Legislature(1999 - 2000)

04/22/1999 06:05 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                                                                                
MINUTES                                                                                                                         
SENATE FINANCE COMMITTEE                                                                                                        
April 22, 1999                                                                                                                  
6:05 P.M.                                                                                                                       
                                                                                                                                
TAPES                                                                                                                           
                                                                                                                                
SFC-99 #106, Side A & B                                                                                                         
SFC-99 #107, Side A & B                                                                                                         
                                                                                                                                
CALL TO ORDER                                                                                                                   
                                                                                                                                
Co-Chair John Torgerson convened the meeting at                                                                                 
approximately 6:05 P.M.                                                                                                         
                                                                                                                                
PRESENT                                                                                                                         
                                                                                                                                
Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator                                                                         
Randy Phillips, Senator Dave Donley, Senator Loren Leman,                                                                       
Senator Gary Wilken, Senator Pete Kelly, and Senator Lyda                                                                       
Green.                                                                                                                          
                                                                                                                                
Also Attending:                                                                                                                 
                                                                                                                                
SENATOR ROBIN TAYLOR; DARWIN PETERSON, Staff, Senator John                                                                      
Torgerson; BRETT HUBER, Staff, Senator Rick Halford; ROBERT                                                                     
BUTTCANE, Juneau Probation Officer, Department of Health and                                                                    
Social Services; NANCI JONES, Director, Permanent Fund                                                                          
Dividend Division, Department of Revenue; ANNE CARPENETI,                                                                       
Assistant Attorney General, Criminal Division, Department of                                                                    
Law; EDDY JEANS, Manager, School Finance Section, Department                                                                    
of Education; ROSALEE WALKER, Older Persons Action Group,                                                                       
Juneau; GARY BERRY, American Legion, Juneau; KEVIN RITCHIE,                                                                     
Alaska Municipal League (AML), Juneau; GERALD DORSCHER,                                                                         
Legislative Officer, Veterans of Foreign Wars (VFW), Juneau;                                                                    
ELMER LINDSTROM, Special Assistant to Commissioner Perdue,                                                                      
Department of Health and Social Services; JAY LIVELY, Deputy                                                                    
Commissioner, Department of Health and Social Services;                                                                         
LORAINE DERR, President, Alaska State Hospital and Nursing                                                                      
Association (ASHNA), Juneau.                                                                                                    
                                                                                                                                
Teleconferenced:                                                                                                                
                                                                                                                                
DALE BONDURANT, Kenai; ED ZASTROW, Alaska Association of                                                                        
Retired Persons (AARP), Ketchikan; BOB GORE, Pioneers of                                                                        
Alaska, Ketchikan; RICK SOLIE, Fairbanks Memorial Hospital,                                                                     
Fairbanks; DAN HOUGHTON, Alaska Regional Hospital,                                                                              
Anchorage.                                                                                                                      
                                                                                                                                
                                                                                                                                
SUMMARY OF INFORMATION                                                                                                          
                                                                                                                                
SB   4-OFFICE OF VICTIMS' RIGHTS                                                                                                
                                                                                                                                
SB 4 was HEARD and HELD in Committee for further                                                                                
consideration.                                                                                                                  
                                                                                                                                
SB  88-DIETITIANS AND NUTRITIONISTS                                                                                             
                                                                                                                                
CS SB 88(FIN) was reported out of Committee with a "do                                                                          
pass" recommendations and with a fiscal note by the                                                                             
Department of Commerce and Economic Development.                                                                                
                                                                                                                                
SB 106-REMAND OF HEALTH FACILITY PAYMNT DECISION                                                                                
                                                                                                                                
SB 106 was HEARD and HELD in Committee for further                                                                              
consideration.                                                                                                                  
                                                                                                                                
SB 151-MUNICIPAL PROPERTY TAX EXEMPTIONS                                                                                        
                                                                                                                                
SB was HEARD and HELD in Committee for further                                                                                  
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Torgerson called the Senate Finance Committee                                                                          
meeting to order at approximately 6:05 P.M.                                                                                     
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 88                                                                                                              
"An Act relating to licensure of dietitians and                                                                                 
nutritionists; and providing for an effective date."                                                                            
                                                                                                                                
CS FOR SENATE BILL NO. 88(L&C)                                                                                                  
"An Act relating to licensure of dietitians and                                                                                 
nutritionists; and providing for an effective date."                                                                            
                                                                                                                                
