Legislature(1995 - 1996)

03/08/1996 09:15 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          8 March 1996                                         
                            9:15 A.M.                                          
  TAPES                                                                        
                                                                               
  SFC-96, #35, Sides 1 & 2                                                     
  SFC-96, #36, Side 1                                                          
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Rick Halford,  Co-chair,  convened  the meeting  at                 
  approximately 9:15 A.M.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  Co-chairman Halford  along with co-chairman  Frank, Senators                 
  Phillips, Sharp,  Donley and  Rieger were  present when  the                 
  meeting was convened.                                                        
                                                                               
  Also Attending: Senator Robin Taylor;  Tom Williams, aide to                 
  Senator  Steve  Frank;  Juanita  Hensley,  Chief  of  Driver                 
  Services, DMV, Department of Public  Safety; Nanci A. Jones,                 
  Director,  Permanent Fund  Dividend Division,  Department of                 
  Revenue;  Roger Poppe,  aide  to Representative  Pete  Kott;                 
  Dugan  Petty, Director  of General  Services, Department  of                 
  Administration; Wendy Redmond, Vice-President for University                 
  Relations,  University  of Alaska;  Sherman Ernouf,  aide to                 
  Senator Tim Kelly; Dan R.  Fauske, CEO/Executive Director of                 
  Alaska Housing  Finance Corporation, Department  of Revenue;                 
  Jetta   Whittaker,   Fiscal  Analyst,   Legislative  Finance                 
  Division; and aides to committee members.                                    
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  SPONSOR SUBSTITUTE FOR SENATE JOINT RESOLUTION NO. 14                        
  Proposing amendments  to the  Constitution of  the State  of                 
  Alaska relating  to confirmation  of appointments  of public                 
  members  who serve on  a board  or commission  involved with                 
  managing the assets of the Alaska permanent fund.                            
                                                                               
  Amendment  #1  was  MOVED  by  Senator Rieger  and  ADOPTED.                 
  Senator Phillips MOVED CSSSSJR 14(FIN) and without objection                 
  it was REPORTED OUT with individual recommendations and $2.2                 
  previous fiscal note from the Office of the Governor.                        
                                                                               
  SENATE BILL NO. 89                                                           
  "An Act  relating to the members  of the board  and staff of                 
  the Alaska Permanent Fund Corporation."                                      
                                                                               
  Amendments #1 & 2 were MOVED  by Senator Rieger and ADOPTED.                 
  Amendment  #3  was  MOVED  by  Senator Donley  and  ADOPTED.                 
  Senator  Rieger MOVED  SB  89 and  without objection  it was                 
  REPORTED OUT with individual recommendations and fiscal note                 
                                                                               
                                                                               
  of $31.5 thousand from the Department of Revenue.                            
                                                                               
  SENATE BILL NO. 226                                                          
  "An Act relating to biennial registration of motor vehicles;                 
  imposing biennial  registration fees  on motor  vehicles and                 
  authorizing  a  scheduled biennial  municipal  tax on  motor                 
  vehicles;  relating  to  fees  for motor  vehicle  emissions                 
  control programs; and providing for an effective date."                      
                                                                               
  Testimony  was given by Tom  Williams, aide to Senator Steve                 
  Frank  in  support of  SB 226.    Juanita Hensley,  Chief of                 
  Driver  Services,  DMV,  Department of  Public  Safety  also                 
  testified in support of the bill.  Amendment #1 was MOVED by                 
  Senator Frank and ADOPTED.   He later withdrew amendment #2.                 
  Senator  Donley  offered  a conceptual  amendment  which was                 
  ADOPTED.    Senator Frank  MOVED  CSSB 226(FIN)  and without                 
  objection   it    was   REPORTED    OUT   with    individual                 
  recommendations  and  fiscal  note  from  the  Department of                 
  Public Safety.                                                               
                                                                               
  SENATE BILL NO. 232                                                          
  "An Act relating  to permanent fund dividend  program notice                 
  requirements,  to   the  ineligibility   for  dividends   of                 
  individuals  convicted  of   felonies  or  incarcerated  for                 
  misdemeanors, and  to the  determination of  the number  and                 
  identity of  certain ineligible  individuals; and  providing                 
  for an effective date."                                                      
                                                                               
  Testimony was given  by Tom Williams, aide  to Senator Steve                 
  Frank in support of SB 232.  Nanci A. Jones, Director of the                 
  Permanent Fund Dividend Division,  Department of Revenue was                 
  also called  to testify.   Amendment  #1  was MOVED  Senator                 
  Frank and ADOPTED.   Senator Frank MOVED CSSB 232  (FIN) and                 
  without  objection  it  was  REPORTED  OUT  with  individual                 
  recommendations  and new fiscal notes in  the amount of zero                 
  from  the Department  of Law;  $2.4  from the  Department of                 
  Revenue;  $8.9  (change  in  revenues)  from   Student  Loan                 
  Operations,  Department   of  Revenue;     $68.7   from  the                 
  Department  of  Corrections;  $5.0  from  the  Department of                 
  Public  Safety;   zero  from  the  Alaska   State  Troopers,                 
  Department of  Public Safety;  and  an indeterminate  amount                 
  from CDVSA, Department of Public Safety.                                     
                                                                               
  SENATE BILL NO. 37                                                           
  "An Act relating  to treatment  of permanent fund  dividends                 
  for  purposes   of  determining   eligibility  for   certain                 
  benefits; and providing for an effective date."                              
                                                                               
  Co-chairman Halford said that SB 37 would be HELD OVER until                 
  next week's calendar.                                                        
                                                                               
  SENATE JOINT RESOLUTION NO. 32                                               
  Proposing amendments  to the  Constitution of  the State  of                 
  Alaska relating to the constitutional defense council.                       
                                                                               
                                                                               
  Senator  Robin  Taylor  testified  in  support  of  SJR  32.                 
  Senator Phillips MOVED SJR 32  and without objection it  was                 
  REPORTED OUT with  $2.2 fiscal note  from the Office of  the                 
  Governor.                                                                    
                                                                               
