Legislature(2001 - 2002)

05/12/2002 09:06 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                           May 12, 2002                                                                                       
                              9:06 PM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-02 # 98, Side A                                                                                                             
SFC 02 # 98, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Pete  Kelly convened the meeting at approximately  9:06 PM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Dave Donley, Co-Chair                                                                                                   
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Loren Leman                                                                                                             
Senator Lyda Green                                                                                                              
Senator Gary Wilken                                                                                                             
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Alan Austerman                                                                                                          
                                                                                                                                
Also Attending:  REPRESENTATIVE  HARRY CRAWFORD; REPRESENTATIVE JOHN                                                          
COGHILL;  REPRESENTATIVE  NORM  ROKEBERG;  DAVE  D'AMATO,  staff  to                                                            
Representative Crawford;  NICO BUS, Administrative Services Manager,                                                            
Division of Support  Services, Department of Natural  Resources; SUE                                                            
WRIGHT, Staff  to Representative Chenault;  HEATH HILYARD,  Staff to                                                            
Representative  James; JOHN MANLEY, Staff to Representative  Harris;                                                            
MARGO KNUTH, Commissioner, Department of Corrections;                                                                           
                                                                                                                                
Attending  via Teleconference:   From an  off-net site in  Sterling:                                                          
DEE HUBBARD;  From an  off-net site  in the State  of Kansas:  FRANK                                                            
SMITH; From  an unspecified  off-net site:  RICHARD VAN HATTON,  16-                                                            
year correctional  officer for the  State of Alaska, and  President,                                                            
Correctional   Officer  Chapter  of  the  Public  Safety   Employees                                                            
Association;  From an off-net site  in Whittier: BEN BUTLER,  Mayor,                                                            
City of Whittier                                                                                                                
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 303-INDIVIDUAL INCOME TAX                                                                                                    
                                                                                                                                
The bill moved from Committee.                                                                                                  
                                                                                                                                
HB 317-STALKING & PROTECTIVE ORDERS                                                                                             
                                                                                                                                
The  Committee   heard  from  the  sponsor.  The  bill   moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HB 252-CHILDREN IN NEED OF AID: SERVICES & LIAB.                                                                                
                                                                                                                                
The Committee  heard from  the sponsor. A  committee substitute  was                                                            
adopted and the bill moved from Committee.                                                                                      
                                                                                                                                
HB 131-FOREST RESOURCES & PRACTICES STANDARDS                                                                                   
                                                                                                                                
The Committee  heard from  the Department  of Natural Resources.  An                                                            
amendment was adopted and the bill moved from Committee.                                                                        
                                                                                                                                
HB 489-CRUELTY TO ANIMALS                                                                                                       
                                                                                                                                
The  Committee  heard from  the  sponsor  and  the bill  moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HJR 35-REPEAL ESTATE TAX                                                                                                        
                                                                                                                                
The  Committee  heard from  the  sponsor  and  the bill  moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HB  27-HOME INSPECTORS/CONTRACTORS                                                                                              
                                                                                                                                
The  Committee  heard from  the  sponsor  and  the bill  moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
HB 498-CORRECTIONAL FACILITIES                                                                                                  
                                                                                                                                
The Committee  heard from  the Department  of Corrections,  industry                                                            
representatives  and  the  City of  Whittier.  The bill  moved  from                                                            
Committee.                                                                                                                      
                                                                                                                                
                                                                                                                                
     2d CS FOR HOUSE BILL NO. 303(RLS)(fld S)                                                                                   
     "An Act relating to taxation of individual income; and                                                                     
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator Leman  commented that  a personal income  tax should  be the                                                            
last option  considered for bridging  the State's fiscal  gap rather                                                            
than the first option.                                                                                                          
                                                                                                                                
Senator Green "moved to  report House Bill 303 out of Committee with                                                            
individual recommendations and accompanying fiscal note."                                                                       
                                                                                                                                
There  was no objection  and  2d CS  HB 303(RLS)(fld  S) MOVED  from                                                            
Committee with  accompanying fiscal note #2 for $3,940,200  from the                                                            
Department of Revenue.                                                                                                          
                                                                                                                                
AT EASE 9:08 PM / 9:10 PM                                                                                                       
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 317(FIN)                                                                                             
     "An Act relating to stalking and to violating a protective                                                                 
     order; and amending Rules 4 and 65, Alaska Rules of Civil                                                                  
      Procedure, and Rule 9, Alaska Rules of Administration."                                                                   
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  HARRY CRAWFORD, sponsor, testified  this bill closes                                                            
a loophole in Alaska law  to allow unacquainted victims of a stalker                                                            
to receive  the same security  of a judicial  protective order  that                                                            
victims who  have had a prior relationship  with a stalker  receive.                                                            
                                                                                                                                
