Legislature(1995 - 1996)
04/27/1995 03:05 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 27, 1995 3:05 p.m. TAPES SFC-95, #48, Side 1 (291-end) SFC-95, #48, Side 2 (575-end) SFC-95, #50, Side 1 (000-end) SFC-95, #50, Side 2 (575-end) SFC-95, #52, Side 1 (000-end) SFC-95, #52, Side 2 (575-220) CALL TO ORDER Senator Rick Halford, Co-chairman, convened the meeting at approximately 3:05 p.m. PRESENT In addition to Co-chairman Halford, Senators Donley, Sharp, and Zharoff were present. Senator Phillips arrived soon after the meeting began, and Senator Rieger arrived as it was in progress. Co-chairman Frank attended portions of the meeting. ALSO ATTENDING: Senate President Drue Pearce; Dale Collins, Southeast Alaska Pilots Association, and member, Board of Marine Pilots; Kate Tesar, Alaska Coastwise Pilots; Paul Fuhs, Southwest Alaska Pilots Association; Eric Eliasson, President, Southwest Pilots and Alaska Pilots Alliance; Ginny Faye, Prince William Sound, RCAC; Bruce Weyhrauch, Southeast Pilots Association; Joe Kyle, Alaska Steamship Association; Captain Michael O'Hara, Pilot from Southwest Alaska and member, Board of Marine Pilots; Dan Twohig, Coordinator, Board of Marine Pilots, Dept. of Commerce and Economic Development; Glenda Straube, Director, Child Support Enforcement Division, Dept. of Revenue; Juanita Hensley, Chief, Driver Services, Dept. of Public Safety; Ron King, Dept. of Environmental Conservation; and aides to committee members and other members of the legislature. SUMMARY INFORMATION SB 28 - MOTOR VEHICLE REG FEE/EMISS'N INSPECTIONS Discussion was had with Ron King and Juanita Hensley. Amendment No. 1, by Senator Sharp, was adopted. Amendment No. 2, by Senator Donley, removing fee provisions (Secs. 1, 4, 5, and 6) and returning Sec. 3 language to status quo statutory language (including a conforming amendment to wording in Amendment No. 1) was adopted. CSSB 28 (Fin) was REPORTED OUT of committee with a $250.0 fiscal note from the Dept. of Environmental Conservation and a revised, $58.8, note from the Dept. of Public Safety. SB 116 - PATERNITY; CHILD SUPPORT ENFORCEMENT Discussion was had with Glenda Straube. The bill was subsequently HELD in committee for additional review. SB 130 - MARINE PILOTS Lengthy discussion was had with Senator Pearce, representatives of pilot associations, and other interested parties. Amendment No. 1, by Senator Sharp, was moved by Senator Phillips and adopted. Amendment No. 2 failed. The bill was then held in committee for further review. SENATE BILL NO. 130 An Act relating to marine pilots and the Board of Marine Pilots; extending the termination date of the Board of Marine Pilots; and providing for an effective date. Co-chair Halford directed that SB 130 again be brought on for discussion. Citing tramper shipping into Chignik and Larson Bay as examples, Senator Zharoff attested to problems with arrangements in coastal areas whereby a different pilot is needed for adjoining ports. DALE COLLINS, Southeast Alaska Pilots Association, acknowledged that in many cases two pilots are needed when the regional line is drawn between ports. He stressed that in creating the regions, the intent was not to place undue economic pressure on any one region or port. For pilots, the intent was that they have a large enough region to make a living. Mr. Collins noted that the standards are set by the federal government rather than the state. He said that using a pilot to overlap between the two regions can be addressed by the Board of Marine Pilots. If industry or the pilots can demonstrate an economic hardship, the board can work with the communities. The purpose of established regions is to keep pilots from bouncing from one area of the state to another. There was considerable discussion about buffer zones or inter-regional zones. Mr. Collins defended the Board of Marine Pilots action in creation of regional zones that take both safety and economic considerations into account. Kate Tesar, Alaska Coastwise Pilots from Ketchikan, next spoke before committee, voicing wholehearted support for the legislation. She associated her comments with earlier remarks made by Senator Pearce and expressed hope that proposed changes to the rewrite in 1991 would eliminate many of the problems and lessen the chance of litigation. Referencing provisions for dispute resolution or mediation, Ms. Tesar advised that ACP has incorporated similar provisions into many of its contracts. Speaking to a tariff, Ms. Tesar said that the group she represents is pleased with the way things are going since the maximum tariff was sunset last year. She advised that if a tariff is going to be discussed as part of the proposed bill, the ACP would support a maximum tariff over a fixed tariff. The ACP supports competition. The