Senator Dave Donley spoke to the committee substitute for SB                                                                    
88.  He explained that the committee substitute work draft,                                                                     
1-LS0409\N, Lauterbach, 4/15/99, provided technical changes                                                                     
recommended by the Division of Occupational Licensing.                                                                          
[Copy on File].  The changes are to version "K" on Page 2,                                                                      
Line 26, deleting the language "after a hearing".  The                                                                          
second change was to version "M", Page 3, Line 26-27,                                                                           
addition of language which allows the Department to adopt                                                                       
regulations necessary to implementing the chapter.                                                                              
                                                                                                                                
Senator Donley MOVED to adopt the "N' version of the                                                                            
proposed legislation.  There being NO OBJECTION, it was                                                                         
adopted.                                                                                                                        
                                                                                                                                
Senator Donley understood that there would be no changes to                                                                     
the fiscal note with the new version.  He believed that the                                                                     
changes made would make the Department's work easier.                                                                           
                                                                                                                                
Senator Donley MOVED to report CS SB 88(FIN) out of                                                                             
Committee with individual recommendations and with the                                                                          
accompanying fiscal note.  There being NO OBJECTION, it was                                                                     
so ordered.                                                                                                                     
                                                                                                                                
CS SB 88(FIN) was reported out of Committee with a "do                                                                          
pass" recommendations and with a fiscal note by the                                                                             
Department of Commerce and Economic Development.                                                                                
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 4                                                                                                               
"An Act relating to establishing an office of victims'                                                                          
rights; relating to compensation of victims of violent                                                                          
crimes; relating to eligibility for a permanent fund                                                                            
dividend for persons convicted of and incarcerated for                                                                          
certain offenses; and amending Rule 16, Alaska Rules of                                                                         
Criminal Procedure, Rule 9, Alaska Delinquency Rules,                                                                           
and Rule 501, Alaska Rules of Evidence."                                                                                        
                                                                                                                                
CS FOR SENATE BILL NO. 4(JUD)                                                                                                   
"An Act relating to establishing an office of victims'                                                                          
rights; relating to compensation of victims of violent                                                                          
crimes; relating to eligibility for a permanent fund                                                                            
dividend for persons convicted of and incarcerated for                                                                          
certain offenses; and amending Rule 16, Alaska Rules of                                                                         
Criminal Procedure, Rule 9, Alaska Delinquency Rules,                                                                           
and Rule 501, Alaska Rules of Evidence."                                                                                        
                                                                                                                                
Co-Chair Torgerson spoke to the Letter of Intent included in                                                                    
the bill package.  The intent of the letter would specify                                                                       
the Legislature to fund the Office of Victim's Rights solely                                                                    
from the additional revenue generated by the new provisions                                                                     
established in the legislation.  Additionally, that funding                                                                     
would not result in a decrease of funding for crime victim's                                                                    
compensation, Council on Domestic Violence and Sexual                                                                           
Assault.                                                                                                                        
                                                                                                                                
DARWIN PETERSON, Staff to Senator John Torgerson, explained                                                                     
that the Senate Finance Committee at a previous meeting had                                                                     
requested a new fiscal note from Legislative Affairs Agency.                                                                    
In the FY00 column, it was requested that only the amount                                                                       
needed to establish that office be entered.  He referenced                                                                      
information from Senator Torgerson's office, outlining how                                                                      
the funding would work.  The estimated amount of revenue                                                                        
that would be generated and available by SB 4 from FY97 and                                                                     
FY98 convictions, would be $391 thousand dollars.  Mr.                                                                          
Peterson addressed the fiscal notes included in member's                                                                        
packets.                                                                                                                        
                                                                                                                                
Senator Adams asked if the fiscal impact referenced by Mr.                                                                      
Peterson would be the same amount as contained in the new                                                                       
work draft.  Mr. Peterson understood that the fiscal impact                                                                     
would not change in the work draft.  Co-Chair Torgerson                                                                         
interjected that the effective date would need to be                                                                            
changed.  The key to making the legislation work would be                                                                       
delaying when that office would open.                                                                                           
                                                                                                                                
Senator Donley explained that the proposed committee                                                                            
substitute would change the location of the Office of                                                                           
Victims Rights from the Legislative Branch to the Department                                                                    
of Public Safety.  He pointed out that is where the other                                                                       
grants for a victim's right pass through.  The only change                                                                      
would be the language on Page 10, Line 31.                                                                                      
                                                                                                                                
Senator Donley MOVED to adopt committee substitute 1-                                                                           
LS0029\H, Luckhaupt, 4/22/99, as the bill version before                                                                        
Committee members.  There being NO OBJECTION, it was                                                                            
adopted.                                                                                                                        
                                                                                                                                
(Tape Malfunction)                                                                                                              
                                                                                                                                
