Legislature(1995 - 1996)

05/03/1996 10:15 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                           3 May 1996                                          
                           10:15 A.M.                                          
  TAPES                                                                        
                                                                               
  SFC-96, #108, Sides 1 and 2                                                  
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator Rick  Halford, co-chairman, convened  the meeting at                 
  approximately 10:15 A.M.                                                     
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition  to  co-chairman  Halford,  co-chairman  Frank,                 
  Senators Phillips,  Sharp, Rieger  and Zharoff  were present                 
  when  the  meeting  was convened.    Senator  Donley arrived                 
  shortly thereafter.                                                          
                                                                               
  Also Attending:  Representative Kay  Brown; Juanita Hensley,                 
  Division  of Motor  Vehicles, Department  of  Public Safety;                 
  Julie  Tauriainen, staff aide  to Representative Gary Davis;                 
  Sam   Kito,III,   Legislative    Liaison,   Department    of                 
  Transportation and Public  Facilities; Amy Daugherty,  staff                 
  aide to Representative Alan Austerman;  Ed Crane, President,                 
  CFAB;   Dave   Tonkovich,   Fiscal  Analyst,   Division   of                 
  Legislative Finance; and aides to committee members.                         
                                                                               
  SUMMARY INFORMATION                                                          
                                                                               
                                                                               
  SENATE CS FOR CS FOR HOUSE BILL NO. 109(FIN)                                 
  "An Act relating to telephone solicitations, advertisements,                 
  and directory listings and relating to political polling and                 
  campaigning by telephone."                                                   
                                                                               
  Representative Kay Brown testified and explained the new "O"                 
  version of the  bill.  Amendment  #6 moved by Senator  Sharp                 
  failed.  Senator Rieger moved SCS CSHB 109(FIN) and with the                 
  objections of Senators Frank, Sharp  and Phillips being duly                 
  noted it was  reported out  with individual  recommendations                 
  and  zero  fiscal  notes  from  Department of  Commerce  and                 
  Economic Development and Department of Law.                                  
                                                                               
                                                                               
  CS FOR HOUSE BILL NO. 436(TRA)                                               
  "An Act relating  to purchase  and sale of  mobile homes  by                 
  mobile home dealers;  to mobile  home titles; and  providing                 
  for an effective date."                                                      
                                                                               
  Co-chairman Halford  introduced the  bill.   Juanita Hensley                 
  testified and said the Department of Public Safety supported                 
  the bill.   Senator  Sharp moved CSHB  436(TRA) and  without                 
                                                                               
                                                                               
  objection   it    was   reported    out   with    individual                 
  recommendations and  zero  fiscal note  from  Department  of                 
  Public  Safety  and $24.2  from  Department of  Commerce and                 
  Economic Development.                                                        
                                                                               
                                                                               
  CS FOR HOUSE BILL NO. 543(FIN)(title am)                                     
  "An  Act establishing  the  procedures  and  conditions  for                 
  lessees of land leases at state airport and air navigational                 
  facilities, including leases in holdover status to receive a                 
  new  lease of  the  same land  or an  extended  term of  the                 
  existing lease; and relating to the title and ownership, and                 
  the sale,  removal,  and  other  disposition,  of  permanent                 
  improvements  made to  a leasehold  under an airport  or air                 
  navigational facility lease."                                                
                                                                               
  Julie Tauriainen,  staff aide  to Representative  Gary Davis                 
  testified  on behalf of  the bill.  Sam  Kito, III, DOT said                 
  the department supported the bill.  Senator Sharp moved CSHB                 
  543(FIN)(title am) and without objection it was reported out                 
  with individual recommendations  and zero  fiscal note  from                 
  Department of Transportation.                                                
                                                                               
  A brief introduction was given  by Amy Daugherty, staff aide                 
  to Representative Alan  Austerman.   Ed Crane, President  of                 
  CFAB testified and answered questions.   Senator Sharp moved                 
  amendment  #1(a)  and  without  objection  it  was  adopted.                 
  Senator Zharoff moved  amendment #1(b) and it  failed; later                 
  it was rescinded  without objection  and removed by  Senator                 
  Sharp it was  adopted.   Amendment #3 was  moved by  Senator                 
  Zharoff and without objection it was adopted.  Amendment  #4                 
  was moved by Senator Zharoff and held pending.  The bill was                 
  held in committee.                                                           
                                                                               
