Legislature(1997 - 1998)

03/25/1997 09:03 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                             MINUTES                                           
                    SENATE FINANCE COMMITTEE                                   
                         March 25, 1997                                        
                            9:03 A.M.                                          
                                                                               
  TAPES                                                                        
                                                                               
  SFC-97, # 69, Sides 1 & 2 (000-590, 590-234)                                 
                                                                               
  CALL TO ORDER                                                                
                                                                               
  Senator  Bert  Sharp,  Cochair,  Senate  Finance  Committee,                 
  convened the meeting at approximately 9:03 A.M.                              
                                                                               
  PRESENT                                                                      
                                                                               
  In  addition to  COCHAIR SHARP,  SENATORS DONLEY,  PHILLIPS,                 
  TORGERSON  and  ADAMS  were  present  when the  meeting  was                 
  convened.  COCHAIR PEARCE and  SENATOR PARNELL arrived while                 
  the meeting was in progress.                                                 
                                                                               
  Also Attending:                                                              
  TOM  WILLIAMS, Staff, Senate  Finance Cochair  Sharp; MARGOT                 
  KNUTH, Assistant Attorney General,  Department of Law; NANCY                 
  SLAGLE,  Director,  Administrative  Services, Department  of                 
  Transportation  and  Public   Facilities;  FORREST   BROWNE,                 
  Investment  Officer,  Department of  Revenue;  and aides  to                 
  committee members.                                                           
                                                                               
  Also Attending Via Teleconference:                                           
  CAPT.  TED BACHMAN,  Alaska  State  Trooper, Anchorage;  KEN                 
  LANCASTER, Mayor, Soldotna.                                                  
                                                                               
                                                                               
  SUMMARY INFORMATION                                                          
       SB 126  STATE EMPLOYEES RIP AMENDMENTS                                  
                                                                               
       TOM WILLIAMS explained  changes in  a proposed CS  work                 
       draft.    SENATOR PHILLIPS  MOVED  for adoption  of the                 
       proposed  CS.   Without  objection,  CSSB 126(FIN)  was                 
       ADOPTED.    SENATOR PHILLIPS  MOVED CSSB  126(FIN) from                 
       committee   with    individual   recommendations    and                 
       accompanying fiscal notes.  There  was no objection and                 
       CSSB 126(FIN)  was REPORTED  OUT of  committee with  an                 
       indeterminate fiscal note from Office of Management and                 
       Budget  and  a  zero  fiscal  note from  Department  of                 
       Administration.                                                         
       SB 68  TASK FORCE ON PRIVATIZATION                                      
                                                                               
       SENATOR  DONLEY  MOVED  to  RESCIND previous  committee                 
       action  of   reporting  out  CSSB   68(FIN).    Without                 
       objection, the  action was  rescinded.   SENATOR DONLEY                 
                                                                               
                                                                               
       MOVED to ADOPT  CSSB 68(FIN).   It was ADOPTED  without                 
       objection.  SENATOR DONLEY MOVED Amendment  #4. Without                 
       objection, Amendment  #4 was  ADOPTED.   SENATOR DONLEY                 
       MOVED  Amendment  #3.    Senators  Torgerson  and Adams                 
       objected.  A vote was taken and the amendment failed by                 
       a 5 to  1 vote.  SENATOR ADAMS MOVED  CSSB 68(FIN) from                 
       committee  with  individual   recommendations  and   an                 
       updated fiscal note, then WITHDREW his motion.  SENATOR                 
       DONLEY MOVED to  RESCIND previous action of  failing to                 
       adopt Amendment #3.  COCHAIR  PEARCE objected.  SENATOR                 
       DONLEY WITHDREW his  motion to rescind.   SENATOR ADAMS                 
       renewed his  motion to  move the  bill from  committee.                 
       Without further  objection, CSSB  68(FIN) was  REPORTED                 
       OUT  with  new fiscal  notes  from  Legislative Affairs                 
       Agency   (17.9),  Office   of  Management   and  Budget                 
       (indeterminate)    and    Office   of    the   Governor                 
       (indeterminate).                                                        
                                                                               
       SB 3  MINOR'S CURFEW VIOL. HEARD IN DIST. CT.                           
                                                                               
       COCHAIR  PEARCE, Sponsor,  testified on  behalf  of the                 
       bill.   Testimony was also heard from CAPT. TED BACHMAN                 
       and MARGOT KNUTH.  SENATOR ADAMS MOVED Amendment #1.  A                 
       vote was taken  and Amendment #1 FAILED by  a vote of 4                 
       to 2.  COCHAIR PEARCE MOVED CSSB 3(JUD)  from committee                 
       with individual recommendations and accompanying fiscal                 
       notes.  Without objection, CSSB 3(JUD) was REPORTED OUT                 
       with  a  previous  fiscal note  from  the  Court System                 
       (24.3),  previous fiscal notes  from the Departments of                 
       Administration  (indeterminate)  and Health  and Social                 
       Services (indeterminate),  and a zero  fiscal note from                 
       the Department of Public Safety.                                        
                                                                               
