Legislature(2001 - 2002)

03/19/2001 09:09 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 19, 2001                                                                                      
                              9:09 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-01 # 46,  Side A                                                                                                            
SFC 01 # 46,  Side B                                                                                                            
SFC 01 # 47,  Side A                                                                                                            
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete  Kelly convened the meeting at approximately  9:09 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Dave Donley, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Loren Leman                                                                                                             
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
Senator Alan Austerman                                                                                                          
                                                                                                                                
Also  Attending:  SENATOR GENE  THERRIAULT;  SENATOR  JOHNNY  ELLIS;                                                          
SENATOR  JOHN TORGERSON;  JANE DEMMERT,  Executive Director,  Alaska                                                            
Commission on Aging; ROSEMARY  HAGAVIG, Executive Director, Catholic                                                            
Community  Services;  SUZANNE PRICE  Executive  Director,  Fairbanks                                                            
Community Mental  Health Center and representative  of Mental Health                                                            
Providers Association  of Alaska; RICHARD RAINERY,  Acting Executive                                                            
Director,   Alaska   Mental   Health  Board;   JAY   LIVEY,   Deputy                                                            
Commissioner,  Department   of  Health  and  Social  Services;  MARY                                                            
JACKSON,  staff to Senator  Torgerson; REMOND  HENDERSON,  Director,                                                            
Division  of  Administrative  Services,   Department  of  Labor  and                                                            
Workforce Development                                                                                                           
                                                                                                                                
Attending  via  Teleconference:     From  Homer:  JIM  BRADY,  Kenai                                                          
Peninsula   Independent  Living   Center;   From  Fairbanks:   DAVID                                                            
JACOBSON,  State  Independent  Living  Council;   RUTH L'HOMMIDIEU,                                                             
Chair,  State  Independent  Living  Council;  NADINE  HARGESHIEMER,                                                             
Fairbanks  North Star  Borough; From  Mat-Su:  TIM ANDERSON,  Senior                                                            
Service Provider and Director,  Wasilla Area Seniors; RICHARD TUBBS,                                                            
Executive Director, Palmer  Senior Center; From Anchorage: STEVE VAN                                                            
SANT,   State  Assessor,   Division   of  Community   and   Business                                                            
Development, Department of Community and Economic Development                                                                   
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SCR  7-HEALTH CARE COST REVIEW TASK FORCE                                                                                       
                                                                                                                                
The Committee  heard from the sponsor, the Department  of Health and                                                            
Social Services,  and took  public testimony.  The bill was  held in                                                            
Committee.                                                                                                                      
                                                                                                                                
SB   4-MUNICIPAL PROPERTY TAX EXEMPTION                                                                                         
                                                                                                                                
The Committee  heard from the sponsor,  the Department of  Community                                                            
and Economic  Development  and the Fairbanks  North Star Borough.  A                                                            
committee substitute  was considered  but not adopted. The  bill was                                                            
held in Committee.                                                                                                              
                                                                                                                                
SB 137-ALASKA HUMAN RESOURCE INVESTMENT COUNCIL                                                                                 
                                                                                                                                
The Committee  heard from the sponsor,  and the Department  of Labor                                                            
and Workforce Development.  An amendment was considered and adopted.                                                            
The bill was held in Committee.                                                                                                 
                                                                                                                                
SB   6-MOBILE HOME PARK EVICTION NOTICE                                                                                         
                                                                                                                                
The  Committee heard  from  the sponsor  and  the bill  was held  in                                                            
Committee.                                                                                                                      
                                                                                                                                
                                                                                                                                
     SENATE CONCURRENT RESOLUTION NO. 7                                                                                         
     Establishing a Health Care Cost Review Task Force.                                                                         
                                                                                                                                
                                                                                                                                
This  was the  first  hearing  for  this resolution  in  the  Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
Senator  Green announced  that while  the Department  of Health  and                                                            
Social   Services   Budget   Subcommittee    was   addressing   that                                                            
department's budget,  the members were "surprised"  at the growth of                                                            
the  Medicaid  program.  She emphasized  the  increasing  costs  and                                                            
subsequent  impacts to both the federal  and state governments.  She                                                            
spoke of  continued proposals  for new matching  fund programs,  but                                                            
stated  that the question  is how  to continue  to pay for  existing                                                            
Medicaid programs.                                                                                                              
                                                                                                                                
Senator Green  informed that the Medicaid program  in Alaska expends                                                            
approximately  $10  million a  week of  combined  state and  federal                                                            
funds. She  calculated this  equals about  one-half billion  dollars                                                            
annually. She pointed out  that Medicaid is the second largest state                                                            
program  behind  education.  She ascertained  several  state  agency                                                            
budgets could  be combined  and still cost  less than the cost  of a                                                            
month of Medicaid expenses.                                                                                                     
                                                                                                                                
Senator Green  expressed the difficulties in examining  the Medicaid                                                            
expenses because  there are "various  layers" of service  providers,                                                            
vendors,  agencies, departments,  individuals  and nonprofit  groups                                                            
that rely on Medicaid funds  as a part of their on-going operations.                                                            
                                                                                                                                
Senator Green  stated the intent of this resolution  is to establish                                                            
a group to investigate  the reasons for the high costs  and possibly                                                            
identify cost containing  alternatives. This, she said would include                                                            
determining  whether  the state  is  participating  in programs  not                                                            
mandated  by the federal  government,  finding out  if any  programs                                                            
could  be restructured  or privatized  to  have less  impact on  the                                                            
state general fund and perhaps build a better program.                                                                          
                                                                                                                                
Senator Green stressed  there is no intent to "negatively impact the                                                            
Medicaid budget."                                                                                                               
                                                                                                                                
Co-Chair Kelly  commented that any  attempt to reduce the  budget is                                                            
beneficial.                                                                                                                     
                                                                                                                                
JIM BRADY, Kenai Peninsula  Independent Living Center, testified via                                                            
teleconference from Homer  to request the Committee keep in mind the                                                            
costs required  to care for  disabled people.  He stressed  that for                                                            
many, Medicaid  is the  only method  of health  insurance. He  noted                                                            
that providing  care at the early  stages of a condition  could save                                                            
considerable  money  in the  long run.  He referenced  the  "buy-in"                                                            
option  that  allows  disabled  individuals  to  pay  for  continued                                                            
Medicaid coverage once they are employed.                                                                                       
                                                                                                                                
Co-Chair  Kelly  noted  that  the  discussion  at this  time  is  to                                                            
determine  whether or not  to form the task  force. He stated  there                                                            
would be another  opportunity to debate  the issues before  the task                                                            
force.                                                                                                                          
                                                                                                                                
DAVID JACOBSON, Member,  State Independent Living Council, testified                                                            
via  teleconference   from  Fairbanks   in  appreciation   that  the                                                            
Committee  was  not yet  setting  the  agenda  for the  task  force.                                                            
However,  he emphasized that  Medicaid is  an essential program.  He                                                            
also spoke  of the necessity  of treating  illnesses in their  early                                                            
stages  rather  then  waiting  for  the  condition  to  become  more                                                            
serious.  He spoke  of  the savings  to the  state  in allowing  the                                                            
elderly to remain in their  community rather than an institution. He                                                            
supported a proposed  language change prepared by  the Department of                                                            
Health and  Social Services.  He explained  this language  addresses                                                            
specific  needs   of  the  disabled  and  elderly   and  also  gives                                                            
recommendations  on  the membership  of the  task  force to  include                                                            
consumers.   He  commented  on  the   Long-Term  Care  Task   Force,                                                            
commending the representation by all factions of the community.                                                                 
                                                                                                                                