  HOUSE BILL NO. 419                                                           
  "An Act relating to the disposal of firearms  and ammunition                 
  by the state or a municipality."                                             
                                                                               
  Roger Poppe, aide  to Representative Pete Kott  testified in                 
  support of HB  419.   Mr. Dugan Petty,  Director of  General                 
  Services, Department of  Administration said that  they felt                 
  the  bill  was  unnecessary.   Senator  Phillips  MOVED CSHB                 
  419(STA)  and  without objection  it  was REPORTED  OUT with                 
  previous  fiscal  notes  of  $10.4  (revenue) Department  of                 
  Administration; zero from the Department of Public Safety.                   
                                                                               
  SENATE BILL NO. 163                                                          
  "An Act approving the University  of Alaska's plans to enter                 
  into long-term obligations  to borrow money from  the Alaska                 
  Housing Finance Corporation for  the acquisition of  student                 
  housing facilities; and providing for an effective date."                    
                                                                               
  Testimony was  given by  Wendy Redmond,  Vice President  for                 
  University Relations, University of Alaska; Sherman  Ernouf,                 
  aide  to Senator Tim Kelly; and Dan R. Fauske, CEO/Executive                 
  Director of Alaska  Housing  Finance Corporation, Department                 
  of Revenue.   Co-chairman  Halford HELD  SB 163  for further                 
  hearing.                                                                     
                                                                               
  SENATE BILL NO. 278                                                          
  "An  Act relating  to  the authority  of  the Department  of                 
  Natural Resources  to allow  credits against  fees at  state                 
  historical parks."                                                           
                                                                               
  Co-chairman Halford HELD SB 278 for further hearing.                         
                                                                               
  Senator  Phillips  introduced  Members  of  the  Legislative                 
  Assembly,  Yukon  Territory.   Co-chairman  Halford welcomed                 
  John Devries,  Speaker of  the  Legislative Assembly;  David                 
  Millar,  Deputy  Speaker of  the Legislative  Assembly, Lois                 
  Marie Moorcroft and  David Sloan, MLA, opposition;  and Esau                 
  Schafer from Old Crow.                                                       
                                                                               
                                                                               
       SPONSOR SUBSTITUTE FOR SENATE JOINT RESOLUTION NO. 14                   
                                                                               
       Proposing  amendments to the  Constitution of the State                 
  of   Alaska  relating  to  confirmation  of appointments  of                 
  public    members  who  serve  on  a  board  or   commission                 
  involved with  managing the  assets of the  Alaska permanent                 
                                                                               
                                                                               
  fund.                                                                        
                                                                               
  Co-chairman Halford said this was a constitutional amendment                 
  proposal that has gone from a generic version to a permanent                 
  fund only  version.   Senator Donley  proposed an  amendment                 
  that  adds  public  corporations and  then  allows  for that                 
  definition  to  be  essentially provided  by  statute  to be                 
  drafted as a  CS.  Senator  Rieger objected and referred  to                 
  the language  on line  15 of  the  amendment.   The way  the                 
  statutory definition  is drafted  it could  be construed  to                 
  pick  and  choose what  parts of  this  amendment are  to be                 
  applicable  to the  corporation, contort  the process,  give                 
  power to the board to appoint  an executive director that is                 
  not subject to  the approval of  the governor or some  other                 
  combination.  The  intent was  to decide which  corporations                 
  are in and which are out and if they  are in it is an all or                 
  nothing deal.  It is suggested  that the phrase "all or part                 
  of" be deleted  so that it just reads  "...the applicability                 
  of  this  section..." and  the  word "limit"  be  changed to                 
  "exclude" so  that it reads  "...the Legislature by  law may                 
  exclude  the  applicability   of  this  section...".     The                 
  presumption is  that if  it  is a  corporation that  manages                 
  assets it is in but a statutory definition may be created to                 
  carve corporations out.                                                      
                                                                               
  Senator   Donley  asked   if  the   interplay  between   the                 
  Legislature and the  executive branch regarding corporations                 
  might be  modified under  this rather  than just a  question                 
  whether to confirm or not?   Senator Rieger said the way  it                 
  is written it  is the applicability  of all or part  of this                 
  section.  It is  not all or part of  the corporation subject                 
  to this section.  The section has a lot of provisions in it.                 
  It is not only the confirmation, which this is aimed at, but                 
  it talks about whether their removal is provided for by law,                 
  whether they are citizens of the United States,  whether the                 
  confirmation  occurs  in  joint  session  or could  we  have                 
  confirmation in separate  sessions.  The  way it is  drafted                 
  one could pick and choose what parts of the section could be                 
  applied, corporation by corporation.   That goes beyond what                 
  the amendment was trying to do.                                              
                                                                               
                                                                               
  Senator  Donley   explained  that  with  regards  to  public                 
  corporations the Legislature has the authority to set up the                 
  parameters  of them by  statute because they  are created by                 
  statute.    All the  others  terms and  conditions,  such as                 
  should  the  governor be  allowed  to approve  the executive                 
  officer be removed or do the board members serve at the will                 
  of the governor, all  that can be set out in statute because                 
  they  are   not  constitutional  creatures  to  begin  with.                 
  Senator  Rieger said  the  actual constitutional  provisions                 
  regarding confirmation by the  Legislature could be modified                 
  by statute.                                                                  
                                                                               
                                                                               
  Co-chairman Halford said  he did not  think that was not  an                 
  intended consequence.    Senator Rieger  and Senator  Donley                 
  agreed that it was a reasonable suggestion to deal with that                 
  particular amendment.                                                        
                                                                               