                                                                               
       SB 136  BUDGET AND APPROPRIATION BILLS                                  
                                                                               
       Amendments  #1  and  #4  had  been  previously adopted.                 
       Amendment #3,  which had  been held,  was not  offered.                 
       SENATOR  PARNELL  MOVED Amendment  #5.   COCHAIR  SHARP                 
       objected, then withdrew his objection.   There being no                 
       further objection, Amendment #5  was ADOPTED.   SENATOR                 
       PARNELL  MOVED   CSSB  136(FIN)  from   committee  with                 
       individual  recommendations  and  a zero  fiscal  note.                 
       Without objection, CSSB 136(FIN) was REPORTED OUT  with                 
       a zero  fiscal note from  the Office of  Management and                 
       Budget.                                                                 
                                                                               
                                                                               
       SB 34  DOT MAINTENANCE FACILITY AT SOLDOTNA                             
                                                                               
       SENATOR TORGERSON,  Sponsor, testified on behalf  of SB
       34.  Testimony  was also heard from NANCY SLAGLE, MAYOR                 
       KEN LANCASTER and FORREST BROWNE.   SENATOR ADAMS MOVED                 
       Amendment  #1.   Without  objection,  Amendment #1  was                 
       ADOPTED.    SB 34,  as  amended, was  HELD  for further                 
       consideration.                                                          
  SENATE BILL NO. 126                                                          
  "An Act  relating to  the retirement  incentive program  for                 
  state employees; and providing for an effective date."                       
  COCHAIR SHARP called attention to the proposed CS work draft                 
  before the committee and invited Mr. Williams to address it.                 
                                                                               
  TOM  WILLIAMS, Staff, Senate Finance Cochair Sharp, referred                 
  to the work  draft which incorporated amendments  to Section                 
  3,  page 2,  and Section 4,  line 20, in  Section 22 (f)(1),                 
  which had previously been  Section 22 (f).  The  Division of                 
  Retirement and Benefits recommended the reference be changed                 
  and Legal Services concurred.                                                
                                                                               
  SENATOR PHILLIPS inquired if the suggestion made by APEA and                 
  AFT to go  from three  years to five  years was  considered.                 
  MR. WILLIAMS responded that those  provisions change the way                 
  one would calculate who would be included  in the pool.  The                 
  intent  of SB  126 was  to encourage  the administration  to                 
  utilize the existing pool,  not to change the nature  of it.                 
  SENATOR PHILLIPS acknowledged it was a policy decision.                      
                                                                               
  COCHAIR  SHARP  called for  a  motion  on the  CS.   SENATOR                 
  PHILLIPS MOVED  for adoption  of the  proposed CS.   COCHAIR                 
  SHARP referenced the technical amendment on page 2, line 20.                 
  He  asked  if  there were  further  questions  or testimony.                 
  There  being   none,  CSSB  126(FIN)   was  ADOPTED  without                 
  objection.                                                                   
                                                                               
  SENATOR  PHILLIPS  MOVED CSSB  126(FIN) from  committee with                 
  individual  recommendations  and accompanying  fiscal notes.                 
  There was no objection and CSSB 126(FIN) was REPORTED OUT of                 
  committee with an  indeterminate fiscal note from  Office of                 
  Management and Budget and a zero fiscal note from Department                 
  of Administration.                                                           
                                                                               
  SENATE BILL NO. 68                                                           
  "An Act  relating to the  Task Force  on Privatization;  and                 
  providing for an effective date."                                            
  COCHAIR SHARP explained that the  bill had been reported out                 
  of committee  on  3-21-97 but  there had  been a  difference                 
  between the actual amendment and what the drafter put in the                 
  CS,  so  he wanted  to bring  it  back before  committee for                 
  clarification.                                                               
                                                                               
  SENATOR DONLEY MOVED to RESCIND previous committee action of                 
  reporting out CSSB  68(FIN).  Without objection,  the action                 
                                                                               
                                                                               
  was rescinded.                                                               
                                                                               
  SENATOR DONLEY  commented that  he had  spoken with  SENATOR                 
  PARNELL about  his concern.  He explained  that the specific                 
  amendment adopted previously dealt with modifying the number                 
  of members of the task force.  The amendment draft sent over                 
  by Legal Services was  different than what they  intended to                 
  draft.   The proposed CS  before the committee  reflects the                 
  actual motion to  Section 2, page  2.  COCHAIR SHARP  stated                 
  for clarification that  the confusion was over page 2, lines                 
  6-7,  and that  the  proposed CS  was  the correct  version.                 
  SENATOR DONLEY concurred, adding that  it was what had  been                 
  discussed and voted on.                                                      
                                                                               