group is neutral on cross regionalization. Paul Fuhs, representing the Southwest Pilot Association, testified in support of the legislation in its current form. He attested to need to ensure safety in large geographical areas with dynamically changing water and shoal conditions. He noted that the U.S. Coast Guard can go anywhere in the state, but it often checks with local pilots prior to proceeding. Necessary information and local knowledged is provided to the Coast Guard without cost. He acknowledged industry testimony expressing a preference for binding arbitration first, or a maximum tariff, and cross regionalization only as a last resort. The reason for that is practical problems associated with cross regionalization in terms of having a central dispatch station. Industry does not want to call 30 different pilots in a region to get a dispatch. Mr. Fuhs asked how a tariff could be set if service is broken up by cross regionalization. He next addressed support for the apprenticeship program and spoke to a willingness to take on more pilots and welcome people into piloting. The apprenticeship will enable trainees to commit to the program and a particular region. Pilot groups are also making a commitment to them. He noted that every year, Alaska's congressional delegation gets two appointments to the Maritime Academy. That represents a good beginning for those who seek to become pilots. Speaking to actual training, Mr. Fuhs noted that there is no school. Training occurs aboard various ships, including foreign vessels. It involves not only local knowledge but ship handling as well. Eric Eliasson, President of the Southwest Pilots, and Chairman of the Alaska State Pilots Alliance, next testified. He voiced support for the bill as presently written, explaining that the Alliance was responsible for drafting the legislation. He acknowledged discussion of cross regionalization and a possible amendment relating thereto and expressed strong opposition. Mr. Eliasson advised that in region 2, over 50% of the income comes from Valdez. The tariff in Valdez is approximately 80% higher than other ports such as Kodiak or Seward. Service to Valdez, in effect, subsidizes outport work. He related past experience and stressed need for pilots to serve only one area. Speaking to regional borders, Mr. Eliasson noted that until 1991, regions 2 and 3 were one region. Region 2 pilots realized they were unable to service the entire area. With the help of the Marine Pilot Board, it was split into two regions. Mr. Eliasson acknowledged talk of four, non-resident individuals who broke away from the original region 2 who are supportive of cross regionalization. Existing pilot groups consist of all except four pilots in the state. None of the groups are proposing cross regionalization. Only those four pilots support the idea. Mr. Eliasson next expressed concern regarding training, citing both safety and economics. He voiced reluctance to take on new trainees when the future appears so uncertain. The Southwest Pilots' Association is totally opposed to cross regionalization. The group does not oppose a maximum tariff or dispute resolution. Senator Zharoff proposed the following language change: the Board shall provide for overlapping regions when it is in the best interest of local communities. as a means of dealing with adjoining ports which fall in different regions. Mr. Eliasson explained that trampers often take on 50 tons of frozen fish at Larson Bay and then proceed to Port Bailey and on to Seward. He acknowledged questions concerning an appropriate cut-off line as pilots take vessels from community to community. Overlapping regions, however, would not solve the problem. The border would merely shift. Mr. Fuhs interjected that communities are not paying more because of need for more than one pilot. Due to cost sharing between the pilot groups, they are not charging more. In response to a question from Co-chairman Halford, Mr. Eliasson advised of three pilots who sought to corner the lucrative piloting service to Valdez and purchased homes in that community. The attempt represents an example of cherry picking. The cost of bringing a tanker into Valdez is $1300. The cost into Kodiak is $500-$600. Approximately 600 ships go into Valdez each year, whereas the number into Kodiak is relatively few. If outports do not require servicing (which they do now, because they are within a region served by a specific association) pilots will pick a port that is lucrative economically. To induce pilots to go to Kodiak, the tariff would have to be raised. The three above-mentioned pilots who purchased homes in Valdez sought to position themselves for the oil shippers. They wanted to be full-time employees available to the oil companies on