  Senator  Rieger MOVED  the two  changes as  an amendment  to                 
  amendment  #1  and without  objection  and the  amendment to                 
  amendment  #1 was ADOPTED.    Co-chairman Halford said there                 
  being  no  objection  to  the   original  amendment  it  was                 
  therefore ADOPTED and  that it would  be drafted as  CSSSSJR                 
  14(FIN).   As do most  constitutional amendments there  is a                 
  required $2.2 fiscal note to put them on the ballot and that                 
  is the only fiscal note to go with the  resolution.  Senator                 
  Phillips MOVED CSSSSJR 14(FIN) and  without objection it was                 
  REPORTED  OUT  with  individual recommendations  and  a $2.2                 
  fiscal note from the Office of the Governor.                                 
                                                                               
                                                                               
       SENATE BILL NO. 89                                                      
                                                                               
       "An Act relating to the members  of the board and staff                 
  of the    Alaska Permanent Fund Corporation."                                
                                                                               
  Senator Rieger  referred to amendments  number 1  and 2  and                 
  addressed  questions  that  came  up  in the  last  meeting.                 
  Amendment number  1 will  make it  clear that all  employees                 
  including the executive  director serves at the  pleasure of                 
  the  board  except that  there  can be  employment contracts                 
  entered  into  as long  as  they  do not  exceed  two years'                 
  duration.   Senator Rieger MOVED amendment number 1 and with                 
  no  objections  it  was  incorporated  as CSSB  89(FIN)  and                 
  ADOPTED.                                                                     
                                                                               
  With  reference to amendment number 2 Senator Rieger said it                 
  was the result  of previous discussion on removal for cause.                 
  This amendment would  make it clear that  the governor shall                 
  appoint a board member solely on the financial best interest                 
  of the fund and shall remove a board  member only for cause.                 
  There  being no  objections  to amendment  number  2 it  was                 
  ADOPTED.                                                                     
                                                                               
  Discussion proceeded between Senators Rieger and Donley with                 
  regards  to amendment  number 3.    Senator Donley  asked if                 
  there  was  an  exception  that  already provided  for  this                 
  amendment,  some sort of  common law.   He felt that  it was                 
  exclusionary in  not allowing  that to  be addressed  unless                 
  someone on  the committee  knew if  there was  some sort  of                 
  common law  provision that would  allow it without  being in                 
  the statute.   Senator  Donley MOVED  amendment number  2 as                 
  directed  by  Senator Rieger  and  without objection  it was                 
  ADOPTED.                                                                     
                                                                               
                                                                               
  Senator Rieger MOVED SB 89 out  of committee and there being                 
  no   objections  it   was  REPORTED   OUT  with   individual                 
  recommendations and  accompanying fiscal note  of $31.5 from                 
  the Department of Revenue.                                                   
                                                                               
                                                                               
       SENATE BILL NO. 226                                                     
                                                                               
       "An  Act relating  to  biennial  registration of  motor                 
  vehicles;      imposing biennial registration fees  on motor                 
  vehicles and   authorizing  a  scheduled  biennial municipal                 
  tax on motor   vehicles; relating to  fees for motor vehicle                 
  emissions control   programs; and providing for an effective                 
  date."                                                                       
                                                                               
  Tom Williams, aide  to Senator Steve Frank gave testimony in                 
  support  of SB  226.   Senator  Frank  noted that  amendment                 
  number 1 had the effect of  bringing the IM program and  the                 
  biennial program into existence at the same time by delaying                 
  the  IM  program by  six months.   It  was requested  by the                 
  Department  but  has  taken  extra  time  to  implement  the                 
  biennial IM from last year's SB 28.  Mr. Williams said  that                 
  this amendment arose out of a request from the Department of                 
  Environmental Conservation  and with  the  agreement of  the                 
  Department of Public Safety, Division of Motor Vehicles.  As                 
  explained  in  the attached  letters  to the  amendment they                 
  believe that public confusion will be reduced and it will be                 
  less expensive if there is  a simultaneous implementation of                 
  biennial registration  with the biennial  emissions testing.                 
  The   amendment   tightens   the  title   and   delays   the                 
  implementation until 1 January 1997, making them concurrent.                 
  It also amends SB 28, last year's IM testing bill, to insure                 
  that they have  the authority to stagger  the implementation                 
  according to  the current  language in  SB 226 allowing  the                 
  biennial  registration  to  be  staggered   as  far  as  the                 
  implementation.  Co-chairman Halford asked about the  effect                 
  of the delay of the fiscal note.  Mr. Williams said that the                 
  Department had been requested to update their fiscal note to                 
  reflect  the  increase  in  revenues  as  a  result  of  the                 
  accelerated collections.   The accelerated collections  will                 
  be moved up by six   months.  There  will be roughly a  $9.8                 
  million  one time  windfall in  present  value terms  to the                 
  State of  Alaska.  Mr.  Williams said that there  would be a                 
  revised fiscal note  showing the time difference  should the                 
  amendment be approved.  Co-chairman  Halford asked about the                 
  statement in  the amendment packet on $150,000  for delay of                 
  SB 28.   Mr. Williams said that the $150,000  dealt with the                 
  software  changes  that  were  required  by the  various  IM                 
  stations and that was funded by DEC.  There is no additional                 
  cost  from DEC as a  result of this  amendment.  Those costs                 
  are  being  incurred right  now  under  SB 28  and  they had                 
                                                                               
                                                                               
  indicated there would be some additional costs if it was not                 
  made consistent.  However, no  new fiscal note was submitted                 
  on the original bill hearing.                                                
                                                                               
