Legislature(1993 - 1994)

03/15/1994 08:35 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         March 15, 1994                                        
                            8:35 a.m.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-94, #41, Side 1 (000-end)                                                
  SFC-94, #41, Side 2 (end-000)                                                
  SFC-94, #43, Side 1 (000-end)                                                
  SFC-94, #43, Side 2 (end-500)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Drue Pearce,  Co-chair,  convened  the  meeting  at                 
  approximately 8:35 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In addition to  Co-chairs Pearce and Frank,  Senators Kelly,                 
  Rieger, and Sharp were present.  Senators Jacko and Kerttula                 
  joined the meeting after it was in progress.                                 
                                                                               
  ALSO  ATTENDING:     Mary   Gay,  Director,   Child  Support                 
  Enforcement Division, Department of  Revenue; Laura Glaiser,                 
  Special Assistant,  Office of the Lieutenant  Governor; Mark                 
  LoPatin,  LoPatin & Co., Developers; Jetta Whittaker, fiscal                 
  analyst,  and  Mike  Greany,  Director, Legislative  Finance                 
  Division; aides to  committee members  and other members  of                 
  the legislature.                                                             
                                                                               
  VIA TELECONFERENCE:  Bob LeResche, LeResche  & Co.,  Juneau,                 
  and Eric Wohlforth, Wohlforth  Argetsinger Johnson & Brecht,                 
  attorneys,  testified  via  teleconference   from  Anchorage                 
  regarding SB 338.                                                            
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  CSSB 148(TRA): An Act  relating to  legislative approval  of                 
                 certain   acts   of   the   Alaska   Railroad                 
                 Corporation; taxation of certain  property of                 
                 the Alaska Railroad  Corporation; members  of                 
                 the board and chief executive officer  of the                 
                 Alaska Railroad Corporation; meetings  of the                 
                 board  of  directors of  the  Alaska Railroad                 
                 Corporation; and providing  for an  effective                 
                 date.                                                         
                                                                               
                 Scheduled but not heard.                                      
                                                                               
  CSSB 190(JUD): An  Act relating  to  income withholding  and                 
                 other  methods of  enforcement for  orders of                 
                                                                               
                                                                               
                 support; and providing for an effective date.                 
                                                                               
                 Mary Gay, Director, Child Support Enforcement                 
                 Division,  Department  of  Revenue, spoke  in                 
                 support  of  SB  190.   Discussion  was  held                 
                 between  Co-chairs  Frank &  Pearce, Senators                 
                 Sharp, Kelly, Kerttula, and Rieger, regarding                 
                 child support enforcement issues.  Amendments                 
                 1 and 2 were ADOPTED.  CSSB 190(FIN) was HELD                 
                 over until Thursday, March 17, 1994.                          
                                                                               
  SB 276:        An   Act   relating   to   criminal   justice                 
                 information;       providing       procedural                 
                 requirements for  obtaining certain  criminal                 
                 justice  information;  and  providing for  an                 
                 effective date.                                               
                                                                               
                 CSSB 276(FIN) work draft  "K" dated March 11,                 
                 1994  was before the committee.  Amendments 1                 
                 and 2  had been  ADOPTED in  a prior  meeting                 
                 (March 12, 1994).  Discussion was held by Co-                 
                 chair  Pearce,  Senators  Sharp   and  Rieger                 
                 regarding  fiscal  notes and  other concerns.                 
                 Amendments  3  and  4  were  ADOPTED.    CSSB                 
                 276(FIN) was REPORTED OUT of committee with a                 
                 "do  pass,"   zero  fiscal  notes   from  the                 
                 Department of Safety, Department  of Law, and                 
                 the Department  of Health &  Social Services,                 
                 and  pending  a  new  fiscal  note  from  the                 
                 Department  of  Corrections  (present  fiscal                 
                 note is in the amount of $181,874).                           
                                                                               
  SB 303:        An Act  relating to voter  eligibility, voter                 
                 registration,    and    voter    registration                 
                 agencies;  and  providing  for  an  effective                 
                 date.                                                         
                                                                               
                 Laura Glaiser, Special  Assistant, Office  of                 
                 the Lieutenant Governor, spoke in support  of                 
                 SB 303.  Discussion was held between Senators                 
                 Kelly,  Sharp  and Co-chair  Pearce regarding                 
                 federal law and other concerns.   Amendment 1                 
                 FAILED to be  adopted.   SB 303 was  REPORTED                 
                 OUT    of    committee     with    individual                 
                 recommendations,  zero  fiscal notes  for the                 
                 Department of Education and the Department of                 
                 Revenue, and fiscal notes  for the Department                 
                 of Public  Safety - $90.9, Lt. Gov. Elections                 
                 -  $23.0,  Department   of  Health  &  Social                 
                 Services (M.H.  Admin.)-$10.7, Department  of                 
                 Health   &   Social    Services   (WIC)-$4.4,                 
                 Department  of  Health   &  Social   Services                 
                                                                               
                                                                               
                 (Pub.Assist.)-$10.4,   and   Department    of                 
                 Commerce & Regional Affairs-$10.0.                            
                                                                               
  CSSB 316(RES): An   Act   relating  to   commercial  fishing                 
                 penalties.                                                    
                                                                               
                 Scheduled but not heard.                                      
                                                                               
  CSSB 321(JUD): An Act relating  to the  taking of a  legible                 
                 set   of  fingerprints   when  a   person  is                 
                 arrested,   upon   initial    appearance   or                 
                 arraignment,  upon  the  conviction   of  the                 
                 person, and when the person  is received at a                 
                 correctional facility, and providing that the                 
                 set of fingerprints shall  be provided to the                 
                 Department  of  Public  Safety;  relating  to                 
                 criminal and crime  records and  information;                 
                 requiring   the   reporting   of  information                 
                 concerning  homicides,  suspected  homicides,                 
                 and violent sexual assaults to the Department                 
                 of Public Safety for analysis; requiring  the                 
                 Department of Public Safety to participate in                 
                 the Federal Bureau of  Investigation, Violent                 
                 Crimes Apprehension Program.                                  
                                                                               
                 Scheduled but not heard.                                      
                                                                               
  CSSB 338(L&C): An Act  relating to  the issuance  of revenue                 
                 bonds for acquisition and construction of the                 
                 Northern Crossroads Discovery Center  for the                 
                 Ship Creek  Landings Project;  relating to  a                 
                 study  of  the   feasibility  and   financial                 
                 viability   of   the    Northern   Crossroads                 
                 Discovery Center; relating to construction of                 
                 the Northern Crossroads Discovery Center; and                 
                 providing for an effective date.                              
                                                                               
                 Mark  LoPatin,  LoPatin  &  Co.,  Developers,                 
                 spoke in support  of SB  338.  Bob  LeResche,                 
                 LeResche & Co.,  Juneau, and Eric  Wohlforth,                 
                 Wohlforth  Argetsinger   Johnson  &   Brecht,                 
                 attorneys, testified via telecon-ference from                 
                 Anchorage regarding SB 338. The bill was HELD                 
                 over until March 16, 1994.                                    
                                                                               
  SENATE BILL NO. 276:                                                         
                                                                               
       An  Act  relating  to   criminal  justice  information;                 
       providing procedural requirements for obtaining certain                 
       criminal  justice  information;  and providing  for  an                 
                                                                               
                                                                               
       effective date.                                                         
                                                                               
  CO-CHAIR PEARCE announced that CSSB  276(FIN) work draft "K"                 
  was before  the committee.    In a  previous Senate  Finance                 
  Committee meeting  amendments 1 and 2 from the Department of                 
  Law had  been ADOPTED and included  in work draft "K".   She                 
  said that the  bill had been  held over and Senators  Kelly,                 
  Sharp, Rieger  and Dean  J. Guaneli,  Chief, Legal  Services                 
  Section, Criminal  Division,  Department of  Law,  had  been                 
  asked  to  draft  new  language  on  legislative  access  to                 
  records, now presented as amendment 4.                                       
                                                                               
