Legislature(1997 - 1998)

03/11/1998 08:25 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                          MINUTES                                            
                 SENATE FINANCE COMMITTEE                                    
                      11 March, 1998                                         
                         8:25 a.m.                                           
                                                                             
TAPES                                                                      
                                                                               
SFC 98 #76                                                                     
#77, Sides A and B                                                             
                                                                               
CALL TO ORDER                                                              
                                                                               
Senator  Bert  Sharp,  Co-Chair,  convened  the  meeting  at                   
approximately 8:25 a.m.                                                        
                                                                               
PRESENT                                                                    
                                                                               
In  addition to  Co-Chair  Sharp,  Senators Pearce,  Donley,                   
Torgerson, Adams and Phillips  were present when the meeting                   
was convened.  Senator Parnell arrived shortly thereafter.                     
                                                                               
Also  Attending:     Senator  RICK  HALFORD;   JANE  ANGVIK,                 
Director,   Division  of   Lands,   Department  of   Natural                   
Resources;  NANCY JONES,  Director, Permanent  Fund Dividend                   
Division,   Department   of  Revenue;   CATHERINE   REARDON,                   
Director, Division of  Occupational Licensing, Department of                   
Commerce and Economic Development;  PAM LA BOLLE, President,                   
Alaska  State Chamber  of Commerce;  MIKE GREANY,  Director,                   
Division  of  Legislative  Finance and  aides  to  committee                   
members and other members of the Legislature.                                  
                                                                             
                                                                             
SUMMARY INFORMATION                                                        
                                                                               
[Note:  There  was  a  presentation   on  the  Key  Campaign                   
Presentation, which was not  transcribed; audio is available                   
on  Tape   #76,  available  at  the   Legislative  Reference                   
Library.]                                                                      
                                                                               
                                                                               
     SENATE BILL NO. 235                                                       
     "An Act extending the termination date of the Board of                    
     Certified Real Estate Appraisers."                                        
                                                                               
                                                                               
Co-Chair Sharp  pointed out a  Legislative Budget  and Audit                   
report on this  bill that, in his opinion,  gave a favorable                   
recommendation for the extension.   He noted the zero fiscal                   
note attached to the legislation  and that the board was set                   
to sunset from  the year 1998 to 2002.   He opened the floor                   
to comments or questions.                                                      
                                                                               
Senator  Pearce  noted  the  auditors'  request  to  further                   
extend the  sunset date  to 2004. The  reason they  gave was                   
that there had  been no problems with the  operation of this                   
board.    The  division  would thus  be  spared  from  doing                   
another  audit in  two  years.   She  said  the report  also                   
pointed out  the lawmaker's ability  to pass  legislation to                   
change the  sunset date back to  the year 2002 if  it became                   
necessary.                                                                     
                                                                               
She then moved to amend page  1, line 6; replace "2002" with                   
"2004"  as   per  the  recommendation  of   the  Legislative                   
Auditors.   There was  no objection,  and the  amendment was                   
adopted.                                                                       
                                                                               
Senator  Pearce moved  Senate  Finance Committee  Substitute                   
for  SB   234  with   accompanying  zero  fiscal   note  and                   
individual recommendations, out of  committee.  There was no                   
objection and Co-Chair Sharp so ordered.                                       
                                                                               
                                                                               
     CS FOR SENATE BILL NO. 180(RES)                                           
     "An Act relating to state rights-of-way."                                 
                                                                               
                                                                               
BRETT HUBER, staff to Senator  Halford, the prime sponsor of                   
the bill,  came to the table  to testify.  He  explained the                   
RS2744 rights-of-way had been  a long-standing issue and was                   
complex.  He offered to  address his comments to first, give                   
a brief history  of the issue then give a  brief overview of                   
previous  action  and  then  address  the  bill  before  the                   
committee.                                                                     
                                                                               
Mr. Huber  said, "RS2477 was  a right granted to  the states                   
by the  US Congress with  the passage  of the Mining  Act of                   
1866.   The purpose  of the  law was to  provide for  and to                   
guarantee  the public's  right  to  establish access  across                   
federal  land.   Subsequent  congressional  action and  more                   
that 100 years  of case law recognize  the state's authority                   
to  determine and  define  RS2477  rights-of-way.   Although                   
Congress  repealed  RS2477 in  1976  when  they adopted  the                   
Federal Land  Policy and  Management Act,  they specifically                   
acknowledged the legal existence  of previous RS2477 rights-                   
of-way that were  established prior to the  repeal.  Current                   
federal  regulation  explicitly  provides  that  any  rights                   
conferred by the RS2477 grant shall not be diminished."                        
                                                                               
He  continued,   "Mr.  Chairman  as  you   are  aware,  this                   
important  state's  rights  issue has  received  legislative                   
attention  in the  past.   Beginning with  appropriations in                   
1992 and 1993, which funded  the research and compilation of                   
the  historical  information  regarding the  rights-of  way.                   
The  Legislature has  taken  the lead  in  moving the  issue                   
forward.    In   undertaking  the  legislatively  designated                   
projects, the  Department of Natural Resources  has reviewed                   
some 117  potential RS2477 routes.   The review  resulted in                   
them coming up  with 582 routes they  believed were accepted                   
prior  to the  extinguishment  of RS2477  grant process  and                   
that  they   have  enough  research  and   documentation  to                   
support."                                                                      
                                                                               
