Legislature(2001 - 2002)

04/28/2001 10:22 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 28, 2001                                                                                      
                            10:22 A.M.                                                                                        
SFC-01 # 90, Side A                                                                                                             
SFC 01 # 90, Side B                                                                                                             
CALL TO ORDER                                                                                                               
Co-Chair  Pete Kelly  convened the  meeting at  approximately  10:22                                                            
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 Alan Austerman                                                                                                          
Senator Lyman Hoffman                                                                                                           
Senator Donald Olson                                                                                                            
Also Attending:  SENATOR  RICK HALFORD; REPRESENTATIVE GARY STEVENS;                                                          
KAREN  PERDUE,  Commissioner,   Department  of  Health   and  Social                                                            
Services; MARY  MCDOWELL, Commissioner,  Commercial Fisheries  Entry                                                            
Commission (CFEC),  Department of Fish & Game, Juneau;  STEVE WHITE,                                                            
Assistant Attorney General, Department of Law.                                                                                  
SUMMARY INFORMATION                                                                                                         
SB 165-EDUCATION TAX ON EMPLOYMENT                                                                                              
Following discussion, the bill was held in Committee.                                                                           
SB 198-STATEWIDE SUICIDE PREVENTION COUNCIL                                                                                     
Following limited  discussion, CS  SB 198 (HES) was reported  out of                                                            
HB 194-COMMERCIAL FISHING LICENSE & PERMIT FEES                                                                                 
Following Committee discussion,  CS HB 194 (FIN) was reported out of                                                            
     CS FOR SENATE BILL NO. 198(HES)                                                                                            
     "An Act establishing the Statewide Suicide Prevention                                                                      
     Council; and providing for an effective date."                                                                             
SENATOR  RICK  HALFORD  explained  that  SB 198  would  establish  a                                                            
statewide  suicide council  made up  of fifteen  private and  public                                                            
members representing  rural  and urban Alaska.   There would  be two                                                            
members from  both the House and the  Senate and the Governor  would                                                            
appoint  eleven members,  including experts  in substance abuse  and                                                            
mental health, as well  as people who have been directly impacted by                                                            
suicide and who work with youth across the State.                                                                               
Senator Halford  reiterated that suicide  is an on-gong epidemic  in                                                            
many parts of  the State, especially in rural Alaska,  and currently                                                            
the numbers  are at an all  time peak.   The council would  focus on                                                            
finding ways  to reduce suicide rates,  broaden public awareness  of                                                            
the suicide warning  signs, and enhance suicide prevention  services                                                            
and programs throughout  the State.  He pointed out that the suicide                                                            
prevention  council has bi-partisan  support throughout the  Senate.                                                            
KAREN  PERDUE,  Commissioner,   Department  of  Health   and  Social                                                            
Services,   noted  that   the  Department   supports  the   proposed                                                            
legislation.   She indicated that the fiscal note  was a responsible                                                            
projection  of  the  anticipated  costs.    She  offered  to  answer                                                            
questions of the Committee.                                                                                                     
Senator Green  asked if the  fiscal note  represented a fourteen  or                                                            
fifteen member board.                                                                                                           
Commissioner  Perdue commented that  fourteen was an error  and that                                                            
it should indicate a fifteen-member board.                                                                                      
Senator Green  moved to report CS  SB 198 (HES) from Committee  with                                                            
individual  recommendations and with  the accompanying fiscal  note.                                                            
There being no objection, it was so ordered.                                                                                    
CS  SB   198  (HES)   MOVED  from   Committee  with   a  "do   pass"                                                            
recommendation  and with fiscal  note #1 by  Department of  Health &                                                            
Social Services.                                                                                                                
     SENATE BILL NO. 165                                                                                                        
     "An Act imposing a tax on employment; and providing for an                                                                 
     effective date."                                                                                                           
SENATOR  AUSTERMAN stated  that SB 165  would impose  a tax  of $100                                                            
dollars a year on each  employed individual ages 19 years and older,                                                            
and  would include  self-employed  persons.    Under the  bill,  the                                                            
employer  would deduct  $50 dollars  from the  employee's salary  on                                                            
each of  their first  two regular  payrolls after  January 1  of the                                                            
calendar year.   A provision would be added to prevent  the tax from                                                            
being taken out more than  one time when the employee provides proof                                                            
to their  new employer  that the tax  has been  satisfied.   The tax                                                            
would  be  deposited   into  the  State's  general  fund,   however,                                                            
accounted  for separately.   The amounts  would be appropriated  for                                                            
education  only.   Senator Austerman  reiterated  that education  is                                                            
under funded.                                                                                                                   
Co-Chair  Kelly responded that  he liked the  concept, as it  had no                                                            
provisions for income.                                                                                                          
