Legislature(1995 - 1996)
05/03/1996 10:15 AM Senate FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
3 May 1996
10:15 A.M.
TAPES
SFC-96, #108, Sides 1 and 2
CALL TO ORDER
Senator Rick Halford, co-chairman, convened the meeting at
approximately 10:15 A.M.
PRESENT
In addition to co-chairman Halford, co-chairman Frank,
Senators Phillips, Sharp, Rieger and Zharoff were present
when the meeting was convened. Senator Donley arrived
shortly thereafter.
Also Attending: Representative Kay Brown; Juanita Hensley,
Division of Motor Vehicles, Department of Public Safety;
Julie Tauriainen, staff aide to Representative Gary Davis;
Sam Kito,III, Legislative Liaison, Department of
Transportation and Public Facilities; Amy Daugherty, staff
aide to Representative Alan Austerman; Ed Crane, President,
CFAB; Dave Tonkovich, Fiscal Analyst, Division of
Legislative Finance; and aides to committee members.
SUMMARY INFORMATION
SENATE CS FOR CS FOR HOUSE BILL NO. 109(FIN)
"An Act relating to telephone solicitations, advertisements,
and directory listings and relating to political polling and
campaigning by telephone."
Representative Kay Brown testified and explained the new "O"
version of the bill. Amendment #6 moved by Senator Sharp
failed. Senator Rieger moved SCS CSHB 109(FIN) and with the
objections of Senators Frank, Sharp and Phillips being duly
noted it was reported out with individual recommendations
and zero fiscal notes from Department of Commerce and
Economic Development and Department of Law.
CS FOR HOUSE BILL NO. 436(TRA)
"An Act relating to purchase and sale of mobile homes by
mobile home dealers; to mobile home titles; and providing
for an effective date."
Co-chairman Halford introduced the bill. Juanita Hensley
testified and said the Department of Public Safety supported
the bill. Senator Sharp moved CSHB 436(TRA) and without
objection it was reported out with individual
recommendations and zero fiscal note from Department of
Public Safety and $24.2 from Department of Commerce and
Economic Development.
CS FOR HOUSE BILL NO. 543(FIN)(title am)
"An Act establishing the procedures and conditions for
lessees of land leases at state airport and air navigational
facilities, including leases in holdover status to receive a
new lease of the same land or an extended term of the
existing lease; and relating to the title and ownership, and
the sale, removal, and other disposition, of permanent
improvements made to a leasehold under an airport or air
navigational facility lease."
Julie Tauriainen, staff aide to Representative Gary Davis
testified on behalf of the bill. Sam Kito, III, DOT said
the department supported the bill. Senator Sharp moved CSHB
543(FIN)(title am) and without objection it was reported out
with individual recommendations and zero fiscal note from
Department of Transportation.
A brief introduction was given by Amy Daugherty, staff aide
to Representative Alan Austerman. Ed Crane, President of
CFAB testified and answered questions. Senator Sharp moved
amendment #1(a) and without objection it was adopted.
Senator Zharoff moved amendment #1(b) and it failed; later
it was rescinded without objection and removed by Senator
Sharp it was adopted. Amendment #3 was moved by Senator
Zharoff and without objection it was adopted. Amendment #4
was moved by Senator Zharoff and held pending. The bill was
held in committee.
SENATE CS FOR CS FOR HOUSE BILL NO. 109(FIN)
"An Act relating to telephone solicitations,
advertisements, and directory listings and relating to
political polling and campaigning by telephone."
Representative Kay Brown was invited to join the committee.
She explained the new "O" version of the bill and said this
version was her preference reflecting the amendments
previously adopted. There was one further change on page 4,
line 26, the deletion of the words "polling or". She said
she pursued the attempt to create a two tier structure,
however, that proved to be problematic because of its
complexity. In working with the phone company associations
she determined that she would not continue pursuit of this
matter. The associations did not support a more complex
variation. She urged adoption of the "O" draft. Senator
Rieger moved "O" version as work draft and without objection
it was adopted.
Senator Sharp moved amendment #6. He said with this
amendment the state could regulate intra-state calls and
eliminate calls as outlined by this bill. The federal law
passed recently does not give states any option to do inter-
state limitations. In response, Representative Brown
referred to a letter of May 1, 1996 from Assistant Attorney
General, Joseph McKinnon. The last paragraph was read into
the record and said there was no limit to telemarketing
according to federal regulations implementing the 1994
Telemarketing Act. Representative Brown said she opposed
the amendment because it could have the effect of driving
business out of the State of Alaska if it only regulated
within the State. Most problems lie out of State. She said
this amendment would essentially gut the bill. Senator
Sharp referred to other states that have passed similar
legislation. Senator Rieger said he also opposed the
amendment. He had correspondence from the Alaska Telephone
Association and said they also opposed this amendment.
Senator Sharp felt the association probably opposed the
whole bill. He referred to computerized systems but said
there were many telephone utilities that do not have access
to these systems and rely on manual systems.
