Legislature(1995 - 1996)

03/26/1996 08:10 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         March 26, 1996                                        
                            8:10 a.m.                                          
  TAPES                                                                        
                                                                               
  SFC-96, #51, Side 1 and 2                                                    
  SFC-96, #52, Side 1                                                          
  SFC-96, #52, Side 2 (575-207)                                                
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Steve Frank,  Co-chairman, convened the  meeting at                 
  approximately 8:10 a.m.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to  Co-chairmen  Frank  and  Halford, Senators                 
  Phillips, Rieger, Sharp, and Zharoff  were present.  Senator                 
  Donley arrived as the meeting was in progress.                               
                                                                               
  ALSO ATTENDING:  Senator  Green; Senator Torgerson;  Barbara                 
  Ritchie,  Deputy Attorney General,  Civil Division, Dept. of                 
  Law;   Laurie  Otto,   Deputy  Attorney   General,  Criminal                 
  Division, Dept.  of Law; Alison  Elgee, Deputy Commissioner,                 
  Dept.    of    Administration;   Dick    Pegues,   Director,                 
  Administrative  Services  Division,   Dept.  of  Law;  Nancy                 
  Slagle, Director, Budget  Review, Office  of Management  and                 
  Budget; Kevin Ritchie, Executive Director, Alaska  Municipal                 
  League; Bill  Rolfzen,  State Revenue  Sharing, Division  of                 
  Municipal and  Regional Assistance,  Dept. of  Community and                 
  Regional  Affairs;   Vern  Voss,   Cash  Manager,   Treasury                 
  Division, Dept.  of Revenue;  Brett Huber,  aide to  Senator                 
  Green;  Annette  Kreitzer, aide  to  Senator Leman;  Kathryn                 
  Daughhetee,  fiscal  analyst, Legislative  Finance Division;                 
  and  aides to  committee members  and  other members  of the                 
  legislature.                                                                 
                                                                               
  ALSO PARTICIPATING VIA TELECONFERENCE:  Christopher Kennedy,                 
  Assistant Attorney General, Environmental  Section, Dept. of                 
  Law,  Anchorage; Pat Poland, Director, Division of Municipal                 
  and  Regional  Assistance, Dept.  of Community  and Regional                 
  Affairs, Anchorage; and John Stein of Wasilla;                               
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
  HB 468 -  APPROPRIATION: SUPPLEMENTAL & OTHERS                               
                                                                               
            Review of  the Dept. of Law request  within Sec. 9                 
            of the bill  was had with Barbara  Ritchie, Laurie                 
            Otto, and Nancy Slagle.  The supplemental was held                 
            in committee  for continued  review at  8:00 a.m.,                 
            Friday, March 29, 1996.                                            
                                                                               
                                                                               
  SB  20 -  ALASKA MUNICIPAL BASIC SERVICES PROGRAM                            
                                                                               
            Discussion was  had with Senator  Torgerson, Kevin                 
            Ritchie,  Bill   Rolfzen,  Vern   Voss,  and   via                 
            teleconference with Pat Poland and John Stein.  An                 
            amendment  by  Senator   Rieger  was  adopted  for                 
            incorporation   within    a   finance    committee                 
            substitute.  CSSSSB 20 (Fin) was then REPORTED OUT                 
            of  committee  with a  zero  fiscal note  from the                 
            Dept.  of Community  and  Regional  Affairs and  a                 
            ($874.0) note from the Dept. of Revenue.                           
                                                                               
  SB 112 -  DISCOVERY ROYALTY CREDIT                                           
                                                                               
            Review and discussion  of CSSB  112 (Res) was  had                 
            with Annette Kreitzer.  The bill  was subsequently                 
            held in committee for further review and answer to                 
            the question  of whether  or not  the state  could                 
            receive a minimum of less than 5%.                                 
                                                                               
  SB 152 -  GEOGRAPHIC PAY DIFFERENTIALS                                       
                                                                               
            Discussion was had with Alison Elgee.  Due to lack                 
            of  time,  the  bill  was  held in  committee  for                 
            further review.                                                    
                                                                               
  SB 177 -  CONCEALED HANDGUN PERMIT AMENDMENTS                                
                                                                               
            Discussion was  had with  Senator Green and  Brett                 
            Huber.    A  draft CSSB  177  (Fin)  (3/25/96) and                 
            amendments  by  Senators  Donley,   Phillips,  and                 
            Rieger  were  adopted.   CSSB  177 (Fin)  was then                 
            REPORTED OUT  of committee with zero  fiscal notes                 
            from the Dept. of Law and Dept. of Corrections and                 
            a (117.6) note from the Dept. of Public Safety.                    
                                                                               
  SB 181 -  PROHIBITED HIGHWAY ADVERTISING                                     
                                                                               
            Discussion was had  with Senator  Green.  A  draft                 
            CSSSSB  181  (Fin)   (3/22/96)  was  adopted   and                 
            REPORTED OUT of committee with a $40.0 fiscal note                 
            from  the  Dept.   of  Transportation  and  Public                 
            Facilities.                                                        
                                                                               
                                                                               
  CS FOR HOUSE BILL NO. 468(FIN) am                                            
                                                                               
       An Act making supplemental  appropriations for the                      
       expenses  of  state  government  and  making   and                      
       amending appropriations;  ratifying certain  state                      
       expenditures; and providing for an effective date.                      
                                                                               
  Co-chairman  Frank  directed  that the  FY  96  supplemental                 
                                                                               
                                                                               
  budget  be  brought   on  for  discussion  and   asked  that                 
  representatives of  the administration  speak to  department                 
  requests.                                                                    
                                                                               
  Dept. of Law                                                                 
                                                                               
  BARBARA RITCHIE,  Deputy Attorney  General, Civil  Division,                 
  Dept. of Law, came before committee.  She explained that the                 
  $369.3 request under Sec. 9(a)  would fund various judgments                 
  and claims against the state that accumulated over the year.                 
  NANCY  SLAGLE,   Director  of  Budget   Review,  Office   of                 
  Management and Budget, noted that the $369.3 includes $144.0                 
  in  judgments  plus   $225.3  for  a  settlement   from  the                 
  international  airport  revenue  fund,  relating  to  safety                 
  officers at the Anchorage International Airport.                             
                                                                               
  Mrs. Ritchie  next described  the class  action against  the                 
  City of Kodiak and  the state over conditions at  the Kodiak                 
  Jail--a community jail  under contract to  the state.   This                 
  case,  which  has  been ongoing  over  five  years, involves                 
  complicated questions of  confinement.  Additional questions                 
  related to state  liability for  a city-operated jail  under                 
  contract to hold state  prisoners.  The state won  a partial                 
  summary judgment clarifying  that the  Cleary case does  not                 
  apply to community jails.  In the settlement, the state paid                 
  25 percent of awarded attorney fees of $104.0 and $2.0.  The                 
  City of Kodiak paid the remaining 75 percent.                                
                                                                               
  Senator Sharp asked  if Alaska Legal Services  was funded by                 
  the state.    Mrs. Ritchie  explained that  it is  primarily                 
  funded  by   federal  appropriations.     However,   it  has                 
  historically received some state funding via grants  through                 
  community  and regional  affairs.   Senator Sharp  suggested                 
  that the $27.0 award  for attorney fees be removed  from the                 
  supplemental.                                                                
                                                                               
  Mrs. Ritchie explained that the State v. Meyer case involved                 
  a  sexual discrimination  appeal  filed  against the  Alaska                 
  Dept.  of  Fish  and  Game  and  the   Alaska  Human  Rights                 
  Commission in March of 1987.   Both the superior and supreme                 
  courts ruled in  favor of Ms.  Meyer and ordered that  court                 
  costs and attorney fees of $1,148.25 be paid by the state.                   
                                                                               
