed.                                                               
Continuity  and one  stop shopping  that Mr.  Shows spoke  of are                                                               
critical to the building trades  and design professionals. He too                                                               
expressed a  desire to address the  jurisdictional question prior                                                               
to  moving the  bill.  The committee  already spent  considerable                                                               
time on  the bill and  moving it without  addressing jurisdiction                                                               
would waste that time and effort.                                                                                               
CHAIR WAGONER  announced he would  hold SB 38 in  committee until                                                               
they heard  from the Governor's  Office, the Department  of Labor                                                               
and the Fire Marshall's Office.                                                                                                 
SENATOR TAYLOR  asked the Chair to  call for objection or  a vote                                                               
then declare whether the CS was adopted or not.                                                                                 
CHAIR WAGONER  apologized and asked  whether there  was objection                                                               
to adopting  Banister 3/17/03  \S version CSSB  38. There  was no                                                               
objection and it was so ordered. The bill was held in committee.                                                                
         SB 118-BOROUGH INSPECTION: FOOD/AQUATIC FARMS                                                                      
CHAIR  THOMAS  WAGONER  asked  Commissioner  Ernesta  Ballard  to                                                               
introduce SB 118.                                                                                                               
ERNESTA   BALLARD,  Department   of  Environmental   Conservation                                                               
Commissioner, gave the following opening remarks:                                                                               
     SB  118 is  the Governor's  legislation, which  we hope                                                                    
     you  will  approve  to allow  first  and  second  class                                                                    
     boroughs to enforce food safety standards.                                                                                 
     The  State of  Alaska has  been ensuring  that food  is                                                                    
     handled correctly  since statehood. State  law provides                                                                    
     the framework and  the department's regulations provide                                                                    
     the  standards  that  protect  public  health.  We  are                                                                    
     fortunate that  in this area  there has been  a growing                                                                    
     knowledge of food safety  handling practices and modern                                                                    
     food  preparation technology  in recent  years. And  in                                                                    
     fact in  the last  20 years  many food  safety programs                                                                    
     have  implemented  new  regulatory approaches  to  take                                                                    
     advantage of this new body of information.                                                                                 
     Nationally,  a   mix  of  local,  state,   and  federal                                                                    
     governments  perform the  needed  tasks  to ensure  the                                                                    
     public  food  supply  is protected.  In  Alaska,  state                                                                    
     government  has been  the primary  entity working  with                                                                    
     food service  establishments to protect  public health.                                                                    
     The state  has had statutory and  regulatory ability to                                                                    
     delegate this program to  local governments since 1999.                                                                    
     Anchorage  takes  advantage  of  this  opportunity  and                                                                    
     conducts food inspections as a home-rule municipality.                                                                     
     We believe it  is important to encourage  as much local                                                                    
     control  as possible  in the  important  area of  local                                                                    
     food  safety. State  law allows  home  rule cities  and                                                                    
     boroughs,  and   first  and  second  class   cities  to                                                                    
     implement  a food  safety  program  that is  consistent                                                                    
     with  their charter  and  approved  by their  assembly.                                                                    
     This bill  provides the same  opportunity to  first and                                                                    
     second  class boroughs.  Specifically, it  allows those                                                                    
     boroughs  to  conduct  a   food  safety  program  using                                                                    
     protective state standards.                                                                                                
     The  State of  Alaska will  continue to  set protective                                                                    
     standards  and implement  them in  areas that  have not                                                                    
     asked   for   delegation   to   provide   the   service                                                                    
     This legislation does not  require any local government                                                                    
     to  take  on this  responsibility.  It  gives them  the                                                                    
     opportunity  to  exercise  local  control  should  they                                                                    
SENATOR  ROBIN TAYLOR  asked if  cities were  in any  position to                                                               
test aquatic farm products.                                                                                                     
COMMISSIONER  BALLARD said  a local  municipality  could take  on                                                               
those  powers, but  they would  have  to demonstrate  they had  a                                                               
sufficiently funded  program and sufficiently  skilled personnel.                                                               
She  added, "This  is a  theoretical delegation,  it sets  up the                                                               
SENATOR  TAYLOR  stated  this  was  a  good  idea  and  he  would                                                               
encourage any municipalities that wanted  to do this. He asked if                                                               
Anchorage or any city monitored air pollution.                                                                                  
COMMISSIONER  BALLARD replied  Anchorage has  a fairly  extensive                                                               
capability that is specifically  delegated through the department                                                               
to handle aspects of their air pollution program.                                                                               
