Legislature(2013 - 2014)SENATE FINANCE 532
03/03/2014 05:00 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SJR21 | |
| SB127 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SJR 21 | TELECONFERENCED | |
| + | SB 127 | TELECONFERENCED | |
| + | SB 169 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 3, 2014
5:05 p.m.
5:05:41 PM
CALL TO ORDER
Co-Chair Meyer called the Senate Finance Committee meeting
to order at 5:05 p.m.
MEMBERS PRESENT
Senator Kevin Meyer, Co-Chair
Senator Anna Fairclough, Vice-Chair
Senator Click Bishop
Senator Mike Dunleavy
Senator Lyman Hoffman
MEMBERS ABSENT
Senator Pete Kelly, Co-Chair
Senator Donny Olson
ALSO PRESENT
Heather Shadduck, Staff, Senator Pete Kelly; Nancy Meade,
General Council, Alaska Court System; Susanne DiPietro,
Alaska Alaska Judicial Council; Mr. Walter Carpeneti, self,
Juneau; Senator Cathy Giessel; Forrest Wolfe, Staff,
Senator Giessel.
PRESENT VIA TELECONFERENCE
Alison Arians, Self, Anchorage; Daniel Cheyettee, Sealaska
Federation of Natives, Anchorage; David Landry, Self,
Anchorage; George Pierce, Self, Kasilof; Amy Erickson,
Director, Division of Motor Vehicles, Department of
Administration; Tim Toth, Vice President, Alaska Auto
Dealers Association, Anchorage; Troy Jarvis, Alaska Auto
Dealers Association, Anchorage; Melissa Cucullu, Alaska
Tags and Titles, Wasilla; Aves Thompson, Alaska Trucking
Association, Anchorage.
SUMMARY
SJR 21 CONST. AM: MEMBERSHIP OF ALASKA JUDICIAL COUNCIL
SJR 21 was HEARD and HELD in committee for
further consideration.
SB 127 VEHICLE TRANSACTION AGENTS
SB 127 was REPORTED out of committee with a "do
pass" recommendation and with one new fiscal note
from Department of Administration.
SB 169 STATEWIDE IMMUNIZATION PROGRAM
SB 169 was SCHEDULED but not HEARD.
5:06:04 PM
SENATE JOINT RESOLUTION NO. 21
Proposing amendments to the Constitution of the State
of Alaska to increase the number of members on the
Alaska Judicial Council and relating to the initial
terms of new members appointed to the Alaska Judicial
Council.
5:06:39 PM
HEATHER SHADDUCK, STAFF, SENATOR PETE KELLY, introduced the
bill. She explained that the bill placed the constitutional
amendment to the state voters if passed. She stated the
goal of adding more public members to the Alaska Judicial
Council. She pointed out that the Alaska Constitution
stated that three attorney members would be appointed by
the bar association to the Alaska Judicial Council along
with three non-attorney members. The members were appointed
by the governor and confirmed by the legislature. She
mentioned article 4, section 8 which stated that members
"shall be appointed for 6 year terms by the governor
subject to confirmation and vacancies shall be filled for
the unexpired term in a like manner and appointments shall
be made with due consideration to area representation and
without regard to a political affiliation."
Ms. Shadduck informed the committee that Senator Kelly
wished to see more public members on the Alaska Judicial
Council because the goal of area representation had not yet
been reached. The historical makeup of the Alaska Judicial
Council included attorneys from four locations: 14 from
Fairbanks, 12 from Anchorage, 10 from Juneau and 3 from
Ketchikan. The public members originated from the same four
cities. Senator Kelly hoped to reach regional diversity
across the state. Additionally, current practice allowed a
tie to be broken by the Alaska Supreme Court justice. She
noted that Senator Kelly viewed the practice as a conflict
of interest. She pointed out the last two years from June
22, 2012 through October 10, 2013, when the last five
attorney/non-attorney vote splits occurred. All three
public members voted to send a name on to the governor, but
the Chief Justice sided with the attorney members to avoid
sending the name. Two of the votes were for the Supreme
Court.
5:10:09 PM
Ms. Shadduck explained that the CS allowed three additional
public members to serve on the Alaska Judicial Council as a
compromise adopted by the Senate Judiciary Committee. She
stated that the odd number of members would help to prevent
soliciting an opinion from the Chief Justice in the event
of a tie.
Co-Chair Meyer opined that he was sensitive to the notion
of conflict of interest as presented in Ms. Shadduck's
testimony. He disagreed that the Chief Justice had a
conflict of interest. He agreed with the need for
additional public input in the process. He wondered about
utilizing 4 public members and 3 attorney members to limit
the amount of members and save the state money for travel
expenses.