  LAURIE  OTTO, Deputy  Attorney  General, Criminal  Division,                 
  Dept.  of Law, explained that Durham v. Kincheloe relates to                 
  Cleary.  The  plaintiff sued saying it  was unconstitutional                 
  under a U.S. Supreme  Court case to require that  the inmate                 
  take psychotropic medication.  The  state argued that Cleary                 
  provisions were controlling.  The  court disagreed and found                 
  that   state   procedures  for   administering  psychotropic                 
  medicines against an  inmate's will did not  comply with the                 
  U.S. Supreme Court  mandate.  The state  voluntarily rewrote                 
  its policies  and procedures to  comply.   It was,  however,                 
  required to pay the plaintiff's attorney fees for litigating                 
                                                                               
                                                                               
  the issue.                                                                   
                                                                               
  Discussion followed regarding the function of the disability                 
  law center.   Ms.  Otto noted  that in the  Durham case  the                 
  inmate had  a severe mental illness.  Senator Randy Phillips                 
  asked that  the  department  determine  whether  the  center                 
  receives state appropriations.                                               
                                                                               
  Senator Rieger  voiced  his understanding  that  the  Cleary                 
  settlement  was in conflict with  the U.S. Constitution.  He                 
  then asked if the  department has the ability to  revise the                 
  settlement  without a separate  court order.   Ms. Otto said                 
  the  final  order  in  Cleary  spells  out  a  procedure for                 
  administering  psychotropic  medicines  against an  inmate's                 
  will.    The U.S.  Supreme  Court  issued an  opinion  which                 
  conflicts  with  Cleary.    The  U.S.   Constitution  always                 
  controls over an  order of a lower court.  It is possible to                 
  litigate whether  or not  certain provisions  of the  Cleary                 
  final  order are unconstitutional.   It is more difficult to                 
  re-litigate  other portions of it, although re-litigation is                 
  possible.   The fact  that a  portion of  the settlement  is                 
  found to be deficient does not negate the remainder.                         
                                                                               
  In  response to  a  question from  Senator  Sharp, Ms.  Otto                 
  explained  that  an  employee of  the  Dept.  of Corrections                 
  (Kincheloe)  was  sued  in  his  official  capacity  as  the                 
  superintendent of  the  institution  where  the  drugs  were                 
  administered.  The  original request  for attorney fees  was                 
  $65.0.  The department was able  to negotiate a reduction to                 
  $45.0.  The fees will accrue to the disability law center.                   
                                                                               
  Attorney fees in  the amount of  $1,219.0 in CSED v.  Allsop                 
  reflect  an  Alaska  Supreme  Court  award.    Mrs.  Ritchie                 
  explained that as a result of statutory changes, these types                 
  of  cases will disappear.  The  instant case involved CSED's                 
  role in dis-establishment of paternity.  Statutory revisions                 
  now   allow   the   division   to  dis-establish   paternity                 
  administratively.   Discussion  of particulars  of the  case                 
  followed.                                                                    
                                                                               
  Senator Rieger noted indications that attorney fees had been                 
  reduced by 80 percent and asked  who would bear that portion                 
  of the cost.  Mrs. Ritchie replied  that it would have to be                 
  paid by Mr. Allsop.  Senator  Rieger stated his concern that                 
  it appears the  defendant will be made  to bear the cost  of                 
  setting the record straight.  Mrs. Ritchie stressed that one                 
  reason the case  was pursued was  to clarify CSED's role  in                 
  these cases and  obtain a  definitive ruling.   The law  has                 
  since been corrected.   Co-chairman  Halford concurred  that                 
  the individual  should not be  made to  pay the cost  of "an                 
  impossible case where the state was wrong."                                  
                                                                               
  Mrs. Ritchie explained that in the case of City of Fairbanks                 
  v.  State   Dept.  of  Labor  (Workers'   Compensation)  the                 
                                                                               
                                                                               
  $2,838.62 in  attorney fees  and costs  of $525.17 would  be                 
  paid  to the office of the  city attorney in Fairbanks.  The                 
  case involves the Workers' Compensation  Board denial of the                 
  city's  application  for  self-insurance.    When  the  city                 
  appealed, the  superior court  reversed the  board decision.                 
  The city moved for  full attorney fees and was  granted half                 
  by the court.  The Dept. of Law has subsequently worked with                 
  the   Workers'   Compensation   Board  regarding   different                 
  regulatory   requirements,   between   public  and   private                 
  entities, for determining eligibility requirements for self-                 
  insurance.                                                                   
                                                                               
  The $42,855.00 payable  to Trustees for  Alaska in the  suit                 
  against the Dept. of Natural  Resources involves a challenge                 
  to state best interest findings for a particular oil and gas                 
  lease sale on behalf of the  trustees, the city of Kaktovik,                 
  and  numerous environmental  organizations.     The  supreme                 
  court remanded  best interest  findings to  DNR for  further                 
  findings.    As  the  prevailing  party, the  trustees  were                 
  granted attorney  fees in both  the superior court  case and                 
  the supreme  court appeal.   Fees  in the  appeal have  been                 
  paid.  This claim is for  superior court fees.  The trustees                 
  charged that  DNR did not give adequate consideration to the                 
  environmental risks  of transporting oil from  the off-shore                 
  lease area to  market.   Litigation has  helped clarify  the                 
  scope of  best interest findings  and the required  depth of                 
  analysis to  support findings  in future lease  sales.   The                 
  state prevailed  on all  issues before  the superior  court.                 
  The trustees prevailed on two issues upon appeal.  The state                 
  objected  to attorney fees  and costs at  both court levels,                 
  arguing that fees should be reduced  to reflect only work on                 
  the two issues  on which the trustees  ultimately prevailed.                 
  Both courts awarded  the trustees  substantially all of  the                 
  fees   they  requested.     Senator  Sharp   suggested  that                 
  deductions be made in the court  budget to cover the awarded                 
  fees.                                                                        
                                                                               
  The $11,829.76 payable to the disability law center in Weiss                 
  v. State  represents interim  costs and  fees following  the                 
  1985 supreme court decision in the mental health trust lands                 
  case.  The court found that the state breached the  trust by                 
  redesignating  trust  lands.   On  remand the  court awarded                 
  these interim costs and fees to  the plaintiff.  Co-chairman                 
  Frank asked for a breakdown of all attorney fees paid in the                 
  case and who the  payments were to.  Senator Sharp  asked if                 
  the  state expects continuing expenses  from the case.  Mrs.                 
  Ritchie  noted that  the merits  case on  the mental  health                 
  trust  appeal  is  pending  before  the  supreme court.    A                 
  briefing schedule was recently issued.   Briefing will occur                 
  through  summer  and into  fall.   There  are 180  points on                 
  appeal.  Mrs.  Ritchie said she would  provided a memorandum                 
  updating the status of litigation.                                           
                                                                               
  Senator  Rieger  inquired   concerning  particulars  of  the                 
                                                                               
                                                                               
  $261.00 payable  in CSED  v. Bond.   Mrs. Ritchie  explained                 
  that the award of attorney fees  stems from a paternity suit                 
  which questioned whether Rule 82  fees should apply to  CSED                 
  paternity cases.  The court  ruled affirmatively and limited                 
  the  fees to the Rule 82 amount.   The defendant sought full                 
  fees.                                                                        
                                                                               
  Senator  Rieger  noted  that  a  review of  judgment  awards                 
  indicates that private  individuals who  sue the state  "get                 
  pennies"  compared to agencies in  the business of suing the                 
  state.    The pattern  in  award  of attorney  fees  appears                 
  backward.  Mrs. Ritchie suggested that greater fees indicate                 
  greater  complexity  and substantially  more  attorney time.                 
  CSED cases tend to  be single issue.  Mrs.  Ritchie stressed                 
  that awards depend upon a number of factors.  The department                 
  consistently attempts to  reduce awards as much  as possible                 
  and requires opposing parties to justify attorney fees.                      
                                                                               