SENATOR TAYLOR asked if the  department would be able to delegate                                                               
or require a city to exercise the powers.                                                                                       
COMMISSIONER BALLARD advised this is  not a mandatory program; it                                                               
is  optional and  the  department will  continue  to implement  a                                                               
program that  is available  statewide that  will assure  that any                                                               
place in  the state  without a locally  delegated program  has an                                                               
adequately protected food safety program.                                                                                       
SENATOR LINCOLN  asked what the  incentive would be  for boroughs                                                               
to assume  this responsibility and, in  particular, the liability                                                               
associated with food inspection.  She questioned whether the bill                                                               
was the result of boroughs asking to assume that role.                                                                          
COMMISSIONER BALLARD  advised the incentive comes  from the basic                                                               
civic principle, "that government likes  to do for its people, as                                                               
close  to the  people as  possible." Food  safety is  one of  the                                                               
oldest government  programs in the  country. She  assured members                                                               
there  would  be  local  governments who  would  seek  the  local                                                               
opportunity to  deal directly with  their restaurants  and people                                                               
who  prepare food.  The department  would continue  to provide  a                                                               
food safety program for cities that don't exercise the option.                                                                  
She  described  a double-pronged  incentive  to  explain why  the                                                               
Governor proposed the bill. In  the last appropriations bill last                                                               
year,  the Legislature  specifically directed  the Administration                                                               
to  reorganize their  inspection  program for  the boroughs  that                                                               
were  large  enough to  run  their  own cost  effective  program.                                                               
Nationally,  the  process of  food  safety  management has  moved                                                               
beyond  Alaska's  conventional   inspection  based  program.  The                                                               
department believes it's time to  work toward offering incentives                                                               
and program components that work  with operator certification and                                                               
operator  management  systems  to  get  more  responsibility  and                                                               
accountability   placed   with   the   operator   of   the   food                                                               
SENATOR LINCOLN questioned how much  the department would save if                                                               
municipalities assumed the authority  of inspecting food and farm                                                               
products  and whether  the savings  might be  enough to  save the                                                               
department a position.                                                                                                          
COMMISSIONER  BALLARD advised  the Governor's  budget proposes  a                                                               
reduction of  six positions  and an  attendant reduction  of more                                                               
than  $500,000 of  program receipts.  That  anticipates the  four                                                               
largest  boroughs assuming  program  responsibility. The  program                                                               
reduction is  specifically a reduction of  the inspection program                                                               
that the department  currently provides in those  boroughs. It is                                                               
fully supported by  restaurant fees; the restaurants  pay the fee                                                               
and the  department provides the inspection  service. Presumably,                                                               
those boroughs would charge a fee and run their own program.                                                                    
The department  has sufficient funds remaining  in the Governor's                                                               
proposed  budget   to  reorganize  and  implement   a  protective                                                               
statewide  program without  that  component of  the program.  She                                                               
advised SB  118 is  best viewed  as a  companion to  the proposed                                                               
budget,  which is  a reorganization  of the  current program.  It                                                               
eliminates the  components of the  program in the  four boroughs,                                                               
but it  doesn't eliminate the department's  responsibility to set                                                               
standards that are protective statewide.                                                                                        
SENATOR GARY  STEVENS said  he had  three questions.  Although he                                                               
likes the  option, it appears to  be a wash. Would  the fees that                                                               
are  collected pay  for  the personnel  hired  to administer  the                                                               
programs? Would this  actually save money for the  state? Also is                                                               
it   possible  that   aquatic  farming   might  include   seafood                                                               
processing as well?                                                                                                             
COMMISSIONER BALLARD replied:                                                                                                   
   · The restaurant fees cover much of the costs but not the                                                                    
     entire cost of the program. At the state level the program                                                                 
     must determine the framework and standards of the                                                                          
     regulatory program for food safety inspection.                                                                             
   · The proposed budget reduction is the actual cost of                                                                        
     implementing  the  inspection  program  in  the  four  large                                                               
     boroughs. The  state budget  includes all  program receipts.                                                               
     There would be  a reduction in those program  receipts and a                                                               
     corresponding  reduction in  the positions  and expenditures                                                               
     at the department level.                                                                                                   
SENATOR GARY STEVENS interjected he  was focusing on the boroughs                                                               
because he  couldn't understand why  a borough would  ever assume                                                               