TIM ANDERSON,  Senior Service  Provider and  Director, Wasilla  Area                                                            
Seniors, testified via  teleconference from Mat-Su about the various                                                            
services provided  to the elderly by Medicaid. He  estimated that 30                                                            
percent  of Medicaid costs  in his  community go  to pay for  senior                                                            
services.                                                                                                                       
                                                                                                                                
RICHARD TUBBS,  Executive Director, Palmer Senior  Center, testified                                                            
via teleconference  from Mat-Su that  he understood the reasons  the                                                            
state wishes to  reduce costs, but emphasized the  necessity of home                                                            
community  based senior services.  He referenced  a state  conducted                                                            
study that found  that community based services cost  much less than                                                            
nursing   home  care.  He   urged  that   the  task  force   include                                                            
representation from the senior care community.                                                                                  
                                                                                                                                
JANE  DEMMERT,  Executive  Director,  Alaska  Commission  on  Aging,                                                            
testified in Juneau about  the Long-Term Care Task Force. She stated                                                            
that there  were recommendations  of  this task  force that  remains                                                            
unimplemented.  She suggested the  new task force consider  the work                                                            
and structure  of the earlier task  force. She stressed the  lack of                                                            
flexibility of insurance for elderly care.                                                                                      
                                                                                                                                
ROSEMARY HAGAVIG,  Executive Director, Catholic Community  Services,                                                            
testified in Juneau to  echo the remarks of the previous testifiers.                                                            
She also  noted that Alaska  is one of only  a few states  that does                                                            
not provide Medicaid for  Alzheimer disease, which she stressed is a                                                            
growing  portion of  elderly  needs. She  spoke of  the benefits  of                                                            
providing care  in the early stages  of this disease. She  hoped the                                                            
task force would consider this.                                                                                                 
                                                                                                                                
SUZANNE PRICE Executive  Director, Fairbanks Community Mental Health                                                            
Center and representative  of Mental Health Providers Association of                                                            
Alaska,  testified   in  Juneau  sharing  the  message   that  cost-                                                            
containment has  been included in the organization's  practice for a                                                            
number of years.  She offered the  groups input in the task  force's                                                            
efforts. She warned  of the "domino effect" when a  task force makes                                                            
cost-containment  decisions.  She stressed,  "Cost containment  is a                                                            
tricky  issue."   She  said  that  the  providers  association   has                                                            
knowledge  in  this  area  and she  requested  they  be  allowed  to                                                            
participate in the task force.                                                                                                  
                                                                                                                                
Senator  Green noted  that  there  would be  a decrease  in  federal                                                            
participation  in Medicaid  funding in  the year  2002. She said  it                                                            
needed  to  be decided  how  the  state's  general  funds  would  be                                                            
prioritized.  She  ascertained  that additional  programs  would  be                                                            
introduced, making the need to prioritize greater.                                                                              
                                                                                                                                
RUTH  L'HOMMIDIEU,   Chair,   State  Independent   Living   Council,                                                            
testified   via  teleconference  from   Fairbanks,  to  advise   the                                                            
Committee to  proceed with caution  in establishing the task  force.                                                            
She  stated  that  Medicaid  is  the  number  one  form  of  medical                                                            
insurance for  people with disabilities.  She recommended  expanding                                                            
the Medicaid  buy-in option. She listed  the annual cost  of nursing                                                            
home  treatment as  $96,809 per  person.  She stressed  the need  to                                                            
ensure  people can  remain in  their own  community,  and return  to                                                            
work. She supported  the Department  of Health and Social  Services'                                                            
proposed language.                                                                                                              
                                                                                                                                
RICHARD  RAINERY, Acting  Executive Director,  Alaska Mental  Health                                                            
Board  testified in  Juneau  to reiterate  other  points raised.  He                                                            
agreed  that the  proposed task  force membership  excludes  several                                                            
factions.  He opined that  health care users,  payers and  providers                                                            
should  be included  in the  primary membership  instead  of ad  hoc                                                            
members. He predicted that  the task force would learn that Medicaid                                                            
is a "very complex subject"  and he was concerned that the timeframe                                                            
allowed would  be inadequate. He warned  that the impacts  on access                                                            
to health care should be  carefully considered, in the mental health                                                            
field.  He spoke  of  the reliance  on  Medicaid by  many  community                                                            
mental  health care  providers and  the limited  ability to  replace                                                            
that funding  from other  sources. He pointed  out that Alaska  does                                                            
not have a health  insurance parody clause, so private  insurance is                                                            
not required to include mental health coverage.                                                                                 
                                                                                                                                
JAY LIVEY,  Deputy  Commissioner,  Department of  Health and  Social                                                            
Services,   testified  in  Juneau   to  voice  concerns   about  the                                                            
resolution.  He expressed  that the task force is "narrowly charged"                                                            
in  that  it  is  only  directed  to  review  cost  containment.  He                                                            
emphasized  the "interrelationships  and complexity of health  care"                                                            
He stated  that  the department  supports  cost containment  and  he                                                            
agreed that  the cost of  health care is  rising. However,  he said,                                                            
"cost containment itself does not exist entirely in a vacuum."                                                                  
                                                                                                                                
Mr. Lively  shared there  are three  ways to reduce  costs within  a                                                            
health  care program.  He  listed  them as  reducing  the number  of                                                            
participants,  lowering  the  reimbursement  rate and  reducing  the                                                            
amount of  services. He pointed  out that  each of these would  have                                                            
other  ramifications on  the health  care system.  He stressed  that                                                            
many  elderly  and  disabled  patients  do  not  have  other  health                                                            
insurance options, due  to preexisting conditions, lack of income to                                                            
purchase private insurance, and other factors.                                                                                  
                                                                                                                                
Mr. Lively  spoke of the connection  between publicly funded  health                                                            
care programs and local  health care economies. He explained that in                                                            
many smaller  communities,  there is a  connection between  Medicaid                                                            
funding  for long-term  care  and the  economic viability  of  small                                                            
rural hospitals.  He stated that the  Medicaid portion of  long-term                                                            
care funding  keeps the  hospitals operational.  He also noted  that                                                            
Medicaid funding for disabled  patients provides funding to maintain                                                            
many mental health  care programs. While he acknowledged  that these                                                            
programs  do  not  serve Medicaid  eligible  patients  exclusively,                                                             
without the  Medicaid funding, there  would not be adequate  private                                                            
funding income to provide the services to any patients.                                                                         
                                                                                                                                
Senator  Green asked  if the witness  was addressing  the impact  of                                                            
private insurance  and subsidized Medicaid in providing  lower rates                                                            
to those individuals that pay for services without insurance.                                                                   
                                                                                                                                
Mr. Livey  agreed  there is  an interrelationship  between  Medicaid                                                            
payments  and the  health  care economy.  He  explained  that if  an                                                            
individual  does  not  have  health care  coverage,  and  must  seek                                                            
medical  care, "somebody  has to  pay for  that." He  said that  the                                                            
"somebody"  is "the rest  of the  public that  pays the health  care                                                            
bill."                                                                                                                          
                                                                                                                                
Mr. Lively qualified that  "the worst" would not necessarily happen,                                                            
but stressed  that because  of the complexity  of the issue,  if the                                                            
task force  only addresses  cost containment,  "it is going  to miss                                                            
some of these  connections. He was  concerned that unless  the scope                                                            
of the  task force  is broadened  to include access,  the impact  on                                                            
other  health  care   economies  and  other  providers,   unintended                                                            
consequences could result.                                                                                                      
                                                                                                                                
