Legislature(2001 - 2002)
05/11/2002 10:52 AM Senate FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
May 11, 2002
10:52 AM
TAPES
SFC-02 # 95, Side A
SFC 02 # 95, Side B
SFC 02 # 96, Side A
SFC 02 # 97, Side A
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 10:52 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Lyda Green
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Senator Loren Leman
Also Attending: REPRESENTATIVE DREW SCALZI; REPRESENTATIVE PEGGY
WILSON; REPRESENTATIVE JOE HAYES; REPRESENTATIVE GRETCHEN GUESS;
DOUG MECUM, Director, Division of Commercial Fisheries, Department
of Fish and Game; VERN JONES, Chief Procurement Officer, Division
of General Services, Department of Administration; DOUG LETCH,
Staff to Senator Ben Stevens; CRYSTAL SMITH, Special Assistant,
Office of the Attorney General, Department of Law; DR. LARRY
LABOLLE, Staff to Representative Richard Foster; JOHN HANDELAND,
Employee, former Mayor, City of Nome
Attending via Teleconference: From Fairbanks: MARY WEYMILLER,
Licensed Practical Nurse and Member, Board of Nursing; From
Anchorage: SALLY HUNTLEY, Owner, Frontier Travel; BILL BECK, Owner,
Airlines-Online Travel Agency
SUMMARY INFORMATION
HB 208-AQUATIC FARMS FOR SHELLFISH
The Committee heard from the sponsor, the Department of Fish and
Game, and a representative from the aquatic farm industry. The bill
was reported from Committee.
HB 276-REGULATION OF NURSING
The Committee heard from the sponsor and the Board of Nursing, and
reported the bill from Committee.
HB 300-PROCUREMENT OF TRAVEL SERVICES
The Committee heard from the bill's sponsor, the Division of
Procurements, Department of Administration, and took public
testimony from representatives of the travel industry. The bill was
held in Committee, re-addressed, and reported from Committee.
HB 382-CLEANUP OF ILLEGAL DRUG SITES
The Committee heard from the sponsor and reported the bill from
Committee.
HB 393-SALES OF BUSINESS OPPORTUNITIES
The Committee heard from the sponsor, the Department of Law, and
the bill reported from Committee.
HB 239-VOCATIONAL EDUCATION PILOT PROGRAM
The Committee heard from the sponsor and the City of Nome. The bill
reported from Committee.
CS FOR HOUSE BILL NO. 208(RES)
"An Act relating to aquatic farming of shellfish; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE DREW SCALZI informed the Committee that the Aquatic
Farm Act, enacted by the State in 1988, was intended to streamline
the process of developing aquatic farms; however, problems have
arisen regarding the Department of Natural Resource's mariculture
review process through which areas are selected for development. He
explained that protests from individuals not wishing to have a
mariculture operation near their property or from user groups such
as lodge owners, have furthered these problems. He explained that
this bill proposes to appropriate money to the Department of Fish
and Game to identify appropriate sites and then coordinate efforts
with the Department of Natural Resources to finalize site
selections. He stated that 90 sites are identified in this bill as
suitable for: suspended culture sites for oysters and mussels; on-
bottom little neck clams; and geoduck mariculture.
Representative Scalzi asserted that some of the 90 identified areas
might incur "common-use" conflicts that would require an Alaska
Coastal Management Plan review. He informed the Committee that the
State of Connecticut has 50,000 acres of land similarly under
lease, whereas Alaska, with more coastline, currently has 500 acres
under lease. He continued that this bill would improve the current
process by providing pre-selected sites, providing for public
hearings in accordance with the Alaska Coastal Management Plan
Review, and establishing the land-lease component. He specified
that the annual lease fee would be $350 for the first acre and $100
per each additional acre, and that, depending on whether half or
all of the sites were leased, the accompanying $220,000 fiscal note
could be recouped in ten years or five years, respectively. He
stressed that this legislation would establish the means to
stimulate new economic development in coastal communities, and
surmised that though the process might be slow; the potential is
immense.
PAUL FUHS, Representative, Alaska Trademark Shellfish, voiced that
this legislation would assist an industry that could provide
benefits to the State. He noted that the Department's lack of
support for mariculture combined with citizen opposition, has
resulted in no sites being available for the aquatic industry, and
asserted that this legislation could provide the needed sites.
Mr. Fuhs pointed out that industry concerns regarding wildstocks
are not addressed in this legislation. He shared with the Committee
that the aquatic industry has proposed to temporarily harvest and
then transplant wildstocks; however, the Department has stated that
this "would be a violation of common property use." He continued
that because of the wildstock issue, the industry is concerned that
the twenty sites pre-selected in this legislation for the shellfish
industry "would have absolutely no animals on them," which is
indicative of "a bad habitat" for growing shellfish.
Mr. Fuhs stated that the organization has worked with the
Department and the bill's sponsor to resolve the habitat concern.
However, he stated a "Catch 22" exists in establishing a common
property habitat policy because the Alaska Court System has
declared that it could not make a ruling on common property because
the Legislature has not established a policy, and the Legislature
states that it could not address the situation because the Court
has not issued a ruling. He asserted that this issue must be
resolved to allow the industry to move forward.
Co-Chair Kelly asked the testifier whether he supports the bill.
Mr. Fuhs relayed that the organization holds a neutral position on
the bill. He commented that while the bill provides benefits to the
suspended culture and little neck clams industries; it offers no
benefits to the geoduck farming industry.
Senator Austerman expressed support for the bill as it does contain
merits.
Mr. Fuhs concurred; however, he declared that the bill should not
be necessary, and that it is unfortunate that the Department is not
actively granting permits.
Representative Scalzi agreed that there are issues involving the
existing geoduck industry applicants; however, he assured that the
Department is committed to providing leases and is addressing the
issue "by offering sites where there are no standing stocks and
that would certainly take care of the problem of common property."
He furthered, "With issue of any standing stocks, their intent is
to have an open access fishery, remove those stocks, and then have
that site suitable for farming." He stated that the bill does
attempt to address the testifier's concern regarding existing
geoduck applicants.
Senator Austerman stated that the concerns of the geoduck industry
should be addressed; however, he stressed that this legislation
should not be delayed as it encourages economic development in the
State.