"Last  year the  Legislature  passed  SJR 13.    That was  a                   
resolution  that reiterated  the position  regarding RS2477,                   
and it  made clear  the objection of  the Department  of the                   
Interior's proposed  policy last  year.   Basically changing                   
the entire playing  field on how RS2477's are  defined.  You                   
should  have  a  copy  of the  policy  memo  from  Secretary                   
Babbitt  in  your packet.    Information  that came  forward                   
during  that process  and also  during  the joint  oversight                   
hearing  last  year  with  the  House  and  Senate  Resource                   
Committees resulted in SB 180."                                                
                                                                               
"SB  180  codifies  582 documented  rights-of-way,  requires                   
them  to  be  recorded,  and provides  a  process  for,  and                   
limitations  on  their  vacation  as  well  as  setting  out                   
liability  limitation  for  the  state.   While  the  RS2477                   
rights-of-way  codifies  in  this  bill  have  already  been                   
accepted by public use and  deemed supportable by the state,                   
it  is  likely  the  federal  government  will  dispute  the                   
state's ownership on some or perhaps all of these routes."                     
                                                                               
"Although the  current federal administration  is attempting                   
to  limit  the state's  rights  regarding  RS2477, over  100                   
years  of  case-law  on  point   recognizes  stated  law  as                   
controlling on the  issue.  We feel that  by codifying these                   
routes in statutes will strengthen  the state's position for                   
possible subsequent  court action  and provide  the affected                   
landowners and general public  clear notification that these                   
RS2477 rights-of-way are out there and available for use."                     
                                                                               
"Mr.  Chairman RS2477  rights-of-way are  an existing  state                   
right.   This  bill doesn't  make  any new  rights, it  just                   
asserts those rights statutorily."                                             
                                                                               
This concluded Mr. Huber's presentation on the bill.                           
                                                                               
Senator  Phillips referred  to the  numbers assigned  to the                   
trails.  He  noticed they were not in  sequence and wondered                   
if there  was a reason for  that.  Where there  other trails                   
that  were not  considered for  this legislation,  he asked.                   
Mr. Huber  explained the numbers  were the RST  numbers from                   
the Historic Trails Atlas.   DNR actually started with about                   
1800  routes  as  possibly qualifying.    They  brought  582                   
forward that were  included in the bill. The  reason all the                   
RST numbers  were not  listed; was  because they  didn't all                   
qualify for designation under RS2477, he said.                                 
                                                                               
Senator Phillips looked for the  Iditarod Trail on the list.                   
Mr. Huber conceded that he  had not memorized all the trails                   
included, but guessed that the Iditarod Trail was included.                    
                                                                               
Senator Adams had a question  about easements.  He wanted to                   
know what  size of easement  was proposed  in the bill.   He                   
said that  many of the  trails in  his area were  very small                   
dog  trails  in nature.    Mr.  Huber  said he  and  Senator                   
Halford shared that  concern and had decided  to address the                   
whole scope  and management aspect  in this  legislation and                   
not  address  the  easement  portion   at  this  time.    He                   
explained that the department had  a regulatory process that                   
could be applied later.  DNR,  when it had been accepting an                   
RS2477,  had  been asserting  them  at  a 100-foot  easement                   
width,  he  noted.   This  bill  did  nothing to  require  a                   
specific  easement width,  a specific  scope  or a  specific                   
use.   The  sponsor  believed that  individual trails  would                   
probably  need  individual  decisions.   He  gave  examples,                   
saying that, some  of the trails were dog  sled routes, some                   
trails led to burial grounds  located one hill away from the                   
village.                                                                       
                                                                               
Senator Adams clarified  that the decision would  be left up                   
to the  department to  make the  width determinations.   Mr.                   
Huber affirmed  that.  He  suggested there would  be another                   
possibility  where  a  court would  make  a  specific  width                   
determination if there were subsequent court action.                           
                                                                               
Senator Adams told  the committee had an  amendment to offer                   
and  he spoke  to  that amendment.   He  said  he felt  that                   
basically the  Legislature needed to require  the department                   
to survey the rights-of-ways before  they were recorded.  He                   
asked the  sponsor's opinion  of the  amendment.   Mr. Huber                   
responded, thanking  the senator  for prior  notification of                   
the amendment.   In his  opinion however, of the  588 trails                   
listed in  the bill, not  all had potential  conflicts. Some                   
crossed state  lands only, some crossed  federal lands only;                   
some crossed  a mix of state,  federal, Native corporations'                   
lands.   To  go out  and survey  all 582  trails would  be a                   
tremendous project.   It would  be difficult  to prioritize.                   
He  anticipated the  priority  to be  set  when an  affected                   
landowner had  a dispute.   The bill included a  process the                   
landowner  could  follow  to work  with  the  department  to                   
vacate  a  portion   of  the  route  if   an  alternate  was                   
established.   The other option  the landowner had  would be                   
to take  the case to court  and have the judge  make a clear                   
determination.   Mr. Huber summarized  that when  a conflict                   
came up; DNR would do a survey.                                                
                                                                               
Senator   Adams  asked   if   there  was   a  timeline   for                   
implementation of  this legislation.  Mr.  Huber replied the                   
only time limit in the  bill required the recording of these                   
routes no later  than January 1, 1999.   He continued saying                   
it was important to note that  the routes listed in the bill                   
were  not the  only RS2477  that existed.   Others  could be                   
added,  and  the bill  also  directed  DNR to  continue  its                   
efforts to identify new routes.                                                
                                                                               