Mr.  Livey  concluded suggesting   that the  task  force  membership                                                            
should include  additional representation from recipients,  families                                                            
of recipients  or  advocates for  recipients as  well as  additional                                                            
membership for the Administration.                                                                                              
                                                                                                                                
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 4(CRA)                                                                                              
     "An Act relating to a mandatory exemption from municipal                                                                   
     property taxes for certain residences; and providing for an                                                                
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
SENATOR  GENE THERRIAULT,  sponsor,  stated the intent  is to  offer                                                            
more flexibility  for establishing and setting local  property taxes                                                            
and tax relief.  He noted that current statutes contain  a provision                                                            
to allow  local  governments  to offer  a ten-percent  property  tax                                                            
exemption  for  residents  with  property  within  the government's                                                             
boundaries  by "a package of an ordinance"  that is voted  on by the                                                            
general populous.                                                                                                               
                                                                                                                                
Senator  Therriault shared  that the Senate  Community and  Regional                                                            
Affairs committee  substitute proposes to increase  that amount to a                                                            
total cap of $50,000 worth  of valuation.  He referred to a proposed                                                            
committee substitute, 22-LS0190\P,  saying it reduces this amount to                                                            
$40,000. He also  noted the proposed committee substitute  addresses                                                            
a concern that  was raised by service  areas in the Fairbanks  North                                                            
Star Borough (FNSB). He  explained if the local government exercised                                                            
an increased residential  property tax exemption, the revenue to the                                                            
service  area  would  decrease.    To rectify  this,  he  said,  the                                                            
proposed  committee substitute  would adjunct  the service  area mil                                                            
rate from  the residential  property  tax exemption.  Therefore,  he                                                            
said  as the  local  government  chose  to shift  the  property  tax                                                            
exception,  there  would  be  no  impact  on  the  amount  of  money                                                            
generated by the service  areas. He noted that many service areas in                                                            
the Fairbanks  area operate on "very  thin budgets" and that  it was                                                            
not his intent to impact them.                                                                                                  
                                                                                                                                
Senator Therriault  addressed a concern raised by  Senator Torgerson                                                            
in the Senate  Community and Regional  Affairs Committee  that there                                                            
would be adverse  impact to the state  treasury. Senator  Therriault                                                            
explained  the issue regarding  communities  that have a portion  of                                                            
the  Trans Alaskan  Pipeline  passing  through  it, referring  to  a                                                            
drawing showing  the service  area and borough.  [Copy on file.]  He                                                            
stated that the  local property tax is credited against  the oil and                                                            
gas property  taxes owed to the state  treasury. He stated  that the                                                            
total cap on oil and gas properties is 20-mils.                                                                                 
                                                                                                                                
Senator Therriault  noted that some boroughs, such  as the FNSB, are                                                            
considering  alternate revenue sources  such as a sales tax  or user                                                            
fees.  However, he  stressed  that the  service area  does not  have                                                            
those  options  to  shift  lost  revenues  and  could  only  collect                                                            
property taxes.  He proposed excluding  the extra mils intended  for                                                            
the service areas  from the residential property tax  exemptions. He                                                            
concluded that this would mitigate Senator Torgerson's concerns.                                                                
                                                                                                                                
Senator  Therriault  then  noted  that  Section 1  of  the  proposed                                                            
committee  substitute  is  added  to  provide  senior  citizens  and                                                            
veterans tax  exemptions, which he  said are in current statute.  He                                                            
detailed  that  a  residence  owned  by a  senior  or  veteran  that                                                            
receives  the property  tax exemption  and that  is sold during  the                                                            
calendar year  to a buyer that does  not qualify for the  exemption,                                                            
is still exempted  from the tax during that year.  He said the local                                                            
government  has no method  to collect  property  taxes from the  new                                                            
owner for  the remainder  of the year. He  stated that the  proposed                                                            
committee substitute allows  local governments to assess and collect                                                            
property taxes  from the new owner for the partial  year. He pointed                                                            
out that this language  is permissive and does not require the local                                                            
government to comply.                                                                                                           
                                                                                                                                
Senator  Wilken moved  to adopt CS  SB 4, 22-LS0190\P  as a  working                                                            
draft.                                                                                                                          
                                                                                                                                
Co-Chair  Donley objected.  He  stated that  he prefers  the  Senate                                                            
Community and Regional Affairs committee substitute.                                                                            
                                                                                                                                
Co-Chair  Kelly asked  if  the reason  Co-Chair Donley  objected  is                                                            
because  the language  in  version  "P" is  "not strong  enough"  to                                                            
preclude the possibility  that state revenues would  drop because of                                                            
the exemption.                                                                                                                  
                                                                                                                                
Co-Chair Donley affirmed that was one of his concerns.                                                                          
                                                                                                                                
Co-Chair Kelly shared that concern.                                                                                             
                                                                                                                                
Senator Therriault  spoke to  Section 1 of  version "P" that  allows                                                            
the  local government  to  assess  part  of the  annual  tax if  the                                                            
property transfers  from a senior  citizen to a person who  does not                                                            
qualify for a  tax exemption. He elaborated the original  version of                                                            
the bill states, "shall" and the proposed language reads "may".                                                                 
                                                                                                                                
Senator  Therriault  next  addressed   Section  2  of  the  proposed                                                            
committee substitute,  saying it "offers a tool."  He explained that                                                            
this provision  does not mandate the  local government increase  the                                                            
personal  property   tax  exemption.   He  stated  that   the  local                                                            
governments have  the option of offering a tax break  to residential                                                            
property owners  and recoup the lost revenue "anyway  they see fit."                                                            
He noted  the amount was  set in statute in  1974, and has  not been                                                            
increased since then.                                                                                                           
                                                                                                                                
Senator Therriault  emphasized that there would be  little impact to                                                            
the  state  treasury.  He elaborated  that  because  of  the  failed                                                            
property  tax cap  ballot  proposal,  he did  not think  that  local                                                            
governments  would provide a tax exemption  for some residents  then                                                            
raise the overall  mil rate. He expressed that this  would shift the                                                            
tax burden from  residents to businesses and rental  property, which                                                            
he did not  think local governments  would want to do. He  suggested                                                            
that if local  governments proposed this, there would  be opposition                                                            
from business  owners and renters  and such a measure would  require                                                            
voter approval.                                                                                                                 
                                                                                                                                
                                                                                                                                
SFC 01 # 46, Side B 09:56 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator  Wilken  addressed  Co-Chair  Donley's  objection.   Senator                                                            
Wilken stressed  that without  Section 2  of the proposed  committee                                                            
substitute, "the bill is  essentially dead." He shared that the FNSB                                                            
was attempting  to respond  to the failed  ten-mil property  tax cap                                                            
ballot measure  from the previous election. He expressed  his desire                                                            
for the  legislature to  assist local governments  in their  revenue                                                            
efforts. He listed two  things that would not happen in the FNSB. He                                                            
said the assembly  would not increase mil rates to  make up for this                                                            
exemption  nor would it  drastically reduce  services to respond  to                                                            
lost revenues.  He predicted the legislation  would encourage  local                                                            
governments  to consider alternative  revenue sources. He  estimated                                                            
there is  a "significant  amount of people"  who "think we  ought to                                                            
spread the burden" of government  funding to more than just property                                                            
owners.                                                                                                                         
                                                                                                                                
Co-Chair Donley  requested the Department of Revenue  comment before                                                            
the Committee  adopt the committee  substitute. He opined  that this                                                            
legislation   is  a  "substantive   issue"   and  a  "major   policy                                                            
consideration"  as far as it affects the state's ability  to collect                                                            
revenue.                                                                                                                        
                                                                                                                                