Ms. Shadduck replied that the constitution demanded area
representation for the appointments. With only three public
members, proper representation of Alaska's regions was
impossible.
Senator Hoffman opined that more members would be optimal.
Co-Chair Meyer asked about more members from Bethel.
Senator Hoffman replied that Bethel had not yet contributed
a member to the Alaska Judicial Council.
Ms. Shadduck agreed and commented that the idea of
representation by judicial district had been explored,
since Fairbanks was in the fourth judicial district with
Bethel.
5:12:39 PM
Co-Chair Meyer asked how often the Chief Justice had to
vote.
Ms. Shadduck replied that the Chief Justice voted 68 times;
15 times when attorneys and non-attorneys split their vote.
Vice-Chair Fairclough believed that an increased frequency
in participation of the Chief Justice was noted in the
recent past; leading to the interpretation of a problem of
frequency.
Ms. Shadduck concurred. She noted that the last five
attorney and non-attorney splits resulted in a vote for an
attorney by the Chief Justice.
5:13:44 PM
Senator Dunleavy asked about the fiscal note.
Ms. Shadduck replied that the updated fiscal note reflected
a cost of approximately $1500 or $12 thousand. The
estimates were reduced from the original request of $32
thousand.
Co-Chair Meyer pointed out the updated fiscal note. He
stated that the expansion would increase the travel costs.
He OPENED public testimony. He stressed that a
constitutional amendment weighed heavily in importance.
5:15:29 PM
NANCY MEADE, GENERAL COUNCIL, ALASKA COURT SYSTEM, stated
that the Alaska Court System rarely defined a position on
proposed legislation. A bill would be opposed only if it
impacted a core aspect of the judicial branch. The Court
System opposed SJR 21 for that reason. The court only
opposed a bill at the express direction of the Supreme
Court. She pointed out that the judicial branch was
comprised of three entities: the court system, the Alaska
Judicial Council and the Commission on Judicial Conduct.
She stated that the court system was used interchangeably
with the judicial branch because the other two entities
were relatively small. The court system was separate from
the council, yet depended on the work of the council in
screening applicants for judicial positions and making
recommendations in judicial retention. The court system
required qualified judges for the maintenance of the
public's trust and confidence. She testified against the
resolution because the court system relied on the council's
work.
5:17:44 PM
Ms. Meade noted that the resolution had the potential to
change the judicial screening process significantly despite
its 50 years of proven effectiveness. The current council
would select the most qualified applicants based on their
merit. Merit selection of judges was considered the gold
standard across the country. The judges were chosen as the
best professionals in their field.
Ms. Meade addressed points made by Senator Kelly's staff.
The council's diversity issue was supported by the court
system. If a proposal demanded or required additional area
representation or diversity among council members, the
court system would not oppose the change. The court system
attempted to attract diverse applicants to the bench with
methods such as outreach and education.
Ms. Meade stated her problem with the proposed balance of
the council. The court system believed that the current
makeup of the council chosen by the constitutional founders
with three attorneys and three public members worked well
by allowing for the balance of differing views. The balance
assured that no one group had a greater voice. The
attorneys likely had a greater understanding of the skills
required to be a judge. The lay members had valuable views
related to communication and character of applicants. She
stated that both types of opinions were valuable during a
screening process. She stressed that the balance between
attorney and non-attorney members was crucial. A consensus
would be better obtained with a balance.
5:20:50 PM
Ms. Meade believed that the bill could lead to selection on
basis other than pure merit. She stated that the Alaska
Court System opined that the bench was strong with lawyers
that were the best in their field. She argued that the
balance forced the council to act on a consensus basis and
listen to the views of the other group. The bench was
viewed as strong with lawyers that were deemed the best in
their field.
5:24:03 PM
Ms. Meade offered to answer questions. She mentioned over
1100 votes with splits 68 times. Only 15 of the splits were
divided evenly among attorney and non-attorney members. She
agreed that 5 out of 200 votes occurred in a row over the
last several years where the attorneys and public members
were split and the Chief Justice voted with the attorneys.
She stated that the numbers in comparison were very small.
Out of the four votes, two were for the same applicant who
applied twice. She argued that the votes could not be
considered a trend or sign of council dysfunction. She
noted that unanimous voting occurred 80 percent of the
time.
Co-Chair Meyer understood the concern that the public
members may not have to listen to the attorneys. He stated
that the Chief Justice was also an attorney.
Ms. Meade replied that while differing views existed, the
vast majority of the times, votes were unanimous. She
believed that the data proved that public member's voices
were indeed heard.
5:25:51 PM
Vice-Chair Fairclough asked if the Supreme Court requested
that the Alaska Court System oppose the bill.