  Senator Zharoff inquired regarding the  effect of not paying                 
  judgments.    Mrs. Ritchie  said she  was  not aware  of any                 
  judgments  against  the  state  that  have  not  been  paid.                 
  Referencing  the judgment  for Alaska  Legal  Services, Mrs.                 
  Ritchie explained that the agency  could be awarded attorney                 
  fees just  as any  private lawyer or  law firm.   That  is a                 
  separate matter  from the  Dept. of  Community and  Regional                 
  Affairs grant to the agency.                                                 
                                                                               
  Ms. Otto suggested that failure to pay court judgments would                 
  trigger more litigation,  place the  state in contempt,  and                 
  lead   to  additional  liability   for  attorney   fees  for                 
  litigation of non-payment of fees, plus interest.    Senator                 
  Randy Phillips asked if the court has the power to force the                 
  Legislature to appropriate funding.  Does the court have the                 
  power of appropriation?   Ms. Otto  said the issue has  been                 
  researched within the context of Cleary fines.  She declined                 
  to  answer  the  question "in  this  setting."   Co-chairman                 
  Halford   remarked   that   the    question   represents   a                 
  constitutional standoff.  He cited incidences wherein courts                 
  have used mandamus to force appropriations.   The other side                 
  of the coin is the fact that the Legislature has the court's                 
  budget.  He noted  that whether justified or not,  judgments                 
  against the  state have eventually  been paid.   He remarked                 
  that the one that "stands out  as a little bit ridicules  is                 
  the  fine . .  . to  the general fund  of the state  for the                 
  Cleary case because it's an absolute circle."                                
                                                                               
  Senator Zharoff asked the  department to provide information                 
  on original requests  versus the  amount of each  negotiated                 
  judgment.                                                                    
                                                                               
  Referencing the $1,285,000.00 for Toksook  Bay v. State, Co-                 
  chairman Halford explained  that the request from  last year                 
  totals  approximately the same as this  year.  However, last                 
  year, the  feeling was  that the  state was  walking into  a                 
                                                                               
                                                                               
  precedent  that  would hold  the  state liable  under strict                 
  liability  for  things  it  had no  control  over  and  that                 
  occurred under  both federal ownership and  state ownership.                 
  That  was  not the  intent  of  strict liability  law.   The                 
  Legislature decided to deal with the issue only if there was                 
  a solution to  the strict  liability question.   Co-chairman                 
  Halford  said  he  would  support  the request  if  a  House                 
  amendment  to SB 69 becomes law,  because new language would                 
  limit strict liability as it applies to the state.                           
                                                                               
  Co-chairman  Frank  next  referenced  the  $225.0   judgment                 
  against the  Dept. of  Transportation and  Public Facilities                 
  for  wrongful  termination  at  the Anchorage  International                 
  Airport.                                                                     
                                                                               
  END:      SFC-96, #51, Side 1                                                
  BEGIN:    SFC-96, #51, Side 2                                                
                                                                               
  Mrs.  Ritchie explained  that  the  Alaska Police  Standards                 
  Council denied certification to two long-term airport safety                 
  officers  when  new legislation  required that  the officers                 
  have  certification.    The superior  court  found  that the                 
  council  abused its discretion  in denying certification and                 
  directed that  the officers  be certified.  In the  interim,                 
  DOTPF   terminated   the  employees   because   they  lacked                 
  certification.   The judgment  compensates the  two officers                 
  for  lost  pay.    The  case  involved  application  of  new                 
  standards to existing  long-term employees.  The  court held                 
  it was  unfair to terminate  employees who had  proven their                 
  ability to do  the job.   The case also  involved a  dispute                 
  between the  council, which regulates and  certifies certain                 
  state  employees,  and  the  department  that  employs them.                 
  DOTPF had no alternative but  to terminate the officers when                 
  the council  denied certification,  even  if the  department                 
  disagreed with the denial.                                                   
                                                                               
  Co-chairman Frank asked why the council was not sued and the                 
  officers allowed to  keep their jobs pending  outcome of the                 
  case.    He voiced  frustration  over repeated  instances in                 
  which  employees  have been  terminated  and the  state must                 
  provide  back pay  for the  time cases progress  through the                 
  courts.   He suggested  that employees  be kept  on the  job                 
  pending a determination.  Ms. Otto stressed that the statute                 
  contains "an absolute prohibition on  being employed in that                 
  capacity  unless  you  are certified  by  the  Alaska Police                 
  Standards Council."   Once certification  was denied,  DOTPF                 
  would have been breaking the law in continuing to employ the                 
  officers.    Co-chairman  Frank  noted  that  the  officers'                 
  individual  rights  were violated  by  wrongful termination.                 
  Ms. Otto  noted that  future problems  could  be avoided  if                 
  legislation effecting new standards  contains grandfathering                 
  provisions.    That  was discussed  when  the  new standards                 
  legislation was pending,  but the  Legislature chose not  to                 
  include the provision.                                                       
                                                                               
                                                                               
  Further discussion  of  vision requirements  giving rise  to                 
  denial of  certification followed.   The  court reached  the                 
  conclusion that because  the officers had been  employed and                 
  carried  weapons  for  many  years,  the regulation,  as  it                 
  applied  to them,  was  not valid.    Further discussion  of                 
  regulatory standards of  the council followed.   Co-chairman                 
  Frank asked that  the Dept. of  Law determine the number  of                 
  employees  terminated each year,  how many  terminations are                 
  appealed  through the grievance process,  and how many go to                 
  court.    Mrs.   Ritchie  remarked  that  the   numbers  are                 
  significant, and she agreed to provide statistics.                           
                                                                               
                             RECESS                                            
                                                                               
  At  this  time, Co-chairman  Frank  announced that  he would                 
  recess  review of  supplemental  requests  until 8:00  a.m.,                 
  Friday,  March  29,  1996, at  which  time  discussion would                 
  commence with Berger v. State.   The meeting was recessed at                 
  9:05 a.m.                                                                    
                                                                               
                            RECONVENE                                          
                                                                               
  Co-chairman Halford reconvened  the meeting at approximately                 
  9:13 a.m. and  announced that  the committee would  consider                 
  legislation in the order listed on the agenda.                               
                                                                               
                                                                               
  SENATE BILL NO. 177                                                          
                                                                               
       An  Act relating  to  permits to  carry  concealed                      
       handguns.                                                               
                                                                               
  Co-chairman  Halford directed that SB 177  be brought on for                 
  discussion,  referenced  a  draft Senate  Finance  Committee                 
  Substitute,  and noted proposed  amendments.  Senator Green,                 
  sponsor of  the legislation,  explained that  work draft  9-                 
  LS1139\D,   Luckhaupt,   3/25/96,   incorporates  amendments                 
  offered at an earlier hearing.  In addition, concern  raised                 
  by members regarding  the drafting style used  in provisions                 
  relating to state  ferries was addressed by  new language at                 
  page 6, line 32, and a new Sec. 14 on page 8.                                
                                                                               
  Senator  Sharp MOVED  for adoption  of  CSSB 177  (Fin), "D"                 
  version as the  mark-up vehicle.   No objection having  been                 
  raised, CSSB 177 (Fin) was ADOPTED.                                          
                                                                               
  Senator Randy Phillips  MOVED for adoption of  Amendment No.                 
  3.   Co-chairman Frank  requested an  explanation.   Senator                 
  Phillips raised a question regarding  whether the ability of                 
  one to carry  a concealed weapon  supercedes the right of  a                 
  homeowner to  prevent those carrying  concealed weapons from                 
  coming into one's home.  Under  current law a homeowner must                 
                                                                               