Co-Chair   Kelly  noted  an   attempt  was   underway  to   reach  a                                                            
representative of the department to join the meeting.                                                                           
                                                                                                                                
Co-Chair Donley pointed  out there are other boroughs that may "find                                                            
this an opportunity  to significantly increase their  ability to tax                                                            
oil and gas property or  other properties that may be at the expense                                                            
of  the  state."  Because  of this,  he  stressed  there  are  other                                                            
considerations besides the FNSB.                                                                                                
                                                                                                                                
Senator Therriault  addressed the  fiscal note, saying the  original                                                            
fiscal  note projected  a possible  impact  of $1.6  million on  the                                                            
state treasury if all local  governments that currently exercise the                                                            
$10,000  property   tax  exemption   took  full  advantage   of  the                                                            
provisions  in the bill and increased  the exemption to $50,000.  He                                                            
stressed  that he  does not  think this  would happen  and  instead,                                                            
local  governments would  consider  other revenue  sources. He  also                                                            
noted  the  proposed  committee  substitute  reduces  the  exemption                                                            
amount to $40,000  in part to address these concerns.  He understood                                                            
Co-Chair  Donley's desire  to hear from the  Department of  Revenue,                                                            
but  Senator   Therriault  did  not   think  the  department   could                                                            
accurately  predict  the impact  to  the  state treasury  since  the                                                            
language is permissive rather than mandatory.                                                                                   
                                                                                                                                
Senator  Therriault  stated that  local  governments  and the  state                                                            
could  offset  reduced  revenues with  a  sales  tax, user  fees  or                                                            
cutting expenditures and increased efficiencies.                                                                                
                                                                                                                                
Senator  Ward shared  that  currently  the Kenai  Peninsula  Borough                                                            
(KPB) taxes  the refineries and the  petroleum industry in  Nikiski.                                                            
Nikiski,  he pointed out,  does not have a  local service area  with                                                            
the exception  of fire service and there has been  debate whether to                                                            
form  some type  of local  government. He  asked what  would be  the                                                            
impact if a  local service area in  Nikiski were not formed  and the                                                            
revenue needed to be increased  in that area. He predicted the local                                                            
government would increase  taxes to the petroleum industry to offset                                                            
the  lost  revenue.  He stressed  this  would  actually  impact  the                                                            
employees of the industry.                                                                                                      
                                                                                                                                
Senator Therriault  responded saying if local government  decided to                                                            
raise the mil  rate on those oil and  gas properties, it  would have                                                            
to raise those  property taxes on all property including  houses and                                                            
stores. He explained that  oil and gas properties could not be taxed                                                            
at a different  rate than other properties.  He continued  that if a                                                            
service area  formed and  levied a one-mil  property tax to  provide                                                            
for the service  area functions, exercising of the  exemption option                                                            
of this committee  substitute would not impact the  revenues derived                                                            
from the one-mil tax.                                                                                                           
                                                                                                                                
Senator Ward  shared that  it was unclear  whether the community  of                                                            
Nikiski was  ready to form a service  area. He asked if the  service                                                            
area  were  not  formed and  the  borough  chose  to  implement  the                                                            
exemption, if the petroleum industry would have to pay.                                                                         
                                                                                                                                
Senator Therriault  answered  this would be  correct if the  borough                                                            
decided to increase the general government mil rate.                                                                            
                                                                                                                                
Senator Ward remarked that the KPB seems to consider this first.                                                                
                                                                                                                                
Senator Therriault  repeated  that a mil  rate increase would  raise                                                            
taxes for all  property owners and that the matter  would have to go                                                            
before the voters.                                                                                                              
                                                                                                                                
Senator  Ward  thought  the  KPB would  decide  to  reduce  services                                                            
instead of raising the mil rate.                                                                                                
                                                                                                                                
Senator Green  wanted to know if there is any crossover  implication                                                            
to  the  education  foundation  funding   formula  and  whether  the                                                            
Department of  Education and Early Development should  be consulted.                                                            
                                                                                                                                
Senator  Therriault  did  not think  there  would  be an  impact  on                                                            
education  funding,  noting that  the  Department of  Education  and                                                            
Early Development has not submitted a fiscal note to the bill.                                                                  
                                                                                                                                
NADINE HARGESHIEMER,  Fairbanks  North Star  Borough, testified  via                                                            
teleconference  from Fairbanks in  support of the bill. She  relayed                                                            
the  increased exemption  option  would be  helpful  as the  borough                                                            
seeks alternative  sources  of revenue. She  informed that  the FNSB                                                            
operates  under  a  revenue  cap.  She noted  the  formation  of  an                                                            
alternative  revenue commission to  investigate sources of  revenue.                                                            
She expressed the intent  is to match any additional revenue against                                                            
reductions to residential property taxes.                                                                                       
                                                                                                                                
Ms. Hargeshiemer  stated that service areas have separate  tax rates                                                            
borough-wide  and if the  residential tax  exemption was applied  to                                                            
service areas, those areas  would lose revenue. As a result she said                                                            
the burden  could be placed on commercial  entities and undeveloped                                                             
parcels that would not  qualify for the exemption. She remarked that                                                            
the borough  does not want to do this  nor would it be "politically                                                             
palatable." Therefore,  she said omitting the service areas from the                                                            
property  tax exemption the  mil rates would  not need to be  raised                                                            
for the commercial and other nonresidential property.                                                                           
                                                                                                                                
Ms. Hargeshiemer next pointed  out that current state law allows the                                                            
borough to tax the Alyeska  Pipeline up to 20 mils. She said that if                                                            
the borough's  mil rate is less than 20, the difference  goes to the                                                            
state.                                                                                                                          
                                                                                                                                
Ms. Hargeshiemer  then addressed the  impact of this legislation  on                                                            
education funding, saying  the FNSB is required by law to provide at                                                            
least four  mils but actually  provides 8.83  mils. She stated  that                                                            
she did not  see how this residential  property tax exemption  would                                                            
impact education  funding since the borough currently  provides more                                                            
than double the requirement.                                                                                                    
                                                                                                                                
Ms.  Hargeshiemer  recognized  there  might  be  other  issues  with                                                            
different boroughs,  but pointed out  the tax exemption is  optional                                                            
and  requires  voter approval.  She  expressed  the FNSB  funds  the                                                            
existing  level  of  services   "in  a  way  that  makes  sense  for                                                            
everybody."                                                                                                                     
                                                                                                                                
Senator Therriault  referenced  a letter addressed  to him  from the                                                            
Alaska Municipal  League dated  February 7,  2001 in support  of the                                                            
bill. [Copy on file.]                                                                                                           
                                                                                                                                
Co-Chair  Donley noted the  Department of  Revenue fiscal note  does                                                            
not apply to the  proposed committee substitute and  Senator Green's                                                            
request  for  input  from the  Department  of  Education  and  Early                                                            
Development.  He  stated  that he  would  like  an analysis  of  the                                                            
committee substitute from both departments.                                                                                     
                                                                                                                                
Co-Chair  Kelly asked  if  the four-mil  requirement  for  education                                                            
funding  is based  on the  assessed value  of the  borough  property                                                            
regardless of any exemptions.                                                                                                   
                                                                                                                                
Senator Wilken  answered that  the four-mils  is based on the  state                                                            
assessed full and true value before exemption.                                                                                  
                                                                                                                                