AT EASE 9:11 PM / 9:13 PM                                                                                                       
                                                                                                                                
Representative  Crawford noted  an anti-stalking  law exists  in the                                                            
domestic violence statues,  but only applies to those offenders with                                                            
a  prior  relationship  with  the  victim,  such  as  husbands,  ex-                                                            
boyfriends, etc., and does  not apply to offenders who are strangers                                                            
to their victim.  He emphasized if  a stranger stalks a victim,  the                                                            
anti-stalking  law currently does  not offer protection against  the                                                            
offender.                                                                                                                       
                                                                                                                                
Senator Green  recalled discussions several years  prior relating to                                                            
other domestic  violence legislation  in which a concern  was raised                                                            
about a presumption  of guilt.  She noted the anti-stalking  laws do                                                            
not  contain a  method  for the  accused to  defend  him or  herself                                                            
against  the allegations  before a  judicial order  is issued.   She                                                            
asked if this  legislation contains provisions allowing  the accused                                                            
proper  notice and  legal  representation  before such  an order  is                                                            
imposed.                                                                                                                        
                                                                                                                                
Representative  Crawford  began  to  describe  the  three  types  of                                                            
protective   orders   currently   available,   including   emergency                                                            
protective orders, which a police officer is able to issue.                                                                     
                                                                                                                                
DAVE D'AMATO, staff to  Representative Crawford, testified that this                                                            
legislation has  been under consideration for six  to seven years in                                                            
part to address such issues  as the concern Senator Green raised. He                                                            
informed that  the attorney who drafted this bill,  Jerry Luckhaupt,                                                            
subscribes to the theory  that, "there should be no such thing as ex                                                            
parte protective  orders" because  of a presumption of guilt  within                                                            
the community.  Mr. d'Amato  explained the  provisions in this  bill                                                            
"balances"  the presumption  of guilt with  the need for  protective                                                            
orders  by  allowing   a  party  to  obtain  an  72-hour   emergency                                                            
protective  order but  would not bar  the accused  party from  their                                                            
home or  work without receipt  of proper notice,  in which  case the                                                            
accused would have an opportunity to challenge the order.                                                                       
                                                                                                                                
Senator   Leman  shared   that   he  had   sponsored  anti-stalking                                                             
legislation  that  passed into  law  during a  previous legislative                                                             
session. He expressed the  protection is important and that he would                                                            
vote in favor of this bill.                                                                                                     
                                                                                                                                
Senator Leman  "moved to report House  Bill 317 from Committee  with                                                            
individual   recommendations   and   the   accompanying   zero   and                                                            
indeterminate fiscal notes."                                                                                                    
                                                                                                                                
There was  no objection  and CS  HB 317 (FIN)  MOVED from  Committee                                                            
with zero fiscal  notes: #1 from the Department of  Law, and #5 from                                                            
the Department of Public  Safety; and indeterminate fiscal notes: #2                                                            
from the Department  of Corrections,  and #3 from the Department  of                                                            
Administration.                                                                                                                 
                                                                                                                                
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 252(JUD)                                                                               
     "An  Act  relating  to the  construction  of  certain  statutes                                                            
     relating  to  children;  relating  to  the scope  of  duty  and                                                            
     standard  of care for persons  who provide services  to certain                                                            
     children and families;  relating to civil liability for damages                                                            
     to certain  children and their families resulting  from failure                                                            
     to comply  with certain statutes; relating to  intensive family                                                            
     preservation  services; and providing  for an effective  date."                                                            
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  JOHN COGHILL,  sponsor, testified  this legislation                                                             
would accomplish  four goals. He listed: 1)"sets the  primacy of the                                                            
family in the discussion  when it comes to children in need of aid,"                                                            
referencing the  intent language of the bill as reflecting  this; 2)                                                            
establishes     "intensive    family     preservation     services";                                                            
3)"establishes  a civil liability issue with regard  to the Children                                                            
in Need of  Aid law, Title 47"; and  4) orders a study to  learn the                                                            
need for these  intensive family preservation services.  He spoke to                                                            
the $80,000 fiscal note,  which he informed would cover expenses for                                                            
additional  staffing to oversee  the intensive  family services  and                                                            
the study.                                                                                                                      
                                                                                                                                
Representative  Coghill  pointed out  language contained  on page  5                                                            
following  line 2  of  the Senate  Judiciary  committee substitute,                                                             
which he stated should have been amended.                                                                                       
                                                                                                                                
     Sec. 7.  AS 47.10.960 is amended to read:                                                                                  
                Sec. 47.10.960.  Civil liability [DUTY AND STANDARD                                                           
          OF  CARE  NOT CREATED].    Failure  by the  department  to                                                          
          comply  with a provision of [NOTHING IN] this chapter does                                                        
          not,  by itself,  constitute a basis  for civil  liability                                                          
          for  damages [TITLE CREATES A DUTY OR STANDARD OF CARE FOR                                                          
          SERVICES]  to  children and  their families  being  served                                                            
          under this chapter [AS 47.10].                                                                                        
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Senator Leman moved to  adopt SCS CS HB 252 (FIN), 22-LS0454\I, as a                                                            
working draft.                                                                                                                  
                                                                                                                                