  Co-chair Pearce also announced that her amendment 3 was also                 
  before the committee.   She  explained that Senator  Halford                 
  had requested  the fingerprinting  language removed from  SB                 
  276. The  fingerprinting language  would stand  alone in  SB                 
  321.  She  said the Department  of Law was comfortable  with                 
  amendment 3  if SB  321 would  pass.   Co-chair Frank  MOVED                 
  conceptual  amendment   3.    No  objection   being  raised,                 
  amendment 3 was ADOPTED for incorporation within the Finance                 
  Committee Substitute for SB 276.                                             
                                                                               
  Senator Sharp MOVED amendment 4 which added language so that                 
  the  legislature, for  official  legislative business  only,                 
  could  upon  written   request,  receive  criminal   justice                 
  information.   No objection  being raised,  amendment 4  was                 
  ADOPTED  for  incorporation  within  the  Finance  Committee                 
  Substitute for SB 276.                                                       
                                                                               
  Senator Rieger asked if the  fiscal note for the  Department                 
  of Corrections in the amount of $181,874 would be reduced to                 
  zero because of  amendment 3, removal of  the fingerprinting                 
  language.    Co-chair  Pearce said  that  the  Department of                 
  Corrections would provide  an updated fiscal note.   Senator                 
  Rieger alerted  the committee that  the fiscal note  for the                 
  Department of  Corrections should  be looked  at closely  in                 
  conference committee.  Senator Sharp  also raised a question                 
  regarding  travel  and personal  services  for FY95  in that                 
  fiscal  note.    Co-chair  Pearce  said  that SB  276,  once                 
  reported out of committee, would be  held until a new fiscal                 
  note could be received for the Department of Corrections.                    
                                                                               
  Senator  Sharp  MOVED  for  passage  of CSSB  276(FIN)  from                 
  committee  with individual  recommendations.   No  objection                 
  being raised, CSSB  276(FIN) was  REPORTED OUT of  committee                 
  with a "do  pass," zero fiscal  notes for the Department  of                 
  Public  Safety,  Department  of Law  and  the  Department of                 
  Health  &  Social Services.   The  bill  was held  in Senate                 
  Finance  until  a  new  fiscal  note  was  received  for the                 
  Department  of   Corrections.    Co-chairs   Pearce,  Frank,                 
  Senators  Sharp,  Kelly, Rieger  and  Kerttula signed  a "do                 
  pass."                                                                       
                                                                               
                                                                               
  CS FOR SENATE BILL NO. 190(JUD):                                             
                                                                               
       An Act relating to income withholding and other methods                 
       of enforcement for orders of support; and providing for                 
       an effective date.                                                      
                                                                               
  Co-chair  Pearce  announced  that  CSSB  190(JUD)  and  CSSB                 
  190(JUD) work  draft "E" were  before the  committee.   Also                 
  before the committee was a letter from Senator Little noting                 
  that the Judiciary Committee had pulled language from SB 190                 
  over her  objections which impacted  the employer  reporting                 
  project.  Proposed amendment 2 would add  that language back                 
  into the bill.   Amendment 1 was proposed by  the Department                 
  of  Revenue.   Senator  Kelly  asked the  difference between                 
  version E  and the original  bill.  Co-chair  Pearce invited                 
  Mary Gay to speak to the differences.                                        
                                                                               
  MARY  GAY,  Director,  Child Support  Enforcement  Division,                 
  Department  of  Revenue,  said the  difference  between  the                 
  previous  draft and  the Judiciary Committee  Substitute was                 
  the removal of the sunset  provision for employer reporting.                 
  She also  said that it was the  Judiciary Committee's desire                 
  to have  the bill include all federal requirements in regard                 
  to child support enforcement.                                                
                                                                               
  At  this  point,  Co-chair  Pearce  asked the  committee  to                 
  consider CSSB 190(JUD) before the  committee.  CSSB 190(JUD)                 
  work draft "E"  would not be used.   She went on  to explain                 
  that the employer reporting project  had been implemented by                 
  the legislature  in 1991  which required  employers with  at                 
  least 20 employees to report new or rehired employees to the                 
  Child Support Enforcement Division on a monthly basis.  This                 
  project sunsets on  January 1, 1995, and  had been extremely                 
  successful.   Collections have  increased by  12 percent  in                 
  Alaska,  even  though  many  still   go  uncollected.    The                 
  continuance  of the  project would  be  expected to  be cost                 
  effective.  The project would be extended by amendment 2.                    
                                                                               
  Ms.  Gay  went  on to  explain  that  amendment  1 had  been                 
  requested by the Department of Revenue.   The change on page                 
  3, line 26, was a technical correction.  On page 6, line 20,                 
  the words "for  a formal hearing"  are added.  This  ensures                 
  that the obligator  has been  through the informal  process.                 
  Senator  Kerttula  MOVED amendment  1.   No  objection being                 
  raised, amendment 1  was ADOPTED for incorporation  within a                 
  Finance Committee Substitute for SB 190.                                     
                                                                               
  Senator Kerttula MOVED amendment 2.  Senator Sharp OBJECTED.                 
  Discussion  followed  by  Co-chairs  Pearce, Frank,  Senator                 
  Sharp, and  Ms. Gay  regarding the  sunset  of the  employee                 
  reporting program.  Co-chair Pearce and Ms. Gay testified to                 
  the success of the  program and informed the  committee that                 
  Congress was  considering mandating  the employee  reporting                 
  program for all states.   Co-chair Pearce called for  a show                 
                                                                               
                                                                               
  of hands  on the  adoption of  amendment 2,  and the  motion                 
  carried on  a vote of  1 to 5  (Co-chairs Pearce  and Frank,                 
  Senators  Kerttula, Rieger,  Kelly  were  in favor,  Senator                 
  Sharp  was opposed.    Senator  Jacko  was absent  from  the                 
  meeting at the time  the vote was taken).   Amendment 2  was                 
  ADOPTED  for   incorporation  within  a   Finance  Committee                 
  Substitute for SB 190.                                                       
                                                                               
  Senator  Kelly  brought  up concerns  regarding  the  $1 fee                 
  charged the obligator and  the additional paperwork required                 
  of   employers  because   of   child  support   withholding.                 
  Extensive  discussion  followed  between  Co-chairs  Pearce,                 
  Frank, Senators  Sharp and Kelly, regarding fees  and who is                 
  subject to the child support withholding.  Ms. Gay explained                 
  that if  a parent  was under  a child  support order  before                 
  1990, and had never missed a  payment, that parent would not                 
  be required to be  under wage withholding unless one  of the                 
  parents  requested  it.    If  recently divorced,  the  non-                 
  custodial  parent/  obligator  would  be  required  to  have                 
  immediate  wage withholding.   As  of January  1, 1994,  the                 
  courts are to include an  immediate wage withholding in  the                 
  child support order, so the custodial parent could serve the                 
  order on the employer her/himself or have an attorney do so.                 
  The monies then  run through  the Child Support  Enforcement                 
  Division,  it  is  receipted, and  mailed  to  the custodial                 
  parent.   It would be considered  an accounting function for                 
  these individuals.   The federal government wants  this done                 
  so there is a better accounting of child support payments in                 
  case there are difficulties in  the future where amounts may                 
  be under dispute.                                                            
                                                                               
  Co-chair  Frank  asked,  if from  this  time  on,  all child                 
  support  payments   would  go  through  the   Child  Support                 
  Enforcement Division.  Ms. Gay agreed they would, unless the                 
  parents had an  alternative arrangement  through the  court,                 
  i.e., a trust fund or such.                                                  
                                                                               
  Co-chair Pearce informed the committee that the Alaska Court                 
  System had  provided  a new  fiscal  note and  voiced  their                 
  objection to not being  included in SB 190.  She  went on to                 
  review the  fiscal note for the Court  and its request for a                 
  parttime employee because of unnecessary paperwork caused by                 
  requirements for employers to notify the Court of terminated                 
  employees.  Co-chair  Pearce asked why that  requirement was                 
  included in the  bill.  Ms.  Gay said  in referring to  non-                 
  child enforcement cases  the wording "agency, the  court, or                 
  other entity" was often repeated,  and agreed that notice of                 
  termination  did not  need to  be sent  to  the Court.   The                 
  notice, however, did need  to be sent to  the obligee.   Ms.                 
  Gay  spoke to  wording in  Sections 6  and 8  that could  be                 
  removed.                                                                     
                                                                               
