Legislature(1993 - 1994)
04/15/1994 09:05 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 15, 1994
9:05 a.m.
TAPES
SFC-94, #62, Side 1 (000-end)
SFC-94, #62, Side 2 (575-276)
CALL TO ORDER
Senator George Jacko, Vice-Chairman convened the meeting at
approximately 9:05 a.m.
PRESENT
In addition to Vice-chair Jacko, Senators Kelly, Rieger, and
Sharp were present. Co-chair Frank arrived as the meeting
was in progress. Co-chair Pearce and Senator Kerttula were
attending an ethics committee meeting and were not present
at Senate Finance.
ALSO ATTENDING: Attorney General Bruce Botelho; Harry Noah,
Commissioner, Dept. of Natural Resources; Cheryl Frasca,
Office of the Governor; Sharon Barton, Director, Division of
Administrative Services, Dept. of Administration; Don Wanie,
Director, Division of Finance, Dept. of Administration; Ken
Lea, Supervisor, Southeast Region, Division of Fire
Prevention, Dept. of Public Safety; Kit Ballentine, Acting
Director, Division of Environmental Health, Dept. of
Environmental Conservation; Deena Henkins, Chief, Drinking
Water and Water Treatment Section, Division of Environmental
Quality, Dept. of Environmental Conservation; Len Verrelli,
Chief, Air Quality Management Section, Dept. of
Environmental Conservation; Mike Greany, Director,
Legislative Finance Division; and aides to committee members
and other members of the legislature.
SUMMARY INFORMATION
SB 67 - MENTAL HEALTH TRUST AMENDMENTS
Discussion of land issues was had with Attorney
General Bruce Botelho and Commissioner Harry Noah
of the Dept. of Natural Resources. The bill was
subsequently HELD in committee for further
consideration.
SB 376 - STATE AGENCY FEES AND COLLECTIONS
A sectional overview was presented by Cheryl
Frasca, Kenneth Lea, Kit Ballentine, Deena
Henkins, and Len Verrelli. The bill was HELD in
committee for further review.
SB 377 - STATE AGENCY FISCAL PROCEDURES
A sectional overview was provided by Cheryl
Frasca, Don Wanie and Sharon Barton. The bill was
subsequently HELD in committee for further review.
SB 67 - MENTAL HEALTH TRUST AMENDMENTS
An Act amending provisions of ch. 66, SLA 1991, that
relate to reconstitution of the corpus of the mental
health trust and to the manner of enforcement of the
obligation to compensate the trust; and providing for
an effective date.
Vice-Chairman Jacko directed that CSSB 67 (Fin) be brought
on for discussion. BRUCE BOTELHO, Attorney General, Dept.
of Law; and HARRY NOAH, Commissioner, Dept. of Natural
Resources, came before committee. Commissioner Noah
directed attention to the land list (copy appended to these
minutes as Attachment A) associated with reconstruction of
the mental health trust.
The Attorney General provided a recap of the current
proposal under consideration by parties to the litigation.
He referenced a handout (copy appended as Attachment B) and
noted specifically the schedule of events on page 3.
Changes embodied within SB 67 are intended to bring closure
to the mental health controversy through either resolution
or settlement. Settlement involves agreement of all parties
to the litigation. Resolution (a legislative fix)
presupposes that not all parties will agree.
SB 67 reconstitutes the trust via three basic components:
1. Restoration, to the extent possible, of original
mental
health lands to the trust.
2. Substitution of additional lands to the trust to
make
up the difference between the original 1 million
acre trust and lands that are restored.
3. Cash payment reflecting the fair market value of
lands
that have been sold.
If fewer than all parties agree to the settlement, the bill
would provide cash, substitute lands, and restoration. The
state retains the ability to set off, as the Supreme Court
in the Weiss decision directed was possible, the $1.3
billion the legislature has appropriated for mental health
programs since 1978. That means the state would continue to
litigate the question of whether the state has fully
satisfied the obligation of reconstituting the trust.
Further, everything done with regard to Ch. 48 and Ch. 66
would vanish, and the state would no longer set aside 6% of
its general fund receipts for mental health programs.