  SENATOR DONLEY MOVED to ADOPT CSSB  68(FIN).  It was ADOPTED                 
  without objection.  SENATOR  DONLEY MOVED Amendment #4.   He                 
  explained  that   he  and  SENATOR  PARNELL   developed  the                 
  language.  Under the CS, the task force  selects a chair and                 
  vice-chair from among its members on page 2, line 14.   That                 
  would be deleted  and replaced with co-chairs,  one of which                 
  would be selected  by the  Senate President and  one by  the                 
  House Speaker.  They both thought that with past  experience                 
  with the Long  Range Financial Planning Commission  it would                 
  be a good idea to keep the legislature more active in it and                 
  have  more  direct  control.     COCHAIR  SHARP  called  for                 
  discussion or objection.  There being none, Amendment #4 was                 
  ADOPTED.                                                                     
                                                                               
  SENATOR DONLEY MOVED  Amendment #3.   It would  adopt a  new                 
  fiscal note to fund the additional public member proposed in                 
  the  CS and a full-time staff person to carry out the duties                 
  of the  task force  from July 1,  1997 to December  1, 1998.                 
  Senators  Torgerson  and  Adams  objected.    SENATOR  ADAMS                 
  opposed  the  additional  staff  position,  as  did  SENATOR                 
  TORGERSON, who added that he would rather hire a contractual                 
  facilitator rather than a staff person.                                      
                                                                               
  A roll call vote  was taken on the MOTION to adopt Amendment                 
                                                                               
  IN FAVOR: Donley                                                             
  OPPOSED:  Torgerson, Phillips, Adams, Pearce, Sharp                          
                                                                               
  And so, the MOTION FAILED (1-5).                                             
                                                                               
  COCHAIR SHARP called attention to  the $17.9 thousand fiscal                 
  note   from  Legislative   Affairs  Agency   and  noted   it                 
  accommodated the additional  member.  He  invited additional                 
  comments or amendments to SB 68 and there were none.                         
                                                                               
  SENATOR  ADAMS  MOVED  CSSB  68(FIN)  from   committee  with                 
  individual recommendations and an updated fiscal note.                       
                                                                               
  SENATOR DONLEY  reiterated his  position that  for the  task                 
                                                                               
                                                                               
  force to be effective  it needed personnel.  He  referred to                 
  significant staff cuts taken by the legislature and appealed                 
  to the committee to rescind their action in failing to adopt                 
  Amendment #3.                                                                
                                                                               
  SENATOR  ADAMS WITHDREW  his motion  at the  request of  the                 
  Cochair.                                                                     
                                                                               
  SENATOR DONLEY MOVED  to RESCIND previous action  of failing                 
  to adopt Amendment #3.  COCHAIR PEARCE objected and spoke to                 
  her objection.  She appreciated the concerns and agreed that                 
  to be credible, complete and have integrity,  the task force                 
  would need good staff with excellent writing and researching                 
  skills.   It  was  her belief  that  there existed  latitude                 
  within the  legislative budget  to provide staffing  without                 
  the  need  to  attach a  fiscal  note  to  the  bill.    She                 
  acknowledged inconsistencies  in the  past regarding  fiscal                 
  notes attached to  task force bills,  but noted that in  the                 
  past  two  years,  the  leadership  of both  houses  stepped                 
  forward to provide  adequate staffing.   She believed  there                 
  were adequate funds in the budget to do so again, if needed.                 
  She added  that Legislative  Finance, Legislative  Research,                 
  and  Legal  Services  staff  were  underutilized during  the                 
  interim, and the task force could benefit from some of their                 
  skills and availability.                                                     
                                                                               
  SENATOR  ADAMS  agreed and  added  that Legislative  Council                 
  could also get someone on contract.                                          
                                                                               
  SENATOR  DONLEY  WITHDREW his  motion  to rescind.   SENATOR                 
  ADAMS renewed his  motion to move  the bill from  committee.                 
  Without  further objection,  CSSB  68(FIN) was  REPORTED OUT                 
  with  new  fiscal  notes  from  Legislative  Affairs  Agency                 
  (17.9),  Office of Management and Budget (indeterminate) and                 
  Office of the Governor (indeterminate).                                      
                                                                               
  SENATE BILL NO. 3                                                            
  "An Act authorizing  prosecution and  trial in the  district                 
  court of municipal curfew violations."                                       
  COCHAIR PEARCE,  Sponsor, brought up  a news item  in Juneau                 
  last fall, in which the Assembly  put a curfew aside because                 
  they found they had  no avenue to prosecute offenders.   She                 
  read the Sponsor Statement relating to  SB 3 (copy on file).                 
  Following is an excerpt of the first and last paragraphs:                    
            "Currently, juvenile offenses other  than traffic,                 
       tobacco,   fish  and   game,  parks   and  recreational                 
       facilities, or alcohol violations,  are handled through                 
       municipal courts where these exist,  or are not handled                 
       at  all because  of the  Division of  Family and  Youth                 
       Services caseload.                                                      
            SB  3  will  mandate  that  all  juvenile   curfew                 
       violations  be  handled  in  District  Court.    Alaska                 
                                                                               