STEVE VAN SANT,  State Assessor, Division of Community  and Business                                                            
Development,  Department  of  Community  and  Economic Development,                                                             
testified via  teleconference from  Anchorage as the drafter  of the                                                            
original  Department of Revenue  fiscal note.  He affirmed  that the                                                            
fiscal  note assumed  the exemption  would increase  to $50,000  and                                                            
also assumed  that  all municipalities  currently  operating with  a                                                            
residential exemption would  adopt the maximum $50,000 exemption. He                                                            
continued that the fiscal  note also assumed that the municipalities                                                            
with oil and  gas properties would  increase their mil rate  to make                                                            
up  for the  lost  revenues  and thus  cause  a reduction  of  state                                                            
revenue  of $1.6 million.  He stressed  this assumes  that no  other                                                            
revenue would be used by  local municipalities. He qualified that if                                                            
Fairbanks instituted  a sales tax there would be a  reduction on the                                                            
state impact.                                                                                                                   
                                                                                                                                
Mr. Van  Sant addressed  the possible  effect  on education  funding                                                            
summarizing that this legislation would not have a major impact.                                                                
                                                                                                                                
Mr. Van  Sant then  spoke to the  provision in  Section 1  regarding                                                            
exempt residents  selling their residence in the middle  of the year                                                            
to a nonqualified  buyer. He interpreted  the language to  read that                                                            
the senior citizen would not get an exemption in that year.                                                                     
                                                                                                                                
Co-Chair Donley  maintained his objection.  He supported  the change                                                            
from  "shall"  to "may"  in  Section 1  but  suggested  it could  be                                                            
addressed  as an  amendment.  He also suggested  that  Section  2 be                                                            
considered  as an amendment rather  than in a committee substitute.                                                             
                                                                                                                                
AT EASE 10:14 AM / 10:16 AM                                                                                                     
                                                                                                                                
Senator  Wilken   WITHDREW  his  motion   to  adopt  the   committee                                                            
substitute, Version "P"  as a working draft. There was no objection.                                                            
                                                                                                                                
Co-Chair Kelly  requested the sponsor  work to address the  concerns                                                            
raised.                                                                                                                         
                                                                                                                                
Senator  Therriault   agreed  to  meet  with  members  in  order  to                                                            
understand  the concerns,  but expressed that  most of the  concerns                                                            
are addressed  in the proposed committee substitute  or by the local                                                            
voter control.                                                                                                                  
                                                                                                                                
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 137                                                                                                        
     "An Act relating to the allocation of money appropriated to                                                                
     the Alaska Human Resource Investment Council; and providing                                                                
     for an effective date."                                                                                                    
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
MARY JACKSON,  staff to Senator Torgerson, testified  that this bill                                                            
extends the first  year funding provision, or allocation  provision,                                                            
of the previous legislative  session's SB 289. She detailed that the                                                            
provision allocated  funding for the  newly created program  through                                                            
the University  of  Alaska, the  Kotzebue Technical  Center and  the                                                            
Alaska Vocational  and Technical Center  (AVTC) because the  program                                                            
itself was not yet established in a manner to receive funding.                                                                  
                                                                                                                                
Ms. Jackson  shared that  these institutions  provide technical  and                                                            
vocational  programs in both  urban and rural  areas of Alaska.  She                                                            
stated  that  a  review  of the  uses  of  the  funds,  "showed  how                                                            
necessary   those   funds   were."  She   referred   to   supporting                                                            
documentation from AVTC.                                                                                                        
                                                                                                                                
Ms. Jackson  explained that  these funds  allow the institutions  to                                                            
"properly  prepare"  for  the  influx of  new  students  into  their                                                            
systems.                                                                                                                        
                                                                                                                                
Co-Chair Donley  asked if the funds  for this program come  from the                                                            
Unemployment Insurance (UI) fund.                                                                                               
                                                                                                                                
Co-Chair Kelly affirmed.                                                                                                        
                                                                                                                                
Amendment #1: This amendment  to Section 1 (a), page 1, lines 12-14,                                                            
changes  the  distribution  of the  allocations  between  the  three                                                            
vocational technical facilities as follows.                                                                                     
                                                                                                                                
     Delete:                                                                                                                    
          University of Alaska                      52 percent                                                                  
          Kotzebue Technical Center                 16 percent                                                                  
          Alaska Vocational Technical Center        32 percent                                                                  
     Insert:                                                                                                                    
          University of Alaska                      67 percent                                                                  
          Kotzebue Technical Center                 11 percent                                                                  
          Alaska Vocational Technical Center        22 percent                                                                  
                                                                                                                                
Senator Wilken moved for adoption.                                                                                              
                                                                                                                                
Senator Austerman objected for the purpose of discussion.                                                                       
                                                                                                                                
Senator Wilken  stated this amendment corrects a drafting  error. He                                                            
said that  the existing percentage  breakdown  was a part of  SB 289                                                            
and was determined by the  intent to allocate $1 million to AVTC and                                                            
$500,000 to Kotzebue Technical  Center, with the remainder allocated                                                            
to the University  of Alaska system.  He said the percentage  change                                                            
is necessary to continue  funding the same fixed amounts to AVTC and                                                            
Kotzebue Training Center.                                                                                                       
                                                                                                                                
Ms. Jackson stated that the sponsor supports the amendment.                                                                     
                                                                                                                                
Senator Leman  asked if the intent is to fund the  technical centers                                                            
a fixed  amount then  why percentages  were listed  in the  language                                                            
instead of the  allocations. He predicted changes  would continue to                                                            
be necessary in future years.                                                                                                   
                                                                                                                                
Ms. Jackson  replied,  "The dollar  values  are always  going to  be                                                            
approximate"  She  explained  the  actual  allocation  to  AVTC  the                                                            
previous  year  was $1,032,000  and  the  projected amount  for  the                                                            
current year is $1,001,000  out of a total allocation to the program                                                            
of $4.5 million.                                                                                                                
                                                                                                                                
Senator   Leman  again   asked  why   the  language   contains   the                                                            
percentages, which require changing.                                                                                            
                                                                                                                                
Ms. Jackson  answered that the previous  allocation was not  for the                                                            
"full funding  year" due to the inception  of the program  after the                                                            
fiscal year began.                                                                                                              
                                                                                                                                
Senator  Leman asked  if the  expectation  were therefore  that  the                                                            
amended percentage amounts would be accurate in future years.                                                                   
                                                                                                                                
Ms. Jackson affirmed.                                                                                                           
                                                                                                                                
Senator Green  expressed that  she did not  support the project  the                                                            
previous session  and would not support  it again this year  either.                                                            
She opined,  "I think it's  a misdirection  of funds that were  very                                                            
clearly laid  out how they were supposed  to be used." She  stressed                                                            
that this legislation "goes totally against" the UI program.                                                                    
                                                                                                                                
Senator  Austerman   removed  his  objection  to  adoption   of  the                                                            
amendment.                                                                                                                      
                                                                                                                                
Senator  Olson  stated  the  UI fund  is  an employer  contribution                                                             
intended  to have  "a  positive action"  on  employees.  He did  not                                                            
understand  why the University of  Alaska was receiving the  "lion's                                                            
share" of the  funds for this program.  He predicted the  university                                                            
would continue to receive  larger percentages of this fund and would                                                            
eventually expect to receive  all of the funds. He stressed that the                                                            
emphasis  of the program  is for vocational  and technical  training                                                            
and that  the percentage  shifts would take  away from the  original                                                            
intention. He  spoke of the preparations for a gas  pipeline and the                                                            
need  to train  Alaskans  throughout  the state  for  the jobs  this                                                            
project would bring.  He  saw this amendment as reducing funding for                                                            
"the only technical institution  in my area." As a result, he stated                                                            
that he objected to its adoption.                                                                                               
                                                                                                                                