demand. The problem then is that pilots would not go to the outports. Smaller communities will be hurt if economics alone drives service. They are not big centers of commerce. They are often production points, with annual fish pickups. Co-chair Halford inquired regarding currency requirement for taking tankers into Valdez? Mr. Eliasson advised of 60 days per year. The association has four people, on a rotating basis. Co-chairman Halford noted that the tariff out of Valdez is part of the cost of Alaskan oil. Ginny Faye, representing the Prince William Sound Regional Citizen's Advisory Council, located in Valdez, next came before committee. She attested to considerable concern regarding traffic in and out of Valdez. The membership is acutely aware of what happens when there is a change in marine pilotage. The Council questions whether the competitive model is the safest way to operate. It focuses attention on economic as opposed to safety issues. The Council's only concern is safety. Ms. Faye voiced opposition to cross regionalization. She expressed concern that if it were allowed, when the cruise ship season ends in Southeast and fishing ends in Southwest, pilots from those regions would begin to compete with pilots in Valdez. She questioned whether the state should encourage competition among pilots. Senator Rieger asked if cross regionalization would give the right to the lower bidder to pilot in the most desirable area? Ms. Faye responded that according to her understanding of the amendment, a licensed pilot could take the necessary trips to have a license in another region. Under "port-specific" licensing, considering the dynamics of the Alaska landscape, it seems unlikely a pilot could ever have enough experience to cover two whole regions. The tendency would be to go after the lucrative ports in a region. She reiterated concern that such pilots would underbid local Valdez pilots. There was considerable further discussion regarding this point. Ms. Faye stressed that a pilot who spends much time operating in a specific region would be a safer pilot. Co-chairman Halford suggested that licensing for a specific port would provide the maximum safety. Ms. Faye concurred that that would be the safest if Alaska had many pilots and much more shipping activity. That is not the case. She expressed support for division of the initial region 2 into two separate regions, and again stressed that cross regionalization would move further away from safety by allowing a pilot to operate in more than one region. Senator Pearce advised that 18 pilots are presently licensed to bring tankers into and out of the port of Valdez. Cross regionalization was examined in 1991, and statutes created a system that would provide for overlapping. The board has chosen not to incorporate that system for good safety reasons. Since 1991, the industry, particularly the cruise ship industry, has wanted cross regionalization. The intent was to use the same pilot coming across the gulf of Alaska and in and out of Prince William Sound and Cook Inlet. There is now more cruise ship trade in Cook Inlet than in 1991, and more ships are coming in the future. Pilots in Prince William Sound and Cook Inlet all know each other. They work together every day. They provide pilotage 365 days a year no matter what the weather. Cruise ships and their captains only come into those waters for a short period of time in the summer. Pilots who work together know and understand how each one works, and that knowledge prevents an incident from happening. The board has continued to avoid cross regionalization. There have been numerous litigations. Every action the board has taken over the past four years has ended up in court. The situation became so heated that a board member from Sitka was threatened and ended up resigning his seat because he did not vote the way industry wanted him to vote. If the legislature allows cross regionalization, pressure from industry will become incredibly intense. That is the kind of heavy handedness the board has been dealing with. Senator Pearce suggested that present language providing for "emergency allowances" would take care of the problem. Bruce Weyhrauch, representing the Southeast Pilot Association, next came before committee to speak in opposition to a proposed amendment relating to the handling of disputes and to present an alternative therefor. He explained that under the amendment, when parties go to mediation, the state requires the cost of the mediator to be borne equally by the parties. If the parties cannot reach an agreement over the price of the pilot service, the issue goes to Superior Court. The Superior Court then appoints an arbitrator. If the arbitrator reaches a decision, it can be appealed to the Superior Court, and