Senator Austerman remarked that he and two other Committee members
traveled to Chile to witness that country's aquatic farming
operations, and he attested that the government of Chile
aggressively supports the process. He stressed that this
legislation is an attempt to get the State "moving in an aggressive
manner" to stimulate economic development.
Senator Green asked whether issues raised in a letter addressed to
Senators and Representatives from Gary Zaugg, dated March 13, 2002
[copy on file] are similar to those raised by Mr. Fuhs.
Co-Chair Kelly confirmed the concerns are the same.
Senator Ward asked Mr. Fuhs how the concerns of the geoduck
industry could be addressed.
Mr. Fuhs clarified that except for the common property issue, the
Department of Fish and Game has addressed other management concerns
raised by the industry. He explained that the industry has proposed
a plan to conduct an annual geoduck harvest involving no more that
20 percent of the existing resources and, as part of that plan, the
wildstocks harvested would be required to be successfully
transplanted. He continued that the harvested resource must be
completely replaced before the next 20 percent could be harvested,
and he attested, this plan contains the necessary safeguards to
expand the industry.
Senator Ward asked why this language is not included in the bill.
Representative Scalzi responded that efforts were made to
incorporate the industry's suggestions; however it was not included
due to resistance from the Department of Fish and Game and the
Department of Law regarding common property uses.
Senator Ward opined that the Department of Law and the sponsor
"have opted to let the Court" System rather than the Legislature
determine what should be included in the bill.
Representative Scalzi responded that the omitted language pertains
"to an existing applicant, this is not something that is out there
for anybody, this is specific to one or two parties so for those
reasons, it is not. I believe the Department of Law says, [it is]
specific to an individual; therefore, it is not constitutional
where everybody has the same equal access to this proposal. My take
on it, Senator, is that if we changed our law, which I would
support to make it more like what we do with timber, you have a
selected site of geoducks or little necks and you offer to have
that for lease. I think that that would be consistent with what we
do for timber; however, aquaculture and mariculture does not apply
with our Constitution. Our Constitution does not apply the same
standards to those species, so there would need [to be] a change
according to the Department of Law."
Co-Chair Donley asked which fiscal notes are applicable to the
House Resources committee substitute.
Senator Wilken identified the four corresponding fiscal notes by
Department.
AT EASE 11:07 AM /11:12 AM
Senator Wilken continued to clarify the fiscal notes by Department
and date.
AT EASE 11:15 AM /11:16 AM
Co-Chair Donley asked whether departments could absorb the expenses
within their existing annual budgets.
Representative Scalzi responded that some of the expenses are being
covered through existing budgets, and he exampled that the
Department of Environmental Conservation currently performs work
that this bill would require, and therefore, it is included in the
existing budgets.
DOUG MECUM, Director, Division of Commercial Fisheries, Department
of Fish and Game stated that the Department of Natural Resources is
primarily involved in this bill; however, the Department of Fish
and Game would incur additional expenses resulting from the
projected intensive public process and the resource inventory
process this bill would require.
Co-Chair Donley asked whether funds were allotted when the original
program was adopted.
Mr. Mecum replied that the program was adopted more than twelve
years ago, and since that time, the Department's budget has been
reduced 30 percent. He surmised that there is "little likelihood"
that additional monies were funded when the program was adopted.
Co-Chair Donley identified that the Division of Commercial
Fisheries fiscal note contains funds to employ scuba divers as well
as a seasonal biologist to assess potential sites.
Mr. Mecum stated that, although the original fiscal request was
higher; the Department collaborated with the Shellfish Growers
Association to have the Association absorb some of the workload,
which allowed the request to be lowered to this level. He specified
that $50,000 would be required to: conduct the dive surveys to
identify whether soil at the sites are biologically suitable; to
identify the types of standing stocks the areas support as well as
the existing uses of an area in order to not conflict with existing
aquatic life and land; and other traditional uses of the site.
Co-Chair Donley asked for assurance that the project would be
completed if funding were allotted.
Mr. Mecum answered that the Department's obligations would be met.
Representative Scalzi stated that the fiscal note includes lease
revenue, but does not include the contributions to the general fund
resulting from either the State Business Tax or the Raw Fish Tax.
Representative Scalzi stressed that by dedicating this funding the
Departments would be obligated to conduct the required work.
Senator Wilken offered a motion to "report Committee Substitute for
House Bill 208 (Resources) Version 'P' from Committee with
individual recommendations and fiscal notes as set forth" in
earlier discussion.
There being no objections, CS HB 208(RES) was REPORTED from
Committee with a new zero fiscal note dated February 28, 2002 from
the Department of Environmental Conservation; a $98,300 fiscal note
dated March 12, 2002 from the Department of Natural Resources; a
$50,000 fiscal note dated April 21, 2002 from Division of
Commercial Fisheries, Department of Fish and Game; and a previous
$72,500 fiscal note dated March 5, 2002 from the Division of
Habitat and Restoration, Department of Fish and Game.
SENATE CS FOR CS FOR HOUSE BILL NO. 276(L&C)
"An Act relating to temporary permits and licenses by
endorsement issued by the Board of Nursing; and relating to
the delegation of nursing duties."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE PEGGY WILSON, the sponsor of the bill, informed the
Committee that this legislation would update State statutes to
align with current nursing practices by: allowing nurses to
delegate nursing duties to other personnel; increasing the
temporary licensing application time period from four months to six
months to allow sufficient time for the required criminal
background check; and provide for changes in statute language to
comply with current Division of Occupational Licensing practices.
Senator Green informed the Committee that some employers discuss
with prospective nursing applicants the expectation that the nurses
would delegate certain responsibilities to Certified Nursing
Assistants (CNAs). She noted that "great pressure" has been exerted
on nurses to delegate duties even when the nurses are not
comfortable in doing so. She asked Representative Wilson whether
this bill would supplant a Registered Nurse's (RN) ability to
decide whether or not to delegate certain duties.
Representative Wilson responded that the language in this bill
"definitely does not" undermine an RN's ability to make those
decisions. She explained that there are strict rules and
regulations for nurses, and nurses are very careful not to delegate
a duty to an unqualified individual as this could jeopardize the
nurse's license.