Senator  Olson opined  this amendment  "polarizes",  "separates  the                                                            
haves from the  have-nots" and causes "a bigger burden  to be placed                                                            
upon  those of  us that  are  already overburdened  by  the lack  of                                                            
availability of training."                                                                                                      
                                                                                                                                
Senator Olson  expressed that  the intent of  the legislature  is to                                                            
provide a  consensus and  "a more even playing  field." He  saw this                                                            
amendment as divisive.                                                                                                          
                                                                                                                                
Co-Chair Kelly noted that  the funds would be directed to vocational                                                            
pursuits  and  therefore  be  used  to  help  Alaskans  develop  the                                                            
necessary skills  for jobs, such as with the proposed  gas pipeline.                                                            
He  stressed  that  this  amendment   does  not  change  the  amount                                                            
originally  intended   for  the  university,  but  rather   corrects                                                            
language to allow it.                                                                                                           
                                                                                                                                
Senator  Wilken explained  that the  amount funded  the program  the                                                            
previous  year was only  enough to  fund three-fourths  of the  year                                                            
because the program started after the fiscal year had begun.                                                                    
                                                                                                                                
Senator  Olson understood  this, but  stressed the  need to  provide                                                            
training in rural areas of the state.                                                                                           
                                                                                                                                
Co-Chair Kelly  recalled the original intent was to  provide funding                                                            
to  the  vocational   training  centers  and  that  this   amendment                                                            
continues to do this.                                                                                                           
                                                                                                                                
Senator  Hoffman suggested  that  the intent  of the  program is  to                                                            
provide  training   for  jobs  in  technical  areas   and  that  the                                                            
university  is  an  institution  of higher  learning.  He  said  the                                                            
question  is actually whether  the allocation  to the university  is                                                            
appropriate.                                                                                                                    
                                                                                                                                
Senator Green  reminded that there  was "great heated debate"  on SB
289 during  the previous  session about the  method of changing  the                                                            
use of the UI  funds. She remarked, "That's not what  this money was                                                            
intended for,  it's not why the money  was collected. It  was not go                                                            
to institutions.  It  was to  got to  individuals  who had  specific                                                            
needs."  While she understood  the  fund has a  surplus, she  argued                                                            
that this  money should go  to individuals.  She stated that  SB 289                                                            
was "supposed to be a one-year budget fix."                                                                                     
                                                                                                                                
Co-Chair Kelly  did not remember SB 189 as a "one-year  budget fix."                                                            
                                                                                                                                
Senator  Green asked if  it was not,  why the  issue was before  the                                                            
Committee this session.                                                                                                         
                                                                                                                                
Co-Chair   Kelly  recalled   the   original   discussions   included                                                            
statements that the program would be on-going.                                                                                  
                                                                                                                                
Senator  Wilken also  did not remember  the program  as a  "one-year                                                            
budget  fix." He  stressed  that funding  for  this  program is  not                                                            
collected from the employee  but rather from the employer's matching                                                            
funds. He found  it appropriate to train unemployed  workers so they                                                            
could qualify  for other jobs, which would be an appropriate  use of                                                            
UI funds. He added that  the University of Alaska is included in the                                                            
program  because it  has a "statewide  reach." He  noted that  while                                                            
AVTC and Kotzebue  Training Center  are located in two rural  areas,                                                            
there  are campuses  of the  University  of Alaska  in several  more                                                            
rural  communities.  He  pointed   out that   University  of  Alaska                                                            
President Hamilton  understands the  need to provide vocational  and                                                            
technical training.                                                                                                             
                                                                                                                                
Co-Chair  Kelly stated, "There  is no reallocation  of dollars  from                                                            
one institution  to another." He stressed  that this is a  technical                                                            
amendment.  He  reiterated  that the  university  is  the  statewide                                                            
entity able to  funnel these funds into rural Alaska  for vocational                                                            
training.                                                                                                                       
                                                                                                                                
Senator Austerman asked  for a breakdown of how the university spent                                                            
the funds allocated to it for this program.                                                                                     
                                                                                                                                
Co-Chair  Kelly   stated  this  information  is  available   on  the                                                            
Internet.                                                                                                                       
                                                                                                                                
Senator  Green expressed,  "the university  [has]  done a fine  job"                                                            
with the  funds allocated  for this  program. She  cited the  "major                                                            
emphasis"  at the  Mat-Su campus  on vocational  technical  studies.                                                            
However she  repeated that the intended  use of the UI fund  was not                                                            
for institutions,  but rather  to individuals  with specific  needs.                                                            
She stated  that the funds could be  given to unemployed  workers to                                                            
pay for tuition at one of the institutions.                                                                                     
                                                                                                                                
Co-Chair  Donley remembered  the argument that  was held during  the                                                            
Senate debate  on SB 289  the previous  session regarding  employer-                                                            
matching funds  comprising the allocation to this  program. He asked                                                            
for an  explanation of  how the  source of these  funds affects  the                                                            
"bottom  line."  He  understood  that the  "bottom  line"  is  money                                                            
available to pay benefits  to unemployed Alaskans who contributed to                                                            
the fund.  He surmised that  using UI funds  for the vocational  and                                                            
technical  training programs  would reduce  the amount available  to                                                            
unemployed Alaskans  regardless of whether the funds  were collected                                                            
from the employer contribution or the employees.                                                                                
                                                                                                                                
Senator  Wilken recalled  a  chart referenced  during  the  previous                                                            
discussions,  which he no longer possessed.  He remembered  that the                                                            
unemployment  benefits  were based on  the demand  of the  available                                                            
money.  He explained  that  the funds  allocated  to the  vocational                                                            
technical  training  program are  "over and  above"  the demand  and                                                            
would not  affect the benefits.  He qualified  that in the  previous                                                            
session, the  Department of Labor  and Workforce Development  warned                                                            
that using  the excess amount in the  fund for other purposes  would                                                            
affect benefits.  He remarked that  this was found to be  untrue and                                                            
that the excess  balance has grown  despite the withdrawal  of funds                                                            
for the vocational technical training program.                                                                                  
                                                                                                                                
Co-Chair  Donley stated that  it does not  matter whether the  funds                                                            
allocated  to the  vocational and  technical  training program  come                                                            
from the employee  or the employer  share of the payments  to the UI                                                            
fund. He  expressed that  any usage of the  fund for other  purposes                                                            
affects the amount  available to pay unemployment  benefits. He said                                                            
this is  because of the  presupposition that  the status quo  is the                                                            
proper  policy  call. He  stated  that the  amount  paid  unemployed                                                            
workers in benefits is  "some of the most miserable lacking benefits                                                            
in the  nation." He  suggested that  the policy  should actually  be                                                            
whether to  increase the  amount of benefit  payments or direct  the                                                            
funds  to  other projects  such  as  the  vocational  and  technical                                                            
training program.                                                                                                               
                                                                                                                                
Senator Wilken  disagreed and emphasized  that the amount  allocated                                                            
from the UI  fund to the vocational  and technical training  program                                                            
is  excess money  in  that fund,  which  constitutes  a reserve.  He                                                            
stated  that  Co-Chair  Donley's  suggestion   to  increase  benefit                                                            
payments  would  need  to  be addressed   as separate  legislation.                                                             
Senator Wilken  admitted that while  it could be stated that  Alaska                                                            
has  "miserable"   unemployment  insurance,  the   state  has  other                                                            
"extraordinary" benefits that compensate for this.                                                                              
                                                                                                                                