Senator  Austerman noted  that there had  been recommendations  that                                                            
the tax be taken from the  Permanent Fund Dividend.  He acknowledged                                                            
that there are a number  of ideas floating around as to when and how                                                            
to tap that $100 dollars.                                                                                                       
Senator Hoffman opposed  a check being taken from the Permanent Fund                                                            
Dividend as there  are many people working in the  State that do not                                                            
collect the dividend.                                                                                                           
Senator  Leman commented  that the  Permanent Fund  check off  would                                                            
work to help  reduce the cost of an  administration fee collection.                                                             
He agreed that  the law should extend beyond those  that collect the                                                            
Senator  Ward  asked  if  there  had  been  consideration  given  to                                                            
privatizing the action and perhaps using a head tax.                                                                            
Senator Austerman replied that had not been considered.                                                                         
Senator Ward supported  the State placing a constitutional  spending                                                            
limit  before the  voters.   He  inquired how  the  amount had  been                                                            
Senator Austerman  replied that the  number had been "picked  out of                                                            
the air" with consideration to Senator Wilkins's SB 1.                                                                          
Senator  Wilken mentioned  that each  year his  office undertakes  a                                                            
survey  to 10,000 constituents.    Five percent  of the people,  who                                                            
responded, thought  that a $200 school tax was favorable.   He noted                                                            
that he had an  amendment, pending arrival, and asked  that the bill                                                            
be held  until that time.   He suggested that  the bill might  focus                                                            
effort on equal treatment for education throughout the State.                                                                   
Co-Chair  Kelly thought the  bill would help  to organize Alaska  to                                                            
pay part of the way for education.                                                                                              
Senator Wilken  interjected that perhaps  the State should  ask $100                                                            
dollars  for  organized  Alaska and  $400  dollars  for unorganized                                                             
Alaska.  He  pointed out that there  is statutory ability  to charge                                                            
each area differently.                                                                                                          
Senator Hoffman  claimed that would not be fair and  that he assumed                                                            
that the amendment  would not achieve what Senator  Wilken intended.                                                            
Senator Wilken  stated that he wanted to address those  that are not                                                            
paying for their share of the education costs.                                                                                  
Senator  Olson  commented  that he  would  not support  the  concept                                                            
proposed by Senator Wilken.                                                                                                     
Co-Chair Kelly  interjected that in his district,  an education tax,                                                            
is the only tax that is supported.                                                                                              
Co-Chair Donley agreed,  however, pointed out that a $100 dollar tax                                                            
would only address five percent of the fiscal gap.                                                                              
Co-Chair Kelly agreed with Co-Chair Donley.                                                                                     
Senator Austerman stated  that the legislation was not introduced to                                                            
solve  the fiscal  gap, but  instead to  create  a discussion  point                                                            
regarding education funding.   He added that the entire issue on the                                                            
education  gap  would take  much  more  than  the proposed  bill  to                                                            
Senator Wilken  reiterated  that a Permanent  Fund check off  in the                                                            
Rural Education Attendance Areas (REAA) could work.                                                                             
Co-Chair  Kelly noted  that SB 165  would be HELD  in Committee  for                                                            
further consideration.                                                                                                          
AT EASE 10:50 AM/10:55 AM                                                                                                       
     CS FOR HOUSE BILL NO. 194(FIN)                                                                                             
     "An Act relating to fees for commercial fishing licenses and                                                               
     permits; and providing for an effective date."                                                                             
REPRESENTATIVE GARY STEVENS  stated that HB 194 would repeal current                                                            
statute  that requires  the Commercial  Fisheries  Entry  Commission                                                            
(CFEC)  to  charge  non-resident  fishers  three  times  the  amount                                                            
charged  a resident  fisher and would  replace it  with a  provision                                                            
that gives  CFEC the  authority  to charge non-resident  fishers  as                                                            
close as is practicable to the maximum amount allowed by law.                                                                   
By passing the  legislation, CFEC would discontinue  the practice of                                                            
charging three  to one and instead  would charge the maximum  amount                                                            
that is allowed  by law.  Starting in January, CFEC  would calculate                                                            
the fee  differential based  on the two budget  categories  that the                                                            
court has allowed.  The  Department of Law is hopeful that they will                                                            
prevail in  their appeal and once  the court makes it final  ruling,                                                            
CFEC  would  be able  to  include  some  of the  other  four  budget                                                            
categories  into  the  formula.     He  added  that  the  bill  will                                                            
strengthen the States position in the current court case.                                                                       
Senator  Green asked  if the  court case  was not  passed, will  the                                                            
State owe $22 million dollars.                                                                                                  
Representative  Stevens explained  that if the State is not  allowed                                                            