  Co-chair Pearce  informed the committee  that her  intention                 
  was to  hold SB  190 so  that she  and  Senator Sharp  could                 
                                                                               
                                                                               
  review the  Court's responsibilities,  and, hopefully,  zero                 
  out the fiscal note for the Court System.  SB 190 would then                 
  come back before committee.                                                  
                                                                               
  Co-chair Frank said he supported SB 190 in light of the poor                 
  child support payment records of  most obligators, but would                 
  like to know how  the system worked in regard to  AFDC.  Ms.                 
  Gay said  that child support  received by  the Division  for                 
  children on AFDC  was kept  by the Division  except for  $50                 
  which was sent  to the obligee  or, in a  rare case, if  the                 
  child support was larger than  the AFDC payments, any excess                 
  was sent to the custodial parent.  She also agreed that when                 
  a parent was not working, child support was seldom received,                 
  but  when  employed  and  the  employer withheld  the  child                 
  support,  compliance  was  good.   The  non-traditional wage                 
  earner (self-employed or  persons working for cash)  was one                 
  type that was  hard to reach.  She reported  that 25 percent                 
  of the  caseload paid on a regular basis.   She did not know                 
  the statistics but said the largest amount of money received                 
  by the  Division was  withheld from  wages.   Co-chair Frank                 
  asked  why the Division  did not  provide a  positive fiscal                 
  note to  that effect.   Ms. Gay  said that the  Division had                 
  been collecting child support by withholding since 1990 when                 
  the  federal  regulation  was  enacted  and  initiated  wage                 
  withholding if a  person had  been delinquent  more than  30                 
  days.  People that had child support orders before 1990, who                 
  were  not  late   on  their   payments,  might  begin   wage                 
  withholding in the  future if they become delinquent.  Child                 
  support cases that came out of the court at present included                 
  wage withholding in the child  support order.  The  Division                 
  would  handle  the  monies  as  a bookkeeping  process,  not                 
  enforcement.                                                                 
                                                                               
  In answer to Co-chair  Frank, Ms. Gay said she did  not know                 
  what  percent  of  persons not  paying,  or  sporadic paying                 
  persons, were wage earners.                                                  
                                                                               
  Co-chair  Pearce  reiterated that  the  program had  made an                 
  increase in collection of child support but still 75 percent                 
  of the obligators were not paying.  Ms. Gay said that of the                 
  caseload, only  half had  been completed.   She  went on  to                 
  explain, that since the federal  government already required                 
  this program as  of 1990, there  had not been a  significant                 
  change, but  now  the  Court  was effected  because  it  was                 
  required  to  include  wage  withholding  in  child  support                 
  orders.  SB  190 updates the  state's statutes in line  with                 
  federal requirements so funding could be sanctioned.                         
                                                                               
  Senator  Kerttula  suggested that  since  this program  is a                 
  administrative burden, all departments  should be asked  for                 
  suggestions or methods to reduce paperwork and still get the                 
  job done.  He maintained that  the inefficiencies that exist                 
  must be resolved in order to reduce overhead costs.                          
                                                                               
                                                                               
  Senator Rieger asked if the same  language (found in page 5,                 
  Sec. 10)  regarding  an appeal  paralleled  modification  of                 
  support amounts.  Ms. Gay replied  that in a modification of                 
  support,  the  person  was told  there  was  going  to be  a                 
  modification   and   was   requested   to   provide   income                 
  information.    (She  noted this  was  not  usually provided                 
  willingly).  If it was  an administrative modification, then                 
  the person  had already  provided their income  information,                 
  and  an  informal conference  was held.    They were  sent a                 
  consent order, but if it was  not signed, it would not  take                 
  effect.  Ms.  Gay stressed that  with every step within  the                 
  process   of  child   support  enforcement   there  is   the                 
  opportunity for  due process.  When the  opportunity for due                 
  process in statute runs  out, the person could always  go to                 
  court and present his/her case.                                              
                                                                               
  Senator Rieger said he received complaints from constituents                 
  that  increases  in  child  support  withholding  were  done                 
  without their  knowledge.   Ms. Gay  replied there might  be                 
  several causes for an increase in withholding such as a cost                 
  of living that was included in their child support order, or                 
  an amount past due that could be  included.  She said that a                 
  yearly,  or every  two  year cost  of  living was  sometimes                 
  written into  child support orders  and the person  may have                 
  forgotten about that provision.                                              
                                                                               
  Senator Rieger  asked  if support  orders  were based  on  a                 
  percentage of income.   Ms. Gay  said a percentage was  only                 
  used  when an  arrearage amount  was being  collected.   She                 
  agreed that some  judges used  a percentage to  decide on  a                 
  figure for  a child  support order.   In  answer to  Senator                 
  Rieger,  she said  that  if either  parent  changed jobs  or                 
  remarried, it would  not automatically  trigger a change  in                 
  the amount withheld from their paycheck for child support.                   
                                                                               
  End SFC-94 #41, Side 1                                                       
  Begin SFC-94 #41, Side 2                                                     
                                                                               
  In response  to  Senator Rieger,  Ms. Gay  said that  either                 
  parent could go  to court  and asked for  a modification  of                 
  child support.   Co-chair Pearce said that  judges sometimes                 
  take  remarriage  or   change  of  jobs  into   account  for                 
  modification of support.   She reminded him that it  was not                 
  up to the Division to set  child support amounts.  The Court                 
  sets the amount,  the Division administers that  amount, and                 
  cannot  change it.  Senator  Rieger believed that there were                 
  court  orders  for  child  support  based on  percentage  of                 
  income.  Ms.  Gay said that  previous court orders may  have                 
  been done on a percentage, but, at present, the court orders                 
  a set amount to be withheld for child support.                               
                                                                               
  In  answer  to Senator  Kelly,  Ms. Gay  confirmed  that the                 
  withholding amount was now determined by 27 percent  for one                 
  child, and 33 percent  for two of the adjusted  gross income                 
                                                                               
                                                                               
  of  the non-custodial  parent, with  a maximum  of  $6,000 a                 
  month.  Senator Kelly said  that his constituents complained                 
  that  the Division was  quick to raise  amounts withheld but                 
  were slow in stopping withholding when appropriate.  Ms. Gay                 
  said that the  Division did not discriminate  between cases.                 
  In answer to a constituent  complaint he mentioned, she said                 
  that if a child is 18 and still a student, the child support                 
  may continue until the child graduates.                                      
                                                                               
  In answer to Senator Kelly, Ms.  Gay reiterated that all new                 
  divorced parents would  be placed on the  withholding system                 
  unless they have  agreed on an alternative  arrangement with                 
  the  Court.   Ms.  Gay felt  that  Congress decided  on this                 
  program because, not only was it an effective way to collect                 
  child support, it did not discriminate against any parent by                 
  saying a parent  was bad  for not paying.   If everyone  was                 
  under immediate wage  withholding, it  just meant that  they                 
  owed child support.                                                          
                                                                               
  Senator Sharp voiced his objection to having all obligations                 
  under a mandatory withholding system.  If someone was paying                 
  on  time,  they   should  not  be  submitted   to  automatic                 
  withdrawal because he feared it would have a negative effect                 
  on their credit rating.  He also felt it  was an unnecessary                 
  burden for the  employer.   Ms. Gay informed  him that  some                 
  obligators did not  mind their child support  being withheld                 
  from  their  paycheck.     Co-chair  Pearce   remarked  that                 
  employers deal with  many different  kinds of  withholdings,                 
  such  as  savings bonds,  direct  deposit to  bank accounts,                 
  etc., and this  was considered just another  withholding and                 
  would  not  negatively  impact a  credit  rating  unless the                 
  obligator  was past  due.   She also reminded  Senator Sharp                 
  that three out of  four obligators were not paying  and that                 
  was not a very good record.                                                  
                                                                               
  In  answer  to   Senator  Sharp,  Ms.  Gay  said   that  all                 
  administrative  orders  since   1990,  established  by   the                 
  Division,   included   wage   withholding   unless   another                 
  arrangement had been made with the  Court.  As of January 1,                 
  1994,  all  court  child support  orders  must  include wage                 
  withholding.  However,  there were orders previous  to 1990,                 
  being  enforced by  the  Division, that  did  not have  wage                 
  withholding but would in the future if the obligee requested                 
  it, or if there was a modification process.  In those cases,                 
  there  had  to be  a  good  reason for  initiating  the wage                 
  withholding.                                                                 
                                                                               