Senator Rieger read the letter from the Alaska Telephone
Association into the record. Senator Sharp felt they were
referring to the Judiciary version and not the one presently
before the committee. Representative Brown said the two
versions were essentially the same and the only changes were
the additional amendments from Senator Pearce in sections 1
and 2. That did not affect the issue they were speaking to.
She further re-iterated that she did not support this
amendment.
Co-chairman Halford asked for a vote on amendment #6 and it
failed adoption.
Senator Sharp referred to limitation on calls from
charitable organizations being from volunteers. He felt
this bill still allowed for paid professionals from the
Lower '48 to conduct the calls. Representative Brown said
she believed the committee did not act on the amendment
proposed by Senator Sharp at the last meeting regarding
this. She felt that the way it read now included employees
of the organization or volunteers on behalf of the
organization. Both a staff person or volunteer would be
covered. Calls would not be covered if the person had made
a contribution within the last twenty-four months. It would
not be an open-ended exemption. Senator Sharp said the
problem with the bill still allowed the two areas that do
90% of the calls that individuals do not ask for to occur.
One is polling and the other is charitable organizations.
Those violating privacy cannot continue to do so.
Senator Rieger moved SCS CSHB 109(FIN) and with the
objections of Senators Frank, Sharp and Phillips being duly
noted it was reported out with individual recommendations
and zero fiscal notes from the Department of Commerce and
Economic Development and Department of Law.
Representative Brown asked if the committee wished to adopt
the letter of intent from the House Judiciary. She read the
letter of intent into the record and said the Telephone
Association and the House supported this. Co-chairman
Halford said that without objection the letter of intent
would go with the bill.
CS FOR HOUSE BILL NO. 436(TRA)
"An Act relating to purchase and sale of mobile homes
by mobile home dealers; to mobile home titles; and
providing for an effective date."
Co-chairman Halford explained the bill. He referred to
section 3 the operative section. It is an optional program.
Juanita Hensley, DMV was invited to join the committee. She
further explained section 3 and said the department
supported the bill. It does not absolutely mandate that
they title, but rather if there is application made the
department shall issue a title. That is already being done.
Senator Sharp moved CSHB 436(TRA) and without objection it
was reported out with individual recommendations and zero
fiscal note from the Department of Public Safety and $24.2
from the Department of Commerce and Economic Development.
CS FOR HOUSE BILL NO. 543(FIN)(title am)
"An Act establishing the procedures and conditions for
lessees of land leases at state airport and air
navigational facilities, including leases in holdover
status to receive a new lease of the same land or an
extended term of the existing lease; and relating to
the title and ownership, and the sale, removal, and other
disposition, of permanent improvements made to a leasehold
under an airport or air navigational facility lease."
Julie Tauriainen, staff aide to Representative G. Davis was
invited to join the committee. She briefly reviewed the
bill. There are several different groups that have been
working with the sponsor on this bill, specifically the
Alaska Air Carrier's Association and the Department of
Transportation.
Sam Kito, III, DOT was invited to join the committee. He
said there was a good working relationship with House
Transportation and others on this piece of legislation and
all are in support of this bill. Senator Rieger asked that
if there were an opportunity to renew a lease would that
also be at market value? Mr. Kito said that in the
constitution they were required to offer leases at the fair
market value or whatever value is in the best interest of
the State. That is an implicit understanding in this
legislation which would presumably be fair market value.
Senator Sharp moved CSHB 543(FIN)(title am) and without
objection it was reported out with individual
recommendations and zero fiscal note from the Department of
Transportation.
CS FOR HOUSE BILL NO. 284(FIN)
"An Act relating to the Alaska Commercial Fishing
and Agriculture Bank."
Amy Daugherty, staff aide to Alan Austerman introduced this
bill. She referred to the last page of the bill, page 17
and deleted the words of the last line, "on or". Co-
chairman Halford asked that the amendment that was adopted
and then inadvertently deleted from the draft and the bill
went all the way through the process without the amendment
be explained either by staff or CFAB.
Ed Crane, President of CFAB was invited to join the
committee. He said the particular amendment in question was
adopted unanimously by the House Finance Committee and it
some how disappeared when the bill was subsequently
transmitted onto House Rules and the House Floor. It was an
amendment that is anticipated Senate Finance Committee will
restore as was the intent of the House Finance Committee.
This bill was occasioned in anticipation of full private
ownership of CFAB which is one of the primary objectives of
the founding fathers back in 1978. There was a requirement
for CFAB to become fully privately owned no later than the
year 2000; that all of the State's investment must be
retired by then. CFAB has retired $25 million of the State
investment and the remaining $7 million will be retired over
the next thirty months. Rather than waiting until the year
2000 that day will soon be upon us. He explained three
general categories of the bill. One, the clarification of
inconsistencies and filling in gaps and the resolution of
uncertainties as referred to in sections 9, 12, 15, 23, 24
and 26. Two, the accommodation of changes in commercial
fishing economics and commercial fishing laws that have
occurred since the original statute was written as referred
to in sections 15, 17 (paragraph 6), 18 (paragraph 5), 19,
20, 21 an 22. Three, to recognize that Alaska Statute 44.81
which applies only to CFAB is a restrictive statute which is
always going to be subject to strict interpretations by the
Court and in which certain inconsistencies present real
dangers to a company like CFAB, which operates in a world
quite sensitive to litigation as referred to in sections 17
(paragraph 14) and 18 (paragraphs 1, 8 and 9). Questions
were raised in House Finance Committee which resulted in
legislative auditors spending considerable time at CFAB
during the interim. They took a long look at the
legislative history of CFAB. In this bill the
accountability was retained to the Legislature and the
State. The Governor will continue to appoint two directors
to CFAB's Board of Directors and the annual report including
an independent auditors report is required be submitted to
the Legislature and the Governor. CFAB remains subject to
annual bank examination. On any given day any legislator
can propose changes to CFAB statute.