Representative  Coghill detailed  the committee  substitute  changes                                                            
the language in Section 7 to read as follows.                                                                                   
                                                                                                                                
     Sec. 7.  AS 47.10.960 is amended to read:                                                                                  
                Sec. 47.10.960.  Civil liability [DUTY AND STANDARD                                                           
          OF CARE  NOT CREATED].  Failure to comply with a provision                                                          
          of  [NOTHING   IN]  this  chapter  does  not,  by  itself,                                                        
          constitute  a basis for civil liability for damages [TITLE                                                          
          CREATES  A  DUTY  OR STANDARD  OF  CARE FOR  SERVICES]  to                                                            
          children  and  their  families  being  served  under  this                                                            
          chapter [AS 47.10].                                                                                                   
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
                                                                                                                                
Representative  Coghill explained  this matter has been contentious                                                             
and the current language  is the recommendation of the Department of                                                            
Law and the Legislative  Division of Legal and Research Services. He                                                            
noted this  language clarifies the  party responsible for  a failure                                                            
to  comply  with this  statute  and  stipulates  that  this  section                                                            
applies only to this chapter of law.                                                                                            
                                                                                                                                
Senator Green  "moved Senate CS for CS for House Bill  252 Version I                                                            
with individual recommendations and accompanying fiscal note."                                                                  
                                                                                                                                
Without  objection SCS  CS HB 252  (FIN) MOVED  from Committee  with                                                            
zero fiscal  note #2 from the Department  of Law and $80,000  fiscal                                                            
note #1 from the Department of Health and Social Services.                                                                      
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 131                                                                                                         
     "An Act relating to standards for forest resources and                                                                     
     practices; and providing for an effective date."                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
NICO  BUS, Administrative   Services Manager,  Division  of  Support                                                            
Services,   Department   of   Natural   Resources   testified   this                                                            
legislation modifies the  Forest Practices Act as a result of State,                                                            
private  industry,   resource  agencies,  university,   and  federal                                                            
government  representatives' efforts  of the previous two  years. He                                                            
noted  this bill  amends standards  applied  to Region  3,  Interior                                                            
Alaska and  is intended to protect  fish habitat and water  quality,                                                            
support a healthy  timber and fishing  industry and incorporate  the                                                            
best available science.                                                                                                         
                                                                                                                                
Co-Chair  Kelly understood  all parties involved  are in support  of                                                            
this legislation.  He relayed he had spoken to miners  and foresters                                                            
and was told of no objections.  He also noted this legislation is of                                                            
a high priority.                                                                                                                
                                                                                                                                
Amendment  #1: This  amendment changes  the effective  date of  this                                                            
legislation from September 1, 2001 to September 1, 2002.                                                                        
                                                                                                                                
Senator Green moved for adoption.                                                                                               
                                                                                                                                
The amendment was ADOPTED without objection.                                                                                    
                                                                                                                                
Senator Green  "moved House  Bill 131, Version  A, out of  Committee                                                            
with individual recommendations  and accompanying zero fiscal note."                                                            
[It was the Committee's  intent to report Version  A as amended from                                                            
Committee.]                                                                                                                     
                                                                                                                                
Without objection  SCS HB  131 (FIN) with  accompanying zero  fiscal                                                            
note  #2  from the  Department  of  Natural  Resources,  MOVED  from                                                            
Committee.                                                                                                                      
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 489(JUD)                                                                                             
     "An Act relating to cruelty to animals."                                                                                   
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
SUE WRIGHT,  Staff to  Representative Chenault,  sponsor,  testified                                                            
this legislation  would increase the  penalties for animal  cruelty.                                                            
She informed that this  legislation is "event-driven" resulting from                                                            
an incident  that  occurred in  Sterling,  Alaska, in  which it  was                                                            
discovered that current statute was "lacking".                                                                                  
                                                                                                                                
Senator  Leman asked  the  reason  community service  as  a form  of                                                            
punishment, is not a requirement  in this legislation. He noted that                                                            
the classification  of the offense  as a Class A misdemeanor  allows                                                            
for the sentencing to include community service.                                                                                
                                                                                                                                
Ms. Wright  stated  that a specific  provision  requiring  community                                                            
service had  been included  in an earlier  version of this  bill but                                                            
removed  through  the efforts  of Representative  Berkowitz  by  the                                                            
House  Judiciary  Committee.  She  suggested  the  matter  could  be                                                            
readdressed the next legislative session.                                                                                       
                                                                                                                                
Senator Austerman  asked the  consequences  of failing to report  an                                                            
incident of animal cruelty.                                                                                                     
                                                                                                                                