Co-Chair Donley voiced concern that current State statutes are
vague regarding medical staffing in the State's medical facilities,
and he noted that other states "have more specific and clear
statutes regarding the proper amount" of medical personnel,
especially nurses. He asserted that hospital staffing level
requirements in the State are "dangerously low," and he questioned
whether this legislation would result in a further "strain on
nurses" who, he asserted are being asked to assume a wider range of
responsibilities. He furthered that nurses are constantly being
asked to update their skills and increase their knowledge about
newly introduced medications.
Co-Chair Donley stressed that the increasing complexities of the
nursing profession intensify his concern regarding delegation of
duties. He stated that the Committee should be cognizant "of any
endangerment to the levels of service" provided to patients because
of the delegation of nurses' duties "as the staffing is already
under a lot of strain because of those cross-training things that
are being forced on nurses now."
Senator Olson advised that this legislation does not propose to
delegate complicated medicating duties or other high-skill
responsibilities to unlicensed staffers, but rather allows
qualified personnel to delegate some "lesser duties that tie up
personnel" to subordinates. He stated that this would allow a nurse
to determine what, if any, responsibilities could be delegated
which would allow the nurse to address more critical needs. He
exampled that this legislation would provide a nurse in a clinic
the authority to delegate such "lesser duties" as monitoring blood
pressure rates to a subordinate in order for the nurse to more
thoroughly concentrate on someone in critical condition who needs
to be admitted to a hospital.
Co-Chair Donley contented that, in addition to the pressure placed
upon a nurse to delegate duties when concentrating on a critical
patient, there are circumstances where a nurse might be under
"tremendous pressure from the hospital," specifically a for-profit
facility, "to delegate more and more of their duties." He stated
that he has witnessed situations where "nurses are being asked to
do things that they don't really feel is in the best interest of
patients, and yet the economic pressure is on them." He stressed
that nurses could be placed in a "tough situation" and ultimately
the license of the nurse, not the facility, is at stake.
Representative Wilson explained that during a recent review of
nursing statutes and regulations, nurses found that several long-
established practices, including the delegation of certain nursing
responsibilities, are not defined in current statute. She stated
that this legislation was prompted by the Department of Law's
suggestion that delegation authority should be addressed in State
statute. She stressed that the Board of Nursing would define the
parameters regarding which duties could be delegated.
Co-Chair Donley asked whether individuals who draw blood are
required to be licensed, for it appears that delegation of this
duty has become an established practice.
Representative Wilson voiced that she does not support the
delegation of this responsibility; however, a hospital might
establish this practice. She stated that the person who is
administering the procedure should have practical experience to
know what they are doing. She asserted that the majority of nurses
would not delegate this responsibility.
Senator Olson, [a medical doctor] stated that his experience has
been primarily in clinics rather than for-profit hospitals, and
that there is a misconception that the "higher licensed" person
should perform a procedure such as drawing blood; however, he
contended that, even though he has a "higher" level of training,
most nurses "and even nurses aides" are more highly skilled in that
procedure than he is. He stressed that there should be "a balance
to make sure that you have the most skilled person" performing the
procedure. He continued that some procedures do not require a
licensed individual and with today's staffing situations,
"sometimes it is not practical."
Co-Chair Donley clarified that his concern involves "delegating
down" rather than to another as equal or higher qualified
individual. He asked whether this legislation would allow a
hospital administration to exert pressure on nurses to delegate
duties, "such as the drawing of blood and other invasive
procedures," to lower level personnel.
Representative Wilson responded that this bill would not change any
practice that is currently established, but rather would
incorporate established practices into State statute. She stated
that this incorporation and clear identification of which
established practices nurses could delegate would serve to protect
nurses.
Senator Olson asked whether Bush Alaska's health aides would be
affected by this legislation.
Representative Wilson reiterated that this legislation would not
incur any changes to established practices.
Senator Olson clarified that health aide's positions would not be
affected.
Representative Wilson concurred.
Senator Olson, addressing Co-Chair Donley's concerns regarding who
administers invasive procedures, stated that oftentimes in rural
Alaska, someone gets injured, and unlicensed, but trained, medical
staffers might have to administer invasive procedures "as the first
line of health care."
Co-Chair Donley stated that statute exemptions address rural health
care situations, and stressed that his primary concern pertains to
large, for-profit medical facilities that might exert "incredible
pressures" on health care professionals in order to reduce the cost
of care. He stated that this legislation might give those entities
more opportunity to exert pressure on the nursing staff to delegate
duties to staff who might not properly trained in a procedure.
Co-Chair Donley explained that current statute requires a minimum
of one person on duty who is specifically trained for the
procedures administered in the department; and that other nurses
assigned to that department would report to the trained individual.
He furthered that if the trained individual becomes unavailable
during a shift, that person is required to delegate duties to other
untrained individuals. He stated that it is unfair to nurses to
have this onus placed on them; especially if they do not agree with
the hospital directives. He stated that a balance must be reached
whereby nurses could not be forced to delegate a duty "that they do
not necessarily agree with."
Representative Wilson stated that nurses could refuse to delegate a
responsibility, and if a doctor overrules the nurse's decision not
delegate a duty that she deems unsafe or ill advised, the nurse
could "write the doctor up." She exampled that duties such as
watching a wound for redness could be delegated provided that the
person has received proper training. She reiterated that State
statutes would specify what could or could not be delegated "which
offers protection to the nurse and to the patient."
Co-Chair Donley asked for examples of what regulations are being
considered by the Board of Nursing, as he considers the bill's
language "wide open as far as delegation of authority."
Representative Wilson stated that current nursing regulations
specify that the Board would define unprofessional conduct to
include: "knowingly delegating a nursing care function, task, or
responsibility to another who is not licensed" when that delegation
is contrary to that specified in State statute, "or involves a
substantial risk or harm to a client, and failing to exercise
adequate supervision over other persons who are authorized to
practice only under the supervision of a licensed personnel." She
expressed that these regulations clearly define what could legally
be delegated; however, the corresponding language is not currently
included in State statute.
Representative Wilson explained that the Department of Law is
requesting that the language be placed in State statute to enable
the statute to conform to existing regulations. She summarized that
the nursing profession is "strongly and heavily regulated," and
that this legislation would match State statute to current
regulations, would not change what is currently common practice,
and would continue to hold nurses to levels of "high conduct."
