Legislature(1995 - 1996)

04/23/1996 04:50 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                          23 April 1996                                        
                            4:50 P.M.                                          
  TAPES                                                                        
                                                                               
  SFC-96, #92, Sides 1 and 2                                                   
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Rick  Halford, Co-chairman, convened  the meeting at                 
  approximately 4:50 P.M.                                                      
                                                                               
  PRESENT                                                                      
                                                                               
  Co-chairman Halford along  with co-chairman Frank,  Senators                 
  Phillips, Sharp, Rieger  and Zharoff  were present when  the                 
  meeting convened.                                                            
                                                                               
  Also  Attending:  Dave  Wilder,  ASMI;  Catherine   Reardon,                 
  Director, Division of  Occupational Licensing, Department of                 
  Commerce  &  Economic Development;  Dwight  Perkins, Special                 
  Assistant  to the Commissioner,  Department of Labor; Remond                 
  Henderson, Director, Administrative Services,  Department of                 
  Community  &  Regional  Affairs;   Janice  Adair,  Director,                 
  Division    of    Environmental   Health,    Department   of                 
  Environmental Conservation; Dugan Petty,  Director, Division                 
  of  General  Services, Department  of  Administration; Nancy                 
  Slagle, Director, Office of Management & Budget; Joe Thomas,                 
  State  Accountant,   Division  of  Finance,   Department  of                 
  Administration;  Vern  Jones,  Chief   Procurement  Officer,                 
  Division of General Services, Department of  Administration;                 
  Mike  McMullen, Personnel  Manager,  Division of  Personnel,                 
  Department  of  Administration;   Bob  Bartholomew,   Deputy                 
  Director,  Income  & Excise  Audit  Division,  Department of                 
  Revenue;   Carol   Carroll,   Special   Assistant   to   the                 
  Commissioner, Department of Natural  Resources; Mike Greany,                 
  Director, Division of Legislative Finance; Jetta  Whittaker,                 
  Fiscal Analyst; and aides to committee members.                              
                                                                               
                                                                               
       SUMMARY INFORMATION                                                     
                                                                               
                                                                               
  CS FOR SENATE BILL NO. 215(RES)                                              
  "An  Act streamlining  the  functions of  state  government,                 
  including allowing agents selling fish and game licenses and                 
  tags  to   retain  certain  compensation;   authorizing  the                 
  Department of Health and Social Services to award grants for                 
  certain  services for  developmentally  delayed or  disabled                 
  children;  relating to rabies  control and administration of                 
  flour and bread standards by the Department of Environmental                 
  Conservation;   repealing   the  Athletic   Commission,  the                 
  regulation  of boxing  and wrestling,  the certification  of                 
                                                                               
                                                                               
  professional  geologists,  and  the  Water Resources  Board;                 
  repealing  certain   filing   statements   and   bonds   for                 
  enforcement  and collection  of certain  taxes; relating  to                 
  service of  process on nonresident  taxpayers; and providing                 
  for an effective date."                                                      
                                                                               
  Nancy  Slagle,  OMB  testified on  behalf  of  the bill  and                 
  reviewed  the   resources  version  including  amendments  1                 
  through 5.   Mike McMullen explained amendment #2.   Senator                 
  Sharp  moved  amendment  #2  and  without objection  it  was                 
  adopted excluding the title provision.  Joe Thomas explained                 
  amendment  #3.    Senator Phillips  moved  amendment  #3 and                 
  without   objection  it  was  adopted  excluding  the  title                 
  provision.  Bob Bartholomew explained amendment #4.  Senator                 
  Phillips moved  amendment #4  and without  objection it  was                 
  adopted  excluding  the  title  provision.    Carol  Carroll                 
  explained amendment #5.  Co-chairman  Halford, at this point                 
  held the bill in committee for further review.                               
                                                                               