                                                                               
  post a sign or verbally advise that  he or she does not want                 
  those carrying concealed  weapons on the premises.   Senator                 
  Phillips voiced his belief that the  right of a homeowner to                 
  prevent entry of those carrying concealed weapons supercedes                 
  the rights of those carrying weapons.  The person carrying a                 
  weapon should have to seek permission to enter the property.                 
  Co-chairman Halford agreed that the  rights of the homeowner                 
  should prevail, but  he raise  a question concerning  notice                 
  requirements.                                                                
                                                                               
  Discussion  followed  among   members  regarding   amendment                 
  language  requiring  that  express  permission  to  bring  a                 
  concealed  handgun  into  a residence  be  obtained  from an                 
  "adult"  residing  in   the  residence.    Senator   Zharoff                 
  questioned  whether  the language  might  be too  broad, but                 
  alternative language was not developed.                                      
                                                                               
  Senator Green stated  her opposition to the amendment.   She                 
  suggested that if a homeowner desires that someone not carry                 
  a concealed handgun onto the  premises, the homeowner should                 
  make his or her wishes known.  A homeowner has the  right to                 
  deny anyone access to the owner's  home.  She suggested that                 
  the  amendment makes  false,  prejudicial assumptions  about                 
  those who  carry concealed  weapons.   Senator Rieger  noted                 
  that, at  times, homeowners  allow individuals  they do  not                 
  know well  to enter their  homes.   Alaskans are  hospitable                 
  people.  The point made by the amendment addresses governing                 
  priorities within the walls of an individual's residence.                    
                                                                               
  Co-chairman Halford called for a  show of hands on  adoption                 
  of the amendment.  Amendment No. 3 was ADOPTED on a vote for                 
  4 to 3.                                                                      
                                                                               
  Senator Randy Phillips next referenced  an amendment for the                 
  Mary Conrad  Center.  He  voiced his understanding  that the                 
  bill   allows  the   department  to   implement  regulations                 
  prohibiting the  carrying  of concealed  weapons in  certain                 
  places such as on  the marine highway system.  He then asked                 
  whether provisions should be placed in statute or dealt with                 
  via regulation.  Senator Sharp noted that entities have  the                 
  right to  post notice  "against anything  coming into  their                 
  building,  whether  it's  handguns  or  backpacks."  Senator                 
  Phillips stressed that the concern is  larger than the issue                 
  of concealed weapons.  Is the Legislature going to allow the                 
  bureaucracy to implement  regulations based on what  the law                 
  says  or  otherwise?   Co-chairman  Frank concurred  that no                 
  parameters had been established.   Senator Phillips voiced a                 
  preference  for statutory  listing of  establishments within                 
  which  the  carrying  of  concealed weapons  is  prohibited.                 
  Senator Green directed  attention to language at  the bottom                 
  of  page 6 and  noted that  it speaks  to state  and federal                 
  prohibitions  against  possession  of  a  deadly  weapon  or                 
  firearm.   BRENT HUBER, aide to  Senator Green, briefly came                 
  before  committee.   He explained  that  language at  page 6                 
                                                                               
                                                                               
  referencing  state  and federal  law  was included  to allow                 
  existing regulations for  the ferry system to  "take care of                 
  their concern."  It was  later determined that ferry  system                 
  prohibitions are policy  rather than regulation.   The ferry                 
  system was thus specifically cited in the bill.                              
                                                                               
  Senator Phillips again referenced an  amendment for the Mary                 
  Conrad  Center  and  asked if  the  facility  could prohibit                 
  possession  of  concealed  weapons.    Mr.  Huber  responded                 
  affirmatively, advising that the  facility would merely have                 
  to post a sign  advising of the prohibition.   Senator Green                 
  noted that the same ability would be available to facilities                 
  providing services  to  victims  of  domestic  violence  and                 
  sexual  assault  set forth  in  Senator  Rieger's amendment.                 
  Senator  Rieger  explained  that his  amendment  responds to                 
  testimony  from  the  director of  the  council  on domestic                 
  violence who  did not  want shelters  excluded from  current                 
  law.  Amendment language reinstates those facilities.                        
                                                                               
  Senator  Rieger further cautioned that the criminal trespass                 
  statute referred to  as a means  of "keeping people out"  is                 
  being removed elsewhere in the bill as one of the violations                 
  providing grounds for revoking a permit to carry a concealed                 
  weapon.  Senator  Sharp noted that the  trespass law remains                 
  strong in terms of  prohibiting entry.  Removal  of trespass                 
  as grounds for revoking a permit  has no relation to posting                 
  of  notices  prohibiting  concealed weapons  in  facilities.                 
  Further discussion focused on provisions at page 4, line 10,                 
  of  the work  draft.   Senator  Donley  noted that  brackets                 
  enclosing citation of AS 11.46.320 and 11.46.330 should have                 
  been removed from  the bill  as part of  an earlier  motion.                 
  Co-chairman Halford directed that the brackets be removed.                   
                                                                               
  Senator Rieger MOVED  for adoption of the  domestic violence                 
  amendment.  Discussion  followed regarding  the process  for                 
  prohibiting  concealed  weapons  on  public  versus  private                 
  property.   Senator  Donley advised  that  private  property                 
  owners need merely  post notice while prohibition  on public                 
  property must  be set  in statutes.   Additional  discussion                 
  followed regarding ferry system policy regarding weapons.                    
                                                                               
  Referencing the proposed amendment, Senator Green noted that                 
  victims of domestic violence  are sometimes permit  holders.                 
  She then suggested  that the  amendment would prohibit  them                 
  from entering shelters.   She noted that, under  the propose                 
  bill,  shelters could  formulate  policy that  regulates the                 
  issue and post the premises, if management chooses to do so.                 
  Senator Rieger stressed  that those  living at shelters  are                 
  living in great fear and want nothing around them that could                 
  cause additional fear.  They seek assurance that the shelter                 
  is a safe place.  Senator Green reiterated that the facility                 
  has the right to post notice of prohibition.  Senator Rieger                 
  suggested that  the  ability  to  post is  not  clear  under                 
  existing language.                                                           
                                                                               
                                                                               
  Co-chairman Halford called  for a show of  hands on adoption                 
  of the amendment.  The  domestic violence facility amendment                 
  was ADOPTED on a vote of 4 to 3.                                             
                                                                               
  Directing attention to page 6,  Senator Zharoff again raised                 
  a question concerning areas cited in subsections (4) through                 
  (12) and posed for  removal.  Senator Sharp MOVED  that CSSB                 
  177    (Fin)   pass    from   committee    with   individual                 
  recommendations and accompanying fiscal notes.  No objection                 
  having  been raised,  CSSB  177 (Fin)  was  REPORTED OUT  of                 
  committee with zero notes from the Dept. of Law and Dept. of                 
  Corrections  and  a note  from  the Dept.  of  Public Safety                 
  showing  a  revenue  reduction  of  ($117.6).    Co-chairmen                 
  Halford and Frank  and Senators Donley and  Sharp signed the                 
  committee report with a "do  pass" recommendation.  Senators                 
  Phillips, Rieger, and Zharoff signed "no recommendation."                    
                                                                               
                                                                               
  SPONSOR SUBSTITUTE FOR SENATE BILL NO. 181                                   
                                                                               
       An  Act  relating  to  the  promotion   of  Alaska                      
       businesses  through  signs, displays,  and devices                      
       within or  adjacent to  highway rights-of-way,  to                      
       municipal   regulation   of   directional   signs,                      
       displays,  and  devices,   and  to  penalties  for                      
       violations related to outdoor advertising.                              
                                                                               