Ms. Meade replied yes.
Vice-chair Fairclough asked if the Supreme Court decision
was divided or unanimous.
Ms. Meade replied unanimous.
Senator Hoffman asked about the potential for a system in
which neither party was disenfranchised. He wondered about
the process of the Chief Justice making the final selection
in the event of a tie. He stated that without that
practice, the lay members and attorneys would have equal
opportunity for candidate selection.
Ms. Meade agreed with the Senator. She stated that the
balance could be maintained with the Senator's suggestion.
5:27:37 PM
SUSANNE DIPIETRO, EXECUTIVE DIRECTOR, ALASKA ALASKA
JUDICIAL COUNCIL testified about the council's merit
selection and retention system. The council served two
functions. The council members screened applicants for
judicial nominations and sent them on to the governor for
his appointment. The council also evaluated sitting judges
and provided information to the voters about the judge's
performance for retention evaluations. The founders created
the methods of selection and retention of judges. Two
methods of selection were established: election and
gubernatorial appointment. The merit selection procedure
allowed involvement from all branches; the Alaska Judicial
Council screened on merit and sent names on to the governor
who then appointed the selected candidate. The election
occurred later when the judge stood for retention. The
concern about public involvement was addressed in light of
the fact that the voters were directly involved in the
retention of the judges.
Ms. DiPietro mentioned public involvement as related to
diversity on the Alaska Judicial Council. The Alaska
Judicial Council was among 38 states employing the same
type of merit selection for judges. She mentioned the
practices of press releases and comment solicitation from
members of the public. The council published the names of
applicants, which was not done by the majority of selection
committees. When bar survey evaluations arrived, the
council made them public. Many of the practices were unique
to the Alaskan selection agency. Alaska Judicial Council
members traveled to the vacancies when the time came to
interview applicants. She stated that multiple interviews
occurred in Bethel in tandem with a public hearing prior to
the vote or interview. The purpose was to solicit
information directly from townspeople to gather data
regarding community preferences.
5:31:59 PM
Ms. DiPietro discussed the deliberation process with the
council. She noted that the process was not public, but the
vote was. The interviews could occur in public if the
applicants wished. She mentioned the upcoming Anchorage
Superior Court vacancy where three of the six applicants
wished to have public interviews. She conveyed the
collegial nature of the interview and deliberation
processes; each council member was called upon to ask the
questions of the candidate and provide reviews of the
merits of each candidate.
5:34:57 PM
Ms. DiPietro discussed the chart: "Alaska Judiciary
Council, Judicial Nomination over time" (copy on file). She
emphasized that the council members had a high rate of
agreement with applicant selection. She noted that 62
percent of votes were unanimous. Another 19 percent of the
time, only one person had a different vote from the
majority. She explained that attorney/non-attorney vote
splits leading to a vote from the Chief Justice were rare
with 68 votes out of 1100, which she deemed as a very high
rate of agreement. She added that the Chief Justice
traditionally voted to send additional names to the
governor (73 percent of the time).
Ms. DiPietro pointed out that the council often presented
more than the minimum of two names for the governor (62
percent). She mentioned that the selections in Bethel were
often for minimal applicants; oftentimes only two. She
highlighted the importance of the data in the chart. The
trends were made obvious. Less than 6 percent of the total
votes were shown to be attorney/non-attorney splits over
the last two years. She noted that the council was busier
in the last two years than at any other time in its
history.
5:36:55 PM
Ms. Dipietro discussed the attorney versus non-attorney
members. She pointed out the merit selection system in
other states. She informed the committee that the majority
of states (18) had even splits of attorney/non-attorney
members. She mentioned five states with more attorney
members, but four of the five had the additional
requirement that no more than half of either group may be
of the same political party. Alaska's system was without
regard to political affiliation. The other states created
balance by prohibiting a majority of people in one
political party.
Ms. Dipietro quoted the founders from the Constitutional
Convention, "the whole theory of the Missouri Plan is that
in substance, a select and professional group licensed by
the state can best determine the qualifications of their
brothers." She noted that the select group was the Alaska
Bar Association, which was created by the legislature by
statute. Another quote, "the intent of the Missouri Plan
was in substance to give a predominance of the vote to
professional men who knew the foibles, the defects and the
qualifications of their brothers, it is unquestionably true
that in every trade and every profession, the men who know
their brother careers the best are the men engaged in the
same type of occupation." Lastly she quoted, "the theory on
the lay members on the confirmation, they represent the
public and they represent the predominant political
thought, the theory on the lawyer members of the council,
they represent the profession, they represent a desire to
have the best judges on the benches."