                                                                               
       CS FOR SENATE BILL NO. 215(RES)                                         
       "An Act streamlining the functions of state government,                 
       including  allowing  agents   selling  fish  and   game                 
  licenses and   tags   to   retain    certain   compensation;                 
  authorizing the     Department of Health and Social Services                 
  to award grants for      certain         services        for                 
  developmentally delayed or disabled     children;   relating                 
  to rabies control and administration of      flour and bread                 
  standards by the Department of Environmental                                 
  Conservation;   repealing   the  Athletic   Commission,  the                 
       regulation of  boxing and wrestling,  the certification                 
  of   professional geologists, and the Water Resources Board;                 
       repealing  certain  filing  statements  and  bonds  for                 
  enforcement    and collection of  certain taxes; relating to                 
  service of     process   on   nonresident   taxpayers;   and                 
  providing for an    effective date."                                         
                                                                               
                                                                               
  Nancy Slagle, OMB  was invited to  join the committee.   She                 
  said  through  the bill  the  Governor  was trying  to  find                 
  efficiencies  and  economies  wherever  possible within  the                 
  State government operations.                                                 
  Using the  RES  version she  reviewed  the bill  before  the                 
  committee.  Sections 1, 2 and 3 dealt with the Department of                 
  Fish and Game in allowing vendors who sell sport fishing and                 
  hunting licenses and  tags to  retain the full  5% they  are                 
  allowed to for compensation.  For services at this time they                 
  are allowed  only a portion and the remainder is transmitted                 
  to  the Department for  recalculation and  then resubmission                 
  back to the vendor.  Section 4 dealt with the  Department of                 
  Commerce and Economic Development which eliminated the  non-                 
  resident affidavit  program also referenced in  the repealer                 
                                                                               
                                                                               
  of section 9.  Section 5 and  6 dealt with the Department of                 
  Health and Social Services and  the infant learning program.                 
  It gave the department the ability  to grant from the infant                 
  learning program  for their services.  Section  7 dealt with                 
  repealers.   One portion dealt with the requirements for the                 
  Department  of  Environmental  Conservation  concerning  the                 
  reporting  and  care  of  animals  suspected of  rabies  and                 
  disposal of rabid animals.   This eliminated the involvement                 
  of  DEC.   In response  to  Senator Phillips  question about                 
  unorganized areas, Janice Adair  informed the committee that                 
  these  areas are  dealt  with through  Public  Health.   Ms.                 
  Slagle  continued and said  the second part  of section nine                 
  dealt with  the vitamin  and  mineral content  of bread  and                 
  flour.   Section 8 also  dealt with several  repealers which                 
  eliminated  the Athletic  Commission, Boxing  and Wrestling,                 
  professional geologists and Water Resources Board.   Section                 
  9 was a  repealer for Fish and  Game which also ties  to the                 
  vendor compensation tied to sections 1, 2 and 3.  Section 10                 
  was transitional language and section 11, 12 and 13 were the                 
  effective dates.                                                             
                                                                               
  Co-chairman  Halford   asked  about  the  amendments.    She                 
  indicated there were amendments #1, 2, 3, 4, 5 and 6; one of                 
  which dealt with calculation of  terminal leave payments for                 
  State  employees  basing  it  on  annualized  rate  of  pay.                 
  Another dealt with the  life of a warrant reducing  the time                 
  by  statute  to  one  year  which  complied  then  with  the                 
  unclaimed property statute.   The next  amendment had to  do                 
  with collecting taxes  on insurance premiums.   Basically it                 
  is collected  on an annual basis.  It  is now proposed to be                 
  done  on  a  quarterly  basis  which  is  supported  by  the                 
  insurance  industry.    Co-chairman  Halford  at  this  time                 
  indicated his concern with the amendments in that they would                 
  add another section to the title.   Ms. Slagle said in order                 
  to delete  a portion of  the title  was a  question for  the                 
  legal  department.  The direction from the Department of Law                 
  was  that  the specific  items  be identified.   Co-chairman                 
  Halford said he would  rather not run a  title a page  long.                 
  He  said  he   would  consider   the  amendments  with   the                 
  understanding that the  portion of each amendment  that goes                 
  into the title would  not be inserted unless necessary.   He                 
  referred  to  amendment   #1  which   would  authorize   the                 
  Commissioner of Fish  and Game to  award grants for  certain                 
  resource  activities.    Ms.  Slagle  explained   that  this                 
  amendment  was in the  original bill submitted.   Senate RES                 
  removed this and the department has since worked with Senate                 
  President  Pearce   on  more  appropriate  language.     The                 
  department  would now be  able to provide  grants where they                 
  have not  had the  authority previously.   Specifically,  it                 
  related  to  Exxon  Valdez  monies  and other  small  grants                 
  through the  National  Marine Fisheries  Service.    Senator                 
  Sharp said  he did  not  want to  see Fish  and Game  become                 
  another  department  with  grant  authority.     Co-chairman                 
  Halford asked  if  there were  any  grants proposed  in  the                 
                                                                               