  Co-chairman Halford directed that SSSB 181 be brought on for                 
  discussion.  Senator Green again came before committee.  She                 
  referenced a work draft CSSSSB 181 (9-LS1164\U,  Utermohole,                 
  3/22/96) and explained that it  incorporates an amendment by                 
  Senator  Rieger  within  both  title  language and  Sec.  4.                 
  Contact with staff  from the Federal Highway  Administration                 
  indicates the program will  work within federal  guidelines.                 
  (See March 25, 1996, correspondence from  FHA on file in the                 
  original Senate Finance Committee file for SB 181.)                          
                                                                               
  Senator  Randy  Phillips MOVED  for  adoption of  CSSSSB 181                 
  (Fin).   No objection having  been raised, CSSSSB  181 (Fin)                 
  was ADOPTED.  Senator Sharp MOVED that CSSSSB 181 (Fin) pass                 
  from committee with individual recommendations and accompany                 
  fiscal  notes.  No objection having  been raised, CSSSSB 181                 
  (Fin) was REPORTED OUT of committee with a $40.0 fiscal note                 
  from the Dept. of Transportation and Public Facilities.  Co-                 
  chairmen Frank  and Halford  and Senators  Donley and  Sharp                 
  signed the committee report with a "do pass" recommendation.                 
  Senators   Phillips,   Rieger,   and   Zharoff  signed   "no                 
  recommendation."                                                             
                                                                               
                                                                               
  SPONSOR SUBSTITUTE FOR SENATE BILL NO. 20                                    
                                                                               
                                                                               
       An  Act establishing  the  Alaska municipal  basic                      
       services program, relating  to certain programs of                      
       state aid to municipalities and recipients in  the                      
       unorganized   borough;   and   providing  for   an                      
       effective date.                                                         
                                                                               
  Co-chairman Halford directed that SSSB 20 be brought  on for                 
  discussion.  KEVIN  RITCHIE came before committee  on behalf                 
  of the Alaska  Municipal League and the Alaska Conference of                 
  Mayors.    He voiced  support  for  the bill  and  described                 
  efforts that led to development of the  legislation over the                 
  past two years.                                                              
                                                                               
  END:      SFC-96, #51, Side 2                                                
  BEGIN:    SFC-96, #52, Side 1                                                
                                                                               
  SENATOR  TORGERSON, sponsor  of  the legislation,  next came                 
  before committee.   He explained that  the bill renames  the                 
  "municipal  assistance" portion to "revenue sharing for safe                 
  communities." Provisions  require moneys received  from safe                 
  communities to be spent on  certain public purposes, require                 
  municipalities to  list notice to taxpayers of the amount of                 
  money received  from safe  communities, and  allow the  base                 
  amount to be  prorated.   Since establishment  in 1978,  the                 
  base amount was  held harmless from  cuts.  This funding  is                 
  the former  business license  tax.   The legislation  "takes                 
  money  from  all  the  communities  and raises  the  minimum                 
  entitlement  to smaller  communities  to  $40.0."    Funding                 
  required for the transition totals  $238.9.  That amount  is                 
  prorated  from each  community.  The  bill also  changes the                 
  date of the payment to coincide  with the earlier payment so                 
  that both sections are paid on July 31.  That results in one                 
  payment for both revenue sharing and  safe communities.  The                 
  remainder of the bill involves housekeeping measures.                        
                                                                               
  The  sponsor  further  described  past  efforts  to  rewrite                 
  municipal assistance and revenue sharing  programs.  He said                 
  he had been  involved in attempts  to change the formula  so                 
  that "We wouldn't have many winners and losers when we tweak                 
  the formula."   The approach proposed within CSSSSB 20 (CRA)                 
  is overwhelmingly supported by the Conference of Mayors, the                 
  Alaska  Municipal  League,  and  communities  that  are  not                 
  members of either of the foregoing organizations.                            
                                                                               
  Senator  Torgerson attested  to  past controversy  over  the                 
  fiscal note.   The  fiscal note  from the  Dept. of  Revenue                 
  derives from moving the $29.4  million payment from February                 
  to July 31.   Senator Torgerson said he  did not agree  with                 
  the resulting ($874.0) fiscal note.  He advised that part of                 
  the reason for advancing  the payment date is the  fact that                 
  July is one  of the  only months  in which the  state has  a                 
  surplus.  The proposed bill would entail expenditure of part                 
  of  the  surplus and  would  not involve  the constitutional                 
                                                                               
                                                                               
  budget reserve.                                                              
                                                                               
  In response to a question  from Co-chairman Halford, Senator                 
  Torgerson directed attention to a  tabulation (copy on file)                 
  listing funding to be received  under the existing municipal                 
  assistance program  versus that  in the  proposed bill.   He                 
  then spoke to impact on specific communities.                                
                                                                               
  Responding  to a question  from Co-chairman Halford, Senator                 
  Torgerson explained that  the idea behind the  $40.0 minimum                 
  entitlement is to transform every community below that level                 
  up to that mark.  That would take care of this  fiscal year.                 
  In future years,  if there  is a reduction  in the  program,                 
  each community will take the same  amount of reduction.  The                 
  $40.0 is  not held  harmless forever.   Co-chairman  Halford                 
  asked  if  the  one-third,  two-third  split   between  safe                 
  communities and  state revenue sharing,  respectively, would                 
  remain in place.  Senator Torgerson responded affirmatively.                 
  He added that state revenue sharing  is distributed on a per                 
  capita basis while the one-third  split is distributed "into                 
  the safe communities  portion."  Co-chairman Halford  voiced                 
  his understanding that the  appropriation goes through  that                 
  separation and  is prorated  for each  community.   He  then                 
  asked if  separation and proration  apply to both  total and                 
  minimum  entitlements.    Senator  Torgerson  said  that the                 
  minimum entitlement is not subject  to "the safe communities                 
  portion."  Minimum entitlement "comes out up front."                         
                                                                               
  BILL ROLFZEN, State Revenue  Sharing, Division of  Municipal                 
  and Regional  Assistance,  Dept. of  Community and  Regional                 
  Affairs,  came  before  committee.   Speaking  to  the  one-                 
  third/two-third split, he  explained that the intent  was to                 
  allow the base  amount to be subject to cuts  in the future.                 
  For  the  FY 96  appropriation  to the  municipal assistance                 
  program, one-third went  to the  base amount and  two-thirds                 
  went  to   the  per   capita  account.     If  the   overall                 
  appropriation is reduced,  each account would be  subject to                 
  the same amount of cuts.                                                     
                                                                               
  In response to  a question  from Co-chairman Halford  asking                 
  how the minimum  entitlement would be impacted,  Mr. Rolfzen                 
  responded,                                                                   
                                                                               
       Okay,  we go through  the revenue sharing program.                      
       We go through the municipal assistance (now called                      
       the safe  communities formula).   If  after we  go                      
       through  the   entire  formula,  there   are  some                      
       municipalities that don't  have a total  of $40.0,                      
       going  to  that  municipality, we  go  to  the per                      
       capita account under the safe communities fund and                      
       grab enough money to bring  everybody up to $40.0.                      
                                                                               
                                                                               
  Mr. Rolfzen  further added,  "But, no one  gets an  absolute                 
                                                                               
                                                                               
  $40.0.   The  intent was  that all  municipalities  share in                 
  bringing up the smaller communities to  $40.0."  If there is                 
  a cut, they are also to share in that cut.  He then directed                 
  attention to the  distributed tabulation and noted  that for                 
  the first  year some municipalities at the $40.0 level would                 
  actually be receiving $39.9.                                                 
                                                                               