the inspection authority  if they didn't collect  enough to cover                                                               
all costs.                                                                                                                      
COMMISSIONER  BALLARD replied  the  boroughs  should answer  that                                                               
question, but she believes many  local governments prefer to have                                                               
a  regulatory  relationship  in  public  health  protection.  She                                                               
thought  Anchorage was  pleased  with  their stakeholder  program                                                               
rather than having the state provide the program for them.                                                                      
She continued:                                                                                                                  
    · When the total state budget is reduced, whether through                                                                   
      program  receipts or  general fund,  it is  a reduction  so                                                               
      this is  a reduction in  state employment. In  theory, when                                                               
      you  reduce  state employment  there  is  a net  beneficial                                                               
      affect in overall cost control.                                                                                           
SENATOR GARY  STEVENS restated  he was looking  for an  answer to                                                               
whether or not the fees  a borough might charge restaurants would                                                               
cover their costs  to administer the inspection  program. Would a                                                               
borough  that  chose  the  delegation   of  authority  assume  no                                                               
financial burden?                                                                                                               
COMMISSIONER BALLARD replied a  borough choosing delegation would                                                               
have to decide  how to structure their program,  which would have                                                               
to be as  protective as the department's program.  There are many                                                               
ways  to  achieve protection  and  inspection  is one  choice.  A                                                               
borough might  choose an operator  certification program,  a food                                                               
worker safety card  or some other tool to achieve  a program. The                                                               
Division  of  Environmental  Health   would  review  the  program                                                               
selected  by the  borough  to  determine whether  or  not it  was                                                               
protective enough. The  borough would select the  type and amount                                                               
of fee  to be  collected. They  could charge  a per-visit  fee, a                                                               
license  or permit  fee, an  annual fee  or some  other scheduled                                                               
fee. While  there are many  ways to  put a program  together, the                                                               
department's job is  to determine whether a  borough had designed                                                               
an acceptably protective  program. The borough's job  would be to                                                               
decide how  to put their program  together so it would  work best                                                               
for them.                                                                                                                       
SENATOR  GARY  STEVENS  asked   what  an  operator  certification                                                               
program means.                                                                                                                  
COMMISSIONER  BALLARD explained  it means  that the  food service                                                               
operator might be required to  have a personal certification that                                                               
could  be  arranged  through the  department  or  an  independent                                                               
provider.   Nationally,   there   is  improved   flexibility   in                                                               
delivering  protective  programs.  The incidence  of  food  borne                                                               
illness is  at least holding its  own; it is not  going up. There                                                               
are good ways  to protect people by  moving accountability closer                                                               
to the restaurant operator and  away from the regulator. "We, and                                                               
the restaurant operators, and the  boroughs and municipalities in                                                               
this state  are ready  to move forward  into a  more contemporary                                                               
regulatory regime."                                                                                                             
In response to the third  question, she said the department would                                                               
continue to  maintain responsibility over the  seafood processing                                                               
plants in the state.                                                                                                            
SENATOR ELTON asked whether she was  aware of any first or second                                                               
class boroughs that had asked for the delegation of authority.                                                                  
COMMISSIONER BALLARD admitted she was aware of none.                                                                            
SENATOR ELTON  thought this was  introducing cross-jurisdictional                                                               
issues. He  pointed out  that owners  of food  service franchises                                                               
would  find different  inspection regimes  in different  areas of                                                               
the state, which wouldn't be business friendly.                                                                                 
COMMISSIONER  BALLARD declared  that  is the  case  in all  other                                                               
states.  Alaska  is probably  the  only  state that  maintains  a                                                               
statewide  food safety  program.  Most states  have local  health                                                               
districts that  are even smaller  units of government  than local                                                               
government.  Local  health   districts  are  generally  organized                                                               
within  counties   and  the  responsibilities   under  discussion                                                               
generally  accrue  to  local health  districts.  For  example,  a                                                               
McDonalds   might  have   30  jurisdictions   in  the   State  of                                                               
SENATOR ELTON  said, "So it would  be intuitive for us  to assume                                                               
that  they   prefer  our   system  where   they  only   have  one                                                               
COMMISSIONER BALLARD wasn't  sure that would be  a good intuitive                                                               
judgment.  Large national  chains  probably have  their own  food                                                               