the ruling by that court can be appealed to the Supreme Court. Eventually, someone will fix the amount of that pilot's service. The process is lengthy and cumbersome. In essence, the amendment does not fix the problem. The state does not want to fix the tariff because it wants an arbitrator and mediator to decide. Mr. Weyhrauch suggested that the tariff must be fixed or a tariff and competitive pilotage should be imposed. Co-chair Halford inquired concerning a maximum tariff. Mr. Weyhrauch said it would not help. He stressed it would promote price collusion, between competitors, to charge the maximum. The competitive system invokes anti-trust laws, and competitors are subject to those laws. A maximum tariff only works where there is no competition, but the legislature wants to promote competition. Joe Kyle, representing the Alaska Steamship Association, stated that the membership pays for pilotage in Southeast and the Gulf of Alaska. The Association is supportive of the amendment because, as customers, they foresee a problem if there is not something in the act that provides for dispute resolution when shippers and pilots cannot agree on price. Mr. Kyle reiterated his prior comment that the number of pilots has decreased at the same time that traffic has increased. Industry is faced with pilotage that barely meets demand. Considerable discussion of this point followed. Mr. Kyle said the Association is looking for a rational, methodical way to settle disputes so that commerce moves with state licensed pilots aboard. Mr. Kyle suggested that the proposed bill had consumed much legislative time on behalf of 68 pilots. He then attested to difficulties associated with attempts to include dispute resolution such as binding arbitration, money placed in trust, trial mediation, etc., in the bill. Senator Pearce advised that the pilots did not work against binding arbitration. She said she was the one who would not include binding arbitration in the bill. She attested to working with other legislators to keep it out. She suggested that Mr. Kyle was mischaracterizing what happened in negotiations. Further lengthy discussion followed regarding proposed amendment no 1. End : Tape SFC-95, #48, Side 2 Begin: Tape SFC-95, #50, Side 1 Captain Michael O'Hara, Member of the Board of Marine Pilots and a Pilot in region 2, voiced support for the bill as written. He advised that he does not support cross regionalization, but would like to see some way of resolving disputes. Senator Zharoff asked where the maritime academies are located. Captain O'Hara advised of five in the United States. Two in New York, and one in Maine, Texas, and California. The Marine Pilots Association has discussed sponsoring a student in an academy. The institutions are four-year colleges offering a B.S. degree in nautical science or engineering and a license to work as a junior mate on a ship. That is one way to accomplish the apprenticeship program. Senator Zharoff suggested that it is ultimately too difficult for Alaskans to enter the program. Captain O'Hara advised of six trainees in his organization. He also noted that the cost of a pilot license increased from $800 to $3500. Many non-active pilots resigned because they did not want to pay the higher licensing fee. The fee was raised because of all the litigation. The loss amounted to 15-20 pilots. Captain O'Hara said that the basic criteria for licensing is need to obtain a federal license. The only way to achieve federal licensing is by working on boats or ships. The Coast Guard license is the initial criteria for obtaining a state license. The apprenticeship program incorporated within legislation now before committee is five years. The board, along with the marine pilot coordinator, would design a system whereby a candidate could become a pilot. Co-chairman Halford inquired concerning litigation giving rise to the increased licensing fee. Captain O'Hara advised that the board is winning cases. Payments for legal services have been made to the Dept. of Law. Discussion followed between Captain O'Hara and Co-chairman Halford regarding currency requirements for a specific port. Captain O'Hara advised of 60 days per region. He added that the proposed bill would increase it to 120 days within the biennial license renewal period. There was further discussion of present law and the dispatching of pilots to ports to which they rarely go. Co-chairman Halford suggested use of currency requirements as a hedge against arguments in opposition to cross regionalization. Captain O'Hara advised that a pilot organization would not dispatch a pilot to a port he has not been to for some length of time. Senator Rieger asked Captain O'Hara to comment on pressures placed upon the board and where they are coming