                                                                               
       Delinquency Rules will not apply, and the minor accused                 
       of  the  offense  will  be  charged,   prosecuted,  and                 
       sentenced in the District Court  in the same manner  as                 
       an adult.   When  a  minor is  charged, prosecuted  and                 
       sentenced  for an  offense under  this subsection,  the                 
       minor's  parent, guardian,  or legal custodian  will be                 
       present at all proceedings."                                            
                                                                               
  COCHAIR PEARCE pointed  out the Judiciary CS was  before the                 
  committee.  She  stated there was  a "quilt of ability"  for                 
  juveniles to be handled in court  in the state.  Some judges                 
  take a more  active interest at  the juvenile level, one  of                 
  whom was Judge  Froehlich of Juneau,  who sets aside  Friday                 
  afternoons  for  juvenile  cases.    He  was  aggressive  in                 
  prosecuting violations of alcohol  and tobacco and  informed                 
  her that the  lion's share  of people he  has seen on  those                 
  charges would  also come before  him on a  curfew violation.                 
  Her intention was to give communities the tools they need to                 
  intervene in  children's problems before they  become large.                 
  If they can be stopped with a curfew violation, young people                 
  could be diverted from a life in the corrections system.                     
                                                                               
  COCHAIR PEARCE mentioned the Court System fiscal note of $24                 
  thousand, stating  they were  not sure  how many  cases they                 
  might see.  Anchorage  might choose to go with  an ordinance                 
  and start prosecuting  their curfews  at the district  court                 
  level rather than at the municipal level.                                    
                                                                               
  Section 2 was  a suggestion  from Anchorage Assemblyman  Joe                 
  Murdy  which would allow  the option  for community  work in                 
  place of fines.  The reason it was permissive was based on a                 
  recent  case  in which  the  judge  decided if  a  youth was                 
  sentenced to  community work,  it was  the sort  of sentence                 
  that should have a jury trial.   She wanted to make sure the                 
  cases didn't automatically  go to  a jury trial,  so it  was                 
  made permissive.  In some Anchorage cases the parents of the                 
  offender were unwilling  to pay the  fine.  She was  hopeful                 
  that  between  parental and  court  pressure they  could get                 
  young people to do community service to work off their fine.                 
                                                                               
  In response  to a  question from  SENATOR PHILLIPS,  COCHAIR                 
  PEARCE did  not recall receiving  a position paper  from the                 
  Anchorage  Municipality, but  did receive  one  from Juneau.                 
  She acknowledged the idea came from the assembly.                            
                                                                               
  SENATOR  ADAMS  brought  up  a  proposed amendment  for  the                 
  committee's consideration.  His understanding  was that SB 3                 
  mandates that  juvenile  curfew  violations  be  handled  in                 
  district courts and  the minor would be  charged, prosecuted                 
  and sentenced  in the  same manner  as an  adult.   It would                 
  shift the  burden  for municipal  violations from  municipal                 
  hearing  officers  to state  district  court.   The juvenile                 
  would  get a  criminal  record and  potential jail  time. He                 
  believed it  was a  municipal rather than  a state  problem.                 
                                                                               
                                                                               
  Criminal records should not  belong to a youth that  makes a                 
  mistake with curfew violations.   His proposal came from the                 
  Governor's   Youth   and   Justice  working   group   as   a                 
  recommendation.  He reiterated that curfew violations should                 
  be a civil rather than a criminal issue, a policy issue they                 
  must  decide at the table.  He wanted to keep the fines to a                 
  maximum of $250.                                                             
                                                                               
                                                                               
  COCHAIR PEARCE responded  to a question by  SENATOR PHILLIPS                 
  by  stating  that  SB  3  would  not  affect  the  Anchorage                 
  ordinance.    They could  choose to  change  it and  use the                 
  district court  system, but  they presently  have their  own                 
  system.  The main problem is in Juneau and other communities                 
  without  their  own court  system  and ability  to prosecute                 
  curfew offenders.   She acknowledged that the  Department of                 
  Health  and   Social  Services  approached  her   about  the                 
  amendment  proposed  by  SENATOR ADAMS.    She  believed the                 
  department did not have the manpower to handle all the young                 
  people and questioned the fiscal impact of the amendment.                    
                                                                               
  The presence of SENATOR PARNELL was noted.                                   
                                                                               
  SENATOR PHILLIPS questioned if  the legislation was assuming                 
  responsibility for local  government and adding more  to the                 
  state budget.   He also inquired  why it was different  from                 
  other  ordinances around  the state.    He then  agreed with                 
  SENATOR ADAMS' point  that it had a different attitude, that                 
  of a criminal record versus a fine.                                          
                                                                               
  COCHAIR   SHARP  called   for   testimony   from  those   on                 
  teleconference.  CAPT. TED  BACHMAN,  Alaska State  Trooper,                 
  deferred to Ms. Knuth, and asked to testify after her.                       
                                                                               