If all parties agree, the cash, substitute lands, and
restoration of original mental health trust lands become
part of the bargain as well as benefits derived from the
trust authority embodied in Ch. 66. That authority allows
the mental health community to make recommendations that are
"for the most part binding on the Governor and the
legislature with respect to earnings." Additional program
improvements are embodied in Ch. 66, and a trust fund,
administered by the authority, would be established.
If SB 67 is enacted, the state expects to "walk away from
the mental health controversy now and forever."
Commissioner Noah directed attention to page 4 of the second
handout (Attachment B) and noted assumptions used in
reconstruction of the mental health lands trust. He then
directed attention to the first handout (Attachment A) and
explained that land is listed by district. He cautioned
that the handout was rapidly compiled and directed attention
to associated maps and noted inaccuracies such as
designation of land within the Pt. MacKenzie agricultural
area as original mental health trust land when the intent is
for the subsurface estate only to return to the trust. The
surface estate falls within the "sold" lands category.
Commission Noah voiced his anticipation that, as part of
ongoing negotiations, the land list may be reduced to
accommodate concerns the department was not aware of when
the list was compiled.
Commissioner Noah next recited assumptions used in
reconstruction of the mental health lands trust as set forth
on page 4 of the second handout (Attachment B). He stressed
that the $1.3 billion set-off has not been used in the
present proposal. In discussions of value, the $1.3 billion
would be available to the court to deduct from claims that
the trust has not been adequately compensated.
Directing attention to page 5 of Attachment B, Commissioner
Noah explained that of the original 1 million acre trust,
466,180 acres will return while 530,865 acres are not
available for return. In addition, approximately 98,398
acres of subsurface only land are available for return.
Mental health lawyers initially identified 525,000 acres
they felt were suitable as potential substitute lands. DNR
review and public comments pared the list to 356,884 acres.
An additional 127,037 acres of subsurface only values have
also been identified that could be returned to the trust
through substitute lands. The final tally evidences total
estate lands of 826,364 acres, consisting of 446,180 acr/es
of original land and 360,184 acres of replacement land.
Split estate lands total 225,435 acres, comprised of 98,398
acres of original lands and 127,037 acres of replacement
land.
Commissioner Noah next directed attention to large maps of
original lands that would and would not return to trust as
well as proposed substitute lands. Subsurface estate lands
are distinguished as either mineral and/or hydrocarbon
lands. Hydrocarbon only lands are associated with the
original mental health trust.
Discussion followed between Commissioner Noah and Senator
Jacko regarding subsurface rights. The Commissioner
explained that the subsurface owner would have to secure
approval from the surface owner to come on to the lands and
disturb them.
Senator Rieger requested detailed information on
legislatively designated areas. He then directed attention
to the initial handout (Attachment A) and inquired
concerning the status of Telephone Hill in Juneau,
Commissioner Noah explained that the City and Borough of
Juneau has spent considerable sums securing the site for a
new state office building. Municipalities all had concerns
regarding certain parcels. Consideration was given to
instances where municipalities had expended considerable
sums "over and above just having vacant land . . . ." The
Commissioner then highlighted the subport area in Juneau
which he described as under utilized because the water front
property is only used for storage. Since there is great
potential for higher use of this valuable property, it was
designated for inclusion within the trust.
In response to a question from Senator Sharp concerning
state lands in the area of Circle Hot Springs, Commissioner
Noah explained that land listed on Attachment A reflects
more controversial parcels. Great amounts of land are not
listed.
Commissioner Noah next spoke to the status of negotiations.
He attested to discussions in "tremendous detail," over the
past six to seven weeks, in an attempt to reach a basic
agreement everyone could support. He then voiced his belief
that "We're pretty close on the land list," if we could
agree on the money. If the current situation unravels, it
will be because of the amount of money requested or control
over mental health budgets. Commissioner Noah acknowledged
that he was less optimistic a true settlement could be
reached because of the number of individuals and groups
involved in the issue.
Senator Rieger inquired concerning the type of budgetary
control sought by the mental health community. Commissioner
Noah explained that the trust authority would like to have
control over both the trust fund and general fund dollars
for mental health. The authority would like to tell the
legislature how the money should be spent. If the Governor
or legislature deviates from that plan, a finding would have
to be rendered detailing why another course was taken.
Senator Rieger asked if the authority also wants control of
land management. Commissioner Noah responded affirmatively.