Co-chairman Halford asked how the bank treated the residency
of borrowers. Mr. Crane said statute provided loans can be
made only to residents for which the duration required is
one year. He referred to their credit policy and read it
into the record.He said they encounter very little
questionable practices and maybe 2 - 3 applications have
been denied because of residency. Co-chairman Halford
referred to section 10(b) on page 4. Mr. Crane said the
specific section does conform. The language was crafted
about nine years ago under the late Senator Bennett. He
related the difficulty in being able to find directors to
serve as there are no special privileges attached to being
on the board of directors. The majority of board members
are fishermen and in general they must be borrowers before
they become members of CFAB. He advised that there can be a
bad season due to any number of reasons, which do not
necessarily reflect poor character, poor credit practices or
any type of misconduct or ethical problem. With borrowers
generally, including directors who are borrowers, when those
situations occur, expectations are modified and there can be
a delinquent loan for twelve months. There needs to be room
for a director who is a fishermen borrower to be able to
deal with the things that happen to fishermen borrowers.
Co-chairman Halford said he believed this was strange
language regarding the board of directors and was too
permissive. Senator Sharp said he was also surprised with
the permissive language. Federal regulations and real banks
are severely limited in loaning to directors and officers.
This kind of allowance was permissive. Mr. Crane said the
bank examiners were aware of this situation. There has been
occasion to act on this matter by the board and
consideration was given to the examiner's view at the time.
Within the past two years there was a director reflecting an
economic rather than ethical weaknesses and was advised
formally that unless certain things were done with respect
to his loan by a certain date, his membership on the board
would be revoked. The qualities that make a person a good
and valued director are not necessarily the same qualities
which make him or her a good fisherman or borrower. Senator
Sharp concurred but felt a delinquent director allowed to
borrow from their own bank may lead to further
complications. That lowering of tolerance is why there is
such prohibition in the banking institutions. Senator Frank
also concurred and said there had been a substantial change
in the last fifteen years in regulations and practices of
banking in general. He suggested deleting the words
"chronically and irredeemably" on page 4, line 30.
Mr. Crane said that CFAB is regulated and this $35 million
institution is subject to strict scrutiny through State bank
examiners, it's own auditors, an exhaustive examination by
it's lenders, legislative audit and IRS audit. The policies
and practices of CFAB which could change, do not permit
special treatment for director loans. Senator Frank still
felt the language was permissive in requiring the board to
remove someone. Senator Sharp concurred. Senator Zharoff
felt there was no problem in leaving the wording as it was
since it had been there since inception. Mr. Crane advised
that there are seven members of the board, two appointed by
the Governor. He further explained the phrase of "natural
persons" as being distinct from legal persons. CFAB has
made a few farming loans and the main reason for that was
because there is little bankable commercial agriculture in
Alaska. Timber is classified as agriculture.
Senator Sharp asked how members were compensated for
attending board meetings and Mr. Crane said the current
practice of CFAB had been for modest compensation, $50/hour
up to $350/day maximum. Total compensation last year for
seven members of the board of directors was $13,000.
Senator Sharp proposed an amendment on page 4, line 30 to
read "maintains a chronic substandard borrowing relationship
with the bank shall be removed from the board." Mr. Crane
noted with regards to changing "may" to "shall" that CFAB
was a private institution and said it was not needed to have
a statute directing something like that. How would this be
enforced? Otherwise there was no objection to the rest of
the amendment. Senator Sharp felt the latitude for the
board and management to define "chronic substandard
borrowing" was left in. However he felt what was fair for
other borrowers should also be fair for directors.
After brief miscellaneous discussion by the committee
members Senator Sharp moved amendment #1(a) and without
objection it was adopted. Amendment #1(b) was also moved
and failed; later it was rescinded without objection and
Senator Sharp re-moved this amendment #1(b) and with the
objections of Senators Zharoff and Phillips being duly noted
it was adopted. Senator Zharoff moved amendment #2, page 17
line 31 to delete "on or" and without objection it was
adopted. Senator Zharoff further moved amendment #3 on
behalf of the sponsor and without objection it was adopted.
Amendment #4 was also moved by Senator Zharoff and it was
held pending.
ADJOURNMENT
Co-chairman Halford recessed the meeting at 12:00 noon to
call of the chair.
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