  Juanita Hensley,  Chief Driver  Services, Division  of Motor                 
  Vehicles was  invited to  join the  committee.   She advised                 
  that  the  Department  supported this  bill  along  with the                 
  amendments.  An updated fiscal note will be provided as soon                 
  as the committee  substitute is adopted.   She said a  draft                 
  fiscal  note  was prepared  and  is  in the  packet  for the                 
  original bill but when  the committee adopted a CS  they had                 
  no idea what  the impacts would be  on the Department and  a                 
  new  fiscal note could not be  prepared.  She said she would                 
  get a fiscal note to the committee as soon as possible  when                 
  she knew  what the final  version was.   Co-chairman Halford                 
  said the committee would  act on the amendment first  and if                 
  after they acted  and she could get the fiscal  note back to                 
  them they could  still move the  bill today.  Senator  Frank                 
  MOVED amendment number  1.   Senator Donley objected  saying                 
  that  some  limits   should  be  set  consistent   with  the                 
  philosophy of the bill on the  costs that were being charged                 
  for  IM.    Currently the  municipalities  of  Anchorage and                 
  Fairbanks were  charging  $10 for  the annual  certificates.                 
  They will want to  go to $20 for the  biennial certificates.                 
  Under  this  bill $2  is discounted  for those  who register                 
  their motor vehicles biennially.   He said he would  be much                 
  more inclined to support this bill if a cap of $18  could be                 
  set for the municipalities  to charge so they do  not double                 
  their  fees.  Without  that it  is kind  of difficult  to go                 
  along  with delaying the  IM provisions again.   People were                 
  disappointed  it  took as  long as  it  did.   Senator Frank                 
  indicated he  and Senator  Donley had  been discussing  this                 
  matter  and  that he  shared  this  concern.   However,  his                 
  reluctance in putting  in the statute  a specific amount  is                 
  because these  issues should be  hashed out  locally by  the                 
  administration and  assemblies who  will have to  administer                 
  the programs.   The administration of the  municipality will                 
  have  to have  public hearings  and defend  it's request  to                 
  increase the fees.   It will be a dynamic  public process to                 
  decide how much to be spent and how  much will be justified.                 
  Perhaps some legislative intent could be sent along.                         
                                                                               
  Co-chairman Halford asked  about a general statement  of the                 
  bill and that  it could state that the fee  could not exceed                 
  the cost of implementing the program.   This is not intended                 
  to be  a  revenue  generator.   Senators  Frank  and  Donley                 
  concurred.     Senator  Frank  said  perhaps   a  conceptual                 
  amendment could be  prepared.   Senator Rieger commented  on                 
  the choice recommended by DEC to delay  the old SB 28 to the                 
  time of implementation of SB 226.  Is there a reason to hold                 
  this off until January 1?  They should  both come into being                 
  at the same  time October 1 or  September 1.  How  much time                 
  would it  take for adoption  and getting all  this together?                 
  Juanita Hensley explained that  DEC implementations will not                 
                                                                               
                                                                               
  be  ready  by July.     The  Division has  already  made the                 
  changes available and would have been able to do a voluntary                 
  biennial  registration.    Coordinating   the  two  is  very                 
  important because it will benefit  the public.  Registration                 
  renewal mail-outs would have  to be ready to go in August to                 
  be ready for 1 October.                                                      
                                                                               
  Senator Rieger said he understood  DEC would be implementing                 
  SB 28 on  1 July and now  they would actually be  getting an                 
  extra three months.   How would it be harder for  them to be                 
  getting something  ready for three  months later?    Juanita                 
  Hensley  said  that  she  could  not  speak for  DEC.    She                 
  testified as to  the fiscal note  numbers that she would  be                 
  submitting.  The  first year would,  if it had an  effective                 
  date  of 1  January, show  a revenue  of approximately  $2.5                 
  million and FY 98 would be $5.85  million.  FY 99 through FY                 
  02  shows  a loss  of revenue  of  $580,000. for  each year.                 
  There would be  no operational costs  for FY 97 because  the                 
  existing  funds that  were appropriated  in SB  28  would be                 
  used.    FY 98  through  the  following years  would  show a                 
  reduction of operating costs to the Division  of $64,000 and                 
  that would be in the mailing of the registrations.                           
                                                                               
  Co-chairman Halford  said the question before  the committee                 
  was the adoption of the amendment.   The remaining questions                 
  are the delay  of one versus  acceleration of the other  and                 
  Senator  Donley's  question on  recovery  of cost.   Senator                 
  Frank said that it was better to take the January 1 deadline                 
  and not argue  about how long implementation  would take and                 
  then have the bill not get passed.                                           
                                                                               
                                                                               
  Senator Halford said that  without objection Senator Frank's                 
  amendment #1 would be ADOPTED.                                               
                                                                               
  Senator Donley  offered the following  conceptual amendment:                 
  "That the State  and local governments could not charge more                 
  for the  inspection fee  than the  programs actually  cost".                 
  Co-chairman  Halford   noted  "...than  the   cost  of   the                 
  administration  of the  program".  The  debate would  be the                 
  direct costs  or the  direct and  indirect  costs.   Juanita                 
  Hensley re-iterated that  this was a  cost that DEC had  and                 
  DMV did not get involved.   Co-chairman Halford did not feel                 
  that it was unreasonable to have  it be a revenue generator.                 
                                                                               
                                                                               
  Co-chairman Halford said  that there  being no objection  to                 
  Senator Donley's conceptual amendment it would be drafted as                 
  part of the Finance CS and  essentially is intended to treat                 
  municipal and State governments the same way.                                
                                                                               
  Senator Phillips MOVED amendment  number 2.  He said  that a                 
  few  years   ago  a  revision   to  Title   28  was   passed                 
  inadvertently  charging  individuals  more money  than  they                 
                                                                               
                                                                               
  should have been charged and there  were a lot of complaints                 
  and this  should correct  the matter.   Co-chairman  Halford                 
  said that the amendment was not changing the numbers, rather                 
  it was changing the words.  Juanita Hensley said DMV was not                 
  in opposition  to the  amendment.   She did  say that  there                 
  would be  a portion of  public complaints.   Some discussion                 
  between  members  regarding   public  complaints  to   their                 
  respective  offices   but  in   general  they  agreed   that                 
  complaints have died  off to some extent.   Senator Phillips                 
  WITHDREW amendment number 2.                                                 
  Senator Rieger still felt that  amendment number 2 should be                 
  adopted.    Co-chairman  Halford  said  that  there  was  no                 
  substantive effect of  what was being  done.  Senator  Frank                 
  felt that  the amendment would only cause more confusion and                 
  strongly objects to  amendment number 2.   He said the  fees                 
  were being  changed from  $35 for  one year  to $68 for  two                 
  years.   Co-chairman Halford asked  for a vote  on amendment                 
  number 2 as drawn by Senator Phillips and offered by Senator                 
  Rieger and it was voted to be WITHDRAWN.                                     
                                                                               