from. Captain O'Hara advised of a board members in Sitka who operates a charter fishing company. He was economically threatened by the cruise ship industry and resigned. He had received a letter from a steamship company that told him he would not be on their approved list. The threat was a result of his not voting the way they wanted him to vote with regard to tariffs. In response to a question from Senator Rieger, Captain O'Hara said that present law allows for cross regionalization when it is "in the best interest of the state". The proposed bill gives an adequate definition of the "best interest of the state". Speaking to the apprenticeship program, Captain O'Hara said that if he were to set it up, it would be a regional concept. The regions are significantly different. Anchorage has ice and extreme tides; Kodiak has high tides; Larsen Bay is very difficult with both a high current and high tides. The program should design an apprenticeship which meets the needs of the individual region. As an example, the Kuskokwim has only small tugs and Japanese trampers. An apprentice would have to ride five years. He noted that the Kuskokwim is only navigable three months a year when it is ice free. That would necessitate a 15-month training program. During the time that the pilot is not on the Kuskokwim, he or she would be in another region or another part of the world, training, watching, and doing a job until the Kuskokwim is again open. In region 2, the five-year program would include riding the cruise ships and tankers. Maritime schools are available, and the program could be written to include the school. There was some discussion regarding qualifying for the various areas. In the future, regions will be sliced smaller. Regions are now so large that it is impossible to gain proficiency in more than one region. Co-chairman Halford asked if lack of multiple region licensing is a restriction on Alaskans. He asked if it is possible for a non-Alaskan to be licensed in another state and in a region in Alaska as well. Dan Twohig, Coordinator, Board of Marine Pilots, Dept. of Commerce and Economic Development, noted that state law requires federal licensing before seeking state endorsement for a region. Federal pilotage endorsements are relatively common in the maritime industry. That licensing allows for licensing anywhere in the country. Senator Donley questioned whether non-Alaskans hold licensing outside the state at the same time they are licensed to pilot a region in Alaska. Mr. Twohig stressed that the position of the department is that the purpose of the Marine Pilot Act of 1991 is to prevent the loss of lives and property in the protection of the marine environment of Alaska. State licensing standards are to ensure the very best possible pilots for Alaska. What non-resident pilots do in their off time, the Dept of Commerce and the State would consider their affair. Senator Pearce noted that a pilot in training is not paid. Most of them work on board other ships. She stated that statutes could require that, "people who have an Alaskan pilotage license cannot be licensed elsewhere." Co-chair Halford stressed that currency ought to be the concentration. Senator Pearce stated that the board sets the regulations. She stated that currency in Alaska is different than in other states. Mr. Twohig noted that current regulations require 60 days per calendar year. Some pilots are having a difficult time making the 60 days due to vessel movements and the rotation process. If a pilot does not achieve 60 days, he is required to conduct various familiarization trips into and out of the ports in his region before his license can be renewed. The proposed change is for 120 days over 2 years. The intent is to provide a 2-year span to gather the required days. Senator Zharoff expressed concern regarding whether the apprenticeship program will produce results. Senator Pearce suggested that it is incumbent upon Alaskans to decide to do what it takes to become a marine pilot. In response to an earlier question, Captain O'Hara said it would not be safe for one with pilotage knowledge in one region to select a port in another region for service as well. He reiterated that it would not be safe to hold both a license in region 3 and a license for Valdez. A pilot cannot come from Ketchikan or Dutch Harbor and work in the ice in Anchorage and only do so once or twice a year. It is not safe. The associations will not dispatch a pilot to Valdez, for example, if he only works a couple months a year. Pilots are on a regular rotation. They are there for two weeks out of five or six, then they go to Cook Inlet and work in the ice. Co-chair Halford suggested a scenario whereby one would pilot cruise ships all summer and tankers in the winter. Captain