                                                                               
       SENATE CS FOR CS FOR HOUSE BILL NO. 109(FIN)                            
       "An   Act   relating   to    telephone   solicitations,                 
  advertisements,     and directory listings  and relating  to                 
  political polling and    campaigning by telephone."                          
                                                                               
  Representative Kay Brown was invited  to join the committee.                 
  She explained the new "O" version  of the bill and said this                 
  version  was   her  preference  reflecting   the  amendments                 
  previously adopted.  There was one further change on page 4,                 
  line 26, the  deletion of the words "polling  or".  She said                 
  she pursued  the  attempt to  create a  two tier  structure,                 
  however,  that  proved  to  be  problematic because  of  its                 
  complexity.  In working with  the phone company associations                 
  she determined that  she would not continue  pursuit of this                 
  matter.  The  associations did  not support  a more  complex                 
  variation.  She  urged adoption of  the "O" draft.   Senator                 
  Rieger moved "O" version as work draft and without objection                 
                                                                               
                                                                               
  it was adopted.                                                              
                                                                               
  Senator  Sharp  moved  amendment  #6.    He said  with  this                 
  amendment  the state  could  regulate intra-state  calls and                 
  eliminate calls as outlined  by this bill.  The  federal law                 
  passed recently does not give states any option to do inter-                 
  state  limitations.    In   response,  Representative  Brown                 
  referred to a letter of May  1, 1996 from Assistant Attorney                 
  General,  Joseph McKinnon.  The last paragraph was read into                 
  the  record and  said there  was no  limit  to telemarketing                 
  according  to  federal  regulations  implementing  the  1994                 
  Telemarketing Act.   Representative  Brown said  she opposed                 
  the amendment because  it could have  the effect of  driving                 
  business out of  the State  of Alaska if  it only  regulated                 
  within the State.  Most problems lie out of State.  She said                 
  this  amendment  would essentially  gut  the bill.   Senator                 
  Sharp  referred  to other  states  that have  passed similar                 
  legislation.    Senator  Rieger  said  he also  opposed  the                 
  amendment.  He had correspondence  from the Alaska Telephone                 
  Association and  said  they  also  opposed  this  amendment.                 
  Senator  Sharp  felt the  association  probably  opposed the                 
  whole bill.   He referred to  computerized systems but  said                 
  there were  many telephone utilities that do not have access                 
  to these systems and rely on manual systems.                                 
                                                                               
  Senator Rieger  read the  letter from  the Alaska  Telephone                 
  Association into the record.    Senator Sharp felt they were                 
  referring to the Judiciary version and not the one presently                 
  before the  committee.   Representative Brown  said the  two                 
  versions were essentially the same and the only changes were                 
  the additional amendments from Senator  Pearce in sections 1                 
  and 2.  That did not affect the issue they were speaking to.                 
   She  further  re-iterated  that she  did  not  support this                 
  amendment.                                                                   
                                                                               
  Co-chairman Halford asked for a vote  on amendment #6 and it                 
  failed adoption.                                                             
                                                                               
  Senator  Sharp   referred  to  limitation   on  calls   from                 
  charitable  organizations being  from volunteers.   He  felt                 
  this  bill  still allowed  for  paid professionals  from the                 
  Lower '48 to  conduct the calls.   Representative Brown said                 
  she  believed  the committee  did not  act on  the amendment                 
  proposed  by  Senator Sharp  at  the last  meeting regarding                 
  this.  She felt that the way  it read now included employees                 
  of  the  organization   or  volunteers  on  behalf   of  the                 
  organization.   Both a  staff person  or volunteer  would be                 
  covered.   Calls would not be covered if the person had made                 
  a contribution within the last twenty-four months.  It would                 
  not be  an open-ended  exemption.   Senator  Sharp said  the                 
  problem with the  bill still allowed  the two areas that  do                 
  90% of  the calls that individuals do  not ask for to occur.                 
  One is polling  and the  other is charitable  organizations.                 
  Those violating privacy cannot continue to do so.                            
                                                                               