  Again, in  answer to Senator Sharp,  Ms. Gay said  that if a                 
  parent  went  on   AFDC,  a  case  would   automatically  be                 
  established with the  Division, and only a  small percentage                 
  of these cases  already had  a court ordered  divorce.   The                 
  largest  percentage  were  never married  or,  if  they were                 
  married,  never went  through  a divorce.    At that  point,                 
  paternity  and   a  child   support  order   needed  to   be                 
                                                                               
                                                                               
  established.   The money  was collected  and 50 percent  was                 
  retained by the  state, and 50  percent was returned to  the                 
  federal AFDC program.  She  agreed that the obligee  assigns                 
  his/her right to  child support over  to the state so  funds                 
  could be recovered.                                                          
                                                                               
  Co-chair  Frank  pointed  out  that   since  75  percent  of                 
  obligators were not paying child  support, it seemed logical                 
  and a more  efficient process to have a  withholding program                 
  and thus, have  the child receive the money.  Unfortunately,                 
  the  employers  were  being inconvenienced.    He  wished it                 
  wasn't necessary but felt it was.  His next question was how                 
  the state could contact the 75 percent that did not pay.  He                 
  also asked if an employer with  less than 20 employees would                 
  still be subject to  the withholding program.  Ms.  Gay said                 
  that employer reporting  was required  of any employer  with                 
  more than 20 employees, but any employer must withhold child                 
  support  if an order  was received by them.   She wanted the                 
  committee  to  remember   that  employers  were   taxpayers.                 
  Ensuring that families  were provided  for by child  support                 
  enforcement alleviated the need for those families  to go on                 
  ADFC.    Employers  understood that  if  families  were kept                 
  independent and  off welfare, it would help keep their taxes                 
  from increasing.                                                             
                                                                               
  Ms. Gay said as a result  of the Uniform Interstate Families                 
  Support  Act,  there were  two  changes to  interstate child                 
  support laws.  One would be that the original order would be                 
  effective in  all states  rather than  each state  having to                 
  initiate their own  order.   The other outcome  was that  it                 
  would allow the  Division to send  its child support  orders                 
  directly to the employers instead of through another agency.                 
                                                                               
  Senator Kelly  reiterated his  concern  over credit  reports                 
  when a person had child support withheld from  his paycheck.                 
  Ms. Gay informed  him that credit  bureaus look at past  due                 
  child support over  $2,000 the  same as any  other past  due                 
  account.   She  assured  him that  credit  bureaus were  not                 
  interested in withholdings from a person's paycheck but were                 
  concerned  with   the  person's  debts.     Co-chair  Pearce                 
  confirmed that if child support was withheld from a person's                 
  paycheck, it  would not  restrict his/her  ability to  buy a                 
  house  or  car.   However, if  a  person was  delinquent, it                 
  should  show  negatively on  their  credit rating.   Senator                 
  Sharp voiced his concern regarding  the word garnishment and                 
  felt it  had a  negative consequence.   Co-chair Frank  said                 
  that credit  bureau's would not receive  notification unless                 
  the obligator  was past due.  He did  not see a problem with                 
  withholding by the employer.                                                 
                                                                               
  Senator Kerttula  voiced  his concern  over individuals  who                 
  married, divorced, and then remarried,  creating two or more                 
  families, and chose not to support any of them.  He asked if                 
  there was any national solution to  this welfare abuse.  Ms.                 
                                                                               
                                                                               
  Gay  said  there was  no  solution  to  her  knowledge,  and                 
  affirmed that  in 25  percent of  the Division's  cases, the                 
  obligator had two or more families.  She said often the huge                 
  amounts of back  child support owed  by obligators had  been                 
  caused by  this phenomenon.   In answer to  Co-chair Pearce,                 
  Ms. Gay said she did not know what percent of past due cases                 
  were multiple family cases.                                                  
                                                                               
  Co-chair   Frank  asked  if   the  federal   government  had                 
  considered using the IRS to collect back child support.  Ms.                 
  Gay said that  the federal government had  considered moving                 
  the collection portion to  the IRS but the IRS was  not that                 
  successful in collecting  unpaid taxes.  Senator  Kelly felt                 
  there probably was  a correlation  between unpaid taxes  and                 
  unpaid child support.                                                        
                                                                               
  Since the  object was to  support the  child, Senator  Sharp                 
  wanted to know if  any collections were being made  when the                 
  parents were not  married.  Ms.  Gay affirmed that an  unwed                 
  father was  responsible for  his  child(ren), but  paternity                 
  must  first  be  proved,  and   then  collections  could  be                 
  attempted to be made.                                                        
                                                                               
  Co-chair Pearce announced  that CSSB 190(FIN) would  be held                 
  in committee until Senator Sharp and Co-chair Pearce's staff                 
  could present a new  CS that incorporated amendment 1  and 2                 
  ADOPTED, and deleted the Court System's responsibility where                 
  possible.  She hoped to reschedule it on March 17, 1994.                     
                                                                               
  SENATE BILL NO. 303:                                                         
                                                                               
       An   Act   relating   to   voter   eligibility,   voter                 
       registration,  and  voter  registration  agencies;  and                 
       providing for an effective date.                                        
                                                                               
  Co-chair  Pearce  announced  that  SB  303  was  before  the                 
  committee and  invited  Laura  Glaiser,  Special  Assistant,                 
  Office  of  the   Lieutenant  Governor,  to  speak   to  the                 
  committee.                                                                   
                                                                               
  LAURA GLAISER  said that  SB 303  was drafted  to bring  the                 
  state into compliance with  the National Voter  Registration                 
  Act of  1993.   The main  significance of  the bill  was the                 
  designation of  the Division  of Motor Vehicles  as a  voter                 
  registration  agency.    It  also  included  those Divisions                 
  within Health &  Social Services that administer  WIC, ADFC,                 
  Medicaid,  and  Food Stamp  programs  as voter  registration                 
  agencies.    As well  as  those state  funded  agencies that                 
  primarily provide  services  with  disabilities,  all  armed                 
  services  recruitment  offices  in  Alaska  would   also  be                 
  designated   as   voter   registration    agencies.      The                 
  administration  also  had  decided to  add  the  Division of                 
  Municipal and Regional Assistance, Department of Community &                 
                                                                               
                                                                               
  Regional Affairs, as well, because  members of that Division                 
  travel  to  the  bush  areas  and  could  provide  bilingual                 
  assistance with voter  registration.  The Director  may also                 
  designate   other  state   and   local  agencies   as  voter                 
  registration agencies.                                                       
                                                                               
  Ms. Glaiser went on to say that being  designated as a voter                 
  registration  agency  meant  the agency  would  assist voter                 
  applicants in  filling out  voter registration  forms.   The                 
  form would be  offered to everyone (not just when requested)                 
  and the person could choose to fill it out or not.  If  they                 
  decided not to fill it out, they would be required to sign a                 
  declination form so  that the agency  had a record of  their                 
  refusal to register.                                                         
                                                                               
  Ms.  Glaiser  went on  to  say  that SB  303  made technical                 
  changes  to  the  election  laws  to  bring  the state  into                 
  compliance  with  the  Voter  Registration  Act.   One  item                 
  changed  was  that  all  witnessing  requirements  would  be                 
  removed from voter registration forms.  In answer to Senator                 
  Kelly,  Ms. Glaiser said  that federal  law did  not require                 
  witnessing  or  formal  notarization  on voter  registration                 
  forms.                                                                       
                                                                               
  In addition, the system by which voters were purged from the                 
  voter registration rolls had been changed.  A voter remained                 
  on the  master list  two years  longer than  presently.   It                 
  would not effect the  precinct list.  In addition,  it named                 
  the Director of Elections responsible for state coordination                 
  and reporting requirements under the federal act.                            
                                                                               