O'Hara said that licensing by vessel type does not exist, with the exception of a Very Large Crew Carrier (VLCC). VLCCs are different than all other ships. The board has determined that various ships can be learned, and what is important is the local knowledge and ship handling ability. Licensing is by region. That is true everywhere else in the country. At this point in the meeting, Co-chairman Halford directed that it be briefly recessed. RECESS: 5:10 P.M. RECONVENE: 5:35 P.M. Senator Phillips offered an amendment on dispute resolution. Senator Donley suggested that the current arrangement represents a monopoly and further suggested that there must be a way to bring finality. Co-chair Halford stated that the bill needs either a maximum tariff or an arbitration provision. He voiced his inclination to vote against the amendment at this time. Upon a show of hands, amendment no. 1 was ADOPTED on a vote of 4 to 3. End : Tape, SFC-95, #50, Side 1 Begin: Tape, SFC-95, #50, Side 2 Senator Rieger moved for adoption amendment no. 2, relating to board issue of a temporary license for a region other than the main region within which a pilot is licensed. He then offered an amendment to the amendment which would insert the word, "certain" in front of the word "vessels" on line 20 of page 1 of the amendment. The Senator expressed concern that, absent the amendment, the proposed bill would create stringent law that excludes a very qualified person from doing the job. Co-chairman Halford expressed a preference for achieving a similar result through currency requirements. He then called for a show of hands on adoption of amendment no. 2. The amendment FAILED on a tie vote of 3 to 3. Senator Donley stated that the binding arbitration amendment and a maximum tariff are not inconsistent. They can both exist within the legislation. Co-chairman Halford voiced need to review provisions that were recently sunset and develop a "safety valve." He directed that the bill be held for further study. SENATE BILL NO. 116 An Act relating to administrative establishment of paternity and establishing paternity by affidavit; relating to child support enforcement; and providing for an effective date. Co-chairman Halford directed that SB 116 be brought on for discussion and noted that it was sponsored by the Governor and previously heard by both the Senate Health, Education, and Social Services Committee and the Senate Judiciary Committee. It received predominantly "do pass" recommendations in both prior committees. Glenda Straube, Director, Child Support Enforcement Division, Dept. of Revenue, testified that the bill allows for administrative establishment of paternity. New federal guidelines require that 75% of all child support audits be established within six months. Paternity must first be established before a child support order may issue. Court backlogs are taking up to six months to approve paternity work. The bill would allow administrative paternity under the same standards used by the court system. Paternity is established either by voluntary acknowledgement or genetic testing showing a 95% or greater chance of paternity. Due process assurances would remain in place. The process would allow for informal and formal conferences and appeal to the courts. For an annual investment of approximately $73.0, the proposed bill would allow the division to bring in $850.0 per year in AFDC reimbursements alone. The division cannot, at this time, comply with federal guidelines when the courts are taking up to 6 months to sign off on paternity. Time needs to be shaved off the process. The proposed bill would cure the problem, decrease the general backlog in the court system, and reduce Dept of Law time in preparing for court cases. Ms. Straube next addressed problems which arise in situations wherein both the wife and husband state that the husband is not the father, and a third party acknowledges paternity. The State cannot, at this time, accept that knowledge without going to court. The proposed bill would allow for acceptance of an affidavit from all three parties acknowledging who the father is. That will avoid the expense of delay in filing a paternity action. Co-chairman Halford posed a questioned regarding genetic testing. He asked if the blood test is evaluated in the probability that 95% means for sure one is the father? Ms. Straube responded that most test results are in the 98%-99% range. Statutes specify 95% since that is the percentage used by the court system. If a father wants to contest the validity of fatherhood, he can go through the court process and have a blood test taken. Ms. Straube attested to past policy which did not allow for disestablish of paternity unless paternity is established for a third party. Ms. Straube