Co-Chair Donley  argued that the benefit  payment issue is  directly                                                            
relevant to the legislation  before the Committee. This, he stressed                                                            
is because other usage  of the UI funds "cuts off the availability,"                                                            
or  impedes  the  flexibility   to improve   the  benefits  paid  to                                                            
uninsured Alaskans.                                                                                                             
                                                                                                                                
Senator Wilken  countered the bill does not address  the possibility                                                            
of using  employer  and employee  contributions  to the  UI fund  to                                                            
increase  the amount of  benefits paid to  individuals. He  stressed                                                            
that  this bill  allocates  funds  collected  "over and  above"  the                                                            
amount paid  out in benefits and establishes  the amount  of reserve                                                            
funds necessary.                                                                                                                
                                                                                                                                
Co-Chair  Kelly agreed Co-Chair  Donley's concern  is a subject  for                                                            
another bill.  He explained  that the existing  structure of  the UI                                                            
fund enables payments for  vocational programs without impacting the                                                            
benefits paid to individuals.                                                                                                   
                                                                                                                                
Senator Wilken noted that  the matter is complicated, just as it was                                                            
when  it was  first discussed  the  prior year.  He  asked that  the                                                            
Department  of Labor and Workforce  Development explain the  issues.                                                            
                                                                                                                                
Co-Chair  Kelly ordered the  bill HELD until  later in the  hearing.                                                            
The motion to adopt Amendment #1 remained on the table.                                                                         
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 6(L&C)                                                                                              
     "An Act relating to required notice of eviction to mobile home                                                             
     park dwellers and tenants before redevelopment of the park."                                                               
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
SENATOR  JOHNNY  ELLIS  testified  this  legislation  increases  the                                                            
notification  requirement  when residents  are  evicted from  mobile                                                            
home  parks from  180 days  under the  landlord-tenant  law, to  365                                                            
days. He  noted that  the legislation  allows for  a shorter  notice                                                            
period in  which the landlord  pays $5,000  for relocation  fees. He                                                            
pointed  out that  this  matter was  brought  to him  by  Archbishop                                                            
Francis Hurley  and Dennis McMillian  of the United Way as  a result                                                            
of  a task  force  convened  to  address  the  "scores  of  families                                                            
becoming homeless"  and subsequent  pressures on the "social  safety                                                            
net" caused by redevelopments of mobile home parks.                                                                             
                                                                                                                                
Senator Ellis  shared that Senator Leman supports  this bill and has                                                            
suggested statutes  providing a vehicle  for "pooling of  resources"                                                            
to help cover the various  relocation costs to multiple residents in                                                            
a  mobile  home  park.  Senator  Ellis  explained  that  under  this                                                            
provision,  the developer could provide  a set amount of  funds to a                                                            
non-profit   entity    for   relocation   costs.   The    non-profit                                                            
organization, he continued would allocate funds based on need.                                                                  
                                                                                                                                
Co-Chair Kelly asked if  Senator Leman's proposal would be addressed                                                            
as a committee substitute.                                                                                                      
                                                                                                                                
Senator  Ellis  was unsure  if  Senator  Leman  wanted to  offer  an                                                            
amendment or a committee substitute.                                                                                            
                                                                                                                                
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
                                                                                                                                
                                                                                                                                
     SB 137-ALASKA HUMAN RESOURCE INVESTMENT COUNCIL                                                                            
                                                                                                                                
                                                                                                                                
[The Committee continued  deliberations from earlier in the hearing.                                                            
A motion to adopt Amendment #1 remained on the table.]                                                                          
                                                                                                                                
Co-Chair  Donley restated  his  objection to  the bill  as the  same                                                            
reason he voted  against similar legislation  the previous  year. He                                                            
expressed  that this  legislation  utilizes funds  that would  "more                                                            
appropriately"  be used in  improving the  unemployment benefits  to                                                            
those workers who have  paid into the system.  He asserted that this                                                            
is  the  "purpose  of the  system"  and  that  the  current  benefit                                                            
schedule is "sub par" and  does not adequately compensate unemployed                                                            
workers.  He noted  that  the  intended purposes  contained  in  the                                                            
legislation are worthy.                                                                                                         
                                                                                                                                
Co-Chair Kelly  reminded that the Committee debate  has been whether                                                            
this  bill  could   adversely  affect  the  potential   to  increase                                                            
unemployment payments.                                                                                                          
                                                                                                                                
SENATOR  JOHN TORGERSON  affirmed Co-Chair  Donley's assertion  that                                                            
this legislation  "intercepts"  unemployment  insurance (UI)  funds.                                                            
Senator Torgerson listed  this amount as one-tenth of one percent of                                                            
the amount paid into the  fund by the employee. He remarked that the                                                            
UI trust fund  is "the most lucrative it has been  in the history of                                                            
our state"  with a balance  of approximately  $220 million.  He said                                                            
the average  balance is between  $160 million  and $180 million.  He                                                            
noted there is other legislation  before this legislature that would                                                            
increase  the UI  benefits.  He stressed  that  if at  any time  the                                                            
benefits  need exceeds  the balance  of the UI  trust, the  employer                                                            
would pay the  difference. Therefore,  he assured that the  trust is                                                            
never compromised.                                                                                                              
                                                                                                                                
Senator  Torgerson  made the  case  that  by providing  funding  for                                                            
training facilities the  number of workers reliant on UI benefits is                                                            
reduced.  In  fact,  he pointed  out,  these  workers  were  instead                                                            
employed and  therefore contributing  to the UI fund. He  noted that                                                            
this  theory  was  also agreed  upon  when  establishing  the  State                                                            
Training Employment  Program (STEP)  several years earlier  and as a                                                            
result, the balance of the trust increased.                                                                                     
                                                                                                                                
Senator Ward  referenced the  amendment and  asked if its  necessity                                                            
was  caused  by  a  mistake  in  SB  289,  which  set  the  original                                                            
allocation percentages.                                                                                                         
                                                                                                                                
Senator Torgerson  replied, "this was actually driven  by money" and                                                            
that his intention  was to allocate $3 million to  the University of                                                            
Alaska. He stated this  was because the House of Representatives did                                                            
not fund the  full request in the  FY 01 operating budget.  He noted                                                            
that other  legislation  was pending  that could  have accomplished                                                             
this, but that SB 289 was  chosen to also provide funds to AVTEC and                                                            
Kotzebue Technical Center.                                                                                                      
                                                                                                                                
Senator  Ward  asked  the  projected  amount   appropriated  to  the                                                            
university under this amendment.                                                                                                
                                                                                                                                
Senator Torgerson answered, $3,051,046.                                                                                         
                                                                                                                                
                                                                                                                                
SFC 01 # 47, Side A 10:44 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator  Leman requested  that the  debate return  to the  amendment                                                            
before the Committee.                                                                                                           
                                                                                                                                
Co-Chair  Kelly  pointed  out  that the  amendment  is  a  technical                                                            
correction,  but noted there  was objection  to the amendment  based                                                            
upon the program. He emphasized  that the program continues, whether                                                            
the amendment  is adopted or not,  but warned that if the  amendment                                                            
is not  adopted, the  program does  not continue  as intended  in SB
289. He surmised  that while this debate could be  "healthy" it does                                                            
not pertain to the amendment  or the legislation before the members.                                                            
He reiterated that the  amendment adjusts the percentages to reflect                                                            
a full fiscal year rather  than the three-quarter year funded in the                                                            
first year of the program.                                                                                                      
                                                                                                                                