BRETT HUBER, Staff, Senator Rick Halford, pointed out that a                                                                    
qualification difference was indicated in the bill.  The                                                                        
previous qualifications were more stringent that those                                                                          
recommended in the proposed draft.  Senator Donley noted                                                                        
that the drafters had only four hours to work on the current                                                                    
language.                                                                                                                       
                                                                                                                                
Senator Donley MOVED to adopt Amendment #5 which would add                                                                      
the Senate Judiciary version qualifications for the victims                                                                     
advocate into the proposed committee substitute.  There                                                                         
being NO OBJECTION, it was adopted.                                                                                             
                                                                                                                                
(Tape Resumed Functioning)                                                                                                      
                                                                                                                                
Senator Donley MOVED to adopt Amendment #6 which would                                                                          
revise the name of the office to conform the committee                                                                          
substitute as it appears in the Senate Judiciary version,                                                                       
from the Office of Victim Advocacy to the Office of Victim's                                                                    
Rights.  There being NO OBJECTION, it was adopted.                                                                              
                                                                                                                                
Senator Donley reminded members that Amendment #2 was                                                                           
pending and that the effective date would need to be                                                                            
changed.  Senator Green pointed out that the "appointment"                                                                      
language was also different.  Senator Donley advised that                                                                       
placing the Office in the Department of Public Safety would                                                                     
constitutionally change the appointment criteria removing                                                                       
the Legislature from the "loop".                                                                                                
                                                                                                                                
Senator Donley MOVED to adopt Amendment #2, a change to Page                                                                    
1, Line 13, after "may" inserting "reasonably".  There                                                                          
being NO OBJECTION, it was adopted.                                                                                             
                                                                                                                                
Senator Donley MOVED to adopt Amendment #4, 1-LS0029\D.2,                                                                       
Luckhaupt, 4/19/99, which would provide for the delayed                                                                         
effective date for hiring.  Upon request of Co-Chair                                                                            
Torgerson, Senator Donley WITHDREW consideration of                                                                             
Amendment #4.  There being NO OBJECTION, it was withdrawn.                                                                      
                                                                                                                                
Senator Donley MOVED a conceptual amendment to Amendment #4,                                                                    
that the committee substitute include the same delayed                                                                          
effective date as appears in the original #4.  He requested                                                                     
that it be brought back to the full Committee for review.                                                                       
Co-Chair Torgerson noted that the delayed effective date                                                                        
would be restricted to the Department of Public Safety.                                                                         
There being NO OBJECTION, it was adopted.                                                                                       
                                                                                                                                
Co-Chair Parnell MOVED to adopt the Letter of Intent.  There                                                                    
being NO OBJECTION, it was adopted.                                                                                             
                                                                                                                                
ROBERT BUTTCANE, Juneau Probation Officer, Department of                                                                        
Health and Social Services, stated that the Department is                                                                       
committed to providing victims of juvenile crime a whole                                                                        
array of services to restore them to wholeness.  Victims are                                                                    
an equal partner in the work of the Department.  The bill is                                                                    
of concern to the Department, as it establishes a separate                                                                      
bureaucracy that polices the delinquency system.  The                                                                           
Department would prefer that the Legislature support the                                                                        
juvenile system in its current efforts to provide services                                                                      
to victims.                                                                                                                     
                                                                                                                                
ANNE CARPENETI, Assistant Attorney General, Criminal                                                                            
Division, Department of Law, testified that the Department                                                                      
of Law was not in favor of the proposed legislation.  The                                                                       
Department does not support the public notice section or the                                                                    
approach of the bill.  She stated that moving that Office to                                                                    
the Department of Public Safety was problematic.  It would                                                                      
make that Department responsible for investigating some of                                                                      
their own staff people, placing them in an adversary                                                                            
position with their own lawyers.                                                                                                
                                                                                                                                
NANCI JONES, Director, Permanent Fund Dividend Division,                                                                        
Department of Revenue, noted that she was present to answer                                                                     
questions of the Committee.                                                                                                     
                                                                                                                                
Co-Chair Torgerson noted that SB 4 would be HELD in                                                                             
Committee for further consideration.                                                                                            
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 151                                                                                                             
"An Act relating to exemptions for municipal property                                                                           
taxes for certain primary residences; relating to                                                                               
property tax equivalency payments for certain                                                                                   
residents; and providing for an effective date."                                                                                
                                                                                                                                