Co-Chair Meyer appreciated the data in the charts.
5:39:30 PM
MR. WALTER CARPENETI, SELF, JUNEAU, gave a brief personal
history. He testified as a former judge that there was not
a demonstrated need for a change in the constitution, which
had served the state well for 55 years. He believed that
the system balanced the competing interests in judicial
selection and he saw a number of problems with the proposed
legislation. He mentioned a letter to the Senate Judicial
Committee (copy on file) related to the problems with the
proposal.
Mr. Carpeneti discussed the state's constitution and its
wide administration. He served as Chief Justice for three
years and attended multiple national conferences. He
reported that Alaska's method of judicial selection was
widely lauded by judges around the country. The
constitution was amended infrequently and only done so with
great need. He did not see a need to amend the
constitution. He appreciated the presentation from Ms.
Shadduck stating two reasons to change the constitution.
The first was to increase geographic representation and the
second was the perceived conflict position of the Chief
Justice when called upon to vote.
Mr. Carpeneti acknowledged that the governor made
appointments with due regard for geographic representation.
He suggested that a problem may exist in the method in
which the appointments were executed versus an issue in the
constitution itself. He did not see how the proposed
legislation would alter the existing process. He argued
that the legislation failed to address the issue of
geographic representation.
Mr. Carpeneti discussed the argument that the Chief
Justice's vote constituted a conflict of interest. He broke
ties rarely during his time as Chief Justice, but he never
felt a conflict position. He mentioned one occasion where
he cast a vote where the applicant was a Superior Court
judge. He could not see an opportunity for a conflict of
interest. He stressed that the conflict was not attorney
versus non-attorney. He noted over 1100 votes over the last
30 years where 1 percent of the time a split vote was
broken by the Chief Justice. He urged the committee to
refrain from amending the constitution for a recent history
comprised of very few votes.
5:46:34 PM
Mr. Carpeneti discussed the need to send the best candidate
to the governor. He cautioned the committee about amending
the constitution that produced a judiciary that was the
envy of other states. The Alaska judiciary was not the
subject of scandal, corruption, kick-backs or other
problems seen in more politically selected judiciaries. The
focus of the bill was narrow, and he worried that the
proposed changes would not benefit the state.
Mr. Carpeneti stated that he served as a council member in
the early 1980s. He concluded then, that Alaska had a two-
step process with a merit/political plan. He used the term
political as it related to policy and its proper
formulation. He stated that the merit portion included the
Alaska Judicial Council who polled every lawyer in the
state including judges that the applicants appeared in
front of and lawyers on the other side of specific cases.
The council requested a writing sample, credit reports and
criminal records. Candidates were rated on competence,
intellect, temperament, integrity and fairness. At least
two names must be submitted by the council.
Mr. Carpeneti noted that the governor was elected by the
people and would account for the candidate's general
philosophy and their approach to problems. He worried about
an unbalanced proposal as it ran the risk of losing the
merit aspect of the process. He opined that Article IV of
the constitution served the state well over the years. He
urged caution in changing the system.
5:51:10 PM
Vice-Chair Fairclough recalled that eight states had a
system similar to Alaska's. She asked to know more about
the predominate systems.
Mr. Carpeneti replied that he was poorly informed about the
process in other states. He noted that approximately half
of the states with merit-based election systems had
commissions that were evenly split between attorneys and
non-attorneys. He stated that he had not felt compelled to
research other state's systems because Alaska's worked so
well.
Vice-Chair Fairclough corrected that 38 states had similar
systems to Alaska's.
Co-Chair Meyer limited public testimony to two to three
minutes.
5:52:51 PM
ALISON ARIANS, SELF, ANCHORAGE (via teleconference)
testified as a small-business owner against SJR 21. She
stated that she appreciated efficiency, limited bureaucracy
and expert advice. She agreed with the process of the
Alaska Judicial Council and opined that adding members
would increase the travel budgets. She stated that she was
comfortable with attorneys evaluating their peers. She
respected the opinion of the Chief Justice if needed for a
vote. She stated that the citizen members of the group
deserved credit for their ability to make good decisions.
She cited that only 15 out of 1100 votes resulted in the
Chief Justice siding with the attorney group against the
public members. She spoke about her volunteer work as a
guardian ad litem for children. She wanted to feel sure
that she would vote for well-qualified judges.