Ms.  Wright replied  that  consequences for  this  failure had  been                                                            
included, and  then amended from,  the original version of  the bill                                                            
by the Senate  Judiciary Committee.  As a result, she remarked,  the                                                            
current version  of the bill  does not contain  a provision  for the                                                            
failure  to report  animal cruelty.  She noted  that Representative                                                             
Chenault  is of  the opinion  that animal  cruelty  has been  proven                                                            
through  many  reports  to be  a precursor  to  child  and  domestic                                                            
violence.  She  indicated  a  provision  in  the  current  committee                                                            
substitute  stipulates   that  licensed  veterinarians   and  animal                                                            
control officers  reporting such an  offense would be held  harmless                                                            
from reporting the event.                                                                                                       
                                                                                                                                
Co-Chair Kelly informed  the Committee that a jury trial is required                                                            
in the imposition of community service as a form of punishment.                                                                 
                                                                                                                                
Senator  Austerman  "moved  House Bill  489  out of  Committee  with                                                            
individual recommendations and the accompanying notes."                                                                         
                                                                                                                                
There was  no objection  and CS  HB 489 (JUD)  MOVED from  Committee                                                            
with  indeterminate   fiscal  notes,  #1  from  the  Department   of                                                            
Corrections, and #2 from the Department of Law.                                                                                 
                                                                                                                                
AT EASE 9:29 PM / 9:37 PM                                                                                                       
                                                                                                                                
Co-Chair Kelly announced bond bills would not be heard tonight.                                                                 
                                                                                                                                
AT EASE 9:38 PM / 9:38 PM                                                                                                       
                                                                                                                                
                                                                                                                                
     HOUSE JOINT RESOLUTION NO. 35 am                                                                                           
     Relating to urging the United States Congress to amend the tax                                                             
     code to permanently repeal the estate tax.                                                                                 
                                                                                                                                
                                                                                                                                
This  was the  first  hearing  for  this resolution  in  the  Senate                                                            
Finance Committee.                                                                                                              
                                                                                                                                
HEATH  HILYARD,   Staff  to  Representative  James  testified   this                                                            
legislation  is   similar  in  "wording  and  intent"   to  HJR  34,                                                            
introduced by Representative  Coghill during the Twenty-First Alaska                                                            
State  Legislature. Mr.  Hilyard  shared that  Representative  James                                                            
chose to revisit  this issued based on the 2001 action  of President                                                            
George W. Bush  signing into law,  a tax relief act that  includes a                                                            
temporary repeal  of the "death tax". Mr. Hilyard  noted that repeal                                                            
expires in September 2010.                                                                                                      
                                                                                                                                
Mr. Hilyard referenced  the sponsor statement [copy  on file], which                                                            
includes  a timeline that  demonstrates a  graduated decline  in tax                                                            
rates and the  increasing exemption  levels as a result of  the 2001                                                            
federal law. He  pointed out Alaska currently has  an estate tax, AS                                                            
43.31, and  that the tax  rates are calculated  as a portion  of the                                                            
federal  tax rate. He  cited the  State's Department  of Revenue  in                                                            
remarking  that regardless  of  whether  the federal  repeal  become                                                            
permanent,  the temporary  repeal  would  eliminate  revenue to  the                                                            
State from this source by FY 06.                                                                                                
                                                                                                                                
Mr. Hilyard  read from a  statement in support  of this legislation                                                             
submitted  by  the  National  Federation  of  Independent   Business                                                            
(NFIB)/Alaska,  "In addition to the  tax itself, thousands  of small                                                            
businesses  are  impacted  each  year  by  expensive  fees  paid  to                                                            
attorneys, accountants,  and life insurers necessary  to prepare for                                                            
eventual death  tax debt." He furthered  that efforts to  repeal the                                                            
estate  tax are  also supported  by the  National  Black Chamber  of                                                            
Commerce,  the National Association  of Women  Business Owners,  and                                                            
the National Congress of the American Indians, among others.                                                                    
                                                                                                                                
Mr. Hilyard  remarked that  the death tax  affects disproportionate                                                             
demographic  groups and "does not  justify its own existence  from a                                                            
fiscal  perspective"  because collection  expenses  are higher  than                                                            
revenue generated.                                                                                                              
                                                                                                                                
Mr. Hilyard informed that  Representative James' office has been "in                                                            
regular contact"  with White House  staff regarding the progress  of                                                            
this resolution.  Mr. Hilyard stated  "the President is continually                                                             
seeking the support and  efforts of individual legislators and state                                                            
legislatures  as a whole for his tax  relief efforts," according  to                                                            
the  director  of  the  White  House  Office  of  Intergovernmental                                                             
Affairs.                                                                                                                        
                                                                                                                                
Mr. Hilyard concluded  with a recent quote from President  Bush, "We                                                            
must  make the  repeal  of this  death tax  permanent.  I call  upon                                                            
Congress to do this immediately."                                                                                               
                                                                                                                                
Co-Chair Donley  noted the fiscal note states this  resolution would                                                            
have no impact on spending  and asked why it does not reflect a loss                                                            
of revenue.                                                                                                                     
                                                                                                                                