                                                                               
  Senator  Rieger  moved  SCS  CSHB   109(FIN)  and  with  the                 
  objections of Senators Frank, Sharp  and Phillips being duly                 
  noted it  was reported out  with individual  recommendations                 
  and zero  fiscal notes from  the Department of  Commerce and                 
  Economic Development and Department of Law.                                  
                                                                               
  Representative Brown asked if the  committee wished to adopt                 
  the letter of intent from the House Judiciary.  She read the                 
  letter  of intent  into the  record and  said  the Telephone                 
  Association  and  the  House  supported  this.   Co-chairman                 
  Halford said  that without  objection the  letter of  intent                 
  would go with the bill.                                                      
                                                                               
                                                                               
       CS FOR HOUSE BILL NO. 436(TRA)                                          
       "An  Act relating to purchase  and sale of mobile homes                 
  by   mobile   home  dealers;  to  mobile  home  titles;  and                 
  providing for  an effective date."                                           
                                                                               
  Co-chairman  Halford  explained the  bill.   He  referred to                 
  section 3 the operative section.  It is an optional program.                 
                                                                               
  Juanita Hensley, DMV was invited to join the committee.  She                 
  further  explained  section   3  and  said   the  department                 
  supported the  bill.   It does  not absolutely mandate  that                 
  they  title, but  rather if  there is  application made  the                 
  department shall issue a title.  That is already being done.                 
                                                                               
                                                                               
  Senator Sharp moved  CSHB 436(TRA) and without  objection it                 
  was  reported out  with individual recommendations  and zero                 
  fiscal  note from the Department of  Public Safety and $24.2                 
  from the Department of Commerce and Economic Development.                    
                                                                               
                                                                               
       CS FOR HOUSE BILL NO. 543(FIN)(title am)                                
       "An Act establishing the procedures  and conditions for                 
  lessees   of   land  leases   at  state   airport   and  air                 
  navigational   facilities,  including  leases   in  holdover                 
  status to receive a      new lease  of the  same land  or an                 
  extended term of the existing      lease;  and  relating  to                 
  the title and ownership, and the sale,  removal,  and  other                 
  disposition, of permanent improvements made  to  a leasehold                 
  under an airport or air navigational facility     lease."                    
                                                                               
  Julie Tauriainen, staff aide to  Representative G. Davis was                 
  invited to join  the committee.   She  briefly reviewed  the                 
  bill.   There are several  different groups  that have  been                 
  working  with  the sponsor  on  this bill,  specifically the                 
                                                                               
                                                                               
  Alaska  Air Carrier's  Association  and  the  Department  of                 
  Transportation.                                                              
                                                                               
  Sam Kito,  III, DOT was invited  to join the  committee.  He                 
  said  there  was  a  good  working relationship  with  House                 
  Transportation and others  on this piece of  legislation and                 
  all are in support of this bill.   Senator Rieger asked that                 
  if there were  an opportunity  to renew a  lease would  that                 
  also  be  at  market value?    Mr.  Kito  said that  in  the                 
  constitution they were  required to offer leases at the fair                 
  market value or  whatever value is  in the best interest  of                 
  the  State.    That  is an  implicit  understanding  in this                 
  legislation which would presumably be fair market value.                     
                                                                               
  Senator  Sharp  moved  CSHB 543(FIN)(title  am)  and without                 
  objection   it    was   reported    out   with    individual                 
  recommendations and zero fiscal note  from the Department of                 
  Transportation.                                                              
                                                                               
                                                                               
       CS FOR HOUSE BILL NO.  284(FIN)                                         
       "An  Act  relating  to the  Alaska  Commercial  Fishing                 
  and            Agriculture Bank."                                            
                                                                               
  Amy Daugherty, staff aide to  Alan Austerman introduced this                 
  bill.  She  referred to the last  page of the bill,  page 17                 
  and   deleted the  words of  the last  line, "on  or".   Co-                 
  chairman Halford asked  that the amendment that  was adopted                 
  and then  inadvertently deleted from the draft  and the bill                 
  went all the way  through the process without the  amendment                 
  be explained either by staff or CFAB.                                        
                                                                               