  In  response  to a  question  from Co-chairman  Halford, Mr.                 
  Rolfzen acknowledged that under existing revenue sharing the                 
  minimum  is  $25.0  times  the cost-of-living  differential.                 
  There is no minimum entitlement under municipal  assistance.                 
  The proposed bill  would set  a minimum of  $40.0 and  bring                 
  approximately  41  of  the "very  small  communities"  up to                 
  $40.0.    It  would  cost  approximately  $238.0  statewide.                 
  Smaller communities would also share in bringing communities                 
  to the $40.0 threshold.                                                      
                                                                               
  PAT  POLAND, Director,  Division  of Municipal  and Regional                 
  Assistance, Dept.  of Community  and Regional  Affairs, next                 
  spoke via  teleconference  from  Anchorage.    He  expressed                 
  support  for  the   bill  and   advised  that  it   contains                 
  improvements  to  municipal assistance  and  revenue sharing                 
  programs.   It  effects  changes in  a  fair and  "generally                 
  balanced manner."   It is  important that the  state protect                 
  its  investment  in   public  infrastructure  made   through                 
  municipal governments.   Establishment of a  minimum funding                 
  level is an  important step in  that direction.  Removal  of                 
  the holdharmless provision  will provide for better  program                 
  equity.   Moving the date  for the safe  communities payment                 
  forward  will  enable   larger  municipalities  to  minimize                 
  impacts from cuts.   In his  concluding remarks, Mr.  Poland                 
  acknowledged  a  difference  between  departments  over  the                 
  fiscal impact of  the date change.   He then voiced  support                 
  for a date that "basically gives us the fiscal impact at the                 
  lower  end  of the  fiscal note  submitted  by the  Dept. of                 
  Revenue."                                                                    
                                                                               
  Senator Rieger referenced a proposed amendment and explained                 
  that when the legislature passed legislation relating to the                 
  ranking of  school projects, the listing of  a priority list                 
  in statutes  produced an awkward  result in which  the first                 
  item  on  the list  was  required  to be  exhausted,  in its                 
  entirety, before proceeding to the next  item.  That was not                 
  the  intent.    To  clarify   the  situation,  the  proposed                 
  amendment contains the following language:                                   
                                                                               
       Subsection  (c)   of  this  section  may   not  be                      
       construed  to require  a municipality to  fund all                      
       requests it receives  for services  in a  category                      
       with a higher ranking  of priority before  funding                      
       services in  a category  with a  lower ranking  of                      
       priority.                                                               
                                                                               
  The  Senator  then  MOVED  for  adoption of  the  amendment.                 
                                                                               
                                                                               
  Senator Torgerson  acknowledged that the amendment clears up                 
  problems within the bill.   No objection having been raised,                 
  Senator Rieger's amendment was ADOPTED.                                      
                                                                               
  To an inquiry  from Co-chairman Frank concerning  the repeal                 
  within Sec.  13, Senator  Rieger explained  that the  clause                 
  required  a  municipality  to reduce  taxes  in  response to                 
  revenue sharing and municipal assistance increases.                          
                                                                               
  Co-chairman Frank asked  if the bill deals with both revenue                 
  sharing  and   municipal  assistance.     Senator  Torgerson                 
  responded, "basically  just municipal assistance."   The Co-                 
  chairman  then  voiced his  understanding  that the  primary                 
  thrust  is  to increase  the  minimum entitlement  to $40.0.                 
  Senator Torgerson  added that  it also removes  holdharmless                 
  provisions.    Discussion  followed  regarding  the  current                 
  workings of  holdharmless language.   Additional  discussion                 
  followed regarding  minimum entitlements under  the proposed                 
  bill.    Co-chairman Frank  asked  if the  legislation would                 
  cover  unincorporated areas.    Senator Torgerson  responded                 
  negatively.                                                                  
                                                                               
  In  response to inquiries  from Co-chairman Frank concerning                 
  municipal  support, Senator  Torgerson  said  that both  the                 
  mayor of the Fairbanks Borough and the mayor of the City  of                 
  Fairbanks worked with the mayor of Anchorage in  putting the                 
  proposed plan together.                                                      
                                                                               
  VERN  VOSS,   Cash  Manager,  Treasury  Division,  Dept.  of                 
  Revenue, came  before  committee in  response  to  questions                 
  regarding cash  flow and  the  department fiscal  note.   He                 
  explained  that  if  funds  are  paid to  municipalities  in                 
  February versus July,  the state must borrow  money from the                 
  constitutional budget  reserve or  another source.   In  the                 
  alternative, if excess  funds are  available, early  payment                 
  would effect a reduction in interest income.                                 
                                                                               
  JOHN STEIN  next testified via teleconference  from Wasilla.                 
  He  voiced  support  for the  legislation,  saying  that the                 
  Alaska Municipal  League and the legislature  have developed                 
  "something  that  sort  of  makes  sense  out  of  municipal                 
  funding."    He  voiced  further   support  for  the  public                 
  relations campaign to explain to voters that "This is really                 
  a sloughing . . . a  pushing down of costs to the  municipal                 
  governments."   That should be  understood.  Mr. Stein urged                 
  support for the bill and local governments.                                  
                                                                               
  Co-chairman Frank MOVED for passage of CSSSSB  20 (Fin) with                 
  individual  recommendations  and accompanying  fiscal notes.                 
  CSSSSB 20 (Fin)  was REPORTED OUT  of committee with a  zero                 
  fiscal note from the Dept. of Community and Regional Affairs                 
  and a note  from the Dept.  of Revenue projecting a  revenue                 
  reductions of $(874.0).   Co-chairmen Frank and  Halford and                 
  Senators Sharp and Zharoff signed  the committee report with                 
                                                                               
                                                                               
  a "do pass" recommendation.   Senators Donley, Phillips, and                 
  Rieger signed "no recommendation."                                           
                                                                               
                                                                               
  SENATE BILL NO. 112                                                          
                                                                               
       An Act establishing a discovery royalty credit for                      
       the  lessees of  state  land drilling  exploratory                      
       wells and making the first discovery of oil or gas                      
       in commercial quantities.                                               
                                                                               
  Co-chairman Halford  directed that SB 112 be  brought on for                 
  discussion.  ANNETTE  KREITZER, aide to Senator  Leman, came                 
  before committee.   She explained  that changes within  CSSB                 
  112 (Res) address  problems with terms contained  within the                 
  original bill.  Concern relates to:                                          
                                                                               
       1.   What constitutes first discovery?                                  
       2.   What are commercial quantities?                                    
       3.   What is the geologic structure?                                    
       4.   What is the discovery date?                                        
       5.   Does the discovery royalty apply to all zones in a                 
            lease?                                                             
                                                                               
  As  introduced, the bill would allow  new discovery rules to                 
  apply  to the exploration  licensing program (Sec.  1).  The                 
  bill is ultimately to encourage  early exploration through a                 
  reduced royalty.   Language within  subsection (3) (page  2,                 
  lines 2  through 11)  narrows the  scope to  the Cook  Inlet                 
  sedimentary basin.                                                           
                                                                               
  Directing  attention to  page 4  of the  bill, Ms.  Kreitzer                 
  noted that the  legislation includes non-unitized  leases as                 
  well as  non-producing leases.   Language  also states  that                 
  leases  that carry  the former  discovery  royalty provision                 
  cannot apply under the new program.                                          
                                                                               
  In her  closing remarks,  Ms. Kreitzer  reiterated that  the                 
  royalty  program applies  only to leases  in the  Cook Inlet                 
  sedimentary basin  (effective  on  all  non-producing,  non-                 
  unitized  leases)  and  future  leases  certified  as  first                 
  discovery by the commissioner six months after the effective                 
  date of the act.                                                             
                                                                               
  Senator Rieger  asked if discovery  royalty provisions  were                 
  known  at the time  of the sale  of original leases  or were                 
  they enacted after  the lease sale.   Ms. Kreitzer said  she                 
  would obtain an answer.                                                      
                                                                               