Mr. Hilyard responded that  the federal law went into effect in 2001                                                            
and  that  the  revenue  decline  would  be  realized  in  2002.  He                                                            
emphasized  that  regardless  of the  passage  of  this resolution;                                                             
revenue from an  estate tax would be eliminated under  current State                                                            
law,  as  it is  based  on  federal tax  rates.  He  qualified  that                                                            
statutes  could be  amended to  impose fees  independently from  the                                                            
federal  tax rates,  in which  case revenues  could  continue to  be                                                            
collected.                                                                                                                      
                                                                                                                                
Senator  Olson  asked  if  any  party  was  actively  opposing  this                                                            
resolution.                                                                                                                     
                                                                                                                                
Mr. Hilyard was unaware  of any opposition and stated he "did a fair                                                            
amount of research" attempting to locate any such parties.                                                                      
                                                                                                                                
Co-Chair  Donley  listed "a  few thousand  economists,  the  AFL-CIO                                                            
labor organization…there's a lot of opposition to it."                                                                          
                                                                                                                                
Senator  Green  "moved  HJR  35 out  of  Committee  with  individual                                                            
recommendations and accompanying zero fiscal note."                                                                             
                                                                                                                                
There was no objection  and HJR 35 am, with zero fiscal note #1 from                                                            
the Legislative Affairs Agency, MOVED from Committee.                                                                           
                                                                                                                                
                                                                                                                                
     SENATE CS FOR CS FOR HOUSE BILL NO. 27(JUD)                                                                                
     "An  Act  relating  to  the  registration  of  individuals  who                                                            
     perform   home   inspections;   relating   to   regulation   of                                                            
     contractors;   relating  to registration   fees  for  specialty                                                            
     contractors,  home inspectors,  and associate home inspectors;                                                             
     relating to home inspection  requirements for residential loans                                                            
     purchased   or   approved  by   the  Alaska   Housing   Finance                                                            
     Corporation;  relating  to civil  actions by  and against  home                                                            
     inspectors  and to civil actions arising from  residential unit                                                            
     inspections; and providing for an effective date."                                                                         
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  NORM ROKEBERG, sponsor, testified  to his four years                                                            
of  effort on  this  matter.  He explained  this  legislation  would                                                            
regulate home inspectors,  which Alaska currently does not regulate.                                                            
He noted "every other aspect"  of home sales are regulated. He spoke                                                            
to the importance  of this legislation  to consumers, pointing  out,                                                            
"anybody  can go  out and  call himself  a home  inspector now;  and                                                            
that's not good and that's not right."                                                                                          
                                                                                                                                
Representative  Rokeberg stated the  legislation is lengthy  because                                                            
of  the  necessary  changes  to  the specialty   contractor  license                                                            
statutes. He noted this  legislation imposes a $250 biannual license                                                            
fee, which he stated is  less than would be required if a regulatory                                                            
board were established.                                                                                                         
                                                                                                                                
Senator  Wilken relayed  his experiences  involving  two "bad"  home                                                            
inspectors.                                                                                                                     
                                                                                                                                
Senator Wilken  "moved to report House  Bill 27 from Committee  with                                                            
individual recommendations and attached fiscal notes."                                                                          
                                                                                                                                
Senator Olson  objected to ask about the impact of  this legislation                                                            
on inspections of homes in Rural Alaska.                                                                                        
                                                                                                                                
Representative  Rokeberg replied that currently home  sales financed                                                            
by the  Alaska Housing  Finance  Corporation (AHFC)  must obtain  an                                                            
inspection  by an International  Brotherhood  of Electrical  Workers                                                            
(IBEW)  member home  inspector.   He noted  that at  the request  of                                                            
AHFC,  this practice  would continue  under the  provisions in  this                                                            
legislation.   However,  he  pointed  out,  the  current   statutory                                                            
immunity from lawsuits, is removed for these inspectors.                                                                        
                                                                                                                                
Senator Olson  asked how  a rural homeowner  or homebuyer obtains  a                                                            
home inspection.                                                                                                                
                                                                                                                                
Representative Rokeberg  responded that if a home inspector does not                                                            
reside  in the area,  a home inspector  from another  area could  be                                                            
retained. He  noted several hundred  home inspectors operate  in the                                                            
State and that many reside in smaller communities.                                                                              
                                                                                                                                
Senator  Olson next  asked about  inspections of  homes financed  by                                                            
regional housing authorities and not through the AHFC.                                                                          
                                                                                                                                
Representative  Rokeberg explained  there is  no statutory  required                                                            
that a home inspection  be conducted in the sale of  a home. Rather,                                                            
he  stated,  lenders  require  the  majority  of  home inspections.                                                             
Therefore,  he assured,  this legislation  would  have no impact  on                                                            
regional housing authorities' activities.                                                                                       
                                                                                                                                
Senator Olson  removed his  objection to the  motion to report  this                                                            
bill from Committee.                                                                                                            
                                                                                                                                