reiterated that the purpose of the bill is to more quickly resolve cases by obtaining financial information and genetic testing. The effort is to reduce the process so it is more timely for all parties. In response to a question from Senator Rieger, Ms. Straube advised that child support enforcement consists of 170 positions with the intent of bringing 30 more on board. Senator Rieger proposed splitting the agency in half and calling it by two different names: Child Support Agency and Child Support Enforcement Agency. The Child Support Agency would handle child support orders until payments are in arrears. Once in arrears, the person would report to the Child Support Enforcement Agency. He advised that the suggestion stems from complaints from timely obligors who feel they have been handled like deadbeats. Ms. Straube indicated that the division is being reorganized so that a client is given one person and that person meets all his or her needs. There are two levels of employees in this field, one of which will be handling the payments. The division was able to effect this change without new statutory language. A question of safety was raised. Ms. Straube acknowledged a problem with safety and having to work behind bullet-proof glass. Senator Rieger asked if the division has the ability to do income withholding orders on non-custodial parents who are current on their child support payments (automatic withholding). End Tape SFC-95, #50, Side 2 Begin Tape SFC-95, #52, Side 1 There was considerable discussion regarding genetic testing and its use in determining paternity. Co-chairman Halford stressed need for availability of genetic testing to a man who has assumed the obligation of payment of support but subsequently has reason to believe he may not be the father of the child. It was determined that testimony from the Dept of Law was needed. Continued discussion regarding children who have been adopted and psychological parenting ensued. The bill was subsequently held in committee for further review. SENATE BILL NO. 28 An Act repealing an additional fee for motor vehicle registration not conducted by mail and limiting motor vehicle emissions inspection to once every two years. Co-chairman Halford directed that SB 28 next be brought on for discussion. Senator Donley explained that the purpose of the bill is two-fold. The first is change of the inspection and maintenance program for certification to a biennial rather than an annual basis. He asked that this section, only, be the one moved with the bill. Remaining sections within the bill are not interdependent and have generated increasing concern. Both the Dept. of Environmental Conservation and the division of motor vehicles have indicated support for the bill. With the additional jurisdictional capability, they believe they can sell biennial testing to the federal EPA. Alaska is the only state that does annual testing. California conducts biennial testing statewide. Movement to biennial testing would save Alaskans time and money. Co-chair Halford inquired regarding fines and fees within the bill. Senator Donley responded that the legislation increases the current $75 fine to $200. Ron King, Department of Environmental Conservation testified that the current fine is a class A misdemeanor for which a complaint must be filed in court. The fine can amount to $5.0 and one year in jail. The proposed change would make it a citation and not require court action. He stated that the Dept of Environmental Conservation has extended the vehicle inspection program to commuters to and from the Matanuska Valley and achieved 75% compliance. He said that 2,200 vehicles have been inspected. The division of motor vehicles reports that 2700 commute. Some are under investigation as class A misdemeanors. Juanita Hensley, Chief, Driver Services, Division of Motor Vehicles, Dept of Public Safety, said the bill would bring in $2.55 million in additional revenue. She explained that in 1994 the $10 fee was waived for 15% of 6,500 vehicles registered in the state. The additional revenue is derived from doing away with waiver of the $10 fee. The final source of new revenue would be new vehicles or out-of-state vehicles registered for the first time in Alaska. These vehicles would pay the increased fee because the original transaction involving a title cannot be done by mail. In 1994 there were approximately 140,000 registrations. This would generate $1.4 million in revenue. The total revenue from all these sources would be $2.5 million. Senator Rieger expressed support for giving a credit for registering by mail rather than a penalty for going into the division of motor vehicles to register. Co-chair Halford inquired concerning how to make the legislation revenue neutral. Ms. Hensley