The committee then invited JANE  ANGVIK to testify on behalf                   
of DNR.   She showed the committee a map  showing the routes                   
referred to in this legislation.   She noted that the RS2477                   
routes  were  identified on  the  map.    She spoke  of  the                   
research  the department  did  in  determining which  routes                   
qualified.                                                                     
                                                                               
She spoke  to a problem  the department had with  this bill.                   
She  said,  that  while  the map  had  lines  depicting  the                   
trails,  the  department  did not  know  exactly  where  the                   
trails were on the ground.   While the department completely                   
supported the effort  of the sponsor to  assert ownership of                   
the  trails,  she  felt  that  if  DNR  recorded  the  trail                   
locations today,  they would unduly  cast shadows  on title.                   
The problem was  not with determining ownership  on state or                   
federal  lands, the  question would  be with  private lands,                   
she warned.                                                                    
                                                                               
Senator Phillips  asked for a copy  of the map.   Ms. Angvik                   
gave him  the map she had  and told the committee  she would                   
provide additional copies for each member.                                     
                                                                               
Ms.  Angvik  said the  map  was  a  product of  the  capital                   
improvement project the Legislature  funded three years ago,                   
which provided  the department with the  funding to actually                   
do  the  research  and  do  the  historical  identification.                   
There were  over 1000 routes that  were originally proposed.                   
This legislation  represented those  ...(tape unintelligible                   
due to paper-shuffling of the map in question.)                                
                                                                               
Ms. Angvik explained  the steps the department  had taken to                   
certify  the routes.   She  mentioned public  participation.                   
She said they had only  done the certification process on 11                   
of the  trails in question, and  of that they had  taken one                   
to  court   with  respect  to   ownership  of   the  federal                   
government.   She  spoke to  the importance  of letting  the                   
public know of the trails' existence.                                          
                                                                               
She  said  DNR had  concerns  about  actually recording  the                   
routes before  their location  had been  actually identified                   
on the land.   Therefore, she said  the department supported                   
Senator Adam's  amendment requiring  the trails  be surveyed                   
before they  were actually recorded.  That would  give proof                   
positive of the location.   The downside, she admitted would                   
be the  expense and  the fiscal  note would  be large.   She                   
gave the  committee an estimate  of the cost to  survey just                   
the  11  trails that  had  already  been certified.    (This                   
amount  was in  written form,  and not  stated on  the audio                   
record.)                                                                       
                                                                               
Senator  Parnell  speculated there  were  a  lot of  private                   
property owners  who would  love to have  the state  pay for                   
surveys.  If  the title was already clouded  by assertion of                   
the  rights,  and  if  someone wanted  to  transfer  or  use                   
property,  whether  the trails  were  recorded  or not,  the                   
individual would have to file  an "Action to Quiet Title" or                   
pay for a  survey.  Therefore, he agreed with  Mr. Huber and                   
felt that  to require  a survey  before recording  would not                   
accomplish anything.                                                           
                                                                               
Ms. Angvik  agreed that they believed  that the right-of-way                   
existed  and  was  out  there   somewhere.    What  DNR  was                   
concerned  about   was  asserting  that   ownership  without                   
knowing  exactly where  it was.   She  would not  anticipate                   
doing  surveys strictly  for private  interests.   What they                   
would be doing would be  finding a centerline of the state's                   
own  easements.   She used  a possible  example, "There's  a                   
road going through  your land, and we would like  to let you                   
know exactly where  it is.  Right now we  don't know exactly                   
where  it is.    What that  does is  make  if difficult  for                   
people to know.  They can  say, 'OK, I've got an encumbrance                   
on my  land, but you can't  even tell me if  it goes through                   
the middle of my house or not.'"                                               
                                                                               
Senator Parnell said that would  take years and suggested it                   
would be  better to put  them on  notice now and  then start                   
working  the  survey process.    Ms.  Angvik responded  that                   
there was no question that  the state should tell the public                   
if there was an easement  on their land.  However, generally                   
speaking,  the  RS2477  question  was cast  as  the  federal                   
government versus the State Of Alaska.   It was the State Of                   
Alaska trying  to provide access the  conservation districts                   
that were created as a result  of ANILCA.  The big fight was                   
with the federal government.                                                   
                                                                               
Senator Phillips referred to  the identification of historic                   
trails, which  he surmised this  legislation was  all about,                   
and  asked how  the identification  was arrived.   He  noted                   
that  during the  Gold  Rush there  had  been another  trail                   
north of  Yakutat that  miners used that  was not  marked on                   
the map.   He saw the  trail marked on the  Canadian side of                   
the border.                                                                    
                                                                               
Ms. Angvik responded that the  original design of the RS2477                   
law was to allow  people to get from point A  to point B, on                   
their way to someplace else.   The requirement for the trial                   
designation  was that  some government  somewhere needed  to                   
have  stated that  the  trail  was real.    In  the case  of                   
Alaska,  the government  entity  was  often the  Territorial                   
Highways.   There may be  many trails that exist,  but there                   
was never a  time when a government indicated  such for that                   
trail, she said.  When  the division reviewed the historical                   
records,  they looked  at not  only  if the  trail had  been                   
used,   but   also   whether  there   was   any   government                   
acknowledgement of the trail.                                                  
                                                                               