5:54:52 PM
DANIEL CHEYETTEE, SEALASKA FEDERATION OF NATIVES, ANCHORAGE
(via teleconference), testified in opposition to the
legislation. He echoed reasons for the opposition from
prior testifiers. While his group would like to see more
Alaska natives on the bench as members of the judiciary,
the solution would be to encourage native Alaskans to
attend law school and become judges. The Alaska Federation
of Natives (AFN) believed that the current Alaska Judicial
Council system worked well. He mentioned the state court
system with multiple talented and respected judges. He
disagreed with the effort to change the system. He worked
as an attorney and noted the incredible time commitment
offered by members of the Alaska Judicial Council. He
feared that an increase in the size of the council would
require too great a commitment from the members. He
suggested that the proposed expansion might lead to a
system with less responsibility.
5:58:43 PM
DAVID LANDRY, SELF, ANCHORAGE (via teleconference)
testified against SJR 21. He explained that he worked as a
small-business general contractor. He stated opposition to
the resolution because of the devaluing of professional
opinion exhibited in the bill. He assumed that each case
presented before a judge had an attorney with an opposing
side of an issue or lawsuit. He believed that the attorneys
operated as business people without monolithic political
views. He mentioned his own practice of seeking advice from
other contractors about his peers for the most valuable
business partners. He stressed the importance of the Bar
Association in the selection of judges. He argued that the
resolution was a solution in search of a problem.
6:01:44 PM
GEORGE PIERCE, SELF, KASILOF (via teleconference) testified
in opposition to the legislation. He opposed the resolution
because the current system worked so well. He commented on
the data presented and noted that 15 instances of a Chief
Justice voting in favor of attorneys did not mandate a
constitutional change. He stated that the bill would allow
the governor to have control of the Alaska Judicial
Council, which would provide the opportunity for political
seeding. He noted the lack of evidence for the need to
change the system. He stressed the lack of evidence of
discrimination in the votes. He found it concerning that
the judges would be selected by the governor versus by the
people. He argued against the need to amend the
constitution.
6:04:12 PM
Co-Chair Meyer CLOSED public testimony. He asked how long
the members were appointed.
Ms. Shadduck replied that members were appointed for six
years with staggered terms.
Co-Chair Meyer discussed the concern that a conservative
governor could appoint conservative members and vice versa.
Ms. Shadduck replied that the terms would be staggered when
additional members were added via the resolution.
Vice-Chair Fairclough asked if the bill would change the
vote of the people for judicial retention.
Ms. Shadduck replied that the resolution did not address
the judicial retention election process. She pointed out
that the public currently had a voice when judges were
already appointed. The resolution would allow for a greater
public voice in the beginning of the selection process.
SJR 21 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 127
"An Act authorizing the commissioner of administration
to enter into agreements with agents to perform for
compensation certain transactions related to vehicles;
relating to the duties of those agents; and providing
for an effective date."
6:06:46 PM
SENATOR CATHY GIESSEL, introduced the bill. She stated that
the bill was simple. She explained that the bill was
modeled after a business partnership in Alaska. She
mentioned the business arrangement involved in selling
hunting and fishing licenses in retail stores through the
Department of Fish and Game, which she compared to the
proposal in SB 127. The businesses retained 15 percent of
the fee paid for the license. The business partners sold a
vast majority of licenses saving the state in personnel
costs. She stated that SB 127 applied the same business
model to the Division of Motor Vehicles.
Senator Hoffman believed that the Department of Fish and
Game agents received a 5 percent fee.
Senator Giessel appreciated the correction.
Senator Hoffman asked why the Department of Fish and Game
and the Division of Motor Vehicles (DMV) would receive
different percentages of the fees.
Senator Giessel replied that she would have her staff
provide the legislation's details.
6:10:31 PM
FORREST WOLFE, STAFF, SENATOR GIESSEL, stressed that visits
to the DMV were often unpalatable as they required a
sacrifice of time from a person's work day. In the interest
of reducing public cost in lost time and wages, the bill
was introduced. Advanced Business Partnerships (ABP) were
created and contracted to perform certain transactions
statutorily mandated to DMV, outsourcing certain services
to the private sector. The business offered citizens more
locations to receive DMV services and expanded business
hours so that citizens would not be required to sacrifice
their work day for a visit to the DMV. He stated that
businesses offering the services received no compensation
from the state, while incurring costs associated with the
transactions, including credit card fees and purchasing of
equipment and supplies.
Mr. Wolfe explained that SB 127 allowed businesses to
retain 15 percent of the fees to cover administrative costs
for the transactions conducted. The concept was used by the
Department of Fish and Game to allow private businesses to
sell and issue hunting and fishing licenses while retaining
a percentage of the proceeds. In 2013, the private sector
sold approximately five times the number of hunting and
fishing licenses as the Department of Fish and Game. The
bill would result in a reduction in the size of state
government. The 15 percent retained by the business
partners was actually reinvested in the economy and the
private sector that brought in 26 percent of DMV's current
revenue.
