Legislature(2003 - 2004)

03/30/2004 09:04 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          March 30, 2004                                                                                      
                              9:04 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-04 # 62,  Side A                                                                                                            
SFC 04 # 63,  Side A                                                                                                            
SFC 04 # 63,  Side B                                                                                                            
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:04 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Gary  Wilken, Co-Chair                                                                                                  
Co-Chair Lyda  Green, Co-Chair                                                                                                  
Senator Con  Bunde, Vice Chair                                                                                                  
Senator Fred Dyson                                                                                                              
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator B. Stevens                                                                                                              
                                                                                                                                
Also  Attending:  SENATOR  JOHN  COWDERY,   SENATOR  RALPH  SEEKINS;                                                          
REPRESENTATIVE   JIM  HOLM;  CHERYL  FRESCA,  Director,   Office  of                                                            
Management  and   Budget,  Office  of  the  Governor;   RICK  URION,                                                            
Director,   Division  of  Occupational   Licensing,  Department   of                                                            
Community and Economic  Development; LUCKY SCHULTZ, Staff to Senator                                                            
Fred  Dyson;  CHERYL FRASCA,  Director,  Office  of  Management  and                                                            
Budget,  Office of  the Governor;  BRUCE TANGEMAN,  Fiscal  Analyst,                                                            
Legislative Finance Division                                                                                                    
                                                                                                                                
Attending   via  Teleconference:   From  Anchorage:  STEVE   ASHMAN,                                                          
Director, Division  of Senior and Disabilities Services,  Department                                                            
of Health  and Social  Services; FRANK  RICHARDS, State Maintenance                                                             
and Operations Engineer,  Statewide Maintenance Division, Department                                                            
of  Transportation  and  Public  Facilities;   DON  VALESKE,  Public                                                            
Employees Local  71; From Fairbanks:  DR. SCOTT LUPER, Naturopathic                                                             
Doctor;  From  Offnet   Sites:  EDEN  LARSEN,  President   and  CEO,                                                            
Associated  Builders and Contractors;  JEFF ALLING, Representative,                                                             
ALCAN   Builders   Incorporated;   BARRY  CHRISTENSEN,    Practicing                                                            
Community  Pharmacist  and  Legislative  Chair,  Alaska Pharmacists                                                             
Association                                                                                                                     
                                                                                                                                
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 394-COMMISSION ON AGING                                                                                                      
                                                                                                                                
The Committee  heard from the sponsor, the Department  of Health and                                                            
Social Services, and reported the bill from Committee.                                                                          
                                                                                                                                
SB 40-CONSTRUCTION OF HIGHWAYS BY DOTPF                                                                                         
                                                                                                                                
The  Committee   heard   from  the   sponsor,   the  Department   of                                                            
Transportation  and Public  Facilities, and  took public  testimony.                                                            
Two  amendments  were considered  with  one  being adopted  and  one                                                            
failing. The bill reported from Committee.                                                                                      
                                                                                                                                
SB 306-NATUROPATHIC MEDICINE TASK FORCE                                                                                         
                                                                                                                                
The Committee  heard from the sponsor,  the Department of  Commerce,                                                            
Community and  Economic Development, the medical and  pharmaceutical                                                            
industry. The bill was held in Committee.                                                                                       
                                                                                                                                
SB 298-OFF-ROAD VEHICLE USE ON DALTON HIGHWAY                                                                                   
                                                                                                                                
The  Committee  heard  from  the  Sponsor.  The  bill  was  held  in                                                            
Committee.                                                                                                                      
                                                                                                                                
SJR 3-CONST AM: APPROPRIATION/SPENDING LIMIT                                                                                    
                                                                                                                                
The Committee  heard from the sponsor, the Office  of Management and                                                            
Budget, and the  Division of Legislative Finance.  The bill was held                                                            
in Committee.                                                                                                                   
                                                                                                                                
Co-Chair  Wilken  introduced  Close  Up  Students  from  Aniak  High                                                            
School, North  Pole Middle School,  the Hoonah School District,  and                                                            
their accompanying teachers.                                                                                                    
                                                                                                                                
                                                                                                                                
     CS FOR HOUSE BILL NO. 394(HES)                                                                                             
     "An Act extending the termination date of the Alaska                                                                       
     Commission on Aging and making technical revisions to                                                                      
     citations related to the commission."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken explained  that this legislation  would extend  the                                                            
Alaska  Commission  on Aging  until  June 30,  2008.  A Division  of                                                            
Legislative  Audit  report  [copy on  file]  dated October  1,  2003                                                            
supports the extension.                                                                                                         
                                                                                                                                