management  safety system  that they  operate uniformly  at every                                                               
restaurant in the  chain and at a higher standard  than any state                                                               
or health district could hope  to achieve. Due to liability, they                                                               
are their own best protectors.                                                                                                  
SENATOR  ELTON asked  how or  whether the  department deals  with                                                               
cruise ship or ferry food service.                                                                                              
COMMISSIONER BALLARD  advised the  department does not  deal with                                                               
cruise  ships  but  they  do have  jurisdiction  over  the  state                                                               
SENATOR  ELTON asked  if she  envisions each  municipality having                                                               
the responsibility to inspect ferries.                                                                                          
MS.  KRISTIN RYAN,  Division  of  Environmental Health  Director,                                                               
responded  that the  division intends  to maintain  oversights of                                                               
operations such  as the  railroad and  ferry system  that operate                                                               
across jurisdictions.                                                                                                           
SENATOR  ELTON  asked  whether   the  department  would  maintain                                                               
jurisdiction    for    school    districts,    particularly    in                                                               
unincorporated  areas,  in  which   a  licensed,  inspected  food                                                               
provider  was  required before  they  could  qualify for  federal                                                               
MS.  RYAN   was  aware  of   the  restriction  that   requires  a                                                               
government-licensed   entity,   which    means   that   a   local                                                               
jurisdiction would qualify.                                                                                                     
SENATOR ELTON speculated that due  to the permissive nature, some                                                               
local  jurisdictions  wouldn't  take  advantage  of  the  option.                                                               
Chevak  probably wouldn't  assume food  inspection powers  and he                                                               
wondered whether the department would maintain jurisdiction.                                                                    
MS. RYAN  replied the department would  maintain jurisdiction for                                                               
any area that chose not to assume the authority.                                                                                
SIDE B                                                                                                                          
2:15 pm                                                                                                                         
CHAIR   WAGONER  remarked   governments  work   in  strange   and                                                               
mysterious ways. He  related a story regarding  how zoning powers                                                               
shifted back and forth between the  borough and City of Kenai and                                                               
wondered if this might not develop similarly.                                                                                   
COMMISSIONER BALLARD  said she couldn't testify  to the stability                                                               
of borough  forms of  government, but  food safety  regulation is                                                               
evolving  and  it's  time  for  Alaska to  evolve  with  it.  The                                                               
department intends  to develop a  statewide program that  will be                                                               
protective statewide  regardless of  borough activity. It  is the                                                               
state's  responsibility to  assure that  there is  a standard  of                                                               
safety available  from Barrow  to Craig  and boroughs  could then                                                               
choose to use  the tool or not  use the tool. "It's  a matter for                                                               
them to  decide what kind  of a  regulatory program they  want in                                                               
their own communities."                                                                                                         
CHAIR WAGONER  requested an accounting  of the receipts  that the                                                               
department currently  collects for inspection services  from each                                                               
SENATOR  TAYLOR remarked  it is  his  understanding that  second-                                                               
class  boroughs have  limited power  for  taxing for  educational                                                               
purposes  and   that  is   all.  Asking   them  to   assume  this                                                               
responsibility may be  too much. Although he had  no objection to                                                               
providing  communities  the   opportunity  to  assume  inspection                                                               
responsibility,  he was  unsure  any would  exercise the  option.                                                               
Because  of  this, he  questioned  whether  the department  would                                                               
accomplish the six person reduction.                                                                                            
COMMISSIONER   BALLARD  advised   Juneau,   Kenai,  Mat-Su,   and                                                               
Fairbanks  are  large  enough  to  cost  effectively  assume  the                                                               
responsibility.  They  formed  this   judgment  by  counting  the                                                               
establishments;  it is  the inspections  for those  boroughs that                                                               
generate  $513,000   in  annual   fee  income  and   require  six                                                               
inspectors. They aren't anticipating  other boroughs would become                                                               
involved  in a  locally run  program, but  the legislation  would                                                               
allow participation.                                                                                                            
SENATOR  TAYLOR expressed  hope that  boroughs would  assume that                                                               
option and  concern in regard  to the accounting  for inspections                                                               
as they relate to business licenses.                                                                                            
COMMISSIONER BALLARD advised Kristin  would explain the Anchorage                                                               
fee  structure and  the relationship  between a  business license                                                               
and the present program.                                                                                                        
MS.  RYAN explained  the fee  structures are  separate. Anchorage                                                               
collects inspection  fees from food service  businesses and those                                                               
businesses apply for  a business license from the  state. That is                                                               