responded that the status quo would make it revenue neutral. Senator Sharp MOVED to adopt amendment no. 1. Ms. Hensley stated that in Anchorage people can register their cars at emission testing stations. One station in Anchorage is currently not charging the $10 fee. Approximately 150 registrations are processed daily through the stations. They process the work for the DMV, and if they collect the $10, they keep it. They have gone to the expense of putting in computers and hook ups to accomplish the work. The Legislative Budget and Audit Committee approved $100.0 to pay for the data processing charge-back and for required data storage. There was considerable discussion of extending the registration period to two years. Mr. King stated that the department has the ability to go to a two-year period. The department's intention has been to move to that time frame when possible. It is contingent upon Anchorage and Fairbanks attaining standards. He attested to recent changes in terms of reliability of automobiles, and noted that with the enforcement provisions in the proposed bill, the department can begin working on cases and achieving greater compliance. These items are key to EPA acceptance of the program change. The Clean Air Act will not allow the state to be less stringent. Mr. King reiterated that with increased enforcement and compliance and newer technology cars, the department can extend testing to a two-year period and make the argument that there is no decrease to the overall effectiveness of the program. Ms. Hensley noted that there are 631,000 vehicles registered in Alaska. She stated that deletion of sections 1,3,4,5, and 6 would render the bill revenue neutral and maintain the status quo. Emission program portions relating to biennial testing would remain in place. No objection being heard, amendment no. 1 was ADOPTED. Senator Donley MOVED to adopt the proposed amendment to render the bill revenue neutral by deleting sections 1,3,5, and 6, as well as a conforming amendment that sec. 3 reflect the statutory status quo. He also included need to insert the word "not" after the word "or" in amendment no. 1 to conform the earlier adopted amendment to changes proposed by amendment no. 2. Senator Rieger OBJECTED. He suggested that the bill could be made revenue neutral by not deleting language on page 2, lines 10, 11, and 12, which refers to allowing a waiver of the $10 fee for "a good cause based on criteria established in regulations by the department." It would keep the status quo but invert the fee structure eliminating the penalty and giving a credit instead. Ms. Hensley noted that Sections 10 and 11 should reflect new section numbers. The department would like to be given the capability to serve the public so that neither the public nor workers are burdened further. That was the initial reason for inclusion of the $10 fee in earlier legislation. Fiscal notes for both the Dept. of Public Safety and Dept. of Environmental Conservation are accurate. In response to a question from Co-chairman Halford, Ms. Hensley advised that the department is neutral on the amendment. Senator Rieger OBJECTED to the conforming amendment. He voiced support for maintaining the status quo but said there should be a credit for renewal by mail rather than a penalty for going to the DMV in person. He proposed an alternative way to make the bill revenue neutral by raising the $10 in the original base fee and eliminating the $10 surcharge. Ms. Hensley noted that the department has regulations for the waiver program under provisions of good cause. Co-chairman Halford called for a show of hands. Amendment No. 2 FAILED on a vote of 3 to 2 with 1 abstention. Senator Rieger MOVED to adopt status quo language relating to the waiver at page 2, lines 9, 10, 11, and 12. Co- chairman Halford called for a show of hands. The motion FAILED on a vote of 1-4. Senator Donley MOVED to rescind action in failing to adopt amendment no 2. With no debate, the committee voted 4 to 1 with 1 abstention to rescind its action on amendment no. 2. Senator Donley then MOVED for adoption of amendment no. 2. Co-chairman Halford called for a show of hands. Amendment no. 2 was ADOPTED on a vote of 4 to 2. Senator Sharp MOVED for passage of CSSB 28 (FIN) with individual recommendations and attached fiscal notes. Senator Rieger OBJECTED. On a vote of 5 to 1, CSSB 28 (FIN) was REPORTED OUT of committee with a revised $58.8 fiscal note from the Dept of Public Safety and a $250.0 note from the Dept of Environmental Conservation. Senators Donley and Sharp signed the committee report with a "do pass" recommendation. Co- chairman Halford and Senators Phillips, Rieger, and Zharoff signed "no recommendation." ADJOURNMENT The meeting was adjourned at approximately 7:20 p.m.