Co-Chair Donley stressed that his concern lies more with "the for-
profit motive in health care" which exerts pressure on nurses, and
that protecting nurses from that pressure is important. He
continued that another concern is when duties are delegated it is
the nurse's license rather than a hospital or clinic's license that
is at risk. He asked whether "better insulations" could be provided
to address this concern.
SFC 02 # 95, Side B 11:45 AM
Senator Green reminded the Committee that these concerns have been
addressed before; however, it was State agencies rather than for-
profit or non-profit entities that were requiring nurses to
delegate duties improperly.
Senator Green furthered that there have been situations in which
employment was contingent on an applicant's agreeing to delegate
authority to CNAs. She stated that hearings were conducted to
affirm that this practice would not be allowed. She stressed the
concern that this legislation might inadvertently undermine the
ability of a nurse to refuse to delegate a duty they were
instructed to delegate, and then not receive "the backup" they
might require.
Co-Chair Donley echoed Senator Green' concerns, and reiterated that
it is unfair for a supervisor's directives to place a nurse's
license in jeopardy.
Co-Chair Donley asked whether current State regulations hold upper
management accountable for exerting pressures on nurses that might
result in endangering the nurses' license.
Representative Wilson responded that doctors know what procedures a
nurse could or could not perform, in addition to what duties could
or could not be delegated. She told of a hearing process in the
event a doctor exerts pressure on a nurse to perform or delegate a
duty that might place the nurse's license in jeopardy or be unsafe
for a patient. She stressed that the procedures are "very clear and
known."
Co-Chair Donley asked whether there is a "medical whistle blower
statute."
Senator Olson interjected that the normal procedure for reporting
undue pressure placed on a subordinate, involves the employee
filing an incident report with a supervisor or a committee for
review. He continued that if the report is determined to have
merit, a letter of reprimand could be issued.
MARY WEYMILLER, Licensed Practical Nurse and Member, Board of
Nursing, testified via teleconference from Fairbanks and read a
letter from Lynne Hart, a Nurse Practitioner and a member of the
Board of Nursing [copy not provided] which spoke in support of this
legislation, specifically as it addresses the established practice
of nurses "delegating, or transferring their legal authority to
perform a specific nursing act to unlicensed assistants." She read:
that it "recently came to light" that the delegation practice is
not included in State statute as had incorrectly been assumed, and
that this omission has affected the Board of Nursing's ability to
modify regulations regarding safe delegation practices. The letter,
she continued, states that this legislation would correct both the
statute and the regulation issues; would not create new health care
worker positions as staffers are already in place, and "would
eliminate a gray area for nurses who currently are already
delegating to assistants as part of their job on a daily basis."
She read that Ms. Hart urges the Committee to support this
legislation.
Ms. Weymiller commented that current practice is that non-licensed
individuals are asked to assume additional duties after receiving
training in those procedures; however, she stressed, the practice
must be included in State statute to protect both the nurse and the
patient. She qualified that patient care could only be delegated
when a patient's condition is chronic and stable, and the non-
licensed staffer and the patient both agree to have the task
delegated. She noted that numerous safeguards and guidelines exist
to protect the licensed nurse, the person to whom the duties are
being delegated, and the patient. She "strongly urged the Committee
to pass this bill."
Senator Wilken offered a motion to "report Committee Substitute for
House Bill 276 from Committee with individual recommendations and
attached fiscal note."
Co-Chair Donley objected and expressed the hope that individuals in
the nursing profession are aware of the content of this bill and
support its intent. He furthered that were this legislation to be
enacted, its regulations should be quickly established and should
include safeguards to protect nurses from undue pressure to
delegate duties as well as including language that specifies that
management should be penalized for any directives that might result
in a nurse's license being placed in jeopardy.
Co-Chair Donley withdrew his objection.
Senator Olson asked whether, during this process, any abuse of
power incidents have been reported.
Representative Wilson stressed she has had "not one single letter
or phone call from anyone" in opposition to this legislation or any
reports of undue pressure to delegate duties.
Co-Chair Donley reiterated that during his conversations with
nurses, he has heard "horror stories" about the pressures exerted
on nurses to delegate authority. He noted that the lack of abuse of
power reports is not surprising as it is sometimes difficult to
record the specifics of an incident.
Senator Olson affirmed that nurses sometimes receive "threats of
retaliation" which could be a "real significant factor."
There being no further objections, SCS CS HB 276 (L&C) was REPORTED
from Committee with a previous zero fiscal note, dated February 15,
2002 from the Department of Community and Economic Development.
SENATE CS FOR HOUSE BILL NO. 300(STA)
"An Act relating to the procurement of certain travel
services."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE JOE HAYES, the bill's sponsor, stated that this bill
would allow the State to exempt certain types of travel services,
including airplane travel, hotel accommodations, and travel agency
services, from the State procurement code. He explained that Alaska
Airlines and other major airline companies have travel agency
commissions from five percent of the total ticket price to ten
dollars for a one-way ticket and $20 for a round-trip ticket, and
that in March of 2002, airline companies notified travel agents
that commissions would be completely phased out. He stated that to
offset the loss of the airline commission revenues, travel agencies
have implemented agency service fees.
Representative Hayes furthered that by exempting specified travel
services from the procurement regulations; the State could foster a
competitive travel service environment by allowing "administrative
agencies to choose travel providers on a case-by-case basis." He
stressed that this competition is important to the State because it
would assure the State of the best possible service fee rate and
prevent a travel service monopoly from occurring in the State.
Representative Hayes noted that travel agencies have received a
letter, dated April 5, 2002 from the Department of Administration
Commissioner Jim Duncan [copy on file] that explains the
Department's support of this legislation.
SALLY HUNTLEY, Owner, Frontier Travel, testified via teleconference
from Anchorage, and informed the Committee that her agency has been
providing travel services to various State agencies since 1982, and
that she supports the fact that State agencies would be permitted
to choose which travel services they wish to use, on a Statewide
basis. She stated that this legislation would "level the playing
field" whereby all agencies could compete for the State's business
and that due to the competitive nature of the industry, service
fees would remain reasonably priced.