  Ed  Crane,  President  of  CFAB  was  invited  to  join  the                 
  committee.  He said the particular amendment in question was                 
  adopted unanimously by  the House  Finance Committee and  it                 
  some  how   disappeared  when  the  bill   was  subsequently                 
  transmitted onto House Rules and the House Floor.  It was an                 
  amendment that is anticipated  Senate Finance Committee will                 
  restore as was the intent of the House Finance Committee.                    
                                                                               
  This bill  was occasioned  in anticipation  of full  private                 
  ownership of CFAB which is one  of the primary objectives of                 
  the founding fathers back in 1978.   There was a requirement                 
  for CFAB to become  fully privately owned no later  than the                 
  year  2000;  that all  of  the  State's investment  must  be                 
  retired by  then.  CFAB has retired $25 million of the State                 
  investment and the remaining $7 million will be retired over                 
  the next thirty months.  Rather  than waiting until the year                 
  2000  that day will  soon be  upon us.   He  explained three                 
  general categories of the  bill.  One, the  clarification of                 
  inconsistencies and filling  in gaps  and the resolution  of                 
  uncertainties as referred to  in sections 9, 12, 15,  23, 24                 
                                                                               
                                                                               
  and 26.   Two,  the accommodation  of changes in  commercial                 
  fishing economics  and  commercial fishing  laws  that  have                 
  occurred since the original statute  was written as referred                 
  to in sections 15,  17 (paragraph 6), 18 (paragraph  5), 19,                 
  20, 21 an 22.  Three, to recognize that Alaska Statute 44.81                 
  which applies only to CFAB is a restrictive statute which is                 
  always going to be subject to  strict interpretations by the                 
  Court  and  in  which certain  inconsistencies  present real                 
  dangers to a  company like CFAB,  which operates in a  world                 
  quite sensitive to  litigation as referred to in sections 17                 
  (paragraph 14) and  18 (paragraphs 1,  8 and 9).   Questions                 
  were raised  in House  Finance Committee  which resulted  in                 
  legislative  auditors  spending  considerable  time at  CFAB                 
  during  the  interim.    They  took   a  long  look  at  the                 
  legislative   history   of   CFAB.     In   this   bill  the                 
  accountability  was  retained  to  the  Legislature and  the                 
  State.  The Governor will continue to appoint  two directors                 
  to CFAB's Board of Directors and the annual report including                 
  an independent auditors  report is required be  submitted to                 
  the Legislature and  the Governor.  CFAB  remains subject to                 
  annual  bank examination.   On any given  day any legislator                 
  can propose changes to CFAB statute.                                         
                                                                               
  Co-chairman Halford asked how the bank treated the residency                 
  of borrowers.  Mr. Crane said  statute provided loans can be                 
  made only  to residents for  which the duration  required is                 
  one year.  He  referred to their credit  policy and read  it                 
  into  the  record.He   said  they   encounter  very   little                 
  questionable practices  and maybe  2 -  3 applications  have                 
  been  denied  because  of  residency.   Co-chairman  Halford                 
  referred to  section 10(b) on  page 4.   Mr. Crane said  the                 
  specific section  does conform.   The  language was  crafted                 
  about nine years  ago under  the late Senator  Bennett.   He                 
  related the difficulty  in being able  to find directors  to                 
  serve  as there are no special  privileges attached to being                 
  on the board  of directors.   The majority of board  members                 
  are  fishermen and in general  they must be borrowers before                 
  they become members of CFAB.  He advised that there can be a                 
  bad  season  due to  any  number  of reasons,  which  do not                 
  necessarily reflect poor character, poor credit practices or                 
  any type of misconduct  or ethical problem.  With  borrowers                 
  generally, including directors who are borrowers, when those                 
  situations occur, expectations are modified and there can be                 
  a delinquent loan for twelve months.  There needs to be room                 
  for a director  who is a  fishermen borrower  to be able  to                 
  deal with  the things  that happen  to fishermen  borrowers.                 
  Co-chairman  Halford  said  he  believed  this  was  strange                 
  language  regarding  the  board  of  directors and  was  too                 
  permissive.   Senator Sharp said he was  also surprised with                 
  the permissive language.  Federal regulations and real banks                 
  are severely limited  in loaning to directors  and officers.                 
  This kind of allowance  was permissive.  Mr. Crane  said the                 
  bank examiners were aware of this situation.  There has been                 
  occasion  to   act  on   this  matter  by   the  board   and                 
                                                                               