  Currently, if  a person  were convicted  of  a felony  moral                 
  turpitude under  federal law,  but resided  in the  state of                 
  Alaska, he/she could  still register  and vote  at the  last                 
  known residence on an absentee ballot.   One other change to                 
  state law,  in compliance  with this federal  act, was  that                 
  federal felonies would  be reported to the state Division of                 
  Elections and the felon  would not be allowed to  vote until                 
  that felony had been cleared.                                                
                                                                               
  Co-chair  Pearce announced that Juanita Hensley, Division of                 
  Motor Vehicles, Dept.  of Public  Safety, and Curtis  Lomas,                 
  Program  Officer,  ADFC program,  Dept.  of Health  & Social                 
  Services,  were  in  the audience  and  available  to answer                 
  questions in regard to SB 303.                                               
                                                                               
  In answer to Senator  Kelly, Ms. Glaiser said that  a person                 
  applying for driver's  license could  refuse to register  to                 
  vote.  The  forms would  be printed so  the applicant  would                 
  simultaneously  fill  out  similar information.    If he/she                 
  chose not to sign the voter registration section, that would                 
  be  considered  a declination.    There would  be  no formal                 
  declination  at  the  Department  of  Motor Vehicles.    Ms.                 
  Glaiser said  there would  be training  sessions similar  to                 
                                                                               
                                                                               
  registrar training on what can be said to the applicant, and                 
  how to assist the applicant.                                                 
                                                                               
  In answer to Senator Sharp, Ms. Glaiser said the state would                 
  not require  witness signatures on voter  registration forms                 
  but would retain the registrar program.  The state would not                 
  make the registration agency employees voter registrars.  In                 
  answer  to  Senator Sharp,  Ms.  Glaiser agreed  that anyone                 
  could  gather  signatures  for  voter  registration and  the                 
  election official would not know who had filled them out.                    
                                                                               
  Ms. Glaiser said that amendment 1 would change the way names                 
  were placed on the ballot.  She explained that the state had                 
  one of the  most complex systems  of ballot rotation in  the                 
  country.  Many  states were doing away  with ballot rotation                 
  as a cost saving  measure because it is believed  voters did                 
  not vote  for candidates because  of their placement  on the                 
  ballot.  She proposed that letters  of the alphabet would be                 
  drawn by the Director of Elections, names would be placed on                 
  the  ballot  accordingly, and  the  names would  not rotate.                 
  Sample ballots could be printed and  then used in the voting                 
  booth as a reference since the  names would stay in the same                 
  order.    Senator  Kerttula voiced  his  opposition  to this                 
  amendment.   In answer to  Co-chair Frank, Ms.  Glaiser said                 
  that the ballot rotation was not  part of the National Voter                 
  Registration Act.  She also informed the committee  that the                 
  National  Voter  Registration  Act  was  a  federal  mandate                 
  without federal funding.  The state would have the threat of                 
  a  lawsuit  if it  did not  come  in compliance  and because                 
  Alaska was a  Voting Rights Act  state, all party rules  and                 
  state election laws  pass through the Department  of Justice                 
  which would flag this issue.                                                 
                                                                               
  In  answer  to Co-chair  Pearce, Ms.  Glaiser said  that the                 
  Division estimated a savings of  approximately $189,000 with                 
  the addition of amendment 1.   If the Republican rule stayed                 
  in effect, and  there was a  separate ballot, it would  save                 
  $267,000  every  election  cycle.    Ms. Glaiser  said  that                 
  Washington, Oregon and California have noticed no complaints                 
  or difference for candidates when ballot rotation was used.                  
                                                                               
  Co-chair  Frank  MOVED   amendment  1.    Senator   Kerttula                 
  OBJECTED.  Co-chair Pearce called for a show of hands on the                 
  adoption of amendment 1, and the  motion FAILED on a 2 to  3                 
  vote.  (Co-chairs  Pearce and Frank were in  favor, Senators                 
  Sharp,  Kerttula and Kelly were  opposed.  Senator Jacko was                 
  absent from the meeting at the time the vote was taken).                     
                                                                               
  Senator Kelly asked  what part  of SB 303  was not  mandated                 
  under  federal law.    Ms. Glaiser  said  the only  addition                 
  outside of  federal requirements  was the  inclusion of  the                 
  Community & Regional Affairs as a voter registration agency.                 
  She  reiterated  that  this  agency  was  added  because  it                 
  contacted the bush  and could provide bilingual  service for                 
                                                                               
                                                                               
  voter registration.  The  federal government mandated  voter                 
  registration forms had to be bilingual if a large population                 
  used another language but since parts  of Alaska had so many                 
  oral and  dialect changes, the  administration thought  that                 
  the Department of Community & Regional Affairs could address                 
  that situation.                                                              
                                                                               
  Senator Sharp  MOVED for passage  of SB  303 from  committee                 
  with individual recommendations.  Senator Kerttula OBJECTED.                 
  Co-chair Pearce  asked for  a show  of hands.    SB 303  was                 
  REPORTED OUT of  committee with a "no  recommendation," zero                 
  fiscal notes for the Department  of Education, Department of                 
  Revenue,  and  fiscal  notes for  the  Department  of Public                 
  Safety-$90.9, Elections-$23.0, Department of Health & Social                 
  Services-M.H. Admin. $10.7,  WIC-$4.4, Pub.Assist. $10.4 and                 
  the Department of  Community & Regional Affairs-$10.0.   Co-                 
  chair  Pearce  signed a  reluctant  "do pass,"  and Co-chair                 
  Frank, Senators  Sharp, Kelly, Rieger,  Jacko, and  Kerttula                 
  signed "no recommendation."                                                  
                                                                               
  CS FOR SENATE BILL NO. 338(L&C):                                             
                                                                               
       An Act  relating to the  issuance of revenue  bonds for                 
       acquisition and construction of the Northern Crossroads                 
       Discovery Center  for the Ship Creek  Landings Project;                 
       relating to a  study of  the feasibility and  financial                 
       viability of the Northern  Crossroads Discovery Center;                 
       relating  to construction  of  the Northern  Crossroads                 
       Discovery Center; and providing for an effective date.                  
                                                                               
  MARK  LOPATIN,  LoPatin  &  Co.,  Developers,  provided  the                 
  committee  with   a  handout  titled   "Northern  Crossroads                 
  Discovery  Center"  (Attachment A,  copy  on file)  and used                 
  slides to  illustrate his presentation.   He  said that  the                 
  land considered for Ship Creek Landing was surrounded by the                 
  Comfort Inn, the new Alaska Railroad headquarters office, as                 
  well  as the Alaska Railroad depot.   LoPatin & Co. had been                 
  paying lease payments on this  land and intended to  develop                 
  it  into one  of the finest  mixed-use developments  in this                 
  part of  the United States.   The development  would contain                 
  four  major  components;  a hotel,  an  office  building, an                 
  upscale residential area,  and a multi-attraction,  tourist-                 
  oriented entertainment center.  Mr.  LoPatin wanted to speak                 
  to  the last  component,  the  proposed Northern  Crossroads                 
  Discovery Center.                                                            
                                                                               
  End SFC-94 #41, Side 2                                                       
  Begin SFC-94 #43, Side 1                                                     
                                                                               
  Mr. LoPatin pointed out that  in today's world of financing,                 
  it was difficult  to get  project financing, especially  for                 
  leased  land.    However, his  company  was  comfortable and                 
  confident  that  the  hotel, office  building,  and  upscale                 
                                                                               
                                                                               
  residential  units  would  be conventionally  financed.   He                 
  placed the  42-year history  of his  company's success  as a                 
  testimony that such financing would be achieved.   In regard                 
  to  the Northern  Crossroads  Discovery Center,  he believed                 
  there  was  a unique  opportunity  allowing the  railroad to                 
  issue  tax-exempt  bonds   that  could   be  sold  for   the                 
  development of a  private-purpose corporation.  This  unique                 
  opportunity was part of federal legislation that allowed the                 
  railroad to be sold from the federal government to the state                 
  of  Alaska.   He  said that  Bob  LeResche, LeResche  & Co.,                 
  Juneau, and Eric Wohlforth, Wohlforth Argetsinger Johnson  &                 
  Brecht,  attorneys, Anchorage,  could attest  to this  fact.                 
  The Alaska Railroad, as an agency of the state,  was free to                 
  sell tax-exempt bonds  for trains, rails, office  buildings,                 
  etc. for public and railroad purpose.   The provision in the                 
  federal  law  that allowed  the  development for  Ship Creek                 
  Landing had nothing to do with the railroad's ability to use                 
  tax-exempt  financing  for  trains  and  railroad  purposes.                 
  These tax-exempt  bonds were  something special  and unique.                 
  He wanted to  clarify that this  was not something that  the                 
  Railroad was using for private purpose.                                      
                                                                               