  Co-chairman Halford said that  a fiscal note of the  bill as                 
  amended had  been explained  to  the committee  and that  it                 
  would  show in  operating zero  for 1997; $64,000  for 1998;                 
  $64,000  for  1999;  $2.5  million;  $5.8 million  and  then                 
  $580,000 going forward on the gain/loss side.  As long as it                 
  is understood  exactly what  it was  going to be  it can  be                 
  assumed  the committee is adopting that fiscal note with the                 
  bill.    Juanita Hensley  advised  that the  information was                 
  correct and  that the  fiscal note  would be  made available                 
  today.  Co-chairman Halford  said it could go with  the bill                 
  to be read across on the floor today.                                        
                                                                               
  Senator Frank MOVED CSSB 226 (FIN) and without objections it                 
  was   REPORTED    OUT   of    committee   with    individual                 
  recommendations and the explained fiscal note.                               
                                                                               
                                                                               
       CS FOR SENATE BILL NO. 232(FIN)                                         
                                                                               
       "An  Act  relating to  permanent fund  dividend program                 
  notice    requirements, to the  ineligibility for  dividends                 
  of   individuals convicted  of felonies or  incarcerated for                 
       misdemeanors, and  to the  determination of  the number                 
  and  identity of certain ineligible individuals."                            
                                                                               
  Tom Williams testified on behalf  of CSSB 232(FIN) and  said                 
  the  Department  of  Administration  initially  proposed  an                 
  amendment to allow monies  to be directed to child  support.                 
  There was  a  constitutional problem;  an  equal  protection                 
  problem  as  opposed to  a  dedicated funds  problem.   That                 
  amendment  should  not be  considered  as agreed  by Senator                 
  Frank's  office  and  the Department.    The  next amendment                 
                                                                               
                                                                               
  addressed additional concerns by the Department of Law which                 
  defined   when  the  conviction   would  be  considered  for                 
  implementation.  The amendment also  addressed concern as to                 
  whether  multiple  convictions  out  of  a  single  criminal                 
  episode  would count  in  determining  ineligibility.   This                 
  amendment said that each criminal  episode should be treated                 
  as  a  single  conviction,  regardless   of  the  number  of                 
  convictions.     Those  amendments  were  requested  by  the                 
  Department  of Administration.   The other concern expressed                 
  by  the Department of Administration  had to do with whether                 
  or not by expanding the  agencies funding would be provided;                 
  that  the Legislature  would  re-direct  current funding  to                 
  those other agencies.  The intent  of this legislation is to                 
  add additional funding for other agencies.                                   
                                                                               
  Co-chairman Halford said a blank CS had been adopted.                        
                                                                               
  Senator Frank MOVED amendment number 1 and without objection                 
  it was ADOPTED.                                                              
                                                                               
  Nanci A. Jones, Director, Permanent  Fund Dividend Division,                 
  Department of Revenue  invited to join  the committee.   She                 
  said the Division was satisfied with the bill in its present                 
  status along with its amendment.                                             
                                                                               
  Senator Frank MOVED CSSB 232(FIN) and with no objections the                 
  bill  was REPORTED OUT  with individual recommendations and                  
            fiscal  notes  in  the  amount  of zero  from  the                 
  Department of Law; $2.4 from the Department of Revenue; $8.9                 
  (change   in  revenues)   from   Student  Loan   Operations,                 
  Department  of   Revenue;  $68.7  from  the   Department  of                 
  Corrections; $5.0 from the Department of Public Safety; zero                 
  from the Alaska State Troopers, Department of Public Safety;                 
  and an indeterminate amount from CDVSA, Department of Public                 
  Safety.                                                                      
                                                                               
                                                                               
       SENATE BILL NO. 37                                                      
                                                                               
       "An  Act  relating  to  treatment   of  permanent  fund                 
  dividends for  purposes  of   determining  eligibility   for                 
  certain benefits; and    providing for an effective date."                   
                                                                               
  Co-chairman Halford HELD the matter  in committee until next                 
  week.  Senator  Phillips said  that there were  a number  of                 
  matters  that needed further discussion regarding the fiscal                 
  notes.                                                                       
                                                                               
                                                                               
       SENATE JOINT RESOLUTION NO. 32                                          
                                                                               
                                                                               
       Proposing  amendments to the  Constitution of the State                 
  of   Alaska relating to the constitutional defense council.                  
                                                                               