Senator  Leman concluded  that  this  amendment  is "a  fix that  is                                                            
necessary  to get  us to  where  we intend  to be."  He appreciated                                                             
Senator  Olson's comments  but disagreed  that this  takes from  the                                                            
"have-nots"  and gives to the "haves".  Senator Leman did  not think                                                            
the redistribution was  in a manner that would be detrimental to the                                                            
Kotzebue Training  Center. He supported the amendment  because it is                                                            
consistent  to the intent  of SB 289. He  stated that like  Co-Chair                                                            
Donley and  Senator Green,  he objected to  the use of the  UI funds                                                            
for an education  program in the previous session  and that he voted                                                            
against  the original  legislation.  He qualified  that  he did  not                                                            
oppose funding  vocational  technical programs.  However, he  stated                                                            
that this  amendment  is appropriate  given that  the program  is in                                                            
place.                                                                                                                          
                                                                                                                                
Senator   Olson  moved  to   amend  the   amendment,  changing   the                                                            
percentages  to 61 percent to the  University of Alaska,  13 percent                                                            
to the  Kotzebue Technical  Center and 26  to the Alaska  Vocational                                                            
Technical Center. He said  he offered this as a compromise saying it                                                            
would provide a 40 percent increase to each institution.                                                                        
                                                                                                                                
Co-Chair Kelly understood  the amendment as stated but did not think                                                            
it gave a 40 percent  increase over what was requested  in the prior                                                            
year.                                                                                                                           
                                                                                                                                
Senator Torgerson  pointed out that the Kotzebue Training  Center is                                                            
estimated   to   receive  $516,000   under   the   previous   year's                                                            
appropriation  and would receive  $500,019  in the current  year. He                                                            
continued that  AVTC was projected  to receive $1,032,000  and would                                                            
receive  $1,001,000.  He suggested  that  the percentages  could  be                                                            
changed slightly  to make up for these reductions.  He stressed that                                                            
the intent is to provide  the same amount to each facility as in the                                                            
prior year  and for  the university  to receive  the maximum  amount                                                            
possible.                                                                                                                       
                                                                                                                                
Co-Chair  Kelly   stated  that  because  the  actual   amount  would                                                            
fluctuate every  year, he did not support adjusting  the percentages                                                            
based on the previous year's funding.                                                                                           
                                                                                                                                
A roll call was taken on the motion to amend the amendment.                                                                     
                                                                                                                                
IN FAVOR: Senator Hoffman and Senator Olson                                                                                     
                                                                                                                                
OPPOSED: Senator  Wilken, Senator Austerman, Senator  Leman, Senator                                                            
Ward, Co-Chair Donley and Co-Chair Kelly                                                                                        
                                                                                                                                
ABSENT: Senator Green                                                                                                           
                                                                                                                                
The motion FAILED (2-6-1)                                                                                                       
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Senator   Leman   expressed   that  Senator   Torgerson   raised   a                                                            
"compelling"  argument  in  that these  numbers  are not  exact  and                                                            
suggested that a one-half  percent adjustment would accomplish this.                                                            
He surmised  changing  the Kotzebue  Training  Center percentage  to                                                            
11.5, changing  the AVTC  percentage to 22.5  and the University  of                                                            
Alaska percentage to 66,  would achieve the same funding amounts for                                                            
each of the three facilities.                                                                                                   
                                                                                                                                
Co-Chair Kelly  stressed that although  this might make the  amounts                                                            
the same  as the previous  year, they would  be different in  future                                                            
years.  He did  not recommend  adjusting  the percentages  to  align                                                            
exactly  with the  previous  year's  amounts, but  rather  supported                                                            
establishing a percentage breakdown.                                                                                            
                                                                                                                                
Senator Torgerson  affirmed that the actual amounts  are fluctuating                                                            
depending on the amount paid into the UI trust fund.                                                                            
                                                                                                                                
Senator Leman stated that  he would no offer this as an amendment to                                                            
the amendment.                                                                                                                  
                                                                                                                                
A roll call was taken on the motion to adopt the amendment.                                                                     
                                                                                                                                
IN  FAVOR: Senator  Leman,  Senator  Ward, Senator  Wilken,  Senator                                                            
Austerman, Co-Chair Donley and Co-Chair Kelly                                                                                   
                                                                                                                                
OPPOSED: Senator Hoffman and Senator Olson                                                                                      
                                                                                                                                
ABSENT: Senator Green                                                                                                           
                                                                                                                                
The motion PASSED (6-2-1)                                                                                                       
                                                                                                                                
The amendment was ADOPTED.                                                                                                      
                                                                                                                                
Co-Chair Donley  stated that there was confusion as  to whether this                                                            
bill is  necessary in order  to extend the  program. He referred  to                                                            
the sponsor  statement;  "…SB  137 extends  the date  of the  direct                                                            
allocations to  named institutions for two more years."  He asked if                                                            
the bill accomplishes  two functions,  adjust the percentage  levels                                                            
and also extend the effect of SB 289 for two years.                                                                             
                                                                                                                                
Senator Torgerson responded  that SB 289 established a grant program                                                            
that would be given to  accredited institutions in Alaska based upon                                                            
grant  criteria.   He  stated   that  he   introduced  the   current                                                            
legislation   because  the   Department  of   Labor  and   Workforce                                                            
Development  has not  issued  any regulations,  nor  has the  Alaska                                                            
Human  Resource Investment  Council  (AHRIC)  taken  steps to  issue                                                            
these grants.  Henceforth, he remarked, this legislation  provides a                                                            
direct  grant to the  three institutions,  rather  than require  the                                                            
institutions apply for the grants.                                                                                              
                                                                                                                                
Co-Chair   Donley  asked   how  this   legislation   with  the   set                                                            
percentages, relates to  the operating budget. He noted that because                                                            
it does not set specific  amounts, it is not an appropriations bill.                                                            
He wanted  to  know if it  is a  guide or  formula to  be used  when                                                            
preparing the operating budget.                                                                                                 
                                                                                                                                
Senator Torgerson  replied that this  legislation has nothing  to do                                                            
with the operating  budget and that  a forthcoming fiscal  note will                                                            
reflect the percentage breakdowns to each institution.                                                                          
                                                                                                                                
Co-Chair  Donley  referred  to an  outdated  zero fiscal  note  that                                                            
stated the bill appropriates $4.5 million to the program.                                                                       
                                                                                                                                
REMOND HENDERSON,  Director,  Division of  Administrative  Services,                                                            
Department  of Labor  and Workforce  Development,  testified that  a                                                            
fiscal  note would  be necessary  to appropriate  the intended  $4.5                                                            
million into  the department's  budget. This,  he stated is  because                                                            
the  funds  are not  included  in  the  budget under  the  House  of                                                            
Representative's version  of the FY 02 operating budget. He admitted                                                            
that this  request should  have been submitted  with the  governor's                                                            
proposed operating budget  but was omitted. He stressed that if this                                                            
bill passes  without the related fiscal  note, the department  would                                                            
not have the necessary  $4.5 million to issue in grants to the three                                                            
institutions.                                                                                                                   
                                                                                                                                
Senator  Torgerson  stated his  intent  to reflect  the  funds in  a                                                            
fiscal  note in  the event  that the  governor vetoes  the bill.  He                                                            
explained  that  if  the  veto occurred,  the  funds  would  not  be                                                            
available for  the department to expend otherwise  and would be held                                                            
for future appropriation.                                                                                                       
                                                                                                                                
Co-Chair  Kelly announced  the  Committee  would wait  for a  proper                                                            
fiscal note.                                                                                                                    
                                                                                                                                
Senator Torgerson offered to write the fiscal note.                                                                             
                                                                                                                                
Co-Chair Kelly ordered the bill HELD in Committee.                                                                              
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Pete Kelly adjourned the meeting at 10:58 AM.                                                                          

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