  He attested to the  fact that Anchorage was the center  of a                 
  European  and  Asian  crossroads   and  that  could  provide                 
  tremendous  opportunities  to   market  both  the   Northern                 
  Crossroads Discovery Center and  Shipcreek Landing.  LoPatin                 
  & Co.  expected this  facility to  bring more  international                 
  travelers,  tourists,  businesses,  and   companies  to  the                 
  Anchorage and Alaska area.                                                   
                                                                               
  With  a  slide  (third  page  of  the  handout)  Mr. LoPatin                 
  illustrated the proposed development on the leased land.  In                 
  answer to Senator Jacko,  he said the point of  land already                 
  existed and was called  Shipcreek Point.  It was now  a boat                 
  storage with  an existing  municipal launch  facility.   The                 
  next slide and  page of the handout showed  a closeup of the                 
  Northern Crossroads Discovery Center and its relationship to                 
  the hotel,  conference  center,  residential,  and  railroad                 
  station.    He  explained  that HB  338  addressed  only the                 
  Northern  Crossroads  Discovery  Center and  not  the  other                 
  portions of the development.                                                 
                                                                               
  He went  on to  say that the  Discovery Center was  a public                 
  amenity,  and the construction cost was  estimated to be $58                 
  million, not  including  some  soft  costs.    It  would  be                 
  composed of three major pavilions,  the Omnimax Theatre, the                 
  Hologram Theatre, and finally the  Museum of St. Petersburg.                 
  In  addition,  there would  be  crafts, demonstrations,  and                 
  other  inter-activities  for the  public.   It  was designed                 
  around a study done by Economic Research Associates, Beverly                 
  Hills,  California,  who  started  with  Disney.   They  had                 
  estimated this facility would  generate an additional $41.6M                 
  to  the area economy in lodging  facilities, food, etc., not                 
  including revenues to the facility.                                          
                                                                               
                                                                               
  He  said  the facility  complements  downtown and  would not                 
  compete with existing shops.  The  concept was that it would                 
  give tourists the  opportunity to see  the beauty of  Alaska                 
  and  use  Anchorage as  a gateway  to  enter other  areas of                 
  Alaska.  In addition, the  facility would allow residents of                 
  Anchorage  an  opportunity to  view  an Omnimax  film series                 
  during the off-season.                                                       
                                                                               
  In  answer to Co-chair Frank,  Mr. LoPatin said the existing                 
  Alaska Experience Theater  in downtown Anchorage was  a wide                 
  screen  theater, a different  format than the  Omnimax.  Co-                 
  chair Pearce made the point that these were still additional                 
  theatres and the tourist  would likely visit only one.   Mr.                 
  LoPatin  argued  that  this facility  would  bring  a better                 
  market to the community and travelers would stay longer.  He                 
  reiterated that financing was difficult to obtain for leased                 
  land and his  company was not  competing on equal ground  in                 
  regard to the  ability to finance.  Co-chair Frank disagreed                 
  with that  statement and indicated  the location could  be a                 
  cause  for  their  problems  with  financing.   Mr.  LoPatin                 
  assured  him  that the  Discovery Center  was  not in  a bad                 
  location, and that financing and  location were two separate                 
  issues.                                                                      
                                                                               
  Mr.  LoPatin  went  on  to  say   that  an  exhibit  by  the                 
  Smithsonian shown in Juneau called "Crossroads of the World"                 
  brought  together  some  of  the  finest pieces  of  Alaskan                 
  artifacts.  Forty  percent of them  came from the museum  in                 
  St. Petersburg, Russia.  An agreement had  been reached with                 
  the museum of  St. Petersburg to  have a permanent annex  in                 
  the Discovery Center creating the first permanent annex of a                 
  foreign museum in America.                                                   
                                                                               
  Co-chair Pearce questioned the total visitor numbers used in                 
  Mr. LoPatin's presentation.  Mr.  LoPatin quoted the number,                 
  764,000 visitors to Anchorage, as confirmed by the Anchorage                 
  Economic Development  Corp., the  Tourist Bureau  in Alaska,                 
  and McDowell & Associates of Juneau.  Other calculations had                 
  been made based on that number.   He also remained convinced                 
  that an  additional 125,000  business  related travel  trips                 
  were made to Anchorage.   Co-chair Pearce said those numbers                 
  did not seem to match any Division of Tourism statistics.                    
                                                                               
  In answer  to  Co-chair Frank,  Mr.  LoPatin said  that  the                 
  second  largest   tourist  attraction  was   the  Museum  in                 
  Anchorage  which  boasted   a  high   rate  of  40   percent                 
  penetration.  He said Denali  was the highest reported  with                 
  Portage  Glacier  also an  important  attraction.   Co-chair                 
  Frank asked Mr. LoPatin  if he was estimating 60  percent of                 
  765,000 visitors at  $30 each.   Mr. LoPatin noted that  the                 
  McDowell Group  believed the  $30 admission  price could  be                 
  raised.    He had  met  with  two large  tour  companies and                 
  interest was strong.   The biggest problem in  Anchorage was                 
                                                                               
                                                                               
  finding hotel rooms.   He made the point that 76  percent of                 
  the  765,000 tourists  arrived  in a  three  and half  month                 
  period so any facility needed to be able to handle a "bulge"                 
  of visitors over a short span of time.                                       
                                                                               
  Co-chair Pearce asked  how many of the  765,000 overnight in                 
  Anchorage.   She explained  that tour  ships bring  tourists                 
  from Seward  and Whittier on  buses to Anchorage  giving the                 
  tourist  a small amount of  free time to  see anything.  She                 
  was afraid  that the  Discovery Center  would just  displace                 
  other  Anchorage  attractions  that were  home  owned.   Mr.                 
  LoPatin  felt  that  Anchorage  was   a  gateway  (point  of                 
  departure or arrival)  for most cruise  ships and there  was                 
  the  opportunity  to  catch tourists  the  day  before their                 
  cruise  begins  or the  day after  their  cruise ends.   The                 
  cruise ships  were not  encouraging people  to stay  because                 
  rooms were not  available and they cannot  afford passengers                 
  staying in rooms  that are  reserved for in-coming  cruising                 
  passengers in those hotels.  The  hotel in this new facility                 
  alone  would have a large effect on Anchorage.  It would not                 
  decrease  people's  activities   but  increase   Anchorage's                 
  capacity for more overnight tourists.                                        
                                                                               
  Co-chair  Pearce  asked  if   financing  through  this  bond                 
  proposal would  facilitate more  conventional financing  for                 
  the hotel, since  the hotel would  be needed to provide  the                 
  rooms for these  visitors.  Mr.  LoPatin felt that the  room                 
  generator (the Discovery Center) needed to be created before                 
  the rooms  were created.   He  expected other  hotels to  be                 
  generated in addition to the hotel in  this facility because                 
  of the interest created by the  Discovery Center.  In answer                 
  to Co-chair Pearce, Mr. LoPatin said that the first phase of                 
  this facility would require about $125-150 million.                          
                                                                               
  Co-chair Pearce noted  that in testimony from  the railroad,                 
  and in her  opinion, building a  new World Trade Center  was                 
  fine, but  all that  was being  done was  a displacement  of                 
  people  from  the   Tudor  Road  facility.     Some  of  the                 
  departments of the state were  also interested in moving  to                 
  the   new  building   and  might   negotiate  lower   rental                 
  agreements.   She reiterated  that new  businesses were  not                 
  being created to fill the new building.  Mr. LoPatin said he                 
  would not deny that tenants would  move from one facility to                 
  another but  he maintained that  if the  World Trade  Center                 
  could operate efficiently, it would  bring new businesses to                 
  the area and help  existing businesses expand.  He  felt the                 
  World Trade Center  was a much better advocate  of that.  He                 
  repeated  their  belief that  there  were businesses  in the                 
  international markets looking for a home that would come  to                 
  Anchorage  if  it had  a  real  World Trade  Center.   Also,                 
  businesses  in Anchorage  would be  able to  expand if  they                 
  could go to a World Trade Center for one-stop shopping.   He                 
  had met  with the Russian  ambassador in  Seattle where  the                 
  Russian council office operates even  though over 50 percent                 
                                                                               