Co-Chair Parnell explained that the bill addresses the                                                                          
municipal property tax exemptions for senior citizens and                                                                       
disabled veterans.  He spoke to work draft 1-LS0842\G, Cook,                                                                    
4/22/99 and the unfunded mandate.  Co-Chair Parnell noted                                                                       
that the committee substitute would add a new Section #1, so                                                                    
that any property exempted from taxation for purposes not                                                                       
included in the local contribution calculation for school                                                                       
funding would remain in State law.  Additionally, the                                                                           
proposed committee substitute would add Section #4, Page 3,                                                                     
which would move the exemption for the seniors to the                                                                           
optional exemption portion of the statute.                                                                                      
                                                                                                                                
Co-Chair Parnell MOVED to adopt the committee substitute as                                                                     
the working draft before the Committee.  Senator Adams                                                                          
OBJECTED.                                                                                                                       
                                                                                                                                
Senator Adams questioned the exclusion from local tax                                                                           
limitations.  Co-Chair Torgerson pointed out that Amendment                                                                     
                                                                                                                                
Senator Donley asked if local government would be                                                                               
responsible for passing an ordinance in order to continue                                                                       
the existing exemption.  Co-Chair Parnell explained that the                                                                    
legislation would clarify that the municipality, by                                                                             
ordinance, would be wholly or partially exempted by taxation                                                                    
and would be responsible for taking that step.                                                                                  
                                                                                                                                
Senator Phillips referenced Page 2, Line 19, and asked if                                                                       
$150 thousand dollars was the determined cap.  Following                                                                        
discussion among Committee members, Senator Adams maintained                                                                    
his objection to adopting version "G" of the proposed                                                                           
legislation.  He advised that pressure would be released in                                                                     
specific portions, however, would be applied more deeply to                                                                     
other cost areas.                                                                                                               
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Donley, Green, P. Kelly, Leman, Parnell,                                                                              
Phillips, Torgerson, Parnell                                                                                                    
OPPOSED:  Adams                                                                                                                 
                                                                                                                                
The MOTION PASSED (8-1).                                                                                                        
                                                                                                                                
EDDY JEANS, Manager, School Finance Section, Department of                                                                      
Education, commented that the Department of Education did                                                                       
have a "problem" with Section #1 of the legislation                                                                             
because it changes the way the value determination is                                                                           
calculated.  It would make it vary from community to                                                                            
community based upon what the voters of that community                                                                          
accepts for property tax.                                                                                                       
                                                                                                                                
He continued that under Title 29, the State Assessor                                                                            
determines the full and true calculation of real and                                                                            
personal property within each community in the State.  There                                                                    
exists a "mandatory exemption", which is $150 thousand                                                                          
dollars and an "optional" exemption which the community                                                                         
can exempt over and above the $150 thousand dollars.  Under                                                                     
Section #1, it states that the property value may not be                                                                        
included in the determination to the extent of the                                                                              
exemption.                                                                                                                      
                                                                                                                                
                                                                                                                                
TAPE SFC-99 #106 Side B                                                                                                         
                                                                                                                                
                                                                                                                                
Mr. Jeans continued.  He stated that the Department                                                                             
recommends that there is a uniform calculation used in                                                                          
applying for a determination for State foundation purposes.                                                                     
                                                                                                                                
Co-Chair Torgerson asked if the end result would be                                                                             
increased local effort, and State aid decreased.  Mr. Jeans                                                                     
acknowledged that was correct.  Co-Chair Torgerson pointed                                                                      
out that the $150 thousand dollars was already deducted from                                                                    
the full and true value.  Mr. Jeans advised that an amount                                                                      
must be set and that vague language will create a problem.                                                                      
                                                                                                                                
Senator Adams asked if there should be a "grandfather                                                                           
clause" included in the legislation.  Mr. Jeans replied                                                                         
that his concern was only with the inclusion of the language                                                                    
"$150 thousand dollars".  He recommended that a uniform                                                                         
process be used to determine the local effort.                                                                                  
                                                                                                                                
In response to Co-Chair Torgerson's concern, Mr. Jeans                                                                          
reiterated that he had had a conversation with the State                                                                        
assessor and that by moving it from a required exemption of                                                                     
$150 thousand dollars to an "optional" exemption would                                                                          
cost municipalities approximately $6 million dollars                                                                            
statewide.                                                                                                                      
                                                                                                                                
ROSALEE WALKER, Older Persons Action Group, Juneau,                                                                             
requested that the legislation be held in Committee.  She                                                                       
noted that many important groups had not been consulted                                                                         
regarding such an important piece of legislation.  Ms.                                                                          
Walker emphasized that this should not be an "optional"                                                                         
amount, and that instead it should stay mandatory.                                                                              
                                                                                                                                
GARY BERRY, American Legion, Juneau, indicated that he was                                                                      
present to testify on a section of the bill which had been                                                                      
deleted.                                                                                                                        
                                                                                                                                