Mr.  Huber  interjected  that   his  understanding  that  no                   
government action  was required  to create an  RD2477 route.                   
They could  be accepted by  public use  so long as  that use                   
pre-dated the extinguishment of the  act in 1976.  Pre-dated                   
public use  constituted acceptance.   He  noted there  was a                   
lot of case law to support that.                                               
                                                                               
Senator Pearce  asked why a  route such as the  Copper River                   
Railroad did not appear as  a historic transportation route.                   
Co-Chair  Sharp  answered that  was  because  the route  was                   
already an existing right-of-way  that has been established.                   
Ms. Angvik added that many  routes are actively managed by a                   
government  or, as  in  the  case of  the  railroad, by  the                   
railroad entity.                                                               
                                                                               
Senator Pearce pointed out many  other trails the government                   
manages that were in fact  included in the designation.  Ms.                   
Angvik  responded the  trails included  a historical  record                   
that  indicated they  could be  provable, with  respect that                   
they exist and  there are entities that  recognize that they                   
exist.  Senator  Pearce asked if the  railroad didn't exist.                   
Senator Phillips commented (undecipherable).                                   
                                                                               
Senator  Phillips questioned  how  the  division arrived  at                   
"historical   trails".     Ms.  Angvik   replied  that   the                   
definition was  established both in  the federal law  and in                   
regulations that had  been adopted.  One  way to demonstrate                   
qualification,  is by  going through  records of  government                   
use and  individual use  that had been  provided.   In cases                   
such  as  the Copper  River  Railroad,  the route  had  been                   
established but  is not  an RS2477 under  the terms  of this                   
law.  It exists as a separate easement that already exists.                    
                                                                               
Mr.  Huber pointed  out that  it was  important to  remember                   
that this  exercise of establishing these  rights-of-way was                   
not to show  all state rights-of way, but  to identify these                   
historic  rights-of-ways that  were accepted  by public  use                   
that aren't  already a part  of the state's  right-of-way or                   
transportation system.                                                         
                                                                               
Co-Chair  Sharp   invited  Senator   Halford  to   join  the                   
committee at the table if he so desired.                                       
                                                                               
Senator Pearce said  the reason she asked  the question, was                   
because there was some dispute  over the Copper River right-                   
of-way and who  owned part of it.  The  original railway bed                   
is gone  because it was over  a glacier and the  land it now                   
occupies belongs to  one of the Native  corporations, not to                   
the  State Of  Alaska.   Mr. Huber  told her  that while  he                   
didn't have a  specific answer on this  right-of-way, it was                   
certainly possible that is would  apply under the portion of                   
the law that  reads, "lands that are  not already reserved."                   
If  there was  a  federal reservation  of that  right-of-way                   
initially,  that was  not previous  to public  use, then  it                   
would  not  be  acceptable  by public  use  because  it  was                   
already reserved ground.  He  qualified by saying that was a                   
possibility,  but  he didn't  know  the  particulars on  the                   
Copper River corridor.                                                         
                                                                               
Senator Parnell wanted to know  if there was any more public                   
testimony to  be heard  on this bill.   Co-Chair  Sharp said                   
there  was  one  more  person  signed  up.    Senator  Adams                   
indicated that  he needed to  leave for another  meeting and                   
requested the  committee take up  his amendment first.   Co-                   
Chair  Sharp granted  the request  stating  that the  public                   
testimony left to be heard  probably wouldn't be affected by                   
the passage or failure of the amendment.                                       
                                                                               
Senator  Adams  moved  to  adopt   Amendment  #2.    Senator                   
Torgerson objected.   Senator Adams spoke  to the amendment.                   
He  acknowledged  the  enormous  cost  of  implementing  the                   
provision of the  amendment, which would require  all of the                   
surveys done  prior to recording.   He  still felt it  was a                   
necessary issue.  Co-Chair Sharp  asked for roll call on the                   
amendment.  The amendment failed 1-5 (Senator Adams, yea.)                     
                                                                               
Senator Torgerson  moved to adopt Amendment  #1, a technical                   
amendment.   Mr. Huber spoke  to the amendment,  which would                   
add 20 additional  routes to the original  182 routes listed                   
in  the Resources  Committee  version of  the  bill.   Those                   
routes had  been supplied  to the sponsor  by DNR  as routes                   
researched  and documented  to a  level  the department  was                   
comfortable with their validity.                                               
                                                                               
Senator  Torgerson  had  a  question on  Page  22  Line  13;                   
changing   the  word   "shall"  to   "may"  and   asked  for                   
explanation.    Mr.  Huber responded  that  the  change  was                   
purely a drafter  recommendation.  It would  not change what                   
the bill was trying to do.   There was some discussion as to                   
the meanings of "shall" and "may".                                             
                                                                               
There were no objections and Amendment #2 was adopted.                         
                                                                               
Co-Chair Sharp called  PAM LA BOLLE to testify.   The Alaska                   
State  Chamber  of  Commerce   supported  the  research  and                   
mapping  of RS2477  rights-of-way on  federal lands  and the                   
state's  assertion of  those rights  on  federal lands,  she                   
told the  committee.  However,  they had concerns  about the                   
private property issue and urged  the committee give careful                   
consideration.   Another concern dealt with  liability.  She                   
said her group  supported the state's efforts  to assert its                   
rights and do the mapping.                                                     
                                                                               
There were no questions by  committee members.  There was no                   
other public  testimony.   Senator Halford  was asked  if he                   
had anything more to offer.                                                    
                                                                               