  Senator Robin Taylor testified on behalf of SJR 32.  He said                 
  that  the  reason the  bill  was  before the  committee  was                 
  because it would require a  vote of the people.  The  fiscal                 
  note attached is because of the  extra paragraph or two that                 
  would be needed  to place it on  the ballot.  The bill  is a                 
  simple   concept   but   a   significant   change   in   our                 
  constitutional make up.   The constitutional defense council                 
  created by this  legislation would  have the option,  should                 
  any governor in the future, fail to defend the  constitution                 
  of  the  State of  Alaska or  fail  to prosecute  actions to                 
  defend the sovereignty and constitution  of this State.  The                 
  council could initiate  such action and would  have standing                 
  before the Courts.   The  committee is well  aware that  the                 
  Legislature  has  in  the past  attempted  to  both initiate                 
  action   or continue  with actions  previously filed by  the                 
  State of Alaska and  upon dismissal by the Governor  when we                 
  attempted to intervene  we were  told that we  did not  have                 
  standing  sufficient  to  be  before   the  Court  and  were                 
  dismissed  on those  grounds.   One  recent  example is  the                 
  "Babbitt"  case.   Because of  the dismissal  of that  case,                 
  federal agencies, both interior and  agriculture, are in the                 
  process of developing regulations  under the subsistence law                 
  of Section 8 in ANILCA which law would, if those regulations                 
  are carried out and enforced, the entire fishing industry of                 
  the  State of  Alaska this  summer will  be regulated  under                 
  subsistence  laws.    That  is  the  direct  result  of  the                 
  dismissal of that suit.   Our forefathers never contemplated                 
  electing a Governor into office who would fail to defend the                 
  constitution  of  the State  of  Alaska,  and in  so  doing,                 
  forfeit the rights  of the people  of Alaska and the  rights                 
  under our constitution.  By creating this council there will                 
  be an independent body  made up of members appointed  by the                 
  Senate President, the  Speaker of the House, by the Governor                 
  and from  the public  at large  who will  make an  objective                 
  determination  as to whether  or not litigation  needs to be                 
  pursued and will have the authority and right to pursue that                 
  litigation in defense of our constitution.  It should not be                 
  seen as a threat  to any administration because it  would be                 
  assumed that the administration, an executive branch of this                 
  State,   would  be  carrying   forward  those  defenses  and                 
  prosecutions that were necessary to defend our constitution.                 
  It  should be only seen  as supplementary to, and supportive                 
  of that administration.   However, should any administration                 
  in  the future fail  to defend  the constitution  they would                 
  have the right to intervene.  Their funding would be through                 
  the legislative branch and that is the basis upon which they                 
  would receive their authority.                                               
                                                                               
  Senator Rieger said the primary concern has been  where only                 
  the executive branch has  been able to bring actions  at the                 
                                                                               
                                                                               
  federal level.  What is added by adding state constitutional                 
  law?  Senator  Taylor said this  would limit the council  to                 
  bringing   those    actions   that   would    affect   State                 
  constitutional  law  as  opposed  to  merely going  off  and                 
  litigating any question involving federal constitutional law                 
  that would  be of  interest to  them.   They are  allowed to                 
  litigate in the State courts, the  Federal courts and before                 
  administrative agencies.  There was a recent dismissal of an                 
  appeal  before an administrative  agency that  two extensive                 
  hearings were  held on  and we still  have no idea  what the                 
  future  ramifications  of  that decision  may  be.   Senator                 
  Rieger   and  Senator   Taylor   discussed  a   hypothetical                 
  settlement question  and what  one  would be  looking at  if                 
  there are State  or Federal  constitutional issues  involved                 
  that  are  being  compromised by  the  settlement.   Senator                 
  Taylor said a most recent and controversial example would be                 
  Governor Hickel's  settlement of the Exxon  Valdez situation                 
  and  the  manner  in  which  the funds  became  appropriated                 
  without passing through the legislative process.  The dollar                 
  amount would  not have  been subject  to the  review of  the                 
  council.   It would  have been wise  at the  time to  have a                 
  group  like  this  available  to  say only  the  Legislature                 
  appropriates  money,  not  the  executive  branch through  a                 
  settlement.                                                                  
                                                                               
  Senator Phillips and Senator Taylor  further discussed if it                 
  was necessary to put  in how many people  make a quorum  and                 
  what number  does it take  to have  a vote.   Senator Taylor                 
  said the drafters advised that  this was covered by Robert's                 
  Rules of Order, just as all panels and groups are.   Senator                 
  Phillips felt this was vague.   Senator Taylor said he would                 
  provide a legal opinion  incorporated in the record, on  the                 
  floor, in consideration of the amendment, stating the excess                 
  verbage was not necessary.                                                   
                                                                               
  Senator Phillips MOVED SJR 32 and without objection the bill                 
  was  REPORTED  OUT   with  individual  recommendations   and                 
  accompanying  fiscal note  of $2.2  from the  Office of  the                 
  Governor.                                                                    
                                                                               
                                                                               
       HOUSE BILL NO. 419                                                      
                                                                               
       "An  Act  relating  to  the  disposal of  firearms  and                 
  ammunition     by the state or a municipality."                              
                                                                               
  Mr.  Roger  Poppe,  aide  to  Representative Pete  Kott  was                 
  invited to join the committee and  testified on behalf of HB                 
  419.    Up   until  a   year  ago  the   Governor  and   the                 
  administration  took  all  guns   which  were  surplused  or                 
  obtained through criminal behaviour and  sold them at public                 
  auction.  Last  October, due to  a change in the  Governor's                 
                                                                               
                                                                               
  policy, in that  he felt handguns  were inappropriate to  be                 
  sold at public  auction, destroyed some  fifty of them at  a                 
  cost of  $12,000.   Consequently, there  were some  lawsuits                 
  filed and then  this bill along  with companion bill SB  219                 
  were filed to  try and stop this  practice.  As a  result of                 
  the  bill  filing  it  appears   the  Governor  amended  his                 
  procedures and is no  longer destroying the guns and  so the                 
  bill's  position   and  the  Governor's  position  are  more                 
  similar,  but there is  still an important  difference.  The                 
  basic difference is that  now under both the bill's  and the                 
  Governor's  policy the  guns would  be sold  to a  federally                 
  licensed  firearm  dealer  and   the  only  real  difference                 
  remaining  is that he would prefer  to see those sold to law                 
  enforcement agencies and personnel, whereas  this bill would                 
  have the guns sold  to the public.  It would  go back to the                 
  auctioneer/sale procedure.    The advantage  of taking  this                 
  approach is by going through a federally licensed dealer the                 
  public  safety  issue  is  maintained  because  there  is  a                 
  background  check  they would  have  to make  on  the person                 
  purchasing  the weapon  to make  sure it was  not sold  to a                 
  felon  and  used for  a possible  crime.   The  other public                 
  safety feature is that the department maintains the right to                 
  still  destroy any  guns that  are deemed unsafe  because of                 
  mechanical  problems.    By passing  this  bill  the revenue                 
  stream  would  be maintained  for  selling the  guns  to the                 
  public and the  public would get  access to them instead  of                 
  just  law   enforcement  agencies.      The  CS   eliminated                 
  municipalities from the bill because  there was some concern                 
  that it was a local issue  and so municipalities remain able                 
  to dispose of all their guns at sale or auction.                             
                                                                               