                                                                               
  budget at this time through Fish and  Game.  Ms. Slagle said                 
  she knew the  department was  working with private  property                 
  owners along  the Kenai River in  construction demonstration                 
  projects to restore and protect streamside habitat  impacted                 
  by human  development and  they would  be  looking at  small                 
  grants on the average of about  $6,000 each.  Those would be                 
  funded  by  the  National  Marine  Fisheries Service.    The                 
  department  would  have   to  either  budget  this   at  the                 
  legislative level or get  approval from OMB for any  type of                 
  line item  transfer  if  monies needed  to  go  for  grants.                 
  Senator  Sharp  asked  if  the  department  would  have  the                 
  authority to give  grants to regional authorities  to manage                 
  fish and game and said he felt  this was a problem.  Senator                 
  Zharoff asked what  type of grants would be  given out.  Co-                 
  chairman Halford indicated the presented information was all                 
  that  was  before  the  committee.   Senator  Zharoff  moved                 
  amendment #1 and it failed to be adopted.                                    
                                                                               
  Mike    McMullen,    Personnel   Manager,    Department   of                 
  Administration   was  invited  to  join  the  committee  and                 
  explained amendment #2.  He  said this amendment would  deal                 
  with how terminal  leave was paid.   Currently depending  on                 
  the balance and what  time a person leaves a  modest balance                 
  may  cover five holidays or it  may cover one holiday.  This                 
  practice was developed to compensate  the employee.  Through                 
  collective  bargaining most  employees  are  paid for  their                 
  balance time at their current rate.  This amendment would do                 
  the  same  for everyone  covered  by  statute  and  not  the                 
  collective  bargaining   agreement.     The  second   change                 
  eliminates   the  option  of   terminal  leave   payoffs  in                 
  installments  over  a  period  of   time.    Most  separated                 
  employees do not choose this form of termination and because                 
  of its' cumbersomeness  the department would like  to see it                 
  eliminated.  The third change was  the proposed inclusion in                 
  the repealer language  of AS  39.20.250 (b) which  currently                 
  provides an employee  paid a terminal leave amount  and then                 
  returns to work for the  State during a period of  time that                 
  terminal leave would have covered the time that the employee                 
  is required  to buy  back the  leave payment  and have  that                 
  leave put  back  on the  books.   In one  of the  collective                 
  bargaining agreements this provision had been eliminated and                 
  the wisdom of  that has been  negotiated and this was  being                 
  pursued  in  the  statute.   Senator  Zharoff  asked if  the                 
  bargaining units agree with this and Mr. McMullen  said that                 
  these  statutes do not affect the bargaining units and their                 
  rights come from their  own bargaining rights.  In  terms of                 
  similarities, the leave  cash-in is available in  almost all                 
  bargaining units.  The lump sum payment is already in place,                 
  the elimination of payback  is in place and those  would not                 
  change  with  this law,  but  rather as  future negotiations                 
  would change them.                                                           
                                                                               
  Co-chairman Halford  asked if  there was  any fiscal  impact                 
  with this amendment and Mr. McMullen  advised there was.  It                 
                                                                               
                                                                               
  would be .04  of 1% of  the personal services budget  spread                 
  over all the  BRU's of the State.   The funds for  this came                 
  from the catastrophic  reserve account  and the Division  of                 
  Finance  would adjust  that  assessment against  payroll  as                 
  needed.  Senator  Sharp asked  if this would  save on  leave                 
  accrual and  Mr. McMullen said  that leave accrual  stops at                 
  the time of termination.   Senator Sharp moved  amendment #2                 
  and without  objection it  was adopted  excluding the  title                 
  provision as per prior discussion.                                           
                                                                               