Co-Chair Sharp  had one  more question  of Ms.  Angvik about                   
the fiscal  note.  He  wondered if the  documents' existence                   
on magnetic  form might excellorate  the process at  a lower                   
cost that the  fiscal note quoted.  He pointed  out the 3200                   
man-hours  needed  for  copying  paper files.    Ms.  Angvik                   
replied  that unfortunately  the  Recorder's  Office had  no                   
capacity  to receive  electronic files.   DNR  would happily                   
give  them  a  disk,  but   the  process  of  recording  had                   
stringent  requirements.   Paper size  must be  exact.   The                   
department is  even facing challenges  of how to  submit the                   
maps  themselves  since they  cannot  be  larger than  legal                   
size.                                                                          
                                                                               
Co-Chair Sharp voiced  his opinion that the  state should at                   
least  assert   its  rights  over   routes  that   had  been                   
documented and  proven.  He felt  that to do any  less would                   
do more  harm to private  citizens that might  be purchasing                   
or acquiring  land.   Those people should  be put  on notice                   
that  there may  be an  RS2477 right-of-way  on their  land.                   
Without  that  information  on  file,  it  would  be  nearly                   
impossible  for them  to  be aware  of  the encumbrance.  If                   
surveying  needs to  be done  later,  then that  could be  a                   
focus.                                                                         
                                                                               
Senator  Pearce moved  Senate  Finance Committee  Substitute                   
for SB  180 with individual recommendations  and appropriate                   
fiscal note.   There were  no objections and the  bill moved                   
out of committee.                                                              
                                                                               
                                                                               
     CS FOR SENATE BILL NO. 254(JUD)                                           
     "An   Act  relating   to  the   exemption  from   levy,                   
     execution,  garnishment,  attachment, or  other  remedy                   
     for the  collection of debt  as applied to  a permanent                   
     fund dividend."                                                           
                                                                               
                                                                               
MIKE  PAULEY,   staff  to  Senator  Leman,   addressed  this                   
legislation.  His testimony was as follows:                                    
                                                                               
"This  bill  would  significantly  enhance  the  ability  of                   
Alaskan  businesses and  other  private  parties to  collect                   
from  debtors  who  are  in  a state  of  default  in  their                   
financial  obligations.   Existing state  law provides  that                   
45% of  a person's annual  Permanent Fund Dividend  check is                   
exempt  from collection  to  pay an  outstanding  debt.   In                   
other  words,  even  though  a   person  may  have  a  court                   
judgement  stipulating that  they  owe a  certain amount  of                   
money, almost  half of their  dividend check is  exempt from                   
collection at  least when its  a private party  that seeking                   
to  collect the  debt.   There are  some exceptions  to this                   
general rule.  Child  support obligations, defaulted student                   
loans  and any  debts  to an  agency of  the  state are  not                   
covered by the 45% exemption.   So on those cases; the state                   
can garnish  100% of  a dividend check  in order  to satisfy                   
its financial  obligation.  But  small businesses  and other                   
private parties  do not enjoy  that ability to  collect 100%                   
of the check."                                                                 
                                                                               
"When businesses  are not able  to collect funds  from those                   
in  default,  it  increases  the  cost  of  doing  business.                   
Ironically, those  costs are passed  on to  honest consumers                   
in the form of higher costs  for goods and services.  So, in                   
a very  real sense,  the majority  of Alaskan  consumers are                   
paying  for  the  financial   irresponsibility  of  a  small                   
minority."                                                                     
                                                                               
"As  originally introduced,  SB 254  proposed to  completely                   
eliminate  the  45%  exemption.     However,  and  amendment                   
adopted in committee, restored the  exemption but lowered it                   
from  the  current  45%  to   30%.    This  means  that  the                   
percentage  of  a  dividend  available  for  garnishment  by                   
private parties would  increase from 55% to 70%  as the bill                   
currently stands.  State agencies  would continue to collect                   
at a rate of 100%."                                                            
                                                                               
As currently  structured, SB  254 significantly  narrows the                   
gap between what  private parties and the State  are able to                   
collect."                                                                      
                                                                               
That concluded Mr. Pauley's prepared statement.                                
                                                                               
Senator  Donley   agreed  that   while  he  felt   the  100%                   
garnishment  would work  because people  would not  have the                   
incentive to actually  file for their PFD, he  did think the                   
higher percentage  was appropriate here.   He said  he would                   
like to  see it  around 25%  or less  so people  would still                   
have the  incentive to  file, but  still benefit  anyone who                   
went through the effort to get a court judgement.                              
                                                                               
Co-Chair  Sharp's comment  was that  he wanted  to keep  the                   
incentive  and  leave  enough  to   pay  the  taxes  on  the                   
dividend.  There was  further discussion  by Co-Chair  Sharp                   
and  Senator Donley  about  the taxes  and  the efforts  the                   
debtor makes in obtaining a judgement.                                         
                                                                               
Co-Chair  Sharp   requested  the   sponsor's  view   of  the                   
Judiciary version.   Mr.  Pauley qualified  that he  must be                   
careful in  speaking his  office's opinion.   The  Labor and                   
Commerce Committee,  who he was here  representing, voted to                   
restore, but  lower, the exemption, which  the original bill                   
eliminated.  Therefore, he felt he could not comment.                          
                                                                               