KEVIN RITCHIE, Alaska Municipal League (AML), Juneau,                                                                           
advised that the AML supports the passage of SB 151.  He                                                                        
agreed that it is important that the school issue had been                                                                      
addressed.  Additionally, AML supports giving the                                                                               
municipalities the broadest possible options in working with                                                                    
the senior community.  Some of the options discussed by the                                                                     
municipalities would be to make that option "needs" based,                                                                      
potentially reducing the amount.  The average exemption                                                                         
under the program is a little under $100 thousand dollars.                                                                      
He recommended that options be included in the package in                                                                       
order to allow the opportunity for deferral.                                                                                    
                                                                                                                                
Senator Parnell requested Mr. Ritchie to explain the concept                                                                    
of "deferral".  Mr. Ritchie explained that tax deferral is                                                                      
a concept used nationally which would simply allow a senior                                                                     
to defer taxes, and that it essentially becomes a lien on                                                                       
the property and not become payable until the property is                                                                       
either sold or the senior dies.                                                                                                 
                                                                                                                                
Senator Leman inquired if AML would continue to support the                                                                     
legislation if the exemption was included, but the                                                                              
municipalities were allowed to opt out.  Mr. Ritchie replied                                                                    
that the bill in the present form is relatively new and that                                                                    
he would not be able to comment on that possibility.  He                                                                        
noted that the AML policy, which was adopted in November                                                                        
1998, states that the choices of the organization provide                                                                       
that there are exemptions.                                                                                                      
                                                                                                                                
Senator Adams asked if AML would support the desires of the                                                                     
senior citizens with the property tax exemptions.  Mr.                                                                          
Ritchie replied that AML adopt its policy statement                                                                             
annually.  Co-Chair Torgerson requested that Mr. Ritchie                                                                        
closely study Section #1 to further discuss the impact.                                                                         
                                                                                                                                
GERALD DORSCHER, Legislative Officer, Veterans of Foreign                                                                       
Wars (VFW), Juneau, asked if the disabled veterans would be                                                                     
affected by the proposed legislation.  Co-Chair Parnell                                                                         
acknowledged that was correct.  The disabled veterans'                                                                          
exemption would remain in place under the proposed draft and                                                                    
would not be affected.                                                                                                          
                                                                                                                                
DALE BONDURANT, Kenai, (Testified via Teleconference),                                                                          
testified against SB 151.  He stated that it would downgrade                                                                    
medical health care, social benefits, schools, roads and so                                                                     
forth.  The oil company knows that the citizens as a whole                                                                      
have less personal benefits from the income of depleting oil                                                                    
resources than the oil industry can easily rate.  Mr.                                                                           
Bondurant noted that fewer benefits equate to less public                                                                       
watchdog interest.  He claimed that the oil companies are                                                                       
raping the Alaska resources.                                                                                                    
                                                                                                                                
ED ZASTROW, Alaska Association of Retired Persons (AARP),                                                                       
Ketchikan, (Testified via Teleconference), spoke in                                                                             
opposition to SB 151.  He noted that there are a growing                                                                        
number of senior citizens that have chosen to live in their                                                                     
homes because of the property tax exemption, permanent fund                                                                     
checks and longevity bonus.  These monies are major factors                                                                     
in their fixed income.  He emphasized that a threat to                                                                          
eliminate any of these sources of funds creates a major fear                                                                    
within the senior population.                                                                                                   
                                                                                                                                
Mr. Zastrow pointed out that the latter portion of the bill                                                                     
addresses local elections.  AARP sees that as "pitting"                                                                         
the seniors against their neighbors which is totally                                                                            
unacceptable.  He urged that the bill be left in Committee.                                                                     
                                                                                                                                
BOB GORE, Past President, Pioneers of Alaska, Ketchikan,                                                                        
(Testified via Teleconference), spoke in opposition to the                                                                      
proposed legislation.  He stated that this is a "hardship"                                                                      
bill and that there is not enough space in the Pioneer Homes                                                                    
to take care of all the seniors that will need to sell their                                                                    
homes with the bill's passage.  He emphasized that this bill                                                                    
does not treat the older Alaskans with respect.                                                                                 
                                                                                                                                
Co-Chair Parnell MOVED to adopt Amendment #1, 1-LS0842\A.2,                                                                     
Cook, 4/22/99.  [Copy on File].  There being NO OBJECTION,                                                                      
it was adopted.                                                                                                                 
                                                                                                                                
Co-Chair Parnell MOVED to adopt Amendment #2.  [Copy on                                                                         
File].  The amendment would insert language on Page 3, Line                                                                     
4:  "An ordinance adopted under this subsection may limit                                                                       
the exemption to only those individuals with financial need                                                                     
as defined in the ordinance".  There being NO OBJECTION, it                                                                     
was adopted.                                                                                                                    
                                                                                                                                