Ms. Huntley asserted that once fair fee rates are established, the
State could choose travel agencies based on quality of service. She
noted that a Request for Proposals (RFP) has been issued by the
State; however, the industry considers it confusing because the
details are not specific. She opined that the RFP's line item
format "is a reconciliation nightmare." She stressed that a
competitive atmosphere would be more beneficial to the State than a
"sole source provider."
Senator Olson asked the testifier how many travel agencies are
Alaskan-owned.
Ms. Huntley replied that some of the larger agencies are owned by
out-of-State entities; however, Alaskans own the majority of travel
agencies.
Senator Wilken asked the testifier the amount her agency charges
for issuing airline tickets for State employee travel.
Ms. Huntley responded that her agency provides this service free-
of-charge.
Senator Wilken reminded the Committee that the original version of
this bill included language that prohibited awarding sole-provider
contracts; however, that language is not included in this committee
substitute. He surmised from Ms. Huntley's testimony that she
preferred the original bill's language.
Ms. Huntley stated she does not support language allowing for sole-
source contracting; however, she noted that were the bill not
adopted, agencies would be required to submit competitive fee bids
to the State, and a contract would be awarded.
Senator Olson asked for further clarification as to the intent of
the bill.
Representative Hayes clarified that the original bill contained
intent language; however, the intent language was omitted in the
Senate State Affairs Committee committee substitute. He stated that
the Procurement Section, Division of General Services, Department
of Administration Department, "understands the intent" of the bill;
however, if desired, that language could be reinstated.
Senator Leman voiced support for the Senate State Affairs committee
substitute language, as sometimes "too much intent language" is
included in a bill. Although it is sometimes necessary, he stated
that in this case, the intent has been "clearly established" in the
Legislative record.
Senator Green asserted that Section 1 of the current legislation
identifies that these services would not be required to go through
the competitive bid process.
Representative Davies agreed with Senator Green's comment.
BILL BECK, Owner, Airlines-Online Travel Agency, testified via
teleconference from Anchorage and noted that he attended the RFP
travel management services workshop held before the introduction of
this legislation. He stated that the State has established two
options for travel services: one being this bill and the other
being a sole-source RFP. He continued that the accompanying fiscal
note indicates that in the event this bill is not adopted, the RFP
would require a travel agency to submit a bid in each of the
seventeen identified local areas where its offices are located, and
in addition, each invoice must specify individual line item
descriptions and the corresponding fee for each transaction such as
tickets, hotel rooms, and car rental reservations. He stated that
this line item requirement would demand additional reconciliation
time of State employees, and he opined that it would be more
economical for the State to develop a simple fee structure that
agencies could either agree or not agree to honor. He stated that
this approach would allow for continuing competition between travel
agencies.
Senator Wilken asked the testifier the amount of the surcharge his
company places on non-State employee travel.
Mr. Beck responded that fees are based on the complexity of the
travel arrangements; however, typical fees range between $20 and
$35.
VERN JONES, Chief Procurement Officer, Division of General
Services, Department of Administration, stated that historically,
the State has not been required to pay service fees as travel
agents were compensated for their services by airlines, hotels, and
car rental companies; however, recent declines or/and elimination
of these commissions fees has placed hardships on travel agents,
and that consumers including the State must absorb these expenses.
Mr. Jones explained that because there are no fee-free travel
services in communities such as Juneau, Petersburg, Wrangell,
Haines and Cordova, the State has awarded, in compliance with the
State's competitive procurement code, a contract for travel
services in each of these locations. He stated that this bill does
not prevent the State from procuring travel service contracts;
however, the intent of the bill is to establish benchmark rate
structures for services that would allow State employees to use any
travel agency that provides its services at or below those
benchmark rates. He stated that were this bill adopted, this
process would begin, and a list of travel agencies who comply with
the State's benchmark rates would be supplied to State employees.
He clarified that existing State contracts would continue through
their specified time commitment.
Mr. Jones confirmed that this bill would incur expenses as
identified in the fiscal note. He explained the fee components of
the fiscal note, and stated that when Alaska Airlines terminates
its commissions to travel agencies, the State would be required to
pay average fees of $20 to $23 per ticket. He noted that the State
of Washington recently transitioned to a non-competitive fee
structure that has resulted in fees ranging from $15 to $45 per
ticket. He stressed that the State of Washington is paying more
than the amount projected using the proposed procurement process
stipulated in this legislation. He estimated that the annual
service fee cost to the State, based on the annual volume of ticket
that State employees use, would be $500,000 per year.
Mr. Jones stated that if this bill fails to be adopted, the State
would continue with the procurement process, which he stressed,
would not result in a single sole-source Statewide contract, as
contracts are awarded on a per-location basis.
Senator Ward asked whether the State would be allowed to solicit a
proposal from the Alaska Airlines Mileage Program to accumulate all
State employee travel mileage credits in a single State account to
assist in reducing State travel costs.
Mr. Jones responded that there is no legal restriction that would
prohibit the State from making this request.
Senator Ward asked the testifier to investigate this option.
Mr. Jones agreed.
Senator Austerman asked for further information about the service
contracts awarded in such locations as Juneau, Petersburg and
Wrangell.
Mr. Jones gave as an example, the contract awarded to US Travel
Agency in Juneau that specifies the service fee for a ticket from
Juneau to Anchorage is five dollars and an eight dollar service fee
for tickets to other destinations; however, he reminded the
Committee that this fee is paid in addition to the commission the
agency currently receives from Alaska Airlines. He continued that
when Alaska Airlines ceases to pay commissions, the fees would
probably increase to approximately $23.
Senator Austerman asked whether the State has investigated
transitioning to electronic ticketing as a means of lowering
service fees.
Mr. Jones stated that currently the State purchases approximately
11,000 out of 50,000 tickets directly from an airline via Internet
access. He stated that purchasing a ticket electronically exempts
it from being subject to any procurement code or service fee, and
that this would remain an option if this bill were adopted.
Senator Austerman asked whether the Department encourages employees
to use electronic ticketing.
Mr. Jones responded that the Department does not anticipate
pressuring employees to make travel arrangements via the Internet,
as this could require a "high-paid state employee" to spend time
online researching travel options. He stated that paying a travel
professional for this service is often a better decision; however,
he asserted that employees would not be prohibited from this course
of action.