Co-Chair Sharp  noted the L&C  version added a  fee schedule                   
based  on five-percent  of the  dividend  rather that  five-                   
percent of the  amount collected.  Mr.  Pauley explained the                   
L&C change from  imposing a $2 fee to a  fee of five-percent                   
of  the total  value  of  the PFD.    This  was because  the                   
existing $2  fee was not  covering the  division's expenses.                   
The  Judiciary  committee then  voted  to  remove the  five-                   
percent  fee,  which  eliminated  the  actions  of  the  L&C                   
Committee.     He  recalled  the  Permanent   Fund  Division                   
testified that they were opposed to the five-percent fee.                      
                                                                               
Co-Chair Sharp noted that the  division had a representative                   
present   at  this   meeting  to   answer  questions.     He                   
anticipated the committee would have a few questions.                          
                                                                               
Senator  Torgerson  was  under the  impression  that  court-                   
ordered  restitution  was  already  at 100%.    He  gave  an                   
example:   "If  I did  a small  claims action,  and took  it                   
through the court  process, and the case was  found in favor                   
of my claim,  I would now have a court  order for re-payment                   
of  that amount  of money  as long  as it  was under  $5000.                   
What you're saying  is that under current law,  I could only                   
collect 55% of  that even though it was  under court order?"                   
Apparently, he said, he had  a different explanation of what                   
court-ordered restitution means.                                               
                                                                               
Mr. Pauley  shared that to  his understanding  that language                   
did  not apply  to  private  debtors.   He  spoke  of a  car                   
dealership with a customer who  defaulted on their car loan.                   
Even if the  dealership had the court  statement saying they                   
were entitled  to that  money, that  didn't entitle  them to                   
100% of the PFD.                                                               
                                                                               
Senator Donley interjected;  pointing out that "restitution"                   
usually applied  to criminal situations.   Senator Torgerson                   
said  he  thought  part  of   this  legislation  dealt  with                   
criminal actions.   Senator Donley  explained how  the court                   
usually assigns  restitution to be  paid by the  criminal to                   
the victim of the crime.                                                       
                                                                               
Senator  Torgerson asked  what  form  the garnishment  would                   
come to  the PFD.  Did  the collection agency submit  a copy                   
of the  credit card statement  showing the balance  owed and                   
substantial documentation,  or was a court  order necessary,                   
he asked.   Mr.  Pauley told  him there  was a  process that                   
must  be  followed.  He  deferred  to  NANCY  JONES  of  the                   
division who had more knowledge of the mechanics.                              
                                                                               
Co-Chair Sharp called Ms. Jones  to come to the committee to                   
testify.  She started  by answering Senator Torgerson's last                   
question.   The court must  certify all claims,  she stated.                   
The  division would  not  accept any  private  claims.   The                   
garnishment request would come to  PFD through a court order                   
that states this was a legal dept.                                             
                                                                               
Co-Chair Sharp restated the  earlier question concerning the                   
$2 fee  and whether  that was  adequate to  cover processing                   
costs.   Ms.  Jones told  of the  division's the  collection                   
staff, which  also does data  processing.  April 1  would be                   
the first  time they  would be accepting  any claims.   They                   
would accept claims from April  1 through the payment period                   
in October.   Of a staff of four, one  person worked 100% on                   
processing these  claims.  Other staff  worked varying parts                   
of the process.  Including  data entry time and computer use                   
charges,  the total  cost  of processing  the  claims was  a                   
little more that $154,000.   The $2 fee adequately reflected                   
the  cost,  summarized  Ms.  Jones.   She  spoke  about  the                   
allocation  of   those  funds  by  the   Legislature,  which                   
required the charges be collected  before the money could be                   
spent.    Therefore,  she  said, if  the  division  did  not                   
receive the  anticipated number  of collections,  they could                   
not spend the $154,000  operating appropriation.  Because of                   
this, they had kept the projections conservative.                              
                                                                               
Co-Chair Sharp asked about the  record of federal government                   
agencies,  namely the  Internal Revenue  Service, as  far as                   
paying  the  processing fee.    He  wanted  to know  if  the                   
division had  gotten any static  from the IRS  attempting to                   
have the  fees waived.   Ms. Jones  recounted that  prior to                   
her tenure  with the division,  there had been  some battles                   
fought over  this matter.  The  IRS did not allow  any other                   
institutions to  collect a processing fee  before dispersing                   
funds.   They had come to  an agreement that said  if at any                   
time the  IRS could collect up  to $21 million from  the PFD                   
fund, they shouldn't  quibble about the meager $2  fee.  She                   
said  the  division  was  working   together  with  the  IRS                   
regional directors.                                                            
                                                                               
Senator Donley  wanted to know  if the $2 fee  was currently                   
set in  statutes.   Ms. Jones responded,  no.   The statutes                   
just provided  the authority  for the  division to  charge a                   
fee.  The amount was set in regulation.                                        
                                                                               
Senator Phillips and Ms. Jones  had further discussion about                   
the  fee  and  whether  it  was  adequate  at  covering  the                   
processing costs.                                                              
                                                                               
Senator  Torgerson  asked  to  make it  clear  that  if  the                   
department's  costs  started  to   exceed  that,  which  was                   
covered by  the $2, that the  fees would be increased.   Ms.                   
Jones  assured  him  that when  the  overhead  exceeded  the                   
collected amount the fees would be  raises.  She said it was                   
difficult to  breakdown and to  determine the exact  cost to                   
process each claim.   Senator Torgerson said  he just wanted                   
reassurance that the  division had the ability  to raise the                   
fee if needed to cover the costs.                                              
                                                                               