  MARGOT KNUTH, Assistant Attorney General, Department of Law,                 
  approached the committee.  She outlined two special projects                 
  she had been  working on this year.  One had  to do with the                 
  need  for more prison beds and the  other was trying to work                 
  on juvenile justice  issues and  keep facilities from  being                 
  filled up.  The governor recently sponsored a conference  on                 
  youth and justice and  asked a group of ninety  citizens and                 
  experts around the state  to look at the growing  problem of                 
  juvenile crime  and make  recommendations on  what could  be                 
  done both at  the local level and  the state level.   One of                 
  the most significant  findings was that  there was a gap  in                 
  the system between  doing almost nothing for  minor offenses                 
  and  "then landing  with  both feet"  on  juveniles who  are                 
  committing  the  most   serious  offenses.     A  need   for                 
  consistent,  swift   and  certain   consequences  has   been                 
  identified  for the  low level  offenses.  The  problem with                 
  utilizing the statewide DHSS system  is a growing population                 
  and decreasing budget, and  they have been unable to  do all                 
  and be all.  The department has had to focus their energy on                 
  the serious offenders because of finite resources.                           
                                                                               
                                                                               
  MS. KNUTH testified that there  were a number of communities                 
  who  have  identified their  juveniles  at risk  of becoming                 
  criminal  offenders  and they  wish  to do  something.   The                 
  desire to work with low level offenders was taking different                 
  forms throughout  the state depending  on the nature  of the                 
  community.  She briefly described the Anchorage Court system                 
  in which they  use a  hearing officer, similar  to a  judge.                 
  The juvenile is cited and required  to go before the hearing                 
  officer  and be held accountable.   In the small communities                 
  of Elim and Koyuk, they started a pilot project that enabled                 
  them to use a village court system, which was different than                 
  the hearing officer, but it focused on the same group of at-                 
  risk kids  and created  an authority  figure  who meted  out                 
  appropriate consequences for juveniles.                                      
                                                                               
  MS. KNUTH continued  by stating  the problem with  SB 3  was                 
  fairly typical of the way the state has  been trying to deal                 
  with those at risk  of becoming offenders, which was  to put                 
  it back  on the state.   It can  be appropriate, but  at the                 
  same time, a  community response  would be more  appropriate                 
  and more  likely to result in swift,  certain and consistent                 
  consequences.  She  felt there was  a need for systems  that                 
  could be utilized.  SENATOR  ADAMS' amendment would increase                 
  the tools that  could be used  by communities, which was  in                 
  the spirit of the need identified by COCHAIR PEARCE.                         
                                                                               
  MS.  KNUTH  described  the proposed  amendment.    First, it                 
  created a possibility of civil penalties instead of criminal                 
  penalties for  kids who  are not  criminals yet  but are  at                 
  risk.  Rather than use the criminal system for them, it made                 
  more sense to  use civil  penalties.  She  noted "We've  run                 
  into this  problem of if  the fine  is too big  or community                 
  work service is ordered, then it  is treated like a criminal                 
  case and there is the right to a jury trial."  The amendment                 
  reduces the fine from $1,000 to $250, which is something the                 
  Court of Appeals has  identified as the cut-off level  for a                 
  civil  penalty.   Section  2  would  require that  DHSS  was                 
  notified of  juveniles who  are racking  up civil  penalties                 
  because  they  are the  youth  at risk  of  becoming serious                 
  offenders and they  need some way  to make sure  there is  a                 
  whole profile so they cannot  escape.  A significant problem                 
  now  is  there  is  no  accountability or  documentation  to                 
  identify  those at  risk.   Section  3, the  civil penalties                 
  section, is what Anchorage is  currently utilizing and wants                 
  to  keep  using.   The  municipal  prosecutor  had expressed                 
  concern that his  workload would not allow  more cases which                 
  would happen  if  they prosecuted  in district  court.   The                 
  remaining sections of the amendment  allow the department to                 
  delegate to  communities the ability to respond to these low                 
  level offenses.  That  is what would create a  formal system                 
  for  the  Elim  and Koyuk  agreement,  the  Mat-Su diversion                 
  panel,  and some  other  systems used  statewide.   It would                 
  create a reporting mechanism so that DHSS doesn't lose track                 
                                                                               
                                                                               
  of  those  at risk  of  becoming  chronic  offenders.    She                 
  believed that state  government needed to be  doing less and                 
  communities were asking to be empowered  to do this work, so                 
  it  seemed appropriate  to create a  new response  level for                 
  kids at risk.                                                                
                                                                               
  CAPTAIN TED BACHMAN,  Alaska State  Trooper, testified  next                 
  via teleconference from Anchorage.  He added to  Ms. Knuth's                 
  comments  regarding  the  proposed amendment.    One  of his                 
  concerns  was  creating  another subset  of  people  who are                 
  prosecuted  in  adult  court.   He  reiterated  one  of  the                 
  findings  of the  governor's  conference  on juveniles  that                 
  spoke  against  creating  any  more  laws that  would  bring                 
  juveniles into adult court.  He supported the accountability                 
  the amendment would create at the  local level for the lower                 
  offenses.  It provides another avenue  that would help steer                 
  young people in the right direction.                                         
                                                                               