REPRESENTATIVE JIM HOLM,  the bill's sponsor, informed the Committee                                                            
that this bill  would extend the Alaska  Commission on Aging  beyond                                                            
its  termination   date.  This  Commission   functions  within   the                                                            
Department of  Health and Social Services and is charged  with broad                                                            
responsibilities  including  providing  assistance  to  seniors  and                                                            
informing  Alaskans  of  the  needs  of  this  older  community.  It                                                            
provides dignity  and independence  to seniors through programs  and                                                            
services  funded by  the Commission,  and  allows  more than  53,000                                                            
seniors to lead useful  and meaningful lives. He urged the Committee                                                            
to support the bill.                                                                                                            
                                                                                                                                
Co-Chair Wilken  announced that as per the Committee's  request, Pat                                                            
Davidson,  Legislative Auditor,  Legislative  Audit Division,  is in                                                            
attendance to respond to questions regarding the Audit.                                                                         
                                                                                                                                
Senator  Dyson  asked   the  Department's  reaction   to  the  Audit                                                            
recommendations.                                                                                                                
                                                                                                                                
STEVE  ASHMAN,  Director,   Division  of  Senior  and  Disabilities                                                             
Services, Department  of Health and  Social Services, testified  via                                                            
teleconference   from  Anchorage   and  stated  that  some   of  the                                                            
deficiencies   highlighted  in  the   Audit  pertaining   to  senior                                                            
employment services  and other components have either  been or would                                                            
be corrected.  The Division  was re-organized  within the past  year                                                            
and  that efforts  are  being undertaken  to  insure that  it is  in                                                            
compliance with State and federal program regulations.                                                                          
                                                                                                                                
Senator  Dyson,  noting  that  the  Legislature   could  extend  the                                                            
termination date beyond  the year 2008, asked whether this should be                                                            
a  consideration  as the  issues of  concern  are known,  are  being                                                            
addressed, and  the aging population of the State  would continue to                                                            
increase.                                                                                                                       
                                                                                                                                
Representative  Holm agreed  that the Commission  is addressing  its                                                            
problems;  however, he stated  that due to  the fact that the  Audit                                                            
does reflect  that there are concerns,  extending the Commission  to                                                            
the year 2008 is appropriate  at this time. He stated that a longer-                                                            
term extension might be considered in the year 2008.                                                                            
                                                                                                                                
Co-Chair  Green, in  response to  Senator Dyson's  question,  stated                                                            
that it might  be possible in the future to consolidate  groups that                                                            
address aging  and senior care issues. Therefore,  she supported the                                                            
extension  date,  as proposed,  in  order to  allow  for merging  of                                                            
boards and commissions in the future, as deemed appropriate.                                                                    
                                                                                                                                
Co-Chair Green  offered a motion to  report the bill from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
There  being  no  objection,  CS  HB  394(HES)   was  REPORTED  from                                                            
Committee  with fiscal note  #2 in the amount  of $417,900  from the                                                            
Department of Health and Social Services.                                                                                       
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 40                                                                                                         
     "An Act relating to construction of highways by the Department                                                             
     of Transportation and Public Facilities."                                                                                  
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken explained  that this  bill would  limit the  use of                                                            
Force Account  Construction funds  to highway construction  projects                                                            
that  cost  less than  $250,000.  He  noted that  bill  version  23-                                                            
LS0381\A, which was initially  heard during the First Session of the                                                            
Twenty-Third Legislature, is before the Committee.                                                                              
                                                                                                                                
SENATOR  JOHN  COWDERY,  the bill's  sponsor,  explained  that  this                                                            
legislation  was introduced  in response  to  concerns from  private                                                            
construction  contractors  regarding the  fact that  a $2.4  million                                                            
highway  construction  project at  St. Mary's  in  Rural Alaska  was                                                            
conducted  by  the  State through  the  Force  Account  process  and                                                            
without  abiding  by the  State  Procurement  Code that  requires  a                                                            
competitive bid process be utilized.                                                                                            
                                                                                                                                
Senator Cowdery stated  that the legislation was developed following                                                            
conversations  with contractors and discussions with  the Department                                                            
of Transportation  and Public  Facilities (DOT).  He noted  that DOT                                                            
was also  asked to develop  a Statewide  Delivery Order maintenance                                                             
contract that would require  a 24-hour call-out for a job. He stated                                                            
that  this  legislation  would  be in  the  State's  best  interest.                                                            
Contractors  throughout   the  State  support  the  $250,000   limit                                                            
specified for Force Account highway construction projects.                                                                      
                                                                                                                                