  Co-chairman Halford said that the effect of the bill is that                 
  you can buy the exact same weapon at K-Mart, Wal-Mart or any                 
  other Fred Meyer store and the  State will not be destroying                 
  them to make a political statement at the cost of the people                 
  of the State.  Mr. Poppe concurred.                                          
                                                                               
  Senator Phillips said that we  have been selling the weapons                 
  since  1959  and  there has  not  been  a  crime, felony  or                 
  misdemeanor  charged  back  to that  weapon  in  the State's                 
  history.                                                                     
                                                                               
  Mr. Dugan Petty, Director,  General Services, Department  of                 
  Administration  was invited to join the  committee.  He said                 
  that Commissioners  Boyer  and Otte  had  set out  a  policy                 
  governing disposal of  firearms.  If  the bill is passed  it                 
  would  present  an  opportunity  to  untangle  multiple  and                 
  confusing  statutes  regarding the    disposal of  seized or                 
  forfeited firearms.  It is also Commissioners Boyer and Otte                 
  policy to make  available to  certified gun safety  programs                 
  firearms for  the use  in gun  safety training.   This  bill                 
  would prevent that provision as well.  It is the position of                 
  the administration that the bill is unnecessary.                             
                                                                               
                                                                               
  Senator Phillips MOVED CSHB  419(STA) and without  objection                 
  the  bill was REPORTED  OUT with  individual recommendations                 
  and  fiscal   notes  of   $10.04  (revenue)   Department  of                 
  Administration; zero from the Department of Public Safety.                   
                                                                               
                                                                               
       SENATE BILL NO. 163                                                     
                                                                               
       "An Act approving  the University of Alaska's  plans to                 
  enter     into  long-term obligations  to borrow  money from                 
  the Alaska     Housing   Finance    Corporation   for    the                 
  acquisition of student   housing  facilities; and  providing                 
  for an effective date."                                                      
                                                                               
  Wendy  Redmond,  Vice-President  for  University  Relations,                 
  University of Alaska was invited to join the committee.  She                 
  said the sponsor had a CS for this bill.                                     
                                                                               
  Sherman  Ernouf, aide to  Senator Tim  Kelly was  invited to                 
  join the committee.   He said  that University of Alaska  at                 
  Anchorage   had  a  student   population  of  16,000  credit                 
  students, which represents  64% of  the total University  of                 
  Alaska  system-wide  enrollment.   UAA  only  has  384 beds,                 
  allowing them to provide housing to 2.6% of  their students.                 
  By way of contrast the Fairbanks campus provides housing for                 
  38.9% of their students and the Juneau campus 16.6%.   Every                 
  fall, hundreds of Alaskans, both  urban and rural are denied                 
  campus accommodations  at  UAA due  to  insufficient  space.                 
  This gap is growing  every year.  This bill  would allow the                 
  University of Alaska to construct a new 600 bed dormitory on                 
  the campus of  UAA, using  a long-term loan  of $33  million                 
  provided from AHFC.  According to studies, resident students                 
  do better in colleges and they achieve more academically.  A                 
  whole host of  things develop better such as;  social skills                 
  and development of  leadership opportunities.   In a  recent                 
  survey conducted at  UAA, 26% of the  student body indicated                 
  their desire to live on campus.   Lack of housing for single                 
  students,  Alaska  Natives, married  students,  athletes and                 
  international students is inadvertently forcing Alaskans  to                 
  attend out of state institutions.  This bill would provide a                 
  mechanism for UAA to get the housing they desperately need.                  
                                                                               
  Senator Frank referred to  page 2 of the bill and  noted the                 
  annual debt services  $2.7 million over  25 years which  the                 
  University of  Alaska will  pay $1.7  million and  asked who                 
  picked up the balance.                                                       
  Wendy  Redmond  answered that  this  would be  financed with                 
  subsidized  loans   from  AHFC.     They   will  be   paying                 
  approximately  $1 million   per  year on  the interest  rate                 
  subsidy for the bonds.  Senator Frank asked if they would be                 
  able to use  arbitrage funds or  something that did not  use                 
  their equity.                                                                
                                                                               
                                                                               
  Mr. Dan R.  Fauske, CEO/Executive Director, Alaska   Housing                 
  Finance Corporation,  Department of  Revenue was  invited to                 
  join  the committee.   He indicated  that under  the current                 
  scenario  it would  be  monies out  of  next year's  capital                 
  budget to pay for  that cash subsidy.   He was  waiting on a                 
  response  on  bond  counsel  and  tax  counsel  as  to  some                 
  potential uses  and at  this time  was unclear  if it  would                 
  qualify  under the arbitrage  limits of IRS.   Senator Frank                 
  asked  if it  were legal  under the  IRS code would  that be                 
  their preference.  Mr. Fauske said  that at present they did                 
  a straight bond  sale calculation,  factored in the  subsidy                 
  that  was  required  to make  the  cash  flow  work for  the                 
  university and then utilized what was known as existing cash                 
  in the succeeding years.                                                     
  Co-chairman Halford said if it could  go in to the arbitrage                 
  use then it probably  had more potential support than  if it                 
  competed with  other non-arbitrage qualified  capital budget                 
  items.  Senator Rieger agreed.                                               
                                                                               