any additional  categories  through the court  system, the  State is                                                            
facing a pay back of $22  million dollars.  Alaska has been charging                                                            
out-of-state fishermen more than in-state fishermen.                                                                            
Senator Green asked who is the "we".                                                                                            
Representative Stevens  replied that the "we" is the State of Alaska                                                            
and the CFEC and that the State is being sued.                                                                                  
Senator Green  clarified that the  State is the entity that  will be                                                            
liable if the class action suit is lost.                                                                                        
Senator Wilken asked what the reduced fee count was.                                                                            
Representative  Stevens  explained  that  was  a  fee allowed  at  a                                                            
reduced level for those that live at poverty level.                                                                             
Senator  Wilken   asked  who  was   the  impoverished  non-resident                                                             
commercial fisherman.                                                                                                           
Representative   Stevens  replied   that  the  criteria   was  quite                                                            
explicate through  CFEC documentation.   He requested that  question                                                            
be deferred  to the CFEC  Commissioner.  He  added that    there are                                                            
only a limited number of fishermen in that category.                                                                            
Senator Wilken  referenced the proposed  amounts, to which  the bill                                                            
recommends  that the  rates  be raised.   He  asked if  it would  be                                                            
essential to stay within the 3 to 1 category.                                                                                   
Representative  Stevens  countered that  the intent  is to get  away                                                            
from the 3 to 1 rating.                                                                                                         
Senator  Austerman  interjected  that the  "poverty"  question  also                                                            
applies to sport fishermen.                                                                                                     
Representative  Stevens  noted  that  poverty  level  was  based  on                                                            
household income, assets, and financial resources.                                                                              
Senator Hoffman voiced  concern that through the legislation, in all                                                            
cases, residents  would be  increased and in  all other cases,  non-                                                            
residents would  be decreased.  He  asked if there was any  possible                                                            
way to hold residents 'harmless'.                                                                                               
Representative  Stevens  explained  that  the legislation  would  no                                                            
longer make  the 3-1 ratio  available.  It  would be based  on other                                                            
categories.   The  United Fishermen  of  Alaska (UFA)  are fully  in                                                            
agreement with  the resident fees.   The money going into  the CFEC,                                                            
will  be used  for the  commercial  fisheries.   He  added that  the                                                            
legislation was a recommendation from the fishermen of Alaska.                                                                  
Senator  Hoffman pointed  out that  the only increases  were  to the                                                            
poverty category.                                                                                                               
Representative  Stevens acknowledged  that was  true and the  reason                                                            
for that increase  was that CFEC was paying into the  fisherman fund                                                            
more than they are receiving from those peoples.                                                                                
Senator  Austerman explained  that  part of  the issue  is how  much                                                            
money the State puts into the management of their fisheries.                                                                    
MARY MCDOWELL,  Commissioner, Commercial Fisheries  Entry Commission                                                            
(CFEC), Juneau, offered to answer questions of the Committee.                                                                   
Senator Olson asked when the fees were first implemented.                                                                       
Commissioner McDowell  replied that the fees currently  charged have                                                            
been in place  for at least twenty years.  The individual  fisheries                                                            
between those  categories changes often.  She acknowledged  that the                                                            
original fees are somewhat dated.                                                                                               
Senator Leman stated that  there are no provisions for the increased                                                            
value for  the Alaska  fisheries.   He thought  someone in the  high                                                            
value fisheries  receives a  greater value  and should pay  more for                                                            
the use of the  facilities.  He added that the biggest  disparity is                                                            
for the child crewmember  going from $5 dollars to $140 dollars.  He                                                            
asked if that was a direction of the Court.                                                                                     
Commissioner  McDowell explained that  the legislation could  make a                                                            
policy call on all the  fees indicated.  In the case of other permit                                                            
costs, the bill  has been drafted to allow the State  to tack on the                                                            
most cost possible for every non-resident fee.                                                                                  
Senator Leman  clarified that the Court stated that  the State could                                                            
not  tack on  the differential  on  the bases  of the  value of  the                                                            
Commissioner  McDowell clarified  that the  State could charge  less                                                            
than that if the Legislature  chooses to do it.  The State has opted                                                            
to tack  on the most possible,  in every fee  class.  She  commented                                                            
that was optional.                                                                                                              
Senator Leman maintained that the Court had seriously errored.                                                                  
Commissioner McDowell acknowledged  that the hope is that the Courts                                                            
will agree with  the State so that all categories  would be allowed.                                                            
Senator   Leman  asked  if   the  listing   of  categories   include                                                            
investments  which the State has made  through corporations  such as                                                            