                                                                               
  of its business is with Alaska.   He felt a much better case                 
  could be made for their relocation  if Anchorage had a first                 
  class World Trade Center.                                                    
                                                                               
  At a  public hearing at  the Anchorage Assembly,  an Alaskan                 
  company said they  were being solicited by  Seattle to leave                 
  Anchorage.  Mr.  LoPatin felt a  World Trade Center in  this                 
  new location would be a huge step in the right  direction in                 
  helping keep local businesses in Anchorage.                                  
                                                                               
  In  answer to  Co-chair Pearce,  Mr. LoPatin  said that  the                 
  World Trade Center's inability to attract new businesses and                 
  their lack of success was due  to location and an inadequate                 
  facility.  He felt the World Trade Center needed to be first                 
  class  with  meeting  and  conference  space at  a  downtown                 
  location.                                                                    
                                                                               
  In  answer to Co-chair Frank, Mr. LoPatin said that expenses                 
  on this kind of facility available for debt service would be                 
  about 75 percent of  the revenue, and $14M would  go towards                 
  operating,  maintenance,  and capital  improvement expenses.                 
  In answer  to Co-chair Frank, Mr. LoPatin  agreed that $3.5M                 
  would be available to  service debt.  In answer  to Co-chair                 
  Frank's  question  regarding  projected  debt  service,  Mr.                 
  LoPatin said that  the project  was about  300 basis  points                 
  above matching treasuries,  placing the  project at about  8                 
  and half to 9 percent.                                                       
                                                                               
  BOB  LERESCHE, LeResche  & Co.,  Juneau,  via teleconference                 
  from Anchorage,  added that it would be  3 to 4 points about                 
  treasuries, putting the project at about 9 to 10 percent and                 
  debt service would  be pushing that suggested  $3.5M figure.                 
  Co-chair  Frank said  that $55M  times 10  percent would  be                 
  $5.5M.  Mr. LeResche  said that bonds would not be  sold for                 
  the entire $55M.   In answer to Co-chair Frank,  Mr. LoPatin                 
  agreed that his  company would provide equity of  roughly 40                 
  percent or  $20M cash.  Mr.  LoPatin said that  today it was                 
  not possible to borrow  $55M or any amount of  money without                 
  putting in some equity.  Co-chair Frank said that 40 percent                 
  equity  seemed  high.   Mr.  LoPatin  argued that  25  to 33                 
  percent was a  standard cash  equity requirement needed  for                 
  any financing.                                                               
                                                                               
  Co-chair  Frank  asked  Mr.  LoPatin  what return  on  their                 
  investment was expected on the $20M.   Mr. LoPatin said that                 
  he could not give  the committee an answer to  that question                 
  but his company was as demanding as a bank on their expected                 
  return.  He said they were not doing this not to make money,                 
  and five, six, seven  or eight percent would not  make money                 
  for them.  Co-chair  Frank said that the proposed  $3.5M, to                 
  cover interest and a little principle, would leave no return                 
  on their investment at all.  He then asked if  the Discovery                 
  Center was a "lost leader" for the hotels.  Mr. LoPatin said                 
  that some of  that would be factored into the return but was                 
                                                                               
                                                                               
  not able to  give them an  answer as  to the exact  expected                 
  percentage  of  return  on their  investment.    Mr. LoPatin                 
  maintained that the Discovery Center would have  to stand on                 
  its own,  and would  not be  treated as a  throw-away, or  a                 
  break-even  facility.   The  other  element that  would help                 
  bring  some  of the  numbers  down  was the  expectation  of                 
  sponsorship grants of  $5M to  $8M.  In  answer to  Co-chair                 
  Frank, he  said tour  or communications  companies might  be                 
  possible sources for grants.                                                 
                                                                               
  Senator Kelly noted that  many changes had been made  in the                 
  Labor and Commerce substitute of  SB 338 including requiring                 
  a feasibility study to be done by the railroad,  paid for by                 
  the  LoPatin  Developers,   and  a   full  performance   and                 
  completion bond  by LoPatin payable  to the railroad  if the                 
  Center was not completed.  Senator Kelly went on to speak to                 
  financing.  He said  the bill was structured so  there would                 
  be no faith and credit or moral obligation from the state of                 
  Alaska, Alaska Railroad Corporation,  or the municipality of                 
  Anchorage on  this project.   That  exact language  would be                 
  placed on the face  of the tax-exempt bonds.   Senator Kelly                 
  called them  "junk bonds"  and  Mr. LoPatin  used the  words                 
  "high-yield."    Senator  Kelly admitted  that  there  was a                 
  demand for  tax-exempt bonds.   He  felt that  the state  or                 
  Anchorage would not be liable, and voiced his support of the                 
  downtown project.                                                            
                                                                               
  Co-chair  Pearce  asked  for  confirmation that  the  Alaska                 
  Railroad Corporation would  have no  equity in the  project.                 
  Mr. LoPatin agreed that it would not.  Mr. LoPatin asked Mr.                 
  Wohlforth  to  respond  to  the   railroad  or  the  state's                 
  obligation  to pay  as  well as  the  railroad's ability  to                 
  borrow additional moneys for railroad purposes.                              
                                                                               
  ERIC WOHLFORTH,  Wohlforth  Argetsinger  Johnson  &  Brecht,                 
  attorneys,  via teleconference  from Anchorage,  agreed that                 
  the language of SB  338 made it absolutely clear  that there                 
  was no railroad  liability for the Discovery  Center's bonds                 
  or debt.   The  offering documents  would contain  bold-face                 
  print to that effect.  He confirmed that everything had been                 
  done so far to exclude Railroad liability for the debt.   As                 
  far  as the  basic railroad  statute was  drafted, the  only                 
  ability of the Railroad to borrow  for any purpose, recourse                 
  or  non-recourse, was with  legislative permission  and that                 
  was what was sought with SB 338  for bonds for the Discovery                 
  Center.  The  legislature would  have to act  to permit  any                 
  further  borrowing  for  major capital  purposes  such  as a                 
  development like this.                                                       
                                                                               
  Mr. LoPatin said that in terms  of federal law, the Railroad                 
  still  had the  ability  to borrow  tax-exempt  money.   Mr.                 
  Wohlforth  said   that  what  inhibits  the   Railroad  from                 
  borrowing  was the lack of legislative  permission to do so.                 
  Federal  law  had survived  several  major revisions  of the                 
                                                                               
                                                                               
  income tax code.  The railroad  still continued to have this                 
  unique provision  to  borrow tax-exempt  money  for  private                 
  purposes which was essentially wiped out for other borrowers                 
  in the 1986 reform bill.                                                     
                                                                               
  Senator Jacko asked how the legislature could approve a $55M                 
  authorization and still have no moral or legal obligation to                 
  the state.  Mr. LoPatin reiterated that federal law gave the                 
  Railroad the unique  ability to sell tax-exempt bonds  for a                 
  private purpose.  The Alaska  legislature had restricted how                 
  the Railroad  can use  that distinct  ability.   As to  this                 
  project, the bonds were not general obligation  bonds.  They                 
  would not in  any way impinge  on the Railroad's ability  to                 
  act like a  railroad.  The bonds would  only be supported by                 
  and backed  by the  revenues from  this facility.   If  this                 
  facility failed, the  Railroad, the state, or  the Anchorage                 
  municipality, would in no way be  effected.  The bonds would                 
  specifically say  that the  bonds were  high-risk, and  this                 
  facility was sole  collateral for repayment of  those bonds.                 
  Mr.  LoPatin reiterated  that there  was no  moral or  legal                 
  obligation to the Railroad, state, or municipality.                          
                                                                               