Senator Kelly asked if the trust authority is well
established. Attorney General Bruce Botelho explained that
it does not exist at the present time. It is embodied
within Ch. 66 which has not yet become effective due to lack
of approval of the underlying settlement. SB 67 would set
up the three-member board. Board membership is dictated by
professional qualifications and recommendations from
constituents in the mental health community. In function it
would be similar to the permanent fund board. Commissioner
Noah described the state approach which calls for DNR to act
as the "hands and feet" for the group in terms of land
management. The board would ultimately make the decisions.
Moneys would be invested with the permanent fund
corporation. Commissioner Noah observed that while there
are advantages to establishment of the trust authority, the
mental health enabling act did not require development of
such an authority.
Co-chair Frank directed that the meeting be briefly recessed
prior to proceeding with remaining agenda items.
RECESS - 9:35 A.M.
RECONVENE - 9:50 A.M.
SENATE BILL NO. 376
An Act relating to fees charged by state agencies for
certain services and to reimbursement for expenses
incurred by the state in providing certain services;
and providing for an effective date.
Upon reconvening the meeting, Co-chair Frank directed that
SB 376 be brought on for discussion. CHERYL FRASCA, Office
of the Governor, came before committee. She explained that
SB 376 would implement "several fee changes to existing
law." She then commenced a sectional review:
Sec. 1. Allows the Dept. of Revenue to charge a fee for
alcohol- server awareness courses. Last year the
legislature passed legislation requiring
alcohol servers to complete an awareness
course.
Sec. 2. Provides the Dept. of Public Safety authority to
promulgate regulations and charge fees for permits
to those servicing portable fire extinguishers and
those who design, install and service fire alarm
systems. KENNETH LEA, Deputy Fire Marshal, Dept.
of Public Safety, came before committee in
response to questions from Co-chair Frank. He
explained that permitting was established at the
request of industry. An ad hoc committee
suggested collection of an associated fee. Mr.
Lea voiced need to maintain quality control over
both those who design and service fire systems.
During the transition period of June 10, 1993,
through June 10, 1996, anyone who is presently
doing this type of work in Alaska may obtain a
permit based on past experience. New people in
the trade will be required to demonstrate
proficiency by documenting past experience and
passing a nationally recognized engineering
technician certification test.
Further discussion followed regarding fees
associated with various permits as well as the
length of time for which the permit would be good.
Additional discussion ensued regarding the public
process associated with issue of regulations
establishing the proposed fees. Mr. Lea estimated
that fees would generate $29.2 for fire
extinguishers and $38.5 from fire alarm systems.
Cheryl Frasca directed attention to information
set forth on accompanying fiscal notes.
Co-chair Frank asked that Mr. Lea provide written
information on the interrelationship between the
permit for fire sprinkler systems and the
mechanical administrator permit.
Sec. 3. Allows the Dept. of Public Safety to charge a fee
for
for permits issued to those who use dangerous
fireworks displays. Approximately $3.0 is
expected to be generated in FY 96 as a result of
this fee.
End: SFC-94, #62, Side 1
Begin: SFC-94, #62, Side 2
Co-chair Frank stressed need for language within the bill to
ensure that fees bear a strict relationship to costs of
administration of permit programs. Ms. Frasca noted a
similar provision relating to program receipts. Departments
are not to make a profit from program receipts that support
a program.
Sec. 4. Allows the Dept. of Public Safety to set in
regulations
the fee charged for retail fireworks permits. The
current statutory fee for those who sell fireworks
is $10.
Sec. 5. Allows the Dept. of Public Safety to set in
regulations the fee charged for wholesale fireworks
permits. The statutory fee is presently
$50. Co-chair Frank noted information
indicating that the proposal is for a
wholesale permit at $500 and a retail
permit at $100. He again stressed need
to ensure a strict relationship between
the cost of the permit program and the
fee paid. Taxing of an activity
represents separate policy.
Sec. 6. Allows the Dept. of Public Safety to increase fees
for
driver training school and instructor licenses.
The present fee is $25 for training schools. That
would increase to $100. Instructor licenses are
now $5. They would increase to $25.
Sec. 7. Allows the Dept. of Corrections to seek payment
for
medical care from third parties such as insurance
companies, the veterans administration, Indian
health services, or other federal agencies.