Co-Chair  Sharp  brought  up  the  issue  of  the  different                   
versions  of the  bill and  asked the  committee which  they                   
would like to address.                                                         
                                                                               
Senator Donley  suggested the simplest bill  version to work                   
from  would  be  the  Judiciary  version.    Co-Chair  Sharp                   
agreed.                                                                        
                                                                               
Senator Donley considered changing the  current 30% to 20 or                   
25%.    Senator  Adams  responded  by  asking  how  low  the                   
percentage  retained  could  drop  and  still  maintain  the                   
incentive for  the individual to  file.  He wondered  if the                   
current  30% was  determined  to be  that  amount.   Senator                   
Donley spoke to the logic of  a desire to pay off one's dept                   
to be the incentive needed.   He felt that if the court told                   
an  individual they  owed a  debt,  they ought  to have  the                   
moral fortitude  to pay off  that debt.   By using  the PFD,                   
they are  getting the advantage  of having the  dividend pay                   
toward that  debt.   He acknowledged  there should  remain a                   
percentage to allow the incentive to file.                                     
                                                                               
Senator Donley  made a motion to  change Page 1 Line  5 from                   
30%  to  20%.     Co-Chair  Sharp  objected  for  discussion                   
purposes.   Senator  Phillips wanted  to know  the sponsor's                   
opinion on the amendment.                                                      
                                                                               
Mr. Pauley  spoke saying they  had heard an  enormous amount                   
of testimony on  this issue as to what  the right percentage                   
should be  to still give an  incentive to apply. He  made an                   
observation,  if there  was a  concern that  garnishing 100%                   
would  be  a disincentive  for  people  to apply,  then  the                   
argument should be  made to take the  state agencies current                   
100%  and  lower  it  to whatever  percentage  was  set  for                   
private party  collection.   The question  was posed  to the                   
Administration  asking   if  they  had  data   showing  that                   
individuals were  not applying  because they knew  that 100%                   
of their  dividend would  go toward  their child  support or                   
student  loan obligation.    The  response was  anecdotally,                   
they had heard of cases where  this was the case, but it was                   
extremely difficult to quantify.                                               
                                                                               
He continued,  saying that the current  stipulation allowing                   
for 55% of the dividend to  be collected was determined at a                   
time  when the  dividend was  a significantly  lower amount.                   
He  predicted  that if  next  year's  check was  $1500,  and                   
Senator Donley's  amendment was adopted, Mr.  Pauley's guess                   
would be the  recipient would still receive  $300.  Speaking                   
for  himself, he  would  still apply  for  the "free"  $300.                   
That was a  lot of money to  him, and he felt it  would be a                   
lot of money to most people.                                                   
                                                                               
Co-Chair  Sharp  removed  his objection  and  Senator  Adams                   
maintained the  objection.   Roll call  was taken,  with the                   
vote  tally 4-2  (Senator Adams  and Senator  Phillips nay).                   
The motion passed.                                                             
                                                                               
Public  testimony   was  heard   from  Ms.  LaBolle.     Her                   
organization  supported the  legislation and  the change  in                   
the percentage from the Judiciary  version.  She added their                   
desire to  keep the amount  of the processing fee  to remain                   
set in regulation rather than statutes.                                        
                                                                               
Senator Donley  referred to language deleted  in lines eight                   
through eleven  and asked  for an  explanation.   Mr. Pauley                   
spoke  to  the   change  in  Workdraft  F   as  a  technical                   
correction suggested by  the Department of Law.   The change                   
gives a definition  of "after" in relation to  the amount of                   
the exemption taken.                                                           
                                                                               
Senator   Donley   moved   the  Senate   Finance   Committee                   
Substitute  for  SB 254  from  committee  with a  new,  zero                   
fiscal note  and individual recommendations.   There were no                   
objections and Co-Chair Sharp so ordered.                                      
                                                                               
                                                                               
     CS FOR SENATE BILL NO. 255(STA)                                           
     "An Act establishing the Joint Committee on Military                      
     Bases in Alaska; and providing for an effective date."                    
                                                                               
                                                                               
TIM BENINTENDI,  staff to Senator  Tim Kelly, spoke  to this                   
bill.  His statement was as follows:                                           
                                                                               
"SB 255  would establish a  joint House, Senate  and citizen                   
committee to  take up issues strictly  dealing with military                   
base closures  in Alaska.  It  would focus upon, but  not be                   
limited to,  activities of the Base  Realignment and Closure                   
Commission,  the  so-called  BRAC  Commission,  which  is  a                   
federal  entity  that   periodically  reviews  all  military                   
facilities  in the  United States.   The  attention by  BRAC                   
given to Alaskan  bases in the past  presents a considerable                   
challenge and  necessitates a  strong and  vigilant response                   
from  the Legislature.   As  it  now stands,  a formal  BRAC                   
reactivation is  being debated in  Washington DC.   However,                   
Defense  Department  officials  have said  that  they  would                   
perform  a base  review and  closure exercise  even if  BRAC                   
isn't reinstituted later in the year."                                         
                                                                               
"The   military  establishment   in   Alaska  accounts   for                   
approximately $1.7 billion  annually throughout our economy.                   
In addition, the base closures  experienced to date, that is                   
Adak Naval Air Facility and  Fort Greely have shown that the                   
process  requires considerable  amount of  attention on  the                   
part of state government to  monitor the economic impact and                   
reuse  potential   of  such  base  closures.     This  joint                   
committee would provide that critical focus."                                  
                                                                               