Without  objection CS  HB 27 (FIN)  MOVED from  Committee with  zero                                                            
fiscal note  #5 from the Department  of Revenue, and $64,500  fiscal                                                            
note #6 from the  Department of Community and Economic  Development.                                                            
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 498(FIN) am                                                                                          
     "An  Act  expressing  legislative  intent  regarding  privately                                                            
     operated correctional  facility space and services; relating to                                                            
     the   development   and   financing   of   privately   operated                                                            
     correctional  facility  space  and  services;  authorizing  the                                                            
     Department  of Corrections to  enter into an agreement  for the                                                            
     confinement   and care  of  prisoners   in privately   operated                                                            
     correctional  facility  space in the  City of Whittier;  giving                                                            
     notice  of and  approving the  entry into and  the issuance  of                                                            
     certificates  of participation for the upgrade,  expansion, and                                                            
     replacement  of a certain correctional facility  in the City of                                                            
     Bethel;  giving notice of and  approving the entry into  lease-                                                            
     financing  agreements for  that project;  and providing  for an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
JOHN  MANLEY,  Staff   to  Representative  Harris,  testified   that                                                            
Representative Harris has  been acting as the lead proponent of this                                                            
legislation  in the  House Finance  Committee  because the  facility                                                            
would be located  in his district. Mr. Manley read  a statement into                                                            
the record as follows.                                                                                                          
                                                                                                                                
     This  bill authorizes  construction of  a government-owned  and                                                            
     privately  managed one-thousand  bed prison  at Whittier  and a                                                            
     96-bed expansion of  the Yukon-Kuskokwim Correctional Center in                                                            
     Bethel.  That was  the Governor's  number one  priority in  his                                                            
     bill.                                                                                                                      
                                                                                                                                
     For the past  eight years, we have sent thousands  of prisoners                                                            
     and millions of dollars  to Arizona, displacing Alaska jobs and                                                            
     losing  economic benefit of spending  those dollars  in Alaska.                                                            
     Our  eight-year  experience  with private  prison  services  in                                                            
     Arizona has been a  tremendous success and there's no reason we                                                            
     cannot duplicate the success in Alaska.                                                                                    
                                                                                                                                
     As you're  aware, we have tried this private  prison concept in                                                            
     South  Anchorage, Delta Junction,  and last year in  Kenai. The                                                            
     difference  this year  is we have a  community that's  done its                                                            
     homework  and wants the project. In over 12 hours  of testimony                                                            
     before the House and  Senate, not a single resident of Whittier                                                            
     has  testified  against  the  prison.  Eighty  percent  of  the                                                            
     registered  voters have actually  signed a petition  urging the                                                            
     City [of Whittier] to move forward on the project.                                                                         
                                                                                                                                
     As  you  know,  Whittier  is  only 50  miles  by  highway  from                                                            
     Anchorage-approximately   the same  commuting  distance as  the                                                            
     Mat-Su  Valley.   Whittier's  proximity  to  Anchorage   goods,                                                            
     services  and human resources, as well as its  deep-water port,                                                            
     and abundant  utility infrastructure, makes the  site both cost                                                            
     effective and feasible.                                                                                                    
                                                                                                                                
     This  bill will create  over 325 union  construction jobs,  228                                                            
     temporary indirect  construction jobs, 225 permanent prison and                                                            
     jail  jobs, and  over  200 permanent  indirect  jobs. At  least                                                            
     that's what we're estimating.                                                                                              
                                                                                                                                
Mr. Manley referenced  a handout that lists the comparative  capital                                                            
and operating  costs of the Governor's  statewide expansion  plan to                                                            
the Whittier facility plan  [Copy on file.] He continued reading his                                                            
statement.                                                                                                                      
                                                                                                                                
     This bill  will allow prisoners to return home  from Arizona to                                                            
     a prison that is situated  near the program resources necessary                                                            
     for effective rehabilitation  and to provide relief to regional                                                            
     jails  by allowing sentenced  felons to  be transferred  out of                                                            
     regional jail beds.                                                                                                        
                                                                                                                                
                                                                                                                                
AT EASE 9:52 PM / 10:00 PM                                                                                                      
                                                                                                                                
Senator Green indicated  she had a concern with this legislation and                                                            
requested the  bill be held until the following day  to allow her an                                                            
opportunity for further consideration.                                                                                          
                                                                                                                                
Senator Ward "moved Committee Substitute House Bill number 498…"                                                                
                                                                                                                                
Co-Chair Kelly  interrupted, noting  that a witness was present  and                                                            
waiting to testify.                                                                                                             
                                                                                                                                
Senator  Ward  continued,  "…I  hate  to  do that,  but  I  do  move                                                            
Committee Substitute  House Bill number  498 Finance amended  out of                                                            
Committee with  individual recommendations and accompanying  notes."                                                            
                                                                                                                                
Senator Hoffman objected.                                                                                                       
                                                                                                                                