Sec. 8. Allows the Dept. of Environmental Conservation to
charge
for direct costs associated with pesticide
registration, subdivision plan review, bank loan
audits, analysis of water systems, and regulation
of motor vehicle fuels. Senator Sharp raised
concern regarding indirect costs. Ms. Frasca
explained that questioned language was contained
within a House version of the bill. KIT
BALLENTINE, Acting Director, Division of
Environmental Health, Dept. of Environmental
Conservation, concurred. She further advised of
discussion in House hearings regarding removal of
the indirect charge. Cheryl Frasca attested to
removal of such language from Senate versions of
the bill as well.
Senator Kelly directed attention to page 5, lines 8 and 9,
subsection (14), and asked how the department intends to
regulate motor vehicle fuels to control emissions. LEN
VERRELLI, Chief, Air Quality Management Section, Dept. of
Environmental Conservation, explained that activity relates
to compilation of information to exempt Alaska from low
sulfur fuel requirements. Senator Kelly voiced his
understanding that the proposed bill would allow the
department to establish a fee structure to capture
sufficient funds to conduct the project. Mr. Verrelli
concurred and noted the many interests in Alaska that would
be impacted by such a waiver. Application for the waiver
may only be made by the state. Co-chair Frank requested
additional written information on the project.
Discussion followed regarding analyses conducted by DEC
versus private labs. Senator Sharp voiced his understanding
that language within the bill prohibits DEC from conducting
analyses if certified private labs are able to do so. Mr.
Verrelli concurred. In response to further questions from
the Senator, Mr. Verrelli attested to problems resulting
from lack of certified labs within the state. Necessary
equipment involves great expense. That is how the state lab
got started. DEENA HENKINS, Chief, Drinking Water and Water
Treatment Section, Dept. of Environmental Conservation,
explained that certified laboratories must be available for
public water system analyses in order to maintain primacy
for state water programs. Private labs have thus been
certified to conduct that analysis. The state must continue
to do needed analyses in situations where the tests are too
expensive for private labs to undertake, and the holding
time on the sample is too short to allow for shipment to an
out-of-state lab.
Sec. 9. Is similar to an effective date clause. It allows
departments to commence work on regulations prior
to the actual effective date of the proposed bill.
Sec. 10. Provides an immediate effective date for Sec. 9.
Sec. 11. Provides a July 1, 1994, effective date.
SENATE BILL NO. 377
An Act relating to state agency fiscal procedures; and
providing for an effective date.
Co-chair Frank directed that SB 377 be brought on for
discussion. CHERYL FRASCA, Office of the Governor, remained
before committee to provide a sectional review.
Sec. 1. Limits the life of a warrant from two years to one
year.
After the initial year, the warrant would become
stale dated. DON WANIE, Director, Division of
Finance, Dept. of Administration, came before
committee. He noted an existing conflict in
statutes where AS 37.05. stale dates a warrant at
two years while AS 34.45.250 provides that such a
warrant becomes unclaimed property at one year.
The intent of the proposed bill is to bring stale
dating requirements into line with unclaimed
property provisions. After one year, warrants
would be submitted to unclaimed property for
payment from a trust within the Dept. of Revenue
rather than through the supplemental bill process.
Sec. 2. Allows payment of obligations that are not more
than
four (rather than two) years old from current year
appropriations.
Sec. 3. Changes the terminal leave statute as it relates
to
non-covered employees. Under the present process,
when a non-covered employee terminates and cashes
out leave, the employee receives credit for any
holidays that occur during the computed leave
time. The proposed bill amends that practice and
would not give credit for a holiday or any other
increase that would have occurred had employment
not been terminated. SHARON BARTON, Director,
Division of Administrative Services, Dept. of
Administration, further advised that the employee
would have to take payment for accrued leave in a
lump-sum manner rather than in installments.
Sec. 4. Changes the time frame for stale dating permanent
fund
dividend warrants to one year.
Sec. 5. Relates to terminal leave. At the present time,
if an
employee were to terminate with two months leave
on the books and go back to work at another job
within one month, the employee must pay back the
other month of leave. The proposed bill repeals
that requirement.
ADJOURNMENT
The meeting was adjourned at approximately 10:50 a.m.
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