Senator Leman MOVED a conceptual amendment, Amendment #3,                                                                       
which would change the "opt in" method to the "opt out"                                                                         
option on Page 4, Line 3.  The language would make the                                                                          
option a municipal decision rather than going before the                                                                        
voters.                                                                                                                         
                                                                                                                                
Senator Adams questioned language on Page #2 regarding the                                                                      
$150 thousand dollars.  Co-Chair Torgerson noted that these                                                                     
concerns would be addressed at a later time.                                                                                    
                                                                                                                                
Senator P. Kelly requested clarification regarding the                                                                          
proposed amendment.  Co-Chair Parnell explained that it                                                                         
would be by ordinance and not by the approval of voters.                                                                        
There being NO OBJECTION, Amendment #3 was adopted.                                                                             
                                                                                                                                
SB 151 was HELD in Committee for further discussion.                                                                            
                                                                                                                                
                                                                                                                                
SENATE BILL NO. 106                                                                                                             
"An Act relating to decisions by the commissioner of                                                                            
health and social services to remand certain health                                                                             
facility payment decisions back to the hearing                                                                                  
officers; and amending Rule 602, Alaska Rules of                                                                                
Appellate Procedure."                                                                                                           
                                                                                                                                
SENATE BILL NO. 106                                                                                                             
"An Act relating to decisions by the commissioner of                                                                            
health and social services to remand certain health                                                                             
facility payment decisions back to the hearing                                                                                  
officers; and amending Rule 602, Alaska Rules of                                                                                
Appellate Procedure."                                                                                                           
                                                                                                                                
SENATOR ROBIN TAYLOR requested that the bill be moved to the                                                                    
amendment process.                                                                                                              
                                                                                                                                
Senator Wilken noted that Rick Solie was on teleconference                                                                      
and had a limited time to testify.                                                                                              
                                                                                                                                
RICK SOLIE, Representing Fairbanks Memorial Hospital,                                                                           
Fairbanks, (Testified via Teleconference), voiced his                                                                           
concern with SB 106.  He noted that it was the intent of the                                                                    
Alaska State Hospital and Nurses Association (ASHNA) to work                                                                    
in a dual track with the legislation, which would move the                                                                      
legislation, but at the same time work with the departments                                                                     
to discuss the appeal process and timing.  Mr. Solie stated                                                                     
that Fairbanks Memorial Hospital's concern is that issues                                                                       
can be resolved within the working group in a timely                                                                            
fashion.  Mr. Solie suggested that it would make more sense                                                                     
to focus on efforts outside of the Legislative process, such                                                                    
as addressing the backlog of appeals.                                                                                           
                                                                                                                                
Mr. Solie advised that ASHNA has concerns with the                                                                              
amendments, particularly Amendment #1.  [Copy on File].  He                                                                     
referenced the report submitted to Committee members from                                                                       
Donna Herbert, a consultant, identifying the difficulty in                                                                      
establishing a flat rate.  [Copy on File].                                                                                      
                                                                                                                                
Mr. Solie continued that Amendment #2 was reasonable and not                                                                    
of great concern to his organization.  [Copy on File].                                                                          
Additionally, Amendment #3 addresses the backlog of appeals.                                                                    
He reiterated that his comments were in opposition to                                                                           
Amendment #1.                                                                                                                   
                                                                                                                                
DAN HOUGHTON, Alaska Regional Hospital, Anchorage,                                                                              
(Testified via Teleconference), stated that he was available                                                                    
to answer questions.  He stated that he would support                                                                           
passage of SB 106 in its present format.                                                                                        
                                                                                                                                
ELMER LINDSTROM, Special Assistant to Commissioner Perdue,                                                                      
Department of Health and Social Services, stated that the                                                                       
Department is opposed to the proposed legislation.  He noted                                                                    
that the rate appeals process is cumbersome and costly.  The                                                                    
Department believes that the reasons for those problems is                                                                      
that the appeals process is "lost" because the underline                                                                        
rate setting system is obsolete.  The existing rate setting                                                                     
system is expensive and those costs are largely based on a                                                                      
federal mandate which has since been appealed.  He noted                                                                        
that there are budget negotiations still in process                                                                             
requiring $15 million dollar reductions to the Medicaid                                                                         
budget.  Mr. Lindstrom concluded that the existing system                                                                       
preserves the status quo and the existing system insulates a                                                                    
portion of the budget more entirely than anything else he is                                                                    
aware of.                                                                                                                       
                                                                                                                                