MARGO KNUTH, Commissioner,  Department of Corrections,  testified to                                                            
the concerns of  the Administration regarding this  legislation. She                                                            
pointed out this bill proposes  the construction of a private prison                                                            
that would  entail a 25-year  contract for  1,000 beds at a  cost of                                                            
$32  million annually.  She  stressed that  this  bill "targets  one                                                            
portion  of our population-the  need  for prison  beds," but  leaves                                                            
unmet the regional  need for jail beds and community  jail beds. She                                                            
therefore,  remarked  that  this legislation   does not  provide  an                                                            
economical proposal. She  explained that 100 bed expansions would be                                                            
necessary for  both the Fairbanks facility and the  Mat-Su Pre-Trial                                                            
facility, and  additional expansions  would also be needed  in other                                                            
locations  to  create  beds  to house  inmates  awaiting  trial  and                                                            
inmates serving  short sentences. She noted it is  not economical to                                                            
transport prisoners from remote areas to a centralized location.                                                                
                                                                                                                                
Ms. Knuth asserted the  process of gaining approval for the proposed                                                            
facility  has not been open  and competitive  as established  in the                                                            
State's  procurement code.  She suggested  a cost-based competitive                                                             
process is  integral to insuring  that the  State is receiving  "the                                                            
most bang for its buck."                                                                                                        
                                                                                                                                
Ms.  Knuth  spoke  to  concerns  of  establishing  Whittier  as  the                                                            
location of a  private prison facility. She informed  that the local                                                            
population is approximately  190 people and that the community lacks                                                            
the proper infrastructure  to operate a 1,000-bed prison. She listed                                                            
fire  protection, police  protection,  utility  services,  secondary                                                            
employment,  housing  for employees  and families,  as  some of  the                                                            
infrastructure necessary.                                                                                                       
                                                                                                                                
Ms. Knuth remarked that  the Governor's proposed "regional approach"                                                            
legislation and other legislation  sponsored by Senator Green are in                                                            
the better interest of the State of Alaska.                                                                                     
                                                                                                                                
AT EASE 10:05 PM / 10:15 PM                                                                                                     
                                                                                                                                
DEE HUBBARD,  Resident  of Sterling,  testified  via teleconference                                                             
from  an off-net  site  in Sterling  about her  efforts  to place  a                                                            
question before Kenai area  voters as to whether the residents would                                                            
support a  private prison  facility in that  community. She  pointed                                                            
out the voters  in the Kenai election  rejected such a proposal,  as                                                            
have voters in Wrangell in a separate election.                                                                                 
                                                                                                                                
Ms. Hubbard surmised that  Cornell Corrections of Alaska, Inc. "went                                                            
shopping" for  a community to support the construction  of a private                                                            
prison  facility for  the company  to operate. She  pointed out  the                                                            
absence of a significant  competitive bidding process and detailed a                                                            
letter sent by  the company to the City of Whittier,  which the City                                                            
utilized  almost verbatim  in an  ordinance adopted  on November  5,                                                            
2001. She  continued describing  other events  demonstrating  that a                                                            
competitive bidding process has not been employed.                                                                              
                                                                                                                                
Ms. Hubbard warned of the  economical costs to the State as a result                                                            
of a binding  contract  with Cornell Corrections  whereby the  State                                                            
would be  obligated to pay  the company for  beds not housing  State                                                            
prisoners.  She furthered  that the company  could transfer  inmates                                                            
from  other  states  to fill  these  empty  beds  and  thus  collect                                                            
additional fees.                                                                                                                
                                                                                                                                
FRANK SMITH  testified via  teleconference  from an off-net  site in                                                            
the State of Kansas that  he has followed this legislation as it has                                                            
progressed  through   the  Legislature.  He  was  troubled   because                                                            
"practically  half the statements"  made by proponents of  a private                                                            
prison in  Alaska, "have  been nonfactual."  He reiterated  that the                                                            
process has not been competitive  and indicated he has obtained many                                                            
documents  proving  this.  He  noted a  competitor  of  Cornell  has                                                            
offered to  construct the  same facility for  $17 million less  than                                                            
the amount Cornell proposes.                                                                                                    
                                                                                                                                
Mr. Smith remarked that  the City of Whittier is a poor location for                                                            
any type of prison as it  is "unstaffable" and the infrastructure is                                                            
"dismal"  as there are no  sewer facilities.  He furthered  that the                                                            
facility  would  be  built  next   to a  tank  farm,   thus  raising                                                            
environmental concerns.                                                                                                         
                                                                                                                                
Mr.  Smith  referenced  a front-page  article  in  the  Wall  Street                                                            
Journal  detailing   the  "troubled   recent  history"  of   Cornell                                                            
Corrections [copy not provided].                                                                                                
                                                                                                                                
Mr. Smith surmised  the only reason  the Legislature is considering                                                             
this bill  is because of  campaign contributions  received by  a few                                                            
legislators.                                                                                                                    
                                                                                                                                
Co-Chair  Kelly interjected  that  it  is inappropriate  to  testify                                                            
about campaign contributions.                                                                                                   
                                                                                                                                
Mr.  Smith apologized  and  spoke of  prison  riots due  in part  to                                                            
under-trained  and low paid  correctional  officers, asserting  that                                                            
the  operations   of  Cornell  Correctional   of  Alaska,   Inc.  is                                                            
"unprofessional".                                                                                                               
                                                                                                                                