Senator  Dyson  asked   that  additional  information   be  provided                                                            
regarding past situations  of abuse of this issue. He also asked how                                                            
Governor Frank  Murkowski's Administration is addressing  the issue.                                                            
                                                                                                                                
Senator Cowdery explained  that in the past, and particularly in the                                                            
notorious St.  Mary's project, the State circumvented  the system by                                                            
utilizing State  employees or hiring  construction crews  and paying                                                            
State employee  wages rather than  paying higher, contractor  Davis-                                                            
Bacon  wages.  He characterized  the  State's  behavior  in the  St.                                                            
Mary's project operation as being "very creative."                                                                              
                                                                                                                                
Senator Cowdery voiced  support for the $250,000 State Force Account                                                            
limit and  stated that  it an appropriate  level  as the purpose  of                                                            
such  an account  is to allow  the State  to respond  to  unforeseen                                                            
projects.  He stated  that this limit  would assure,  in a  workable                                                            
manner, that  DOT would operate using  the competitive bid  process.                                                            
                                                                                                                                
Senator  Hoffman  asked whether  this  limit  is pertinent  only  to                                                            
general funds expenditures.                                                                                                     
                                                                                                                                
Senator  Cowdery  responded  that  it would  apply  to  any  project                                                            
exceeding  $250,000  regardless  of  whether  the funding  for  that                                                            
project was State or federal.                                                                                                   
                                                                                                                                
Senator  Olson asked  whether this  legislation  would specifically                                                             
apply to Department  of Transportation  and Public Facilities  (DOT)                                                            
highway construction projects.                                                                                                  
                                                                                                                                
Senator Cowdery responded  that the legislation could be expanded to                                                            
include all  State departments, as  the intent is to address  abuses                                                            
within the State procurement system process.                                                                                    
                                                                                                                                
Senator  Olson asked  whether  this bill  could therefore  apply  to                                                            
other departments.                                                                                                              
                                                                                                                                
Senator  Cowdery  pointed  out that,  as  reflected, in  the  bill's                                                            
title, this legislation is specific to DOT.                                                                                     
                                                                                                                                
Amendment #1:  This amendment deletes  language in Section  1, lines                                                            
eight through eleven, on page one that reads as follows.                                                                        
                                                                                                                                
     "when  the estimated  cost of  a construction  project is  less                                                            
     than $100,000 or when  it appears to be in the best interest of                                                            
     the state  and the estimated cost of a construction  project is                                                          
     $250,000   or  less,  the  department  may  perform   the  work                                                          
     notwithstanding any other provisions of law.                                                                               
                                                                                                                                
In addition,  the following language  would be inserted on  page one                                                            
following line seven in Section 1.                                                                                              
                                                                                                                                
     the department  may perform the work notwithstanding  any other                                                            
     provisions of law when                                                                                                     
          (1) the estimated cost of a construction project is less                                                            
     than $100,000;                                                                                                             
          (2) the construction project is not connected by a land                                                             
     road to the main road  system of the state and the commissioner                                                          
     determines  that  [OR  WHEN}  it  appears  to be  in  the  best                                                          
     interests of the state; or                                                                                               
          (3) the construction project is connected by a land road                                                            
     to the main  road system of the state, the estimated  cost of a                                                          
     construction project  is $250,000 or less, and the commissioner                                                          
     determines  that it appears to be in the best  interests of the                                                          
     state[, THE DEPARTMENT  MAY PERFORM THE WORK NOTWITHSTANDING AN                                                          
     Y OTHER PROVISIONS OF LAW].                                                                                                
                                                                                                                                
     New Test Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Senator Olson moved Amendment #1.                                                                                               
                                                                                                                                
Co-Chair Wilken objected  for clarification. He noted that Amendment                                                            
#1 is accompanied  by a sponsor statement  from Senator Olson  and a                                                            
copy of Administrative Order No. 199 [copies on file].                                                                          
                                                                                                                                
Senator Olson  stated that  this amendment  addresses the fact  that                                                            
the legislation,  as presented,  would require  all DOT public  road                                                            
projects  exceeding $250,000  to be subject  to the competitive  bid                                                            
process.  This  process  could limit  the  economic  feasibility  of                                                            
numerous  Rural construction  projects.  Therefore,  this  amendment                                                            
would  exempt Rural  road projects  that  are not  connected to  the                                                            
Alaska road system  from the competitive bid requirement.  Questions                                                            
regarding the  use of the competitive bid process  in these areas is                                                            
best answered  by language  in Administrative  Order No. 199,  which                                                            
addresses  construction  projects in  rural Alaska.  This Order  has                                                            
been in effect since October 2002.                                                                                              
                                                                                                                                