Senator Wilken asked the reason for an indeterminate fiscal note to
accompany this bill, and he noted how unusual it is for a fiscal
note to specify that department agencies would absorb expenses.
Senator Wilken voiced concern that a total service fee of $350,000
has been calculated based on a projected minimal service fee of $12
per ticket; however, he stressed, the actual fee amount could incur
expenses as high as $750,000. He stressed that the fiscal note does
not appear to realistically present the possible costs, and he
asked whether a statewide limit could be considered in order to
more accurately project the expense.
Mr. Jones stated that if this bill fails to be adopted, procurement
procedures would be implemented and the lowest travel service bid
per location would be awarded a contract. He noted that if the bill
were adopted, "a cap" might be negotiated. He continued that when
Alaska Airlines discontinues its commission fees, the average
service fee charged for State employee travel would be
approximately $23 per ticket, which he reiterated is ten to fifteen
dollars lower than fees being paid in the State of Washington,
where a competitive procurement procedure was not implemented.
Senator Austerman asked whether the US Travel service fee procured
for Juneau would be honored by the US Travel agency in Kodiak.
Mr. Jones stated that agencies are not obligated to offer the
location-specific rates throughout their service areas, and he
noted that travel agencies, including US Travel, are not currently
charging service fees in Anchorage. He informed the Committee that
current Department policy mandates that State employees must use an
agency that does not charge a service fee, and in communities where
fees are charged, the Department would award a contract to a
specific agency through the competitive bid process.
Senator Austerman stated that he recently paid a $25 service fee in
Kodiak.
Mr. Jones surmised that there must be a travel agency in the City
of Kodiak that does not charge a service fee, as a contract has not
been negotiated for Kodiak, and he reiterated that State employees
should use that agency when making travel arrangements.
Senator Ward asked the Department to provide the Committee with the
total dollar amount the State has paid to Alaska Airlines for State
travel in order to further a consolidated State mileage plan
proposal with the airline.
Mr. Jones expressed that approximately $11 million has been spent
on travel with Alaska Airlines.
Senator Ward calculated that this would equal approximately 15
million mileage credits. He reiterated his request for the
Department to investigate whether negotiating with Alaska Airlines
to establish a mileage agreement "would be legal."
Co-Chair Kelly asked Mr. Jones to provide the requested information
to Senator Ward.
Senator Wilken reiterated his concern that the fiscal note does not
specify whether travel fees would amount to $228,000 or $1 million.
Representative Hayes responded that this bill proposes to establish
specific service fees, and that State employees could use any
travel agency agreeing to provide their services at the determined
levels. He stated that this bill would allow all travel agencies an
opportunity to compete for State travel business, and he asserted
that it would be "dangerous" to have only one agency handle all the
State business.
Senator Olson asked why motor vehicle rentals are excluded from
this legislation.
Representative Hayes responded that the State has "already secured
contract agreements" for motor vehicle rentals.
Senator Wilken clarified that if this bill fails to be adopted,
procurements would be solicited, and contracts would be awarded to
a single travel agency in each of the seventeen identified regions
in the State, as determined by best value and fees.
Senator Wilken continued that if the bill is adopted, the State
would establish fee structures by location, and State employees
could use any travel agency agreeing to honor those fees.
[Discussion ensued to clarify the various processes based on
whether or not the bill was adopted.]
Senator Wilken asked whether a travel agency could choose to
provide travel services at lower rates than those established by
the State.
Mr. Jones responded that employees would not be obligated to use an
agency offering services at less than the negotiated rates;
however, a listing of any agencies offering lower fees would be
distributed, and employees could decide which agency to use.
Senator Wilken asked what would occur if a State employee used an
unapproved agency.
Mr. Jones responded that if the bill fails to be adopted, State
employees would not have an option, as only one agency in each
community would have the ability to write State travel tickets.
Senator Hoffman asked how travel arrangements are handled in remote
areas of the State where no contracts exist.
Mr. Jones stated that the intent of bill is to establish rates for
services in areas "that have more than negligible amounts" of
travel traffic. He stated that if the bill fails to be adopted, the
Department intends to establish contracts in all locations.
Senator Hoffman asserted that, currently, there are no contracts in
remote areas.
Mr. Jones clarified that contracts are not being established in
communities where agencies are providing fee-free services. He
reiterated that if one or more travel agencies in a community
provides fee-free services, State employees are required to use
those agencies. He continued that in communities where no fee-free
agencies exist, the State would award a contract to one agency
through the procurement process.
Senator Hoffman responded that the lone travel agency in the City
of Bethel has informed him that, "the State is unwilling to pay
those fees in Bethel."
Co-Chair Kelly announced that due to the amount of questions
concerning this bill; he would be holding the bill in Committee
until additional information could be provided.
Senator Wilken summarized that the State does not currently pay a
significant amount for travel service fees; however, the
forthcoming changes in the travel industry would require the State
to pay significantly more for services. He continued that the
question is which method would have the least fiscal impact to the
State.
Mr. Jones responded that the competitive procurement method would
be "cheaper."
SFC 02 # 96, Side A 12:33 PM
Senator Wilken clarified that this would be the method established
if the bill were not adopted.
Mr. Jones concurred.
Senator Leman suggested that the Division of General Services
should provide State agencies with a list of travel agencies that
would honor the State's established level of service rates, and
indicate which agencies on that list would provide services at
lower fees.
Mr. Jones responded that this is the intention.
Senator Hoffman reiterated that as airline agencies eliminate the
current commission structure, the level of service fees the State
pays would increase. He stated that is it appropriate for the State
and people who use travel agencies to absorb these costs as the
travel agents are providing a service. He surmised the State would
benefit from utilizing a travel agency rather than State employee
time in making those arrangements. He voiced support for the bill.
Co-Chair Kelly ordered the Bill to be HELD in Committee. [This bill
is re-addressed later in the meeting.]
RECESS TO CALL OF THE CHAIR 12:36 PM / 8:15 PM
[Note: The remainder of Tape SFC 02 #96, side A, and all of side B
are blank; however, the recording of the meeting continues on Tape
SFC 02 #97 Side A and no portion of the meeting is unrecorded.]