                                                                                                                                
SFC 02 # 98, Side B 10:24 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr. Smith urged the Committee to reject this legislation.                                                                       
                                                                                                                                
Senator Leman requested the witness' affiliation.                                                                               
                                                                                                                                
Mr. Smith replied he is  a citizen activist, an author of a recently                                                            
written  chapter  on  Native  Americans  in private  prisons  for  a                                                            
Canadian publisher,  as well as an opinion article  in the Anchorage                                                            
Daily News  and is  involved in  research and  service provision  in                                                            
criminal  justice for 30  years, including  running programs  in the                                                            
Palmer Pre-Trial  facility and the  Sutton prison. He emphasized  he                                                            
has no financial interest in the outcome of this legislation.                                                                   
                                                                                                                                
AT EASE 10:26 PM / 10:31 PM                                                                                                     
                                                                                                                                
RICHARD VAN  HATTON, 16-year correctional  officer for the  State of                                                            
Alaska, and  President, Correctional  Officer Chapter of  the Public                                                            
Safety Employees  Association, testified via teleconference  from an                                                            
off-net  site  that  every  public  vote on  this  matter  has  been                                                            
defeated  by a wide majority.  He stated the  City of Whittier  is a                                                            
poor choice  for such a facility  as it would  be unable to  provide                                                            
security in the event it was needed.                                                                                            
                                                                                                                                
Senator Ward  called for  the question on  the motion to report  the                                                            
bill from Committee.                                                                                                            
                                                                                                                                
Senator  Green  objected  and  pointed  out the  Committee  has  not                                                            
discussed  the  certificates  of  participation,   the  sole  source                                                            
process, the actual costs  of the project in addition to the amounts                                                            
indicated  in the  fiscal  notes,  as well  as other  concerns.  She                                                            
remarked  that a  financial obligation  of this  magnitude  warrants                                                            
further hearings.                                                                                                               
                                                                                                                                
Senator  Olson  noted  that  although  he  has  heard  testimony  in                                                            
opposition to this bill  from witnesses who do not live in Whittier.                                                            
He asked if a resident  of Whittier could testify as to the adequate                                                            
infrastructure.                                                                                                                 
                                                                                                                                
BEN BUTLER,  Mayor, City of Whittier,  testified in Juneau  that the                                                            
infrastructure issue has  been researched and it has been determined                                                            
that  electrical  power  is  available  through  a  new  power  line                                                            
installed  in  the  Whittier  Tunnel.  He  informed  that  the  City                                                            
currently  utilizes  14 percent  of  available  power  and that  the                                                            
prison facility  would utilize  half the  total available power.  He                                                            
continued  that natural  gas is now  supplied to  the community  and                                                            
ample  water   is  available.  He   said  no  new  roads   would  be                                                            
constructed,  thus road  maintenance  costs would  not increase.  He                                                            
pointed out  that septic  treatment would be  conducted on  site and                                                            
that  these expenses  are  included  in the  proposed  costs of  the                                                            
facility. He  expressed, "we have  a pretty good fire department  in                                                            
Whittier,"  noting state of the art  fire equipment is stationed  at                                                            
the Whittier Tunnel and  that an emergency plan would be employed by                                                            
the prison facility.                                                                                                            
                                                                                                                                
Mr. Butler detailed  the process whereby the city  government issued                                                            
a request for  proposals (RFP) on  a private facility to  be located                                                            
in Whittier after  the ballot initiative for such  a facility in the                                                            
Kenai  area failed.  He asserted  that  this process  was deemed  by                                                            
legal advisors to be comparable to State-issued RFPs.                                                                           
                                                                                                                                
Mr.  Butler  emphasized  that  no  Whittier  residents  have  voiced                                                            
opposition  to this legislation. He  stated the intent to  add value                                                            
to the State  from the Whittier Tunnel  by diversifying the  economy                                                            
in Whittier.                                                                                                                    
                                                                                                                                
Senator Wilken  was concerned with  large fiscal note and  the legal                                                            
opinion issued  by the Division of  Legal and Research Services.  He                                                            
questioned the construction  of a 1,000-bed prison in a community of                                                            
190 residents.                                                                                                                  
                                                                                                                                
A  roll call  was  taken  on the  motion  to  report the  bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
IN FAVOR: Senator Ward,  Senator Austerman, Senator Hoffman, Senator                                                            
Leman, Co-Chair Donley and Co-Chair Kelly                                                                                       
                                                                                                                                
OPPOSED: Senator Olson, Senator Wilken, and Senator Green                                                                       
                                                                                                                                
The motion PASSED (6-3)                                                                                                         
                                                                                                                                
CS HB 498 (FIN)  am MOVED from Committee  with $165,500 fiscal  note                                                            
#3 from the Department  of Corrections and zero fiscal  note #4 from                                                            
the Department of Revenue.                                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Pete Kelly adjourned the meeting at 10:42 PM.                                                                          

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