  Senator  Sharp  voiced  his  understanding  that Cook  Inlet                 
  leases  on  which  there  has  been no  discovery  would  be                 
  entitled to  a 5 percent  royalty on future  discoveries for                 
  ten years.  Ms. Kreitzer noted  that the royalty would apply                 
                                                                               
                                                                               
  to discoveries in  the Cook Inlet  sedimentary basin.  If  a                 
  non-producing,  non-unitized lease  is  involved, the  owner                 
  could apply for first discovery (one per lease).                             
                                                                               
  Senator Sharp  voiced his understanding that  all production                 
  from the lease, regardless of the  number of wells, would be                 
  subject to the 5 percent royalty.  In response to a question                 
  from Senator Sharp concerning the number of leases involved,                 
  Ms. Kreitzer directed attention to backup  materials (copies                 
  on file in the original Senate Finance Committee file for SB                 
  112) and  referenced a  list of  leases as  well as  a legal                 
  decision outlining problems with the previous program.                       
                                                                               
  Discussion followed  regarding the proposed  royalty program                 
  and the existing exploration incentive credit.  Ms. Kreitzer                 
  noted that the exploration license is separate and unrelated                 
  to  discovery  royalty  credits.     One  working  under  an                 
  exploration  license could  apply  for a  discovery royalty.                 
  Ms. Kreitzer  next spoke  to situations  surrounding earlier                 
  passage of the exploration license  program.  She voiced her                 
  understanding  that  regulations for  the program  were only                 
  recently promulgated by the department.                                      
                                                                               
  Senator Sharp asked if the proposed  bill would allow one to                 
  pyramid discovery  benefits or exploration  credits to where                 
  the  "state  would be  receiving less  than  a minimum  of 5                 
  percent on  oil production."   Ms.  Kreitzer responded  that                 
  while that is  not the intent  of the proposed  legislation,                 
  she would review the situation to  determine whether it is a                 
  possibility and whether there is need for limiting language.                 
                                                                               
                                                                               
  END:      SFC-96, #52, Side 1                                                
  BEGIN:    SFC-96, #52, Side 2                                                
                                                                               
  Senator Sharp  directed attention  to page 3,  line 25,  and                 
  expressed need for clarification of new  language commencing                 
  there and continuing to  the next page.  Ms.  Kreitzer asked                 
  if it  was the  intent of  the committee  that the  bill not                 
  allow  opportunity  for one  to  apply under  more  than one                 
  program,  resulting  in  more  than   a  5  percent  royalty                 
  reduction.    Senator Sharp  again voiced  concern regarding                 
  opportunity, through the proposed  bill in combination  with                 
  other programs, for  the state  to receive less  than the  5                 
  percent minimum.  Ms. Kreitzer said she did not know whether                 
  bill  language  needed  to  be  clarified to  preclude  that                 
  opportunity.    Co-chairman  Halford  acknowledged  need  to                 
  answer that question and  directed that the bill be  held in                 
  committee pending receipt of additional information.                         
                                                                               
                                                                               
  SENATE BILL NO. 152                                                          
                                                                               
                                                                               
       An Act  relating to  geographic differentials  for                      
       the  salaries of certain  state employees  who are                      
       not  members  of  a  collective  bargaining  unit;                      
       relating   to   periodic   salary    surveys   and                      
       preparation of  an annual  pay schedule  regarding                      
       certain state employees; relating to certain state                      
       aid calculations based on geographic differentials                      
       for state  employee salaries; and providing for an                      
       effective date.                                                         
                                                                               
  Co-chairman Halford directed  that SB 152 be  brought on for                 
  discussion.   ALISON  ELGEE, Deputy  Commissioner, Dept.  of                 
  Administration, came before  committee.  She  explained that                 
  the bill  contains a  lower cost  of  living than  presently                 
  being  paid state  employees who  are not  represented by  a                 
  union or  covered by  collective bargaining.   A  relatively                 
  small group  would initially  be impacted.   However,  union                 
  contracts  now  before   the  Legislature  contain  reopener                 
  clauses that would  allow the state  to negotiate a new  pay                 
  differential  for  union members,  based  on passage  of the                 
  proposed bill.    Ms. Elgee  next  directed attention  to  a                 
  handout  demonstrating  differences  between   existing  and                 
  proposed differentials.    She explained  that  the  current                 
  differential is tied  to other statutes.   In developing the                 
  proposed bill, the  Governor attempted to impact  only state                 
  employees.                                                                   
                                                                               
  Sec.  1  maintains  magistrates  at the  existing  statutory                 
  level.    Ms. Elgee  said the  court  has been  conducting a                 
  review of  magistrate salaries  "and does  not believe  this                 
  section is any longer necessary."  Co-chairman Halford asked                 
  if the  cost to  the state  would be  raised  or lowered  by                 
  removal of Sec. 1.  Ms.  Elgee responded that costs would be                 
  lower if the  new differential  was applied to  magistrates.                 
  However,  the fiscal  note  does not  represent "any  of the                 
  court  system  employees."   It  covers  only  the executive                 
  branch.   The Legislature would  have to indicate its desire                 
  to apply the bill to court system employees as well.                         
                                                                               
  In response to a question from Co-chairman Frank, asking how                 
  the court system  proposed to  handle the differential,  Ms.                 
  Elgee termed the  magistrates "a real unique  little bunch."                 
  The  court  is   conducting  salary  review  of   "just  the                 
  magistrates."  They are the only group specifically  tied by                 
  statute  to the existing  differential.  As  a practice, the                 
  court  system has  followed  the statutory  differential for                 
  non-covered employees as well.                                               
                                                                               
  Ms. Elgee explained that Sec. 2 makes clear that the revenue                 
  sharing calculation currently tied to the existing area cost                 
  differential would continue.  That  would ensure that taking                 
  action  on  the proposed  bill  would produce  no unintended                 
  reduction  of  revenue  sharing  to  municipalities.     The                 
  Governor  did  not  want to  complicate  the  legislation by                 
                                                                               
                                                                               
  bringing  in issues  such as  aid to  municipalities.   That                 
  should be dealt with separately.                                             
                                                                               
  Sec. 3 applies specifically to the minimum payment level  in                 
  revenue sharing statutes.                                                    
                                                                               
  Sec. 4 lays out the proposed differential.   It has been ten                 
  years since a complete cost-of-living differential study was                 
  conducted for Alaska.   The 1985  study resulted in what  is                 
  known  as  the "union  differential."   Two  years  ago, the                 
  courts dictated that  the state abide by  existing statutory                 
  language that requires an annual salary survey.  Since there                 
  was no funding for the survey,  the department used $20.0 to                 
  contract with  the Runzheimer  Group to  prepare a  cost-of-                 
  living differential study.   Ms. Elgee noted  that the study                 
  produced odd results.   In preparing the proposed  bill, the                 
  administration used Runzheimer's work  as an indication that                 
  the cost-of-living  differential across the  state is coming                 
  down  but  did  not   utilize  it  as  the  basis   for  the                 
  administration's  proposal.   Ms. Elgee cited  study figures                 
  for cost-of-living differentials  at Nome  and Ketchikan  as                 
  evidence of apparent  inaccuracies.   In developing SB  152,                 
  the  administration utilized House  districts and looked for                 
  geographic similarities among the districts and common modes                 
  of transportation.                                                           
                                                                               