  SENATOR  ADAMS commented that he  offered the amendment as a                 
  proposal  to work  with the  sponsor.  He  felt it  was good                 
  legislation but  needed more  work, communities  need to  be                 
  involved,  and there  was  a  middle  ground that  could  be                 
  considered.                                                                  
  COCHAIR PEARCE  explained that  the Judiciary  Committee did                 
  look at the same  idea, which had  been offered by the  HESS                 
  Committee.  It was her feeling that a young person who faced                 
  a DHSS  procedure is  less likely  to have  an epiphany  and                 
  decide they didn't want to be in that situation again than a                 
  person who had to face a judge.                                              
                                                                               
  End SFC-97 # 69, Side 1                                                      
  Begin SFC-97 # 69, Side 2                                                    
                                                                               
  COCHAIR  PEARCE  continued with  a  discussion about  unpaid                 
  fines resulting in court contempt problems and incarceration                 
  in  a youth facility.   That was  the reason for  adding the                 
  option of community  service.   She questioned whether  DHSS                 
  could  handle the  workload that  would be  required by  the                 
  amendment.   After thinking  through the  proposal, she  saw                 
  there  were   two  directions  to  go,  and   she  was  more                 
  comfortable   with   the  Judiciary   CS   version  of   the                 
  legislation.                                                                 
                                                                               
  SENATOR ADAMS MOVED Amendment #1.   COCHAIR PEARCE objected.                 
  A roll call vote was taken on  the MOTION to adopt Amendment                 
                                                                               
  IN FAVOR: Phillips, Adams                                                    
  OPPOSED:  Parnell, Torgerson, Pearce, Sharp                                  
                                                                               
  And so, the MOTION FAILED (2-4).                                             
                                                                               
  COCHAIR  PEARCE  MOVED  CSSB  3(JUD)  from  committee   with                 
  individual  recommendations  and accompanying  fiscal notes.                 
                                                                               
                                                                               
  Without  objection,  CSSB  3(JUD) was  REPORTED  OUT  with a                 
  previous fiscal note from the  Court System (24.3), previous                 
  fiscal   notes  from   the  Departments   of  Administration                 
  (indeterminate)    and    Health    and   Social    Services                 
  (indeterminate), and a zero fiscal  note from the Department                 
  of Public Safety.                                                            
                                                                               
  SENATE BILL NO. 136                                                          
  "An Act relating  to the state  budget and to  appropriation                 
  bills."                                                                      
  COCHAIR  SHARP  explained  that  the  bill  had  been  heard                 
  previously (3-21-97).  Amendments #1 and #4 had been adopted                 
  and there was an additional amendment before the committee.                  
                                                                               
  SENATOR PARNELL informed  the committee  he would not  offer                 
  Amendment  #3.  SENATOR PARNELL MOVED Amendment #5.  COCHAIR                 
  SHARP  objected  for the  purpose  of explanation.   SENATOR                 
  PARNELL explained  that it would  require a report  from OMB                 
  detailing what funds and  how much was expected to  lapse in                 
  the fiscal year  to be submitted  to the legislature by  the                 
  45th legislative day.   He justified that "we're gonna  know                 
  what  they  need to  make  up  in their  budget  through the                 
  supplemental process, we ought to also know how much money's                 
  left over in the budget to work with."                                       
                                                                               
                                                                               
  SENATOR  ADAMS  asked  to   hear  from  the   administration                 
  concerning the amendment.  COCHAIR SHARP noted  there was no                 
  one present to testify on behalf  of the administration.  He                 
  then  withdrew  his  objection.    There  being  no  further                 
  objection, Amendment #5 was ADOPTED.                                         
                                                                               
  SENATOR  PARNELL  MOVED CSSB  136(FIN)  from  committee with                 
  individual recommendations and a zero  fiscal note.  Without                 
  objection, CSSB 136(FIN) was REPORTED OUT with a zero fiscal                 
  note from the Office of Management and Budget.                               
                                                                               
  SENATE BILL NO. 34                                                           
  "An  Act  giving notice  of  and approving  a lease-purchase                 
  agreement  with  the  City  of  Soldotna for  a  maintenance                 
  facility of  the  Department of  Transportation  and  Public                 
  Facilities."                                                                 
  SENATOR   TORGERSON,  Sponsor,   explained  SB   34  was   a                 
  straightforward  lease-purchase agreement  with the  City of                 
  Soldotna   to   finance  and   construct  a   Department  of                 
  Transportation and Public  Facilities maintenance  facility.                 
  The current facility would be moved off the present location                 
  on the Kenai River.  It has been a top priority for the city                 
  for a number of years.  The bill originally started out with                 
  $6 million for  the cost of the facility.  Amendments in the                 
                                                                               
                                                                               
  Transportation Committee  reduced the amount to $4.5 million                 
  with the lease payment obligation at $620 thousand per year.                 
                                                                               