Mr. Wolfe informed the committee that allowing businesses
to retain the percentage to offset costs provided an
incentive for businesses to offer additional services. In
the interest of reducing the size of government and
increasing efficiency, strategies like SB 127 would provide
an effective way to reduce government through an innovative
use of the private sector. The Department of Fish and Game
found the process of working with the private sector
effective for the sales of licenses and tags. He responded
to Senator Hoffman's question by stating that 15 percent
was more appropriate than 5 due to the higher cost of
equipment and supplies required for provision of the DMV
services.
6:14:18 PM
Co-Chair Meyer stated that the he had used the satellite
offices discussed in the testimony and found them to
increase convenience. He noted that the cost would increase
by 25 percent for the department without the option of the
satellite offices.
Mr. Wolfe replied that the transactions in the private
sector represented the work of approximately 32 DMV
employees. He stated that more incentive allowed by a
greater retention of fees could increase the amount of
business conducted in the private sector.
6:15:53 PM
Vice-Chair Fairclough asked if the bill allowed a fee in
addition to what the state would pay for the individual
organization.
Senator Giessel replied no, the bill had no mandate or
comment related to a fee. She stated that the public would
be more inclined to choose the service if a fee was not
incurred. A fee for administrative costs was currently
charged. She was unsure about the charge of the additional
fee; the question would be answered by the private sector.
She imagined that fees would decrease if the private sector
was able to retain 15 percent to cover overhead.
6:17:00 PM
Vice-Chair Fairclough wished to ensure that the consumers
benefited from the credit offered by the state. She
supported the bill and its concept. She asked about the
fees collected from municipalities for administrative
overhead.
Mr. Wolfe replied 8 percent was collected as a municipal
tax.
Senator Giessel clarified that DMV collected municipal
taxes and retained 8 percent. A similar situation was
proposed in the legislation via the business partners and
DMV.
Vice-Chair Fairclough wondered about the 15 percent cost
recovery plus the fee to consumers. She mentioned the
fiscal note and the cost of approximately $2 million. She
wished to understand the investment in the private sector.
She pointed out that the businesses received additional
benefit from providing the service in the convenience
offered to their customers.
Senator Giessel discussed that private business partners
utilized the license tag, collected the municipal tax and
presented the money to DMV. The division then retained 8
percent of the municipal tax forwarded on. She stated that
DMV did not sell the tag, yet retained the 8 percent as a
middle-man.
6:20:07 PM
AMY ERICKSON, DIRECTOR, DIVISION OF MOTOR VEHICLES,
DEPARTMENT OF ADMINISTRATION (via teleconference),
discussed the business partnerships related to license and
title registration transactions since the early 2000s. The
partnerships were comprised of DMV services storefronts,
car and snow machine dealerships, credit unions and banks;
all of which were eligible to collect up to 15 percent of
DMV proceeds if the legislation was enacted. She stated
that DMV provided the supplies needed to conduct title and
registration transactions including license plates, month
and year tabs, forms, commercial, noncommercial, motorcycle
driver manuals and handicap placards, all free of charge.
Ms. Erickson mentioned that the DMV also provided free
training and free access to its database. The business
partners charged fees for services that were not regulated
or disclosed to the division. She stated that the business
partners comprised approximately 26 percent of DMV's
revenues; the businesses did not function autonomously.
Each DMV had three separate components for completion prior
to close-out. The initial transaction included the
collection of fees; the second included an audit to verify
receipt of all required information. The third transaction
included the reconciliation process, which verified that
all monies were received and placed into fee codes.
Ms. Erickson explained that DMV had a seven-person staff
dedicated to supporting the everyday operations of the
business partners. The staff spent hours reviewing,
approving and correcting documents. When errors were found,
the division used its resources to resolve them. The
business partners were paid regardless of the accuracy of
their transactions.
Ms. Ericson pointed to the fiscal note. She stated that the
division presented a less expensive note in the Senate
State Affairs Committee. Initially it was believed that the
bill applied to the eleven business partners serving as
storefronts for the services, but the legislation indeed
extended to the auto dealerships and financial institutions
leading to the revenue loss shown in the fiscal note. She
mentioned the idea of modeling the fish and game fees who
was prohibited from adding a service fee. The fees obtained
by the Department of Fish and Game were from the state
alone, which was 5 percent for the fee or 25 cents for the
license, whichever were greater. The department also
received compensation of $50 per year or $1 per license,
whichever was greater.
6:22:55 PM
Co-Chair Meyer asked if the division supported the bill.
Ms. Erickson replied that the administration had no
position on the bill. She expressed her availability to
answer questions.