how she would  anticipate it would happen with  other boroughs as                                                               
well.  The   department  would  step   away  from   charging  and                                                               
collecting  the fees  because  they would  not  be providing  the                                                               
service. The borough  would have to determine how  to establish a                                                               
fee  structure and  collection process.  As Commissioner  Ballard                                                               
explained, the  program could be  inspection based or  some other                                                               
SENATOR TAYLOR noted the department  would have to track business                                                               
locations  to   determine  whether  they  were   on  the  state's                                                               
inspection list or someone else's.  Currently everyone is used to                                                               
sending their fee  to DEC. With the change,  fee collection would                                                               
be based  on a geographic  designation and some  businesses could                                                               
fall through the crack.                                                                                                         
COMMISSIONER  BALLARD  replied  the  challenge is  real  but  the                                                               
department  is  well  capable  to handle  it  because  they  have                                                               
extensive and  daily and  intricate financial  relationships with                                                               
almost  every level  of  government and  every  community in  the                                                               
state. "While it  sounds like a complex challenge,  it's part and                                                               
parcel of what our business is."                                                                                                
SENATOR ELTON asked  what would happen if  local government opted                                                               
not to provide inspections because  it appears that the state has                                                               
the option  of saying,  "We're not  going to do  it for  you." It                                                               
seems the  ultimate goal is  to pass the responsibility  to local                                                               
COMMISSIONER BALLARD responded, "There  are many forces colliding                                                               
at one time  on the food safety inspection program."  In the last                                                               
appropriations  bill the  Legislature made  it clear  they wanted                                                               
the  department  to step  away  from  inspections in  those  four                                                               
larger  boroughs. Because  of that  directive, the  department is                                                               
revamping the entire program to  be sure that without inspections                                                               
in  those  four  boroughs,  the  public is  still  assured  of  a                                                               
protective food safety program.                                                                                                 
SENATOR  ELTON  observed  the  cheaper   and  easier  to  inspect                                                               
restaurants  would be  taken out  thereby leaving  the department                                                               
with the  more expensive inspections.  He cited a lodge  owner in                                                               
Idaho Inlet  who is unhappy because  he has to apply  for so many                                                               
permits. If  the department has  to inspect his food  service, it                                                               
would lose  money unless his  fees are  increased to pay  for the                                                               
COMMISSIONER BALLARD said they are  not assuming that inspections                                                               
are the only or even the  best way to accomplish food safety. The                                                               
lodge owner  referred to may not  have seen an inspector  and yet                                                               
that  lodge owner  probably  has a  very  remarkable food  safety                                                               
record because he has a very  high sense of responsibility to his                                                               
customers.  The department  is providing  him the  tools, through                                                               
the plan  review permit, to help  him assure that his  kitchen is                                                               
constructed so  he can easily  wash and  sanitize it, so  that he                                                               
has adequate food  preparation separation areas, and  that he has                                                               
three  sinks  so   that  when  he  is  using  a   sink  for  food                                                               
preparation,  he isn't  using  it for  dishwashing  as well.  The                                                               
department is providing him tools  and resources and they believe                                                               
they can extend  their relationship to him  through the Internet,                                                               
through the telephone,  and through passing on  best practices so                                                               
they do  not depend on  an inspection to achieve  compliance with                                                               
state  standards. The  majority of  restaurants in  the State  of                                                               
Alaska have achieved  a remarkable food safety  record without an                                                               
SENATOR ELTON remarked that lodge  owner probably wasn't going to                                                               
want to  talk to  the department  any more  than he  already had.                                                               
That being said,  it seems as though that lodge  owner would have                                                               
it   better   than   Bullwinkles  [Juneau   restaurant]   because                                                               
Bullwinkles would be  inspected. This would be  a two-tier system                                                               
in  which   the  remote  person  would   operate  "best  business                                                               
practices"   while  the   restaurant   in   town  would   undergo                                                               
COMMISSIONER BALLARD didn't  agree she said that.  If Juneau does                                                               
not assume  responsibility for a food  safety inspection program,                                                               
then Bullwinkles would  get the same care and  attention from the                                                               
department  that  the  remote lodge  owner  receives.  If  Juneau                                                               
assumes the responsibility,  there are many tools  to choose from                                                               
to achieve food safety.                                                                                                         
SENATOR ELTON said, "So inspections are not required."                                                                          
COMMISSIONER  BALLARD replied  the  department  is reviewing  its                                                               
food safety  program to determine  whether inspections  should be                                                               