SFC 02 # 97, Side A, 8:15 PM
Vice-Chair Ward called the Senate Finance meeting back to order.
SENATE CS FOR CS FOR HOUSE BILL NO. 382(RES)
"An Act relating to the evaluation and cleanup of sites where
certain controlled substances may have been manufactured or
stored; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
REPRESENTATIVE GRETCHEN GUESS, the sponsor of the bill, informed
the Committee that this legislation provides assurance that illegal
drug laboratory sites would be thoroughly decontaminated before the
premise could be re-occupied. She informed the Committee that
currently "after a lab has been busted," the law enforcement agency
sends a notice to the property owner to clean up the facility, and
the agency takes no further action. She continued that no
guidelines exist to specify the proper way to clean up a site, and
the cleanup activities that occur are usually not adequate. She
stated that this bill would establish proper clean-up guidelines
for testing and decontamination of sites.
Senator Olson asked whether an existing problem has prompted this
legislation.
Representative Guess responded that 50 methamphetamine laboratories
"were busted" in the State in the year 2000, and proper cleanup
provisions are not established to assure a safe environment for
future occupants of these locations. She reiterated that this
legislation would provide a residential property owner with the
appropriate clean-up guidelines for a site.
Senator Austerman moved to report House Bill 382 "out of Committee
with individual recommendations and accompanying fiscal notes."
There being no objections, SCS CS HB 382 (RES) was REPORTED from
Committee with a previous zero fiscal note, dated February 27,
2002, from the Department of Public Safety, and a $12,000 fiscal
note dated February 25, 2002 from the Department of Environmental
Conservation.
SENATE CS FOR HOUSE BILL NO. 300(STA)
"An Act relating to the procurement of certain travel
services."
[This bill was addressed earlier in this meeting.]
Representative Hayes clarified that this bill would allow the State
to negotiate with travel agencies to establish equitable fees for
travel services rendered to the State. He continued that if this
bill fails to be adopted, a single travel agency in each community
would be selected, through the RFP process, to handle State travel
arrangements. He opined that the agency awarded the State's
business would be the only agency "still open for business" at the
end of the contract period, and that higher service fees could
result from this "monopoly" situation.
Representative Hayes noted that Committee members received a list
of twenty-two travel agencies [copy not provided] that currently do
not charge a service fee for State travel arrangements. He
contended that if this bill fails to be adopted, eighteen of those
twenty-two agencies would be forced out of business.
Senator Wilken asked whether the Committee could mandate a
Statewide service fee of, for example, $15, and allow each travel
agency to determine whether or not to honor that fee. He stated
that identifying a specific fee would provide for an accurate
fiscal note.
Representative Hayes responded that Alaska Airlines currently pays
a $20 commission to travel agencies, and that the State has
determined that any level below that amount would not provide an
agency with sufficient operational revenue.
Senator Wilken asserted that a pre-determined fixed fee rate would
simplify the situation and provide for an accurate fiscal note.
Representative Hayes affirmed that the State supports establishing
a specified fee, but declared that this would continue to result in
an indeterminate fiscal note, as the State is unsure of the number
of agencies who would adhere to the specified amount.
Senator Wilken expressed his continuing concern with the fiscal
impact, and noted that the Senate Finance Committee Co-Chairs have
not been present during discussions regarding the bill's fiscal
impacts. He calculated that a $20 transaction fee, based on State
travel patterns, would create an annual fee expense of $600,000. He
continued that the fiscal note specifies that this amount would be
absorbed within each Department's annual budget; however, he
commented that this could create a hardship for State agencies. He
avowed that while he understands that the travel industry supports
this bill, as a Member of the Finance Committee, he "is charged
with looking out for the general fund."
Representative Hayes expressed that the indeterminate fiscal note
reflects the intent that the $600,000 travel fee expenses would be
absorbed "in each agency's current travel budget," and no increases
in department travel expenses would be incurred.
Senator Ward clarified that absorbing $600,000 in this manner would
essentially remove that amount from the agencies' budgets for
actual travel.
Representative Hayes affirmed that this could be the case; however,
suggested that the resources of a professional travel agency could
provide the best values in travel options.
Senator Ward contended that analysis supporting this has not been
provided to the Committee.
Senator Hoffman surmised that lower fares might result if Alaska
Airlines utilizes the savings resulting from the elimination of its
travel agency commission fees to offset the service fees charged to
the State by travel agencies.
Senator Olson, referencing earlier testimony that the State has
spent $11 million on travel, stated that five percent of that
amount would be approximately half a million dollars.
Representative Hayes estimated that the fiscal cost to the State to
absorb the travel fee expenses would range between $500,000 and
$600,000.
Senator Olson voiced that Senator Wilken's concern that the State
would incur a substantial fiscal impact is valid.
Representative Hayes, responding to Senator Hoffman's comment,
stated that departments would continue to pay the same amount of
money for travel; however, the question is whether the money would
be paid to Alaska Airlines or as a fee to a travel agency.
Senator Wilken offered a motion to report "HB 300 from Committee
with individual recommendations and attached indeterminate fiscal
note."
There being no objections, SCS CS HB 300 (STA) was REPORTED from
Committee with a previous indeterminate fiscal note, dated February
7, 2002 from the Department of Administration.
SENATE CS FOR CS FOR HOUSE BILL NO. 393(L&C)
"An Act relating to unfair and deceptive trade practices and
to the sale of business opportunities; amending Rules 4 and
73, Alaska Rules of Civil Procedure; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
DOUG LETCH, Staff to Representative Gary Stevens, stated that this
consumer protection bill is designed to protect Alaskans from "get-
rich-quick-schemes" that prey on individuals such as senior
citizens. He stated that by requiring certain companies to register
with the State before establishing and operating their business
would provide the Department of Law with the means to regulate and
enforce regulations regarding trade practices.
Senator Olson asked whether this bill would address such things as
"sweepstakes or pyramid" schemes.