Co-Chair Meyer asked if the satellite offices were an asset
or a hindrance.
Ms. Erickson replied the satellite offices were mostly an
asset. She highlighted the convenience provided to Alaskans
related to location and volume. She noted that lines at the
DMV offices would be longer without the satellite
operations.
Co-Chair Meyer clarified that the satellite offices saved
the division money, time and staff while providing a
convenience to Alaskans.
Ms. Erickson agreed.
Co-Chair Meyer appreciated that one DMV office remained
open until six o'clock in Anchorage.
Ms. Erickson stated that two additional DMV offices in the
Anchorage area were also open until six o'clock.
6:24:38 PM
Vice-Chair Fairclough understood that no incentive existed
for accuracy on the part of the businesses.
Ms. Erickson replied that more frequent errors were made by
the businesses partners than by the DMV employees.
Vice-Chair Fairclough asked if the partners were
cooperative with the division.
Ms. Erickson replied that the division had the obligation
to fix the errors. She mentioned one problematic error made
by a satellite business that landed in the Alaska Supreme
Court.
6:25:42 PM
Senator Bishop requested a written copy of her testimony.
He asked if any of the satellite providers were located in
rural Alaska.
Ms. Erickson replied that Kenai and North Pole were the
most rural locations.
Senator Bishop pointed out that the Tok DMV office remained
open until 9:00 pm in the summer.
6:26:30 PM
Co-Chair Meyer asked if Ms. Erickson would provide written
testimony to Senator Bishop.
Ms. Erickson agreed.
6:26:50 PM
TIM TOTH, VICE PRESIDENT, ALASKA AUTO DEALERS ASSOCIATION,
ANCHORAGE (via teleconference) testified about the auto
industry's part in the proposed legislation. He discussed
the expense of the bill. He noted that the larger
dealerships required additional employees for full-time
efforts related to DMV services. He was unaware of a
franchised dealer charging extra fees to the customer. The
dealer absorbed all labor costs associated with the
service. He noted that DMV provided one week of free
training for the dealerships. He noted the difficulty
filling the positions in his office. Some dealers were
unable to handle the volume in their offices and were
forced to hire storefront DMV units for an additional
charge. Some dealerships processed 3000 to 6000 DMV
transactions per year at an annual cost of approximately
$75,000.
6:30:29 PM
Vice-Chair Fairclough asked if Mr. Toth had access to DMV
records.
Mr. Toth replied that he logged into the DMV website to
access their records. He stated that the employee training
was offered at a DMV office.
6:31:06 PM
TROY JARVIS, ALASKA AUTO DEALERS ASSOCIATION, ANCHORAGE
(via teleconference) testified that the service at DMV
offices was poor 12 years ago when the division proposed
the idea of partnerships with the dealers. He stated that
his business agreed to partner with the division to
increase customer service for both the dealer customers and
the retail customers. He stated that the process worked
well for 10 years at no expense to the state. Dealer
expenses had risen while margins decreased over the last
five years. He suggested that the state had responsibility
to help the businesses offset expenses. He provided an
example of a business's payroll expenses related to DMV
services.
6:34:09 PM
MELISSA CUCULLU, ALASKA TAGS AND TITLES, WASILLA (via
teleconference), testified that 11 privately owned business
partners in Alaska during the 2012-2013 fiscal year
processed an excess of 193,000 transactions on behalf of
the DMV. She stated that the private sector provided the
staffing, facilities, required technology and office
supplies to process the transactions that generated
millions of dollars in revenue for the state. She stated
that the legislation would allow Alaskan-owned businesses
to hire additional employees and provide extended hours for
the creation of greater options for Alaskan residents. She
stressed that SB 127 addressed the issue of fairness for
Alaskan residents, the private sector and state government.
6:35:33 PM
AVES THOMPSON, ALASKA TRUCKING ASSOCIATION, ANCHORAGE (via
teleconference), testified in support of the legislation.
He stated that his association was a statewide organization
representing the interests of approximately 200 member
companies from Barrow to Ketchikan. The association
operated as a DMV business partner issuing titles and
registrations along with additional DMV services. He noted
that his association provided the services to their members
and to members of the general public. The association
members benefitted from the partnership in time and savings
and convenience. The general public shared similar
benefits. He noted that the association charged a service
fee for each transaction. He pointed out that the business
partners were contractually obligated to post their service
fees for customer awareness. He stated that the fees were
also disclosed to DMV and had been requested recently by
the division.