required  and whether  they  are  the best  way  to achieve  food                                                               
safety protection.  Department records indicate  most restaurants                                                               
in the State  of Alaska have achieved a good  food safety program                                                               
without  ever  being  inspected.  The  department  has  regularly                                                               
reported through their missions and  measures that they have been                                                               
unable to  fulfill departmental  goals in  realizing inspections.                                                               
In  spite of  this, the  food safety  record is  good because  of                                                               
their plan review and restaurant  relationships. Most states have                                                               
moved beyond sole dependence on inspections.                                                                                    
SENATOR ELTON advised  he would follow up on  his questions later                                                               
since the bill would be held in committee.                                                                                      
SENATOR LINCOLN asked for the following at the next hearing:                                                                    
    · An accounting of both the income and costs of the                                                                         
      inspection program and a list of the first and second                                                                     
      class boroughs referred to                                                                                                
    · How the department planned to find out which borough would                                                                
      opt in or out and how many staff would be needed to make                                                                  
      that determination before the effective date that is less                                                                 
      than four months away                                                                                                     
    · How the fiscal note is zero                                                                                               
    · Whether there are fees for the aquatic farm products                                                                      
    · What the liability would be                                                                                               
SENATOR  TAYLOR recalled  a time  when people  that lived  in the                                                               
various communities did public health  inspections. Once the duty                                                               
was moved into  DEC, small communities were no  longer given that                                                               
service  unless someone  flew out  of  Juneau. The  fees went  up                                                               
while the  service went  down. He asked  why the  state shouldn't                                                               
return to a similar system.                                                                                                     
COMMISSIONER BALLARD admitted the level  might not be the same as                                                               
it was  before the transfer  of responsibility to DEC,  but about                                                               
15 of their 35 staff members  are located in 20 remote offices to                                                               
provide inspection and consultation  services. Since the transfer                                                               
to DEC the  number of restaurants has increased,  more people eat                                                               
out, and the state's administrative  budget has consistently been                                                               
reduced. The level of service state  agencies used to offer is no                                                               
longer available because the budget won't allow it.                                                                             
Years ago the department implemented  a risk based prioritization                                                               
of inspection  planning so those establishments  that handled the                                                               
broadest spectrum of  food and the most  complex preparation were                                                               
the targets for  the most regular inspections.  It is responsible                                                               
of  the  Executive  Branch  to reorganize  the  program.  In  the                                                               
meantime, restaurant  owners, the  Food and  Drug Administration,                                                               
and   state  governments   have  figured   out  better   ways  to                                                               
communicate  the  principles.  Mandatory hand  washing  signs  in                                                               
bathrooms  are a  good example.  This  is something  that a  once                                                               
yearly  inspection  would  not   improve;  it  must  be  operator                                                               
2:50 pm                                                                                                                         
SENATOR  TAYLOR asked  if DEC  staff is  cross-trained and  would                                                               
losing the positions impact the overall DEC mission.                                                                            
COMMISSIONER BALLARD  said there  has been extensive  training in                                                               
the environmental health department. There  used to be a separate                                                               
food  processing and  food  management groups  and  they are  all                                                               
cross-trained now.                                                                                                              
SENATOR ELTON  referred to  statutes 17.20.005  through 17.20.075                                                               
and  announced   they  include  labeling  and   advertisement  of                                                               
halibut, salmon, and sablefish  products, misbranding of halibut,                                                               
sale and labeling of frozen meat and fish.                                                                                      
MS. RYAN referred to the end  of the chapter, 17.20.075, and said                                                               
it gives the  Commissioner the authority to  delegate sections or                                                               
not.  She  added, "That's  an  exact  copy  of the  ability  we'd                                                               
already given  to first  and second class  cities... And  we also                                                               
only have  the authority in our  food code to delegate.  We don't                                                               
have the  authority to  delegate our  seafood processing  code at                                                               
this time.  Although if at some  point, someone wants to  do that                                                               
we can look at doing that."                                                                                                     
SENATOR ELTON  asked why they  are authorizing  it to be  done if                                                               
they don't plan on doing so.                                                                                                    
No response was forthcoming and there were no further questions.                                                                
CHAIR WAGONER announced the bill would be held in committee.                                                                    
           SB 136-RESIDENTIAL PROPERTY TAX EXEMPTION                                                                        