Alaska Industrial Development Export Authority (AIDEA).                                                                         
SFC 01 # 90, Side B 11:16 AM                                                                                                    
Senator Leman  referenced capital  expenditures used to support  the                                                            
fishing industry as measured by annual depreciation.                                                                            
Commissioner  McDowell answered  that the  Office of Management  and                                                            
Budget  and the  Department of  Law combed  through  the budget  and                                                            
attempted to find everything  conceivable that could be problematic.                                                            
Senator Hoffman  questioned how much  currently was being  collected                                                            
with the fee structure  in place and what is the anticipated  amount                                                            
that will be collected thorough the proposed legislation.                                                                       
Commissioner McDowell referenced  the two fiscal notes.  She pointed                                                            
out that there would be  a "slight" gain in overall revenue received                                                            
from non-residents  through the bill.  She added that  the bill does                                                            
not  bring  in  fewer  revenues  from  non-residents,   but  instead                                                            
shuffles the burden  down.  There will be a slight  reduction in the                                                            
high-end charge permits.                                                                                                        
Senator Hoffman  requested information be provided  to the Committee                                                            
regarding the  number of residents and non-residents  in each of the                                                            
classes.    He  claimed  that  information  was  important  for  the                                                            
Committee to make a decision.                                                                                                   
Commissioner McDowell offered to provide that information.                                                                      
Senator Leman remembered  that the Court did not use the denominator                                                            
that the State recommended.                                                                                                     
Commissioner McDowell acknowledged that was correct.                                                                            
Senator Leman  asked if that  issue was under  appeal.  He  believed                                                            
that either the  court misunderstood or misrepresented  the reality.                                                            
Co-Chair Donley  agreed with Senator  Leman that the judge  involved                                                            
in the  case did a  very poor job.   He added  that Judge  Michalski                                                            
should be held  responsible for his "terrible" legal  performance in                                                            
that case.                                                                                                                      
Senator Austerman recommended  that the bill be moved from Committee                                                            
and then find  a way to highlight the work of those  specific judges                                                            
during their re-election time.                                                                                                  
Co-Chair Kelly commented  that the court decision is flawed and that                                                            
the bill would help to address those concerns.                                                                                  
Senator Wilken  repeated his question  of what an impoverished  non-                                                            
resident would be.                                                                                                              
Commissioner McDowell explained  that is defined in regulations used                                                            
at this time.   Regulations that were used in the  past did not have                                                            
eligibility  standards.  She  referenced Page  6, Line 6, and  noted                                                            
the use of the asset caps.                                                                                                      
Senator Wilken  recommended investigating the public  policy of that                                                            
group.  He asked what would happen if that language was deleted.                                                                
Commissioner McDowell noted  that the Department of Law advised that                                                            
the State would  probably be challenged by not offering  that option                                                            
to non-residents.                                                                                                               
Senator Austerman pointed  out that was not the issue with this bill                                                            
and that concern should be addressed in separate legislation.                                                                   
Senator Austerman  moved to report CS HB 194 (FIN)  out of Committee                                                            
with individual  recommendations  and with  the accompanying  fiscal                                                            
Senator Leman objected  in order to take testimony by the Department                                                            
of Law.                                                                                                                         
STEVE  WHITE,  Assistant   Attorney  General,  Department   of  Law,                                                            
referenced the Carlson  Case.  He noted that he had argued that case                                                            
to the Supreme  Court last time.  He offered to answer  questions of                                                            
the Committee.                                                                                                                  
Co-Chair Donley asked the  possibility of success if the legislation                                                            
followed recommendations made by Senator Wilken.                                                                                
Mr. White stated that it  was a policy call whether to eliminate the                                                            
entire fee  schedule for everyone.   If it was limited to  only non-                                                            
residents, then there would  be an equal protection problem with the                                                            
same magnitude that the State is currently having.                                                                              
Senator  Wilken  requested  that  the Department   of Law  submit  a                                                            
written defense for the poverty section of the bill.                                                                            
Mr. White explained that  there would be no legal implication if the                                                            
poverty section  were removed  for both the  residents and  the non-                                                            
There  being no  further  objections,  CS HB  194 (FIN)  MOVED  from                                                            
Committee  with "no  recommendations"  and  with fiscal  note #3  by                                                            
Department  of Fish  & Game  and #4 by  Department  of Fish &  Game,                                                            
Co-Chair Pete Kelly adjourned the meeting at 11:32 A.M.                                                                         

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