  SENATOR ADAMS inquired  where the project  was on the  DOTPF                 
  capital budget priority list.                                                
                                                                               
  NANCY  SLAGLE,  Director,  Administrative  Services,  DOTPF,                 
  testified  in  support of  SB 34.    She explained  that the                 
  department had requested direct funding for the facility for                 
  the  past 2-3 years.   Some appropriations were provided for                 
  remediation, design and preliminary work.  It was felt SB 34                 
  was  the  most  appropriate  method  to obtain  funding  for                 
  construction of the facility at this  time.  The project, as                 
  well  as  the removal  and  clean-up  of the  old  site, was                 
  supported  by  the  governor, but  there  was  limited money                 
  available because  of budget  constraints.   She noted  that                 
  representatives from the Department  of Revenue were present                 
  to explain that they  have been assured by the  state's bond                 
  counsel that  the clean-up  portion can  be included in  the                 
  financing package,    as  long as  there  is a  tie  to  the                 
  exchange of the new land expected from the borough.                          
                                                                               
  SENATOR TORGERSON  elaborated on the  land issue.   In 1964,                 
  when the borough was created, they selected a piece of DOTPF                 
  land  for the borough  building.  It  has been on  the books                 
  since then, to be traded  back to DOTPF when requested.   It                 
  surfaced as part  of the  agreement to move  the site.   The                 
  borough  has  made land  available  to  the  state  for  the                 
  facility just outside Soldotna and  are prepared to deed the                 
  land over  to the  state.   There had  been some  discussion                 
  about whether or  not to include approximately  $1.5 million                 
  for clean-up of the contaminated maintenance yard site.  The                 
  City of Soldotna has indicated they would go either way, but                 
  preferred not to sell revenue bonds to finance the clean-up.                 
                                                                               
                                                                               
  MAYOR  KEN  LANCASTER,  City  of  Soldotna,   testified  via                 
  teleconference.   He  stated  that it  has  been the  city's                 
  number one priority  to move the  facility off the banks  of                 
  the Kenai River.   They are prepared to go to  bond to build                 
  the  new facility.   It  had been their  prior understanding                 
  that the clean-up would be a separate item but they could go                 
  either  way.    They   just  want  the  facility   moved  as                 
  expeditiously as possible to protect the river.                              
                                                                               
  SENATOR  TORGERSON brought  up  a previous  appropriation of                 
  $600 thousand for clean-up, $400  thousand of which has been                 
  spent.    He  noted  it was  an  ongoing  process.   It  was                 
  difficult  to  tell how  much  it  would cost  and  what the                 
  definition of clean was.  He stated the department estimated                 
  a lower figure of $250 thousand, but no upper limit had been                 
  established.  It was dependent on what they might find.   He                 
  was uncertain if  the clean-up should be  included, possibly                 
  clouding the title,  particularly with the City  of Soldotna                 
                                                                               
                                                                               
  being the  lead agency.   He  referred to  a budgetary  item                 
  included by the governor last  year of $1 million, one-fifth                 
  of the project, and it was traded off for $600 thousand  for                 
  additional clean-up.                                                         
                                                                               
  MAYOR  LANCASTER added  that  it seemed  strange  to try  to                 
  inflate the cost of a new facility by  $1.5 million, when it                 
  (the  clean-up) was actually occurring on  another site.  So                 
  instead  of the facility only costing $4.5 million, it makes                 
  it worth $6 million.  It did not make economic sense to him.                 
                                                                               
  COCHAIR  SHARP invited Mr.  Browne to discuss  the nature of                 
  the fiscal note and proposed lease.                                          
                                                                               
  FORREST BROWNE,  Investment Officer, Department  of Revenue,                 
  addressed  the committee.   The administration had suggested                 
  several technical  changes to the proposed  legislation that                 
  would minimize the  cost of issuance  of the financing.   It                 
  would also give  more flexibility  in terms of  refinancing.                 
  Their experience has  been that typically, over  the term of                 
  the  lease,  it  gets  refinanced two  to  three  times when                 
  interest  rates  dip.   So  they  have  aggressively pursued                 
  refinancing  any  time  they can  save  money  on  the lease                 
  payments.  They had recommendations in three areas.                          
                                                                               