CHAIR  THOMAS WAGONER  announced this  was a  preliminary hearing                                                               
and more information  regarding SB 136 would be  available at the                                                               
next hearing. He asked Ms. Jackson to introduce the legislation.                                                                
MS. MARY JACKSON, staff to  Senator Thomas Wagoner, explained the                                                               
bill increases  the existing property tax  exemption from $10,000                                                               
to $50,000.  The $10,000  exemption has been  on the  books since                                                               
1974. She  noted the  bill has  two fiscal  notes. The  first one                                                               
from  the  Department of  Commerce  and  Economic Development  is                                                               
zero. The second is from the Tax Division and is incorrect.                                                                     
The Tax  Division presumes that  if up to $50,000  exemption were                                                               
provided, the  Bristol Bay Borough, the  Kenai Peninsula Borough,                                                               
the Fairbanks  North Star Borough,  the North Slope  Borough, and                                                               
the City of  Valdez would take advantage of  the provision, which                                                               
would reduce revenues  to the State of Alaska.  The Kenai Borough                                                               
is the only  one that collects a sales tax  and they offset their                                                               
property taxes, in part, because  of the $14 million they collect                                                               
in sales tax.  Kenai residents are actually helping  the State of                                                               
Alaska by  paying a  sales tax because  they aren't  reducing the                                                               
revenues to the state.                                                                                                          
SENATOR LINCOLN  allowed that she supported  property exemptions,                                                               
but  she  had two  concerns.  First,  whom would  this  exemption                                                               
actually help? Both  rich and poor pay sales tax,  but just those                                                               
with  enough money  to  become property  owners  qualify for  the                                                               
property tax  exemption. Renters  would not have  the opportunity                                                               
to take advantage of the exemption  even though they pay rent and                                                               
thereby  help the  property owner  pay for  property taxes.  "The                                                               
poor  are the  ones  that  end up  suffering  for something  like                                                               
this." Second,  she thought increasing  the exemption  to $50,000                                                               
would force the hand of the other four municipalities.                                                                          
MS. JACKSON  agreed everyone  pays sales tax,  but in  this state                                                               
there  is a  rebate  program, which  provides  some offset.  With                                                               
regard  to the  second concern,  she thought  the other  boroughs                                                               
would utilize the program, but  the Kenai Borough wouldn't object                                                               
to this being single purpose legislation.                                                                                       
SENATOR  ROBIN TAYLOR  asked if  it  was correct  that the  Kenai                                                               
Borough had a 6.5 millage rate.                                                                                                 
MS. JACKSON told him that was correct.                                                                                          
SENATOR TAYLOR asked for the sales tax rate.                                                                                    
MS. JACKSON advised they pay a five percent sales tax.                                                                          
CHAIR  WAGONER added  the borough  charges two  percent and  some                                                               
areas charge five and one half and six percent tax.                                                                             
SENATOR TAYLOR  announced he  is currently  paying ten  or eleven                                                               
mills and  seven percent sales  tax and Wrangell needs  every bit                                                               
of that to  operate. He assumed Kenai needs the  $40 million they                                                               
generate from property taxes and  $14 million from sales taxes to                                                               
cover their  budget. He  observed this  would simply  shift money                                                               
within the  tax frame. The income  has to stay at  the same level                                                               
to keep everything  running. He asked how the  amount of property                                                               
tax  revenue would  be affected  if all  property owners  were to                                                               
receive a $50,000 exemption.                                                                                                    
MS. JACKSON said if property tax  were reduced, there would be an                                                               
increase  in sales  tax  or  a decrease  in  a  service that  was                                                               
SENATOR TAYLOR  replied sales tax wouldn't  increase because it's                                                               
generated by  the economy, but there  would be a decrease  in the                                                               
total  taxable base.  He advised  Kenai Borough  could accomplish                                                               
the  same thing  by making  the  local decision  to increase  the                                                               
sales tax rate and to drop the mill rate.                                                                                       
MS.  JACKSON agreed  and  said the  Kenai  Borough has  discussed                                                               
SENATOR TAYLOR  said he could  guarantee the North  Slope Borough                                                               
would take  full advantage  of the  increased exemption  and they                                                               
would probably  exempt all residential properties  and nothing on                                                               
an oilrig.  He was  unclear what  impact this  would have  on the                                                               
educational formula that requires a minimum payment of 4 mills.                                                                 
MS.  JACKSON reported  that  Eddy Jeans  from  the Department  of                                                               
Education  and Early  Development said  it would  have no  affect                                                               
because it is optional.                                                                                                         
SENATOR  TAYLOR remarked  that  is because  for  the North  Slope                                                               
Borough it's  an either or situation.  It's either 4 mills  or 30                                                               
percent, whichever is  less and for the rest of  the state it's a                                                               
mandated 4 mills.                                                                                                               