                                                                                                                                
TAPE SFC-99 #107 Side A                                                                                                         
                                                                                                                                
                                                                                                                                
Mr. Lindstrom stated that the bottom line is that if the                                                                        
State is concerned about reforming the system, the issue                                                                        
should not be distracted.  He referenced the letter in                                                                          
members packet dated April 19th by Commissioner Perdue                                                                          
regarding the appeals issue at Bartlett Regional Hospital.                                                                      
He reiterated that the Department could not accept the                                                                          
underlining premise of SB 106.                                                                                                  
                                                                                                                                
Senator Phillips asked if Providence Hospital had any                                                                           
appeals current at this time.  Mr. Lindstrom replied that                                                                       
there are a number of facilities that have appeals every                                                                        
rate every year.  Of the forty appeals that are outstanding,                                                                    
one issue accounts for twenty of the appeals.  Senator                                                                          
Phillips voiced a conflict of interest as he is employed by                                                                     
the Providence Health Care System.  He asked to refrain from                                                                    
voting on the amendments and the bill.                                                                                          
                                                                                                                                
Senator Leman asked if the Department could recommend any                                                                       
changes for the current "archaic" system in place.  He                                                                          
questioned the opinion of Commissioner Perdue on an                                                                             
amendment that he had recommended.  Mr. Lindstrom agreed                                                                        
that there was need for legislation to change the current                                                                       
system.  A big portion of the problems is imbedded in State                                                                     
laws resulting from federal mandates.  He deferred the                                                                          
question regarding the amendments to Mr. Lively, Deputy                                                                         
Commissioner.                                                                                                                   
                                                                                                                                
Senator P. Kelly pointed out that some of the ASHNA                                                                             
Hospitals are in support of the legislation.  Mr. Lindstrom                                                                     
replied that he could not speak for all the facilities,                                                                         
however, there have been some facilities that have never                                                                        
appealed a rate.  He believed that Fairbanks would fall into                                                                    
that category.                                                                                                                  
                                                                                                                                
Mr. Lindstrom spoke to the problems with the proposed                                                                           
legislation.  On the facilities side of the Medicaid budget,                                                                    
the ability to actively manage the cost control is very                                                                         
limited.  There are only two elements, one on the front end                                                                     
and the certificate of need process and the second is the                                                                       
ability to some degree to oppose policy and issues reflected                                                                    
in the appeals payments process.  Those are the only tools                                                                      
that the State has.  He emphasized that this bill would                                                                         
essentially remove one of those tools.                                                                                          
                                                                                                                                
JAY LIVELY, Deputy Commissioner, Department of Health and                                                                       
Social Services commented on Amendment #1 in response to                                                                        
questions from Senator P. Kelly.  Mr. Lively pointed out                                                                        
that the Department has focused mostly on the details of the                                                                    
appeal process.  He commented that the amendment would                                                                          
charge the Department to go back to determine how current                                                                       
rates are set and then create an alternate system that would                                                                    
be less cumbersome.                                                                                                             
                                                                                                                                
Senator Wilken referenced Page 2, Line 16 and asked the                                                                         
recommendation of the Department regarding the most                                                                             
reasonable amount of time.  Mr. Lively responded that the                                                                       
Department would like to see between 120 and 180 days.  Co-                                                                     
Chair Torgerson interjected that 120 days was not a                                                                             
reasonable number.  He acknowledged that 30 days might be                                                                       
too "tight".                                                                                                                    
                                                                                                                                
LORAINE DERR, Representing the Alaska State Hospital and                                                                        
Nursing Association (ASHNA), Juneau, spoke in support of the                                                                    
legislation and stated that the problem is that in the                                                                          
appeals process, there is no finality.  The basis of the                                                                        
bill puts finality to the process.  ASHNA would like to see                                                                     
the process have some sort of completion.                                                                                       
                                                                                                                                
Co-Chair Torgerson explained that he agreed with the bill                                                                       
and the way it was written, however, he believed that the                                                                       
legislation does not address the heart of the problem.  The                                                                     
legislation does solve the problem in how quickly it could                                                                      
move to court, however, the underlining problem is that                                                                         
there is no agreement on what qualifies an eligible                                                                             
reimbursement.                                                                                                                  
                                                                                                                                
Senator Donley MOVED to adopt Amendment #1.  Senator Wilken                                                                     
OBJECTED.  Senator Wilken pointed out that there are many                                                                       
hospital officials that are uncomfortable with Amendment #1.                                                                    
                                                                                                                                
Co-Chair Torgerson stated that the bill would not be moved                                                                      
out of Committee if Amendment #1 failed.  Senator Adams                                                                         
commented that it was his preference to work on the bill in                                                                     
Subcommittee.                                                                                                                   
                                                                                                                                