CRYSTAL SMITH, Special Assistant, Office of the Attorney General,
Department of Law stated that pyramid schemes may or may not be
affected by the bill, and that other consumer protection measures
address sweepstakes schemes. She explained that this bill is
intended to address schemes wherein people purchase a product or
establish a business to sell a product. She noted that Alaskans
seem to be targeted by these enterprises, and that the operators of
these businesses set up, conduct, and finish their business in a
short time-frame. She stated that many of these businesses would be
deterred from setting up practice in the State if their business
were required to register with the State. She insisted that this
bill would provide the State with the ability to charge a business
with a registration violation if business were conducted without
first registering, and she noted that this violation would be
faster to implement than proceedings based on a "scam violation."
Senator Austerman offered a motion to move "HB 393 out of Committee
with individual recommendations and accompanying indeterminate
fiscal note."
There being no objections, SCS CS HB 393 (L&C) was REPORTED from
Committee with an indeterminate fiscal note dated February 21, 2002
from the Department of Law.
SENATE CS FOR HOUSE BILL NO. 239(HES)
"An Act establishing a pilot program for a regional learning
center."
This was the second hearing for this bill in the Senate Finance
Committee.
DR. LARRY LABOLLE, Staff to Representative Richard Foster,
testified to a letter to the Committee dated May 10, 2002 co-signed
by Dr. John A. Davis, Superintendent, Bering Strait School District
and Dr. Stan Lujan, Superintendent, Nome City Schools [copy on
file] which identifies various project funding sources such as
training grants through Kawerak, Inc, a consortium of regional
social services agencies. He noted that this letter does not
provide a financial plan although other letters supporting this
project have been received; including one from the City of Nome
[copy not provided] that assures the City's support of the project
and specifies that Kawerak, Inc. would commit up to $2,300,000 in
State and federal training money to the project, and another letter
addressed to the superintendents of the Bering Strait School
District and Nome City Schools District from Kawerak, Inc. [copy
not provided] that specifies that $2,300,000 in grant funding is
available to support this program. He continued that the Norton
Sound Development Corporation has additionally supplied a letter
[copy not provided] citing their support of the program.
Dr. LaBolle stressed the importance for project planning; however,
he pointed out "nobody is able to put together a financial plan
until they have some idea of what the program looks like." He
continued that in order to "shape the program," it would be
necessary for the Bering Straits School and Nome School Districts
to work with other "major players," such as the Northwest Campus
and Kawerak, Inc. "to meet and develop a consensus" as to how the
program would operate.
Senator Wilken attested that a business plan has been requested
numerous times, and the fact that none of the recent correspondence
addressed the issue "shocked" him. He reviewed the known elements
of the project including the utilization of an existing building
for which operational costs are available, and the identification
of the number of students and corresponding staffing requirements.
He surmised that the affected school districts' superintendents
each manage large school district budgets and should be able to
develop a business plan for this project. He stated that in return
for the State, acting as "the project banker" by providing funding
for the project, the districts should be able to provide a project
business plan. He voiced two suggestions: one; "stop this bill
right here" until a business plan is presented; or two; "zero out
the fiscal note" which would allow the project to begin and develop
a funding needs plan as it progresses.
Senator Wilken opined that this bill should not be considered until
a viable business plan is presented.
JOHN HANDELAND, Employee, and former Mayor, City of Nome, informed
the Committee that the City of Nome has been exploring methods to
utilize the existing Nome Beltz School complex and to provide an
innovation educational experience for both rural and urban students
in the City of Nome and the Bering Straits School Districts. He
stated that this project is the result of that endeavor. He
informed the Committee that the City of Nome has approached Alaska
US Senator Ted Stevens, who asked the City to identify local
support for the project.
Mr. Handeland confirmed that the City of Nome, Kawarek, Inc, and
the Bering Straits and Nome School Districts are committed to
supporting this project. He further expressed that the City of Nome
has responsibly and continually demonstrated its support of
education, and that there is widespread support in the region to
support this bill as presented.
Mr. Handeland avowed that the approval of the accompanying $150,000
Department Education and Early Development fiscal note would
provide the project with the required State support necessary to
further the opportunity to receive federal and other funding
support.
Senator Green asked why the two school districts could not provide
the required support for this project, without the need for this
legislation.
Dr. LaBolle explained that US Senator Stevens has specifically
requested a demonstration of support for this project from the
State. He continued that as the concept of the project expanded,
the Department of Education and Early Development became involved
in the process of coordinating the two affected school districts.
Senator Green questioned whether a letter of recommendation from
the Department of Education and Early Development would be
sufficient to demonstrate the State's support. She voiced that this
appears to be a request for money, and that every school district
would like to have a comparable amount of money to further the
development of innovation teaching programs. She stated that she is
very concerned about the long-term impact of this legislation.
Senator Wilken asked the testifier whether a five-year business
plan could be developed.
Mr. Handeland responded that a business plan should be and could be
developed, and he mentioned that US Senator Stevens has also
requested a business plan to be developed by the two school
districts. He contended that perhaps a business plan should have
been established first; however, the emphasis was placed on
cementing the necessary support and cooperation for the project
from the various regional entities.
Mr. Handeland responded to Senator Green's comment about providing
innovative education funding to all districts, by qualifying that
the City of Nome School District, unlike other State school
districts, has an existing, but unused, teaching facility that
would provide the required infrastructure for this project.
Senator Olson reiterated that having an existing facility does make
this project unique.
Senator Olson offered a motion to move from Committee, "House Bill
239 with individual recommendations and accompanying fiscal note."
Senator Wilken objected and asked that consideration be given to
zero out the accompanying fiscal note.
Vice Chair Ward inquired whether Senator Wilken would offer an
amendment to that effect.
Senator Wilken stated that if the fiscal note were zeroed out he
could support the legislation; however, he did not offer a formal
amendment.
A roll call was taken on the motion to report the bill from
Committee.
IN FAVOR: Senator Hoffman, Senator Olson, Senator Ward, Senator
Austerman
OPPOSED: Senator Green, Senator Wilken
ABSENT: Co-Chair Donley, Co-Chair Kelly, Senator Leman
The motion PASSED(4-2-3)
SCS CS HB 239(HES) was REPORTED from Committee with a previous
$150,000 fiscal note, dated April 16, 2002 from the Department of
Education and Early Development.
RECESSED TO THE CALL OF THE CHAIR 8:40 PM / 9:11 PM
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 09:11 PM
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