MS. JACKSON agreed;  the corrected fiscal note  will reflect that                                                               
if  the  exemption  increased, Fairbanks  would  see  a  $625,000                                                               
revenue  decline Kenai  revenue  would decline  by $700,000,  the                                                               
North  Slope  by  $133,000  and Valdez  by  $475,000.  The  total                                                               
projected  revenue  decline  is  $1.9 million  and  this  is  the                                                               
dilemma, but the issue is  that the Kenai Peninsula Borough would                                                               
like  to have  another  option.  They provide  the  sales tax  in                                                               
addition to  the property tax.  She noted there are  additions to                                                               
the 6.5 mill rate for the service areas.                                                                                        
SENATOR  KIM  ELTON  asked  if   you  could  distinguish  between                                                               
vacation property and primary residence.                                                                                        
CHAIR  WAGONER  informed  him they  differentiate  now  and  this                                                               
legislation wouldn't change that.                                                                                               
SENATOR  TAYLOR added  this is  currently done  under the  senior                                                               
SENATOR ELTON noted the bill  says exempt residential property so                                                               
a  borough could  make a  distinction between  owner occupied  or                                                               
MS. JACKSON informed him line 8 says, "for any one residence."                                                                  
CHAIR WAGONER called for teleconferenced testimony.                                                                             
TAPE 2                                                                                                                          
3:00 pm                                                                                                                         
MR. GARY SUPERMAN, Kenai Peninsula  Borough Assemblyman, said the                                                               
rationale  for pursuing  the increase  is  to provide  homeowners                                                               
some  tax relief.  The borough  finance department  projects that                                                               
the impact to the borough and the  state on AS 43.56 [Oil and Gas                                                               
Property] revenues  would be  minimal. Property  assessments have                                                               
climbed each  year for the  last five years  and over a  two year                                                               
period  should mitigate  the exemption.  Also, voters  defeated a                                                               
ballot  proposition  to  exempt  food from  sales  tax.  Property                                                               
owners are looking for tax relief  and voters want this option to                                                               
be available on the local  level. Stable tax rates are attractive                                                               
to potential new residents.                                                                                                     
SENATOR TAYLOR asked  him to think about  the earlier discussion.                                                               
This legislation  would just  cause a  revenue shift  because the                                                               
borough  would need  the  same  amount of  money  each year.  The                                                               
borough  would have  to increase  the mill  levy after  exempting                                                               
$50,000  or increase  the sales  tax rate  if those  are the  two                                                               
primary  sources  of  income.  If   the  Legislature  allows  the                                                               
increased  exemption it  would decrease  the amount  of valuation                                                               
the State  of Alaska has.  This would  be a $1.9  million revenue                                                               
impact to the state  at a time when the Governor  has a series of                                                               
revenue enhancers. He calls those taxes and fees.                                                                               
He asked Mr. Superman to send a  note and give his opinion on how                                                               
that adjustment would occur.                                                                                                    
MR. SUPERMAN agreed  he could do so then pointed  out the borough                                                               
gives seniors a  total exemption. They have a  list of exemptions                                                               
but it doesn't  include a property tax exemption  for the working                                                               
class people.  Voters elected to  keep the  sales tax the  way it                                                               
is, but that doesn't mean they  aren't looking for tax relief. If                                                               
the exemption for the sales tax  had been approved, it would have                                                               
had a  $2 million  impact to  the borough  and the  increase from                                                               
$10,000 to $50,000  is about the same. They see  a projected loss                                                               
in taxable  assessed valuation of  $310 million and from  FY02 to                                                               
FY03  they  see  an  increase   of  $270  million  in  their  tax                                                               
assessment roles.                                                                                                               
There were no further questions for Mr. Superman.                                                                               
SENATOR GARY STEVENS asked Mr.  Van Sant a question regarding the                                                               
school contribution. He  noted it is 4 mills on  the valuation of                                                               
the  property. If  there is  an  exemption to  property taxes  he                                                               
wondered  if  that would  reduce  the  valuation and  change  the                                                               
amount of money that would go into the foundation formula.                                                                      
MR. Steve Van Sant, State  Assessor, advised moving the exemption                                                               
from  $10,000 to  $50,000 would  have  no bearing  on the  school                                                               
foundation funding. It  would still be 4 mills of  full value. If                                                               
the Kenai  Borough elected to  increase the exemption,  the State                                                               
Assessor  would  keep the  same  full  value  there is  now.  The                                                               
optional exemptions are added back.                                                                                             
There were no further questions.                                                                                                
The bill was held in committee.                                                                                                 
CHAIR WAGONER adjourned the meeting at 3:15 pm.                                                                                 

Document Name Date/Time Subjects