  Joe  Thomas, Division  of Finance  was invited  to join  the                 
  committee.   He explained  amendment #3 and  said this would                 
  just change the statute for time  limitation on payment of a                 
  warrant so that it  would be consistent with the  statute on                 
  unclaimed  property.    Currently the  statute  on unclaimed                 
  property considers warrants  after one year to  be unclaimed                 
  property.   The  statute  worded for  AS 37.05.180  says two                 
  years for stale  dated.  This  amendment would make the  two                 
  consistent.  There  would be no  fiscal note regarding  this                 
  amendment.  Senator Phillips moved  amendment #3 and without                 
  objection it was adopted excluding the title provision.                      
                                                                               
  Bob Bartholomew, Income & Excise Audit  Division, Department                 
  of Revenue was invited to join  the committee.  He explained                 
  amendment #4 would resulted in two changes to the bill.  One                 
  related  to  insurance companies  that  pay annually  and in                 
  March submit a paper check to the Treasury Division and also                 
  to Commerce  which would  require electronic  payment.   The                 
  other  change  related to  making  the payment  be quarterly                 
  which  would be consistent  with what most  other states do.                 
  Department of Revenue had already submitted a fiscal note to                 
  SB 215  in which the  department thought this  amendment was                 
  already in.   This  bill would  earn the  state treasury  an                 
  additional  $600,000/year  in interest  income  by going  to                 
  quarterly  payments.   There  would be  a one-time  boost in                 
  revenue for  FY 97.   Revenues would  be up  by $7  million.                 
  When  the  change would  be  made  it would  be  almost five                 
  quarters  after  they collected.    When brought  current an                 
  extra  quarter would be  picked up.   Senator Phillips moved                 
  amendment #4 and without objection  it was adopted excluding                 
  the title provision.   Ms. Slagle  at this point voiced  the                 
  position of the insurance industry  limiting tax collections                 
  to at least  annually but not  more that once each  quarter.                 
  Co-chairman Halford  advised  that the  amendment  had  been                 
  adopted and  would reflect  the insertion of  "no more  than                 
  once each quarter".   Senator Phillips moved  the conceptual                 
  amendment and without objection it was adopted.                              
                                                                               
  Carol Carroll, Department  of Natural Resources was  invited                 
  to join the  committee.   She said that  amendment #5  would                 
  modify the process  for both industry and  department to not                 
  have to report annual expenditure activity  that may be less                 
  that a  floor of $250,000.   If a  credit would be  taken in                 
  excess  of  $40,000 the  industry  would  have  to get  this                 
                                                                               
                                                                               
  certified by a CPA.   She referred to section (e)  and asked                 
  "September  30" be  deleted and  "within six  months of  the                 
  receipt of the request"  be inserted.  This would  also take                 
  place  under section  (f).    The  amendment would  then  be                 
  internally  consistent.   Co-chairman Halford  asked if  the                 
  credit would  still apply at  whatever level it  had applied                 
  before and Ms. Carroll concurred.   This related only to the                 
  reporting  of the expenditure and not  credits.  There would                 
  be  an option of waiting until the amount was at $250,000 or                 
  at the time  one wanted to take  the credit at  whatever the                 
  amount  the expenditure  activity was.   There  would be  no                 
  limiting of the availability of the  credit.   Senator Sharp                 
  moved amendment  #5 as amended and without  objection it was                 
  adopted as amended.                                                          
                                                                               
  Nancy Slagle said  that in  amendment #6  the University  of                 
  Alaska had requested this change of policy in order for them                 
  to direct deposit  paychecks for employees.  This  would cut                 
  down on administrative costs and provide for a cost savings.                 
  Ms.  Slagle advised  the  co-chairman that  this  was not  a                 
  requirement but an  option.   The University perceived  this                 
  amendment as an option rather than requirement.  Co-chairman                 
  Halford  said  the  way  the  language  was  stated  if  the                 
  University adopted this  measure it would be  a requirement.                 
  Senator Phillips  suggested deleting the  word "require" and                 
  state "may deposit".  Ms. Slagle said she would research the                 
  matter of direct  deposit being deposited in  wrong account.                 
  Co-chairman Halford held  the bill in committee  for further                 
  review.                                                                      
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
                                                                               
  Co-chairman Halford recessed until 9:00 a.m. tomorrow.                       

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