  The  first area would clarify that  the state bond committee                 
  would coordinate the financing.   It is state debt,  it will                 
  affect the state debt capacity, it  will be rated as a state                 
  debt by the  national bond rating  services and it would  be                 
  appropriate  to  be  involved  in that  process.    A second                 
  suggestion was to eliminate the requirement that the City of                 
  Soldotna be  the nominal  issuer of the  debt.  If  there is                 
  flexibility in that regard, it could be structured that way,                 
  but in the event it could be combined with another financing                 
  coming  along at the same time,  they might wish to do that.                 
  As written, the  bill specifies  they must use  the City  of                 
  Soldotna, and  having the  flexibility could  save over  the                 
  long term.   The third suggestion  was to clarify that  both                 
  the facility and land will be owned by the state at  the end                 
  of the lease term.  It  was suggested in discussion earlier,                 
  however the  bill speaks only  to the facility  being owned.                 
  They  had found  in  previous situations  that  it became  a                 
  controversy as to who actually owns  the land.  Summarizing,                 
  MR.  BROWNE believed the changes would  minimize the cost of                 
  issuance  by  eliminating duplicate  costs  at the  city and                 
  state  level  for  things such  as  bond  counsel, financial                 
  consultants and advisors, etc.   The changes will also allow                 
  the state flexibility to package the debt  issuance with any                 
  others they might have.  The financial markets respond  well                 
  to the larger  packages, enabling more competitive  bids and                 
  lower  interest rates.   The  changes would  also allow  the                 
  state to  expeditiously refinance  when interest  rates dip.                 
  He  cited  a  $1.5  million  potential interest  savings  on                 
  refinancing of the Spring Creek Correctional facility.                       
                                                                               
                                                                               
  SENATOR PHILLIPS inquired if the three  suggestions outlined                 
  were  made  in  the Transportation  Committee.    MR. BROWNE                 
  responded that  they had discussed them but  the feeling was                 
  that because they  were financially oriented, they  would be                 
  best discussed in the Finance Committee.                                     
                                                                               
  SENATOR ADAMS noted that lines 11-12 stated the  state would                 
  own the facility  and questioned Mr. Browne's concern.   MR.                 
  BROWNE explained that his suggestion was to insert the words                 
  "and the land" after "facility."   He added, "There has been                 
  confusion in lease-purchase transactions in the future where                 
  a city has claimed  ownership of the land at the  end of the                 
  term and then the state has to either buy it or  renegotiate                 
  a lease."  He believed it was the intent of the sponsor that                 
  the state would own the land when the debt was paid off.                     
                                                                               
  SENATOR  TORGERSON  had  no  problem  with the  proposal  to                 
  include  land.  He had  additional comments about the clean-                 
  up.  The land  transfer that the borough owes  the DOTPF for                 
  the  borough building land  is supposed  to be  an appraisal                 
  saying they owe  x number of dollars, then divide  it by the                 
  assessed valuation  of other acreage.   What the  borough is                 
  proposing  for the  clean-up is  to increase  the amount  of                 
  acreage on the  trade to give  the bond counsel the  feeling                 
  that they will secure the additional money with the land and                 
  tie it all into one facility.  It went from early discussion                 
  of  about  fifteen acres  for  a DOTPF  site  to forty-eight                 
  acres.  When  the appraised  value and number  of acres  are                 
  divided out by $6 million, "it doesn't pencil anywhere."  He                 
  believed that was what the mayor was referring to.                           
                                                                               
                                                                               
  With respect to  the state  bond counsel, SENATOR  TORGERSON                 
  stated that every purchase agreement  he'd been involved in,                 
  the cities have always wanted to have this authority and not                 
  turn it  over to the state.   He referred  to Palmer, Seward                 
  and Kenai as lead agencies.  He objected to adding the state                 
  bond counsel and removing the city as the lead agency.                       
                                                                               
  SENATOR ADAMS MOVED Amendment #1, to insert "and land" after                 
  "facility" on page 1,  line 11.  SENATOR PARNELL  stated for                 
  clarification that by adopting the amendment the state would                 
  take  responsibility for  environmental  clean-up.   SENATOR                 
  TORGERSON had no  objection to adding the language,  but was                 
  uncertain what the amount  of acreage would be.   He opposed                 
  adding the clean-up to the bond proposition because it was a                 
  state responsibility  and  may end  up as  a super  clean-up                 
  site.  To request  the city to bond  for clean-up is  "above                 
  and beyond the call of duty of this municipality."                           
                                                                               
  SENATOR PHILLIPS asked if the state  was refusing to pay for                 
  the clean-up.   SENATOR TORGERSON  said they  didn't know  a                 
  number either, it  just happened to  be a convenient way  to                 
                                                                               
                                                                               
  finance the entire thing.                                                    
                                                                               
  COCHAIR SHARP asked if the city  had the capability to issue                 
  tax-exempt bonds, or would the state's bonds qualify as tax-                 
  exempt.    MR.  BROWNE responded  that  they  both  have the                 
  ability.   The city would not  be on the debt,  their credit                 
  would not carry the debt.   It is clearly state debt,  which                 
  was why  they  recommended  the  state be  involved  in  the                 
  process.                                                                     
                                                                               
  COCHAIR SHARP asked if there  was any objection to Amendment                 
                                                                               
  COCHAIR SHARP stated his intention to  hold SB 34 along with                 
  the Public Health  Lab bill (SB  51), see where the  capital                 
  budget figure was in  a couple weeks and what  options would                 
  be available at that time.   And so, SB 34, as amended,  was                 
  HELD for further consideration.                                              
  COCHAIR SHARP announced upcoming bill hearings.                              
                                                                               
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  The meeting was adjourned at approximately 10:30 A.M.                        

Document Name Date/Time Subjects