Mr. Thompson discussed the expenses incurred when
conducting DMV business including bank and credit card
fees. Compensation for services became an issue for the
association as business increased. He noted that the costs
increased and the association processed more than 11,000
transactions in 2013 generating revenue of $1.6 million for
the state. He noted that local taxes were passed through to
DMV; the association therefore generated revenue for both
the state and municipalities. He calculated that the
association generated approximately $1.1 million in in fee
revenue for DMV. He stated that Alaskans would benefit from
the proposed legislation. He believed that the amount
proposed in the fiscal note would not cover the cost of DMV
operations in the absence of the business partnerships.
6:39:23 PM
Co-Chair Meyer asked about the higher rate of errors in the
satellite offices.
Mr. Thompson replied that a few errors were committed by
the association, but he felt that the error rate was within
acceptable limits. He mentioned a couple of incidents of
more serious errors, but the contractual obligation to
cooperate with DMV regarding the errors allowed the
association to take responsibility.
Co-Chair Meyer CLOSED public testimony.
6:41:03 PM
Senator Bishop referred to the sponsor statement. He noted
personal use of a satellite office for DMV services, but he
wondered if a driver's license could be obtained through
the business partnership.
Mr. Wolfe replied no.
Senator Bishop asked if the statement referred to license
plates.
Mr. Wolfe answered in the affirmative.
6:42:06 PM
Co-Chair Meyer understood that the satellite offices were
an asset to the division. He asked if the error rate was
within acceptable limits.
Ms. Erickson responded that the division worked directly
with those businesses operating outside of the acceptable
error limit. She stated that the case of the Alaska
Trucking Association led to a voluntary discontinuation of
some of the services offered by the business for DMV. Those
transactions were often prone to errors. She credited the
association for making the wise decision. She noted that
the quicker transactions involved vehicle renewals and
straight title transactions. Complex transactions were best
left to the experts at DMV offices.
Co-Chair Meyer asked about the fiscal note.
Ms. Erickson had no further comments related to the fiscal
note.
Co-Chair Meyer asked if the new amount was the $1.979
million.
Ms. Erickson spoke to the motor vehicle registration tax
collected by the division. She stated that the division
allowed for the collection of the municipal tax. When the
registration renewal notices were sent to Alaskans, they
came in to renew registration and the collection was
provided to the municipality. She did not agree with the
proposal that the business partners would retain 8 percent
because they would not distribute the tax, the division
would.
6:44:39 PM
Senator Giessel agreed that the 8 percent was collected and
passed to the municipality; the business partners would not
retain the money. She appreciated the gravity of the fiscal
note. She stated that 32 employees would be necessary to
replace the private business partnership efforts in the
division, which was calculated at approximately $1.976
million annually. She mentioned that she interacted with a
constituent in Cooper Landing related to a misspelled name.
Co-Chair Meyer agreed that the bill could be classified as
cost-neutral.
Vice-Chair Fairclough MOVED to REPORT SB 127 out of
committee with individual recommendations and the
accompanying fiscal note.
SB 127 was REPORTED out of committee with a "do pass"
recommendation and with one new fiscal note from Department
of Administration.
SB 169 was SCHEDULED but not HEARD.
ADJOURNMENT
6:51:31 PM
The meeting was adjourned at 6:48 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Historical Roster of AJC members.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 - Judicial Merit Selection Charts.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 - Judicial Selection Map.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 - Kathleen Miller's Letter to Legislature re AJC 2-20-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 AJC. BYLAWS.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 ARTICLE.IV.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 Sponsor Statement.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SB 127 Explanation of Changes.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 127 |
| SB 127 Sponsor Statement.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 127 |
| CSSB 169HSS Sectional Analysis.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB 169 changes vsn O to Y.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB 169 Historic vaccine photo.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB 169 Support all.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169 FAQ.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169 Sponsor Statement FIN.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169 Vaccines In AK short vsn (2).pptx |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SJR 21 - Summary of Changes.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 TESTIMONY OF DAVID JENSEN.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SB 169 Historic vaccine photo.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169CS(HSS)-DHSS-EPI-02-27-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169CS(HSS)-DHSS-HCMS-02-27-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169CS(HSS)-DHSS-VAA-02-27-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SJR 21 Kreitzer support .docx |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR21 AK Judicial Council Members-voting info.- duties.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SB127-DOA-DMV-02-18-2014.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 127 |
| SJR21 AFN Resolution.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR21 AK Judicial Council Voting Stats..pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SB 169 Support Cmmsn Aging.pdf |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SB169 AK_BIO PhRMA Testimony SB 169 Mar2014 v2.docx |
SFIN 3/3/2014 5:00:00 PM |
SB 169 |
| SJR021CS(JUD)-AJC-2-28-14.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |
| SJR 21 opposition - Bundy.pdf |
SFIN 3/3/2014 5:00:00 PM |
SJR 21 |