  Senator Jacko asked at what point the 65 percent penetration                 
  of  700,000  visitors would  be  achieved after  the opening                 
  date.  Mr.  LoPatin corrected the  projection to 60  percent                 
  and proposed those  levels of penetration would  be achieved                 
  in three to four years.                                                      
                                                                               
  In answer to  Senator Jacko, Mr. LoPatin  explained that the                 
  "salmon center"  referred  to on  page 19  of the  Economics                 
  Research Associates handout dated  April 1992 (Attachment B,                 
  copy on file) was a Juneau hatchery and was being used as an                 
  example of visitor  penetration.  Mr. LoPatin  said that the                 
  Discovery Center would  act as a  marketing tool for all  of                 
  Alaska and could market salmon.                                              
                                                                               
  Senator  Jacko  asked   if  this  was  the  first  time  the                 
  legislature had authorized "junk bonds."  Senator Kelly said                 
  that "junk bonds" was his term  because he himself would not                 
  invest in them because  of lack of collateral.   He believed                 
  other people would be willing to  take the chance and invest                 
  in  this facility.  Senator  Kelly said he  was not aware of                 
  the legislature ever before authorizing  these kind of bonds                 
  through the railroad.                                                        
                                                                               
  End SFC-94 #43,                                                              
  Begin SFC-94 #43, Side 2                                                     
                                                                               
  Mr. LeResche noted that  this was unique today but  prior to                 
  the 1986 Tax Reform  Act, AIDEA sold billions of  dollars of                 
  high-yield bonds secured  only by project revenues.   People                 
  around the country  also sold billions  of dollars worth  of                 
  these kinds of  bonds.   There were still  some in  people's                 
  ownership and a demand probably existed for these high-yield                 
                                                                               
                                                                               
  municipal bonds.  It was not a new concept, but this type of                 
  bond had survived the 1986 Tax Reform Act.                                   
                                                                               
  Co-chair Frank asked  if there was  any dollar limit to  the                 
  number of bonds that could be  issued by the Alaska Railroad                 
  Corporation.    Mr.  Wohlforth  said   the  only  limit  was                 
  legislative approval.   Co-chair Frank  asked what  pay-back                 
  terms would be  on the bonds.   Mr. LeResche  said that  the                 
  term  for the bonds would be as long as possible, perhaps 20                 
  years.                                                                       
                                                                               
  Co-chair Frank asked for other examples of projects financed                 
  prior  to  1986 through  stand-alone  AIDEA financing  where                 
  there  would  be no  moral  obligation  to the  state.   Mr.                 
  Wohlford listed  Alaska Airlines, Alaska  Pipeline (M-Star),                 
  Louisiana  Pacific,  American   President  Line's  dock   at                 
  Unalaska, as examples  of companies  that had issued  bonds.                 
  In  answer  to  Co-chair  Frank,   Mr.  Wohlford  said  that                 
  typically, general  obligation bonds were issued  by private                 
  companies.    Co-chair  Frank,  referring   to  one  of  his                 
  examples,  asked  if  it  would  have  been  termed  "Alaska                 
  Airlines full faith and credit."  Mr. Wohlford agreed.                       
                                                                               
  Co-chair Frank asked  what was envisioned for  this project.                 
  Mr. Wohlford said  that he  did not know  what the  ultimate                 
  financing would be.  It would  be project financing and that                 
  would  be  where   the  parties  would  look   for  ultimate                 
  repayment.  Mr.  LeResche said other  bonds had been  issued                 
  that  did  not  remotely  include  anyone's full  faith  and                 
  credit.    For  example,  several  native   corporations  in                 
  southeast built a  dock at Klawock  with $12M-$14M worth  of                 
  AIDEA project bonds.  At the Energy Authority, $30-35M worth                 
  of conduit  bonds were sold  for the Solana  Energy Project.                 
  Co-chair  Frank  asked if  LoPatin  & Co.'s  full  faith and                 
  credit would  be put up  for the bonds.   Mr.  Wohlford said                 
  that if  the bonds  were enhanced  by an  outside letter  of                 
  credit bank, or  bond insurance, those entities would tie up                 
  every full faith and  credit of LoPatin & Co.'s  assets that                 
  they could to provide a letter of credit.  In answer  to Co-                 
  chair  Frank, Mr.  Wohlford said it  was not  appropriate to                 
  discuss this  with LoPatin & Co. until the feasibility study                 
  for the bond market was complete.                                            
                                                                               
  Co-chair  Frank asked  Mr.  Wohlford if  he  thought it  was                 
  proper  for  the legislature  to  authorize this  before the                 
  feasibility study was complete and terms and conditions were                 
  still unknown.  Mr. Wohlford said  that this bill included a                 
  requirement for  a feasibility  study, and  the bond  market                 
  would absolutely require it.  He  felt Mr. LoPatin would not                 
  want to complete a feasibility  study without assurance that                 
  if the  study came out  positively, the Railroad  would have                 
  the authority to sell the bonds.  Senator Kelly noted that a                 
  feasibility  study had  been  done but  the problem  was Mr.                 
  LoPatin's company  contracted it  making it  unacceptable to                 
                                                                               
                                                                               
  the bond market  (some parts of  it are found in  Attachment                 
  B).  He  pointed out  that this feasibility  study had  said                 
  that the Discovery Center would be feasible and that was why                 
  LoPatin  &  Co.  was  in  support  of  the  Discovery Center                 
  project.  The feasibility  study needed for the bond  market                 
  would have  to be  done and the  cost would  be paid  for by                 
  LoPatin & Co.                                                                
                                                                               
  Mr.  LoPatin  explained  the  process  that was  to  follow.                 
  Before the sale  of bonds, a detailed feasibility study must                 
  be completed  with performas including  capital construction                 
  contracts and budgets.  Once  that happens, the bond  market                 
  would know  what the facility would cost,  and its revenues,                 
  as best projected, so  that an amount  could be set for  the                 
  sale  of  bonds.    For  all  this  to  happen,  legislative                 
  authority had to be  in place first.  Moving this bill would                 
  not  guarantee that  this  facility would  be built.   Other                 
  steps would have to happen, but this was the first step.  It                 
  could  not proceed without it.   Senator Kelly remarked that                 
  the Anchorage  municipality's approval  had  been the  first                 
  step and  $5.5M had  been put  into the  Ship Creek  landing                 
  project a few years ago.                                                     
                                                                               
  Co-chair Pearce  announced that SB  338 would be  HELD until                 
  March 16, 1994, 9:00 a.m.   At that time SB 316, SB 321, and                 
  SB 148 would also be heard.  She hoped SB 190 would be heard                 
  March 17, 1994.                                                              
                                                                               
  SCHEDULED BUT NOT HEARD:                                                     
                                                                               
  CS FOR SENATE BILL NO. 148(TRA):                                             
                                                                               
       An Act relating to legislative approval of certain acts                 
       of the Alaska Railroad Corporation; taxation of certain                 
       property of the Alaska Railroad Corporation; members of                 
       the board  and chief  executive officer  of the  Alaska                 
       Railroad  Corporation;   meetings  of   the  board   of                 
       directors  of  the  Alaska  Railroad  Corporation;  and                 
       providing for an effective date.                                        
                                                                               
  CS FOR SENATE BILL NO. 316(RES):                                             
                                                                               
       An Act relating to commercial fishing penalties.                        
                                                                               
  CS FOR SENATE BILL NO. 321(JUD):                                             
                                                                               
       An  Act  relating to  the taking  of  a legible  set of                 
       fingerprints  when a person  is arrested,  upon initial                 
       appearance or  arraignment, upon the conviction  of the                 
       person,  and  when   the  person   is  received  at   a                 
       correctional facility,  and providing  that the  set of                 
                                                                               
                                                                               
       fingerprints  shall be  provided to  the  Department of                 
       Public  Safety; relating to  criminal and crime records                 
       and information; requiring the reporting of information                 
       concerning homicides, suspected homicides,  and violent                 
       sexual assaults to the Department  of Public Safety for                 
       analysis;  requiring the Department of Public Safety to                 
       participate  in  the Federal  Bureau  of Investigation,                 
       Violent Crimes Apprehension Program.                                    
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:10 a.m.                        

Document Name Date/Time Subjects