  Mr. Fauske said that there is  an assisted and an unassisted                 
  portion of this  debt.  The unassisted portion is  at 3% and                 
  it is about $3.253 million they  will pay full interest rate                 
  on.  Senator  Rieger asked if  the arbitrage funds could  be                 
  blended  in  with  other totally  different  projects.   Mr.                 
  Fauske said  there were  two different  arbitrage funds  you                 
  might  need to use to get the  total blended rate within the                 
  excess cap that is established by  the IRS.  The excess must                 
  be determined  and the rate  of the coupons  determines what                 
  interest rates would be charged on use of arbitrage funds.                   
                                                                               
  Co-chairman Halford said that the arbitrage determination is                 
  based on the project  and could apply to the  whole project.                 
  If it is eligible for use of arbitrage earnings it may be to                 
  our advantage to  take the entire  income stream out of  the                 
  arbitrage  earnings and  thereby release  the  other dollars                 
  within or outside of the  university system for unrestricted                 
  capital  use.   Mr. Fauske  asked if  he meant  to  fund the                 
  entire project out  of arbitrage.  Co-chairman  Halford said                 
  if the whole project is qualified  for use of arbitrage then                 
  it is qualified  as a project next  is to look at  the whole                 
  package  of  expenditure  of  arbitrage earnings.    Senator                 
  Rieger asked how   the split was arrived at, the amount that                 
  was to be arbitraged or assisted and the amount that goes to                 
  the unassisted.  Mr.  Fauske said that it was based  on cash                 
  flow information  the university  supplied as  to what  they                 
  felt they could afford on their projected future finances.                   
                                                                               
  Senator Sharp  said he  didn't  know what  size capacity  of                 
  dormitory this amount of  money would build.  At  a capacity                 
  of 500 it would come out to $5,000 per year per  occupant to                 
  support that building counting debt service, maintenance and                 
  operation.    That  would  only  pay  for  the  university's                 
  portion,  not  the portion  being  paid by  AHFC subsidized.                 
                                                                               
                                                                               
  Wendy  Redmond indicated  that this  project was  a  550 bed                 
  facility and included a full food service facility.  Senator                 
  Sharp voiced  concern  of obligating  AHFC for  25 years  of                 
  payments on the subsidized amount and would the economics of                 
  $34 million plus furnishings and operating costs on the debt                 
  service  inflate  an   additional  operating  cost   to  the                 
  university.  The  total university  operating cost plus  the                 
  university's debt,  less the  amount of anticipated  revenue                 
  from student occupancy  would appear to not cover  the total                 
  cost of the  structure.  The money  would have to  come from                 
  someplace else.   Wendy Redmond  said the dorm  receipts are                 
  expected to be $1.5 million per year.  That will be covering                 
  the student occupancy during the year as well as  use of the                 
  facility during the summer for tours and groups and projects                 
  they  bring in,  similar to what  they do in  Fairbanks.  In                 
  addition the campus is committed to generating an additional                 
  $4 million of  revenue.  $3 million will be  financed over a                 
  twenty-five year period.   Hopefully that can be  bought out                 
  sooner.  There is also anticipation in selling a condominium                 
  facility and putting the money into the project.  Mr. Fauske                 
  said that if you look at the numbers there is a  gap between                 
  construction costs.  There is  a capitalized interest period                 
  of about three years  during the construction phase.   There                 
  is no revenue coming in because it is being built.  The debt                 
  structure or bond sale would be designed with bonds to cover                 
  that cost.  During that  time interest is paid on  the bonds                 
  and interest is earned  on the money that was  sold. Senator                 
  Sharp  asked  what the  projected operating  and maintenance                 
  cost  would  be  on  this  structure.    The  total  revenue                 
  anticipated is $1.5 million and that does not cover the cost                 
  of  the debt  service  the  university  will pay  at  $1.751                 
  million.   Somewhere the university  budget will have  to go                 
  up.    Senator  Frank  asked   if  he  meant  heat,  lights,                 
  maintenance  and  janitorial   service  and  Senator   Sharp                 
  concurred.   Wendy Redmond said those  costs were covered by                 
  the  rental receipts from the facility, the students and the                 
  summer   usage  and  those   would  cover  the  university's                 
  obligation for the debt repayment  under the AHFC subsidized                 
  portion plus  pay  the costs  to  maintain and  operate  the                 
  facility.  The  board of  regents will no  longer approve  a                 
  project that does not provide all those costs up front.  She                 
  said  she  would  bring  a   complete  break  down  for  the                 
  committee.  Senator  Sharp indicated  that it  would cost  a                 
  student in  the dorm approximately  $6,000 for a  nine month                 
  period.  This  would not cover a maintenance  operating cost                 
  of  this  building.   Wendy  Redmond said  that  the board's                 
  intention is not  to create two residential  campuses in the                 
  State.  Fairbanks is the residential campus and we intend to                 
  maintain 35% to 50% of the  full time students with housing.                 
  In Anchorage we  are currently at 6%.  This will bring us up                 
  to 12%-13% of the total full time students and a little less                 
  than 5% of  their total  student body.   However, there  are                 
  students coming in from  all over the State because  we have                 
  programs in the Health/Sciences, social work, and vocational                 
                                                                               
                                                                               
  programs  that  are  offered  only  in  Anchorage.    It  is                 
  particularly difficult for young college students to try and                 
  find housing.                                                                
                                                                               
  Co-chairman Halford  HELD the  bill in  committee and  would                 
  like an answer on the arbitrage question.                                    
                                                                               
  Senator Frank asked  that how much  interest rate has to  be                 
  paid, and explanation of the $1  million in cash, what about                 
  the other $3  million and why  you have them separated,  and                 
  level payment  term all  be explained  at the  next meeting.                 
  Wendy Redmond answered about the $3 million at this time and                 
  the reason  it was separate was because  the Chancellor felt                 
  he   had   commitments  from   the  local   communities  and                 
  corporations  to  raise  $3 million  to  support  housing in                 
  Anchorage.   Senator Frank  said it  appeared to  be a  debt                 
  service.  Wendy Redmond said that  they would finance the $3                 
  million from a separate stream of cash flow.                                 
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 10:50 A.M.                        
                                                                               

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