"We have included public members  in this joint committee to                   
draw  the  participation  of individuals  from  the  state's                   
primary military  base localities, Anchorage  and Fairbanks.                   
We have invited participation  from the state's Commissioner                   
of Military and Veteran's Affairs department."                                 
                                                                               
"The  bill before  you  reflects a  correction  made in  the                   
Senate State Affairs Committee to  more clearly indicate the                   
inclusion of  three public,  non-legislative members  of the                   
committee.                                                                     
                                                                               
"The  amendment you  also have  would  change the  indicated                   
amount of value  the military presence hold  for Alaska from                   
$2.7  billion to  $1.7 billion.   This  revision comes  from                   
Institution for Social and  Economic Research, which updated                   
that value  for us.   It modifies  the higher  number, which                   
was previously  used by our  congressional delegation.   The                   
revised figure  reflects past troop reductions  and previous                   
base  closures and  does not  include the  value of  retired                   
military personal."                                                            
                                                                               
"We ask your  support for that amendment.   I understand the                   
teleconference won't take place,  so Mr. Chris Nelson, who's                   
had experience with  this in the past, won't  be joining us,                   
but I  would be happy to  take any questions or  discuss the                   
fiscal note."                                                                  
                                                                               
Senator   Adams  noted   the  fiscal   note  added   another                   
Legislative  assistant.    Senators Hoffman  and  Adams  had                   
volunteered their  staff for  this.   Senator Adams  felt it                   
would be  more objective to have  representation coming from                   
a rural  area rather  than hiring  a new  staff member.   He                   
said this  would save $73,600,  by eliminating  the personal                   
services.                                                                      
                                                                               
Senator Pearce said  her intention had been to  zero out the                   
fiscal note  with the exception  of the travel and  per diem                   
for  the public  members, which  she felt  they did  have to                   
pay.   She  thanked Senator  Adams for  the offer  his staff                   
support.                                                                       
                                                                               
She added  that she had  been supportive of  earlier efforts                   
on BRAC commissions.   She noted they had  tried this before                   
and enjoyed success.   Alaska occupies a  unique position on                   
the globe  that makes it  a top priority for  the Department                   
of  Defense, she  observed.   She  still felt  the need  for                   
concern about losses perhaps of  some of their armed forces,                   
particularly in Anchorage and Fairbanks.                                       
                                                                               
She was  troubled, because she  felt it was time  for others                   
to  step  forward.   It  shouldn't  always  have to  be  the                   
Legislature that  brings forward the support  and the effort                   
to stop these  closures.  She would have  expected some sort                   
of  commitment   from  the  Governor  and   from  the  local                   
communities.  She didn't see  any money contributed from the                   
local communities who would be  affected.  She did see where                   
they were  recommending people to  serve on the  task force,                   
but thought they should also contribute money.                                 
                                                                               
She felt  the approach should  be broader than just  a small                   
Legislative committee.   She also  thought there  was plenty                   
of staff available  during the interim to  support the group                   
and  that no  new positions  should be  funded.   She stated                   
that she casts a dim view  of staff travel as a general rule                   
and  particularly to  staff traveling  to  Washington DC  to                   
represent the Legislature of the  State Of Alaska.  She felt                   
that only Legislatures  could do an adequate  job of meeting                   
with the appropriate people and making that effort count.                      
                                                                               
She then  moved to adopt  a Senate Finance Fiscal  Note that                   
would not  fund staff  especially for this  task force.   It                   
also would  not fund  travel for  the legislators  or staff.                   
It would  fund travel and  per diem  for the members  of the                   
public who  would serve on the  task force.  She  added they                   
could look  at contracting supplies, but  would need funding                   
for advertising.                                                               
                                                                               
She  asked  that  the  bill  be  held  until  the  afternoon                   
meeting, while the  new fiscal note was prepared.   She said                   
this would  only hold up  the bill  one day, and  there were                   
adequate votes to pass the legislation.                                        
                                                                               
Senator Adams  asked about the  Legislator travel  costs for                   
this task force.   Would the funds come  from the Leadership                   
funds for  each body, House  and Senate, he asked.   Senator                   
Pearce affirmed  that.   He then asked  about the  sunset of                   
the task force and if it would be a three-year committee.                      
                                                                               
Mr.  Benintendi  told  the committee  they  had  no  problem                   
removing the provision  for new staff.  The  intent had been                   
just  to show  what the  cost  would be  if the  Legislature                   
decided to add a special position.                                             
                                                                               
There was further discussion  about different military sites                   
in the state.                                                                  
                                                                               
Senator  Phillips  moved  Amendment #1,  which  updates  the                   
economic  value  to the  state,  deleting  $2.7 billion  and                   
inserting  $1.7 billion.   The  sponsor  concurred with  the                   
amendment.   There was  no objection  and the  amendment was                   
adopted.                                                                       
                                                                               
There was  no further discussion  on the bill at  this time.                   
Co-Chair  Sharp ordered  the bill  held  in committee  until                   
4:30pm when a new fiscal note would be presented.                              
                                                                               
He  announced  the committee  would  re-convene  at 4:30  to                   
address SB 255  and the Results Based  Budget Worksession on                   
the Alaska State Troopers.                                                     
                                                                               
ADJOURNMENT                                                                
                                                                               
Co-Chair Sharp recessed the meeting at approximately                           
10:45 a.m.                                                                     

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