Senator Taylor disagreed with comments made by the                                                                              
Department regarding the legislation and the amendments.  He                                                                    
commented that he would not object to Amendment #1 which                                                                        
would allow the benefit of finality for legislative                                                                             
consideration.                                                                                                                  
                                                                                                                                
Co-Chair Torgerson urged the various factions to come to the                                                                    
table and create a working document.  He acknowledged that                                                                      
the Legislature does not have the expertise to undertake the                                                                    
challenge at this time.                                                                                                         
                                                                                                                                
Senator Wilken asked if the new rates would be included in                                                                      
the report.  Co-Chair Torgerson commented that there would                                                                      
be a report provided with the rates, subject to appeal.  He                                                                     
advised that it was his intent to create language, which                                                                        
would remove all the appeals.                                                                                                   
                                                                                                                                
Senator P. Kelly commented that Amendment #1 should be made                                                                     
into a separate bill rather than incorporated into the                                                                          
legislation.  Co-Chair Torgerson stated that he was not                                                                         
willing to make that change.                                                                                                    
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR:  Donley, Green, Leman, Parnell, Torgerson                                                                             
OPPOSED:  Adams, P. Kelly, Wilken, Phillips                                                                                     
                                                                                                                                
The MOTION PASSED (5-4).                                                                                                        
                                                                                                                                
Co-Chair Parnell MOVED to adopt Amendment #2 which would                                                                        
insert language on Page 2, Line 17, "unless the facility                                                                        
requests a delay", and Page 2, following Line 25, inserting                                                                     
a new subsection: "At the request of any party, the                                                                             
department may offer a process of voluntary mediation".                                                                         
There being NO OBJECTION, it was adopted.                                                                                       
                                                                                                                                
Senator Leman questioned if Amendment #3, 1-LS424\G.7,                                                                          
Bannister, 4/21/99, would be beneficial to the proposed                                                                         
legislation.  [Copy on File].  Senator Leman MOVED to adopt                                                                     
Amendment #3 and asked to hear from the Department.                                                                             
                                                                                                                                
Mr. Livey responded that Amendment #3 would provide any                                                                         
appeal that is remanded back to the hearing officer by the                                                                      
Commissioner after April 20th but before the effective date,                                                                    
would also be subject to the 30-day rule.                                                                                       
                                                                                                                                
Senator Taylor questioned the retroactive date and the                                                                          
effect that the amendment would have on the legislation.  He                                                                    
commented that he was not concerned with passage of the                                                                         
amendment.                                                                                                                      
                                                                                                                                
Senator Leman WITHDREW Amendment #3 with the understanding                                                                      
provided by Commissioner Perdue from an earlier conversation                                                                    
that the Department would work diligently to achieve                                                                            
finality.  There being NO OBJECTION, it was withdrawn.                                                                          
                                                                                                                                
Co-Chair Torgerson commented that the bill would be HELD in                                                                     
Committee in order to work in more detail with the                                                                              
Department on the fiscal notes.                                                                                                 
                                                                                                                                
Co-Chair Parnell requested a brief discussion on the fiscal                                                                     
notes.  He noted the three temporary positions requested in                                                                     
the fiscal statement.                                                                                                           
                                                                                                                                
Mr. Lindstrom commented that new hearing officers would be                                                                      
needed to deal with the backlog of outstanding appeals.  He                                                                     
emphasized that the most effective way to resolve the                                                                           
backlog of appeals would be to grant an additional hearing                                                                      
officer position and the additional resources for the                                                                           
Department of Law and the Department of Health and Social                                                                       
Services Commissioner Office to address the concern.                                                                            
                                                                                                                                
Co-Chair Torgerson requested a check of the length of time                                                                      
between the 30-60-90-day comparison and the fiscal impacts                                                                      
that each would bear.  Senator Taylor commented that he                                                                         
would oppose any additional changes to the fiscal note.                                                                         
                                                                                                                                
Mr. Lively responded that 120 days would be a more                                                                              
acceptable amount of time.                                                                                                      
                                                                                                                                
SB 106 was HELD in Committee for further clarification on                                                                       
the fiscal notes.                                                                                                               
                                                                                                                                
                                                                                                                                
TAPE SFC-99 #107 Side B                                                                                                         
                                                                                                                                
                                                                                                                                
ADJOURNMENT                                                                                                                     
                                                                                                                                
The meeting adjourned at 8:45 P.M.                                                                                              
                                                                                                                                
                                                                                                                                
SFC-99 14 4/22/99 p.m.                                                                                                          

Document Name Date/Time Subjects