                                                                               
  consideration was given  to the examiner's view at the time.                 
  Within the past two years there was a director reflecting an                 
  economic  rather than  ethical  weaknesses  and was  advised                 
  formally that unless  certain things were done  with respect                 
  to  his loan by a certain date,  his membership on the board                 
  would be revoked.   The qualities that make a  person a good                 
  and valued director  are not necessarily the  same qualities                 
  which make him or her a good fisherman or borrower.  Senator                 
  Sharp concurred but  felt a  delinquent director allowed  to                 
  borrow   from   their   own  bank   may   lead   to  further                 
  complications.  That  lowering of tolerance is  why there is                 
  such prohibition in the banking institutions.  Senator Frank                 
  also concurred and said there had been a substantial  change                 
  in the  last fifteen years  in regulations and  practices of                 
  banking  in  general.    He  suggested  deleting  the  words                 
  "chronically and irredeemably" on page 4, line 30.                           
                                                                               
  Mr. Crane said that  CFAB is regulated and this  $35 million                 
  institution is subject to strict scrutiny through State bank                 
  examiners, it's own  auditors, an exhaustive  examination by                 
  it's lenders, legislative audit and IRS audit.  The policies                 
  and practices  of CFAB  which  could change,  do not  permit                 
  special treatment for  director loans.  Senator  Frank still                 
  felt the language  was permissive in requiring  the board to                 
  remove someone.   Senator Sharp concurred.   Senator Zharoff                 
  felt there was no problem  in leaving the wording as  it was                 
  since it had been there since  inception.  Mr. Crane advised                 
  that there are seven members of  the board, two appointed by                 
  the Governor.   He further explained the  phrase of "natural                 
  persons"  as being distinct  from legal  persons.   CFAB has                 
  made  a few farming loans  and the main  reason for that was                 
  because there  is little bankable  commercial agriculture in                 
  Alaska.  Timber is classified as agriculture.                                
                                                                               
  Senator  Sharp  asked  how  members   were  compensated  for                 
  attending  board  meetings and  Mr.  Crane said  the current                 
  practice of CFAB had been  for modest compensation, $50/hour                 
  up to  $350/day maximum.   Total compensation last  year for                 
  seven members of the board of directors was $13,000.                         
                                                                               
  Senator Sharp proposed  an amendment on  page 4, line 30  to                 
  read "maintains a chronic substandard borrowing relationship                 
  with the bank shall be removed  from the board."  Mr.  Crane                 
  noted with  regards to changing  "may" to "shall"  that CFAB                 
  was a private institution and said it was not needed to have                 
  a statute directing something like that.   How would this be                 
  enforced?  Otherwise there  was no objection to the  rest of                 
  the amendment.    Senator Sharp  felt the  latitude for  the                 
  board  and   management  to   define  "chronic   substandard                 
  borrowing" was left  in.  However he felt what  was fair for                 
  other borrowers should also be fair for directors.                           
                                                                               
  After  brief  miscellaneous  discussion  by  the   committee                 
  members  Senator Sharp  moved  amendment  #1(a) and  without                 
                                                                               
                                                                               
  objection it was  adopted.  Amendment  #1(b) was also  moved                 
  and failed;  later it  was rescinded  without objection  and                 
  Senator Sharp  re-moved this  amendment #1(b)  and with  the                 
  objections of Senators Zharoff and Phillips being duly noted                 
  it was adopted.  Senator Zharoff moved amendment #2, page 17                 
  line  31  to delete  "on or"  and  without objection  it was                 
  adopted.    Senator Zharoff  further  moved amendment  #3 on                 
  behalf of the sponsor and without objection it  was adopted.                 
  Amendment #4 was  also moved by  Senator Zharoff and it  was                 
  held pending.                                                                
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  Co-chairman Halford recessed  the meeting  at 12:00 noon  to                 
  call of the chair.                                                           

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