  Base levels (areas in which no geographic differential would                 
  apply) are Anchorage, Juneau, the Kenai Peninsula, Matanuska                 
  Valley, and  the Fairbanks  area.   For coastal  communities                 
  with ferry access but no road access, the bill proposes  a 5                 
  percent differential.  For interior  communities on the road                 
  system, the  proposal is  a 10  percent  differential.   The                 
  proposed  differential   is  20  percent  for   western  and                 
  northwestern communities.  The out-of-state differential has                 
  also  been modified.  In the  past, the differential applied                 
  to  all out-of-state  workers.   The  bill proposes  that it                 
  apply only to Washington state, and  that the state adopt an                 
  approach similar to that used  for foreign offices for other                 
  locations.    That  approach  is  specific  to   information                 
  relative to the cost of living in each  location.  Ms. Elgee                 
  cited need for flexibility to deal with unique circumstances                 
  such as salaries  for state  employees in Washington,  D.C.,                 
  where the cost of living is extremely high, as well as those                 
  temporarily stationed  in Louisiana pending  construction of                 
  the new state ferry.                                                         
                                                                               
  Co-chairman  Halford  asked  if   the  proposed  bill  would                 
  increase pay for  employees in Seattle  by 20 percent.   Ms.                 
  Elgee concurred that  it would increase pay  for non-covered                 
  employees,  but  it  would  reduce  pay  for  union  members                 
  residing  in  Seattle  by  approximately  10 percent.    Co-                 
  chairman Halford  voiced his  understanding that  the factor                 
  change increases Seattle  from 79.1  percent to 100  percent                 
  for non-covered  and 13  percent for union  employees.   Ms.                 
                                                                               
                                                                               
  Elgee clarified that  the bill proposes a  zero differential                 
  for Washington  state.   She concurred  that should  unions,                 
  through  collective   bargaining,  adopt  the   factor,  the                 
  foregoing would be the case.  Co-chairman Halford questioned                 
  reduction of pay  at Alaskan  locations while increasing  it                 
  for employees  in Seattle.   Ms.  Elgee responded,  "This is                 
  just  a  reflection of  what  we're seeing  in  the American                 
  Chamber    of    Commerce    studies    on    cost-of-living                 
  differentials."  It appears  that the cost of living  in the                 
  Seattle  area  is  comparable  to  the  cost  of  living  in                 
  Anchorage.                                                                   
                                                                               
  Senator Rieger presented  a handwritten amendment  to change                 
  the factor  for Seattle to  -10 percent.   Co-chairman Frank                 
  asked  that  the  committee  be   provided  a  copy  of  the                 
  Runzheimer report.  Ms. Elgee agreed  to do so, but stressed                 
  that it  has  little  value  since it  does  not  accurately                 
  reflect community-by-community cost of  living differentials                 
  for  Alaska.    She  said  she  would  also  make  available                 
  information  developed by  the American Chamber  of Commerce                 
  research  group,  which relates  to specific  communities in                 
  Alaska.                                                                      
                                                                               
  In response to a question  from Co-chairman Frank, Ms. Elgee                 
  explained  that  upon  passage  of  the proposed  bill,  the                 
  administration and unions  would go  back to the  bargaining                 
  table   to   renegotiate  the   cost-of-living  differential                 
  applicable  to  union  members.    Each  contract  currently                 
  contains its own area cost differential.  With the exception                 
  of PSEA, they all reflect  the differential outlined on  the                 
  handout.  Members questioned the administration's ability to                 
  engage  unions  in  such  negotiations  without  giving   up                 
  something and suggested that the  differential should be set                 
  in statutes and applied to all, union and non-union alike.                   
                                                                               
  Senator  Donley  directed   attention  to  Senator  Rieger's                 
  amendment  and noted ASMI claims  that it pays its employees                 
  in Washington state 18 percent below  the rate in Alaska and                 
  continues to obtain quality workers.  He then suggested that                 
  the reduction in the amendment should be -20 rather than -10                 
  percent.  Senator Donley further  directed attention to page                 
  3, line  3, and  voiced need  to change  the salary  portion                 
  ($30.0) to which the differential applies so that it applies                 
  to the whole salary range.                                                   
                                                                               
  In  response  to earlier  comments  regarding renegotiations                 
  with unions, Ms.  Elgee said that  the unions are "all  very                 
  well aware of  this legislation."   The administration  made                 
  clear  its  intent  to conform  area  cost  differentials to                 
  statutory  changes.    Reopeners were  negotiated  with that                 
  understanding.                                                               
                                                                               
  Co-chairman Frank referenced the $30.0 set forth at  page 3,                 
  subsection  (b)  and asked  if  the current  differential is                 
                                                                               
                                                                               
  applicable  to  the  entire  salary.   Ms.  Elgee  responded                 
  affirmatively, advising  that  bill  language  would  modify                 
  application  to cover only  "that portion of  salary that we                 
  would deem to be for the actual basic cost of living and not                 
  the  discretionary   portion  of  any   individual  salary."                 
  Senator Sharp suggested that the  $30.0 appears arbitrary in                 
  light of current low income and poverty numbers.                             
                                                                               
  Co-chairman Frank  raised  questions concerning  lack  of  a                 
  differential for Fairbanks, citing the  cost of heating fuel                 
  as an example  of costs  higher than those  in Anchorage  or                 
  Ketchikan.  Ms. Elgee explained that differentials reflect a                 
  market basket survey.  She  cited offsetting factors between                 
  communities.  Fairbanks  is included in national  chamber of                 
  commerce  surveys.    Information  provided  by  that  group                 
  indicates that the cost of living in Anchorage and Fairbanks                 
  is "almost identical."                                                       
                                                                               
  Senator Sharp voiced  interest in reviewing the  federal CPI                 
  for Seattle compared to Anchorage and Fairbanks.                             
                                                                               
  Senator Donley  requested an  assessment of  Alaska pay  for                 
  employees residing in Washington state versus  salaries paid                 
  state workers by the state of Washington.                                    
                                                                               
  Discussion among  members followed  regarding numbers  cited                 
  for North Pole, Alaska.                                                      
                                                                               
  Co-chairman Frank inquired regarding the dynamics associated                 
  with  achieving  parity   between  covered  and  non-covered                 
  workers when reducing differentials.  Ms. Elgee pointed to a                 
  one-year  transition.    At  the  time  of  passage  of  the                 
  legislation,  the  department   would  notify  all  impacted                 
  employees  who  would be  frozen in  current salaries  for a                 
  year.  Thereafter the  salaries would be reduced to  the new                 
  differential.   The feeling  was that a  year's notice would                 
  give  people  an  opportunity  to  readjust their  financial                 
  circumstances  or  look  for other  employment.    The state                 
  cannot afford a freeze, forever, given cutbacks in operating                 
  budget funding.                                                              
                                                                               
  Co-chairman Frank asked  why new  differentials rather  than                 
  merely  reopeners were  not negotiated  in  union contracts.                 
  Ms. Elgee said that the state has no substantive information                 
  allowing  for  renegotiation.     Passage  of  the  proposed                 
  legislation would put the administration in a position to do                 
  so.  Otherwise,  absent expenditure of $300.0  to $400.0 for                 
  an area-cost-differential study, the state has no basis.                     
                                                                               
  In response to further comments  from Co-chairman Frank, Ms.                 
  Elgee said  that for  ten years  non-covered employees  have                 
  enjoyed  a  differential  that  far  exceeds that  of  union                 
  employees.  Unions are not interested in "continuing to lead                 
  that   particular  action   without  modification   of  this                 
                                                                               
                                                                               
  schedule."  Contracts  have been ratified by  employees with                 
  the reopener in place.                                                       
                                                                               
  Senator Zharoff  raised a  question regarding  differentials                 
  for coastal communities with  ferry service.  He noted  lack                 
  of service by  the TUSTUMENA from October  through April and                 
  asked  that  the administration  review  the  consistency of                 
  service for individual communities.                                          
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 11:05 a.m.                        
                                                                               

Document Name Date/Time Subjects