Senator Olson  noted that  Administrative Order  No. 199 is  working                                                            
effectively and  was, when developed, supported by  a vast number of                                                            
people in  the construction  industry, including  State contracting                                                             
agencies,  the Associated  General  Contractors,  labor unions,  and                                                            
rural construction entities.                                                                                                    
                                                                                                                                
Senator  Olson stressed  that  $250,000  oftentimes  might not  even                                                            
provide  for the required  air transportation  and mobilization  and                                                            
demobilization   of   equipment   and  materials   relating   to   a                                                            
construction projects in Rural areas.                                                                                           
                                                                                                                                
Senator  Dyson asked  whether  the  intent of  the amendment  is  to                                                            
provide local people an opportunity to work.                                                                                    
                                                                                                                                
Senator  Olson   responded  that   is  correct.  He  cited   several                                                            
successful  "Force  Account"  projects,  including  the  St.  Mary's                                                            
project,  that were  completed below  budget, on  time, and with  no                                                            
worker's  compensation  claims.  Another  benefit  of  hiring  local                                                            
residents  and having local  expenditures,  including equipment,  is                                                            
that a community is able  to continue to utilize purchased equipment                                                            
to  maintain its  roads  and airports.  He  stressed  that were  the                                                            
$250,000 limitation  in place, construction projects  costs would be                                                            
driven  upward due  to equipment  transportation  and other  related                                                            
expenditures  rather than  being the  result of  labor expenses.  He                                                            
exampled  the 1998  Selawik  Boardwalk  Improvement  project as  one                                                            
whose  $75,000  labor  costs  were  minimal  when  compared  to  its                                                            
$310,000  cost  relating  to  equipment  transportation   and  other                                                            
associated  things. He referred the  Committee to the "DOT&PF  Force                                                            
Account  Report" [copy  on file] dated  February  12, 2003 that  was                                                            
provided by the sponsor  that depicts Force Account projects for the                                                            
years 1998 through 2002.                                                                                                        
                                                                                                                                
Senator  Olson  argued  that  the $250,000  limitation  would  be  a                                                            
logical approach  for a construction  project that could  be reached                                                            
via the  State's connected  road system;  however,  the fact  that a                                                            
project is  not on a road  system has significant  financial  impact                                                            
that, adhering to the competitive  bid policy, would not serve to be                                                            
in the best interest of the State.                                                                                              
                                                                                                                                
Senator Hoffman, referencing  the aforementioned Force Account list,                                                            
stated that  projects such  as boardwalk projects  do not require  a                                                            
high level of skilled labor;  however, the costs associated with the                                                            
project mobilization  and the demobilization  expenses could  either                                                            
increase the costs  associated with the project or  serve to provide                                                            
"less  of a project."  In  addition, he  noted that  in addition  to                                                            
providing jobs to rural  residents, experiences indicate that when a                                                            
community is  involved in a project,  it becomes invested  in it and                                                            
subsequently  takes care of  it. Therefore,  he summarized  that the                                                            
benefit of Force Account  projects include getting a better product,                                                            
local  control  and  investiture,  and  dollars  being  spent  in  a                                                            
community  which   has  few  other  financial  opportunities.   "The                                                            
Amendment makes a lot of sense."                                                                                                
                                                                                                                                
Senator  Cowdery  spoke  against  the  amendment,   particularly  in                                                            
regards to Davis  Bacon wages not being paid, the  State procurement                                                            
code being  circumvented,  and there being  questions regarding  the                                                            
liability of  using city rather than  private contractor  equipment.                                                            
Rural  contractors have  testified that  they have  been denied  the                                                            
opportunity  to   bid  on  rural  projects  because  Force   Account                                                            
operations were  conducted. He noted that local contractors  support                                                            
the development  of a DOT day-labor  Delivery Order Contract,  which                                                            
would specify a 24-hour  callout timeframe through which maintenance                                                            
projects could be conducted.  Development of this contract would not                                                            
be difficult  as DOT is quite  good of estimating  what a job  would                                                            
cost. This would assure  that the public is served at the best price                                                            
and  would  allow  local contractors  an  opportunity  to  bid  jobs                                                            
accordingly.                                                                                                                    
                                                                                                                                
Senator Hoffman,  referencing the sponsor's position  that the Force                                                            
Account program  has been abused,  characterized that position  as a                                                            
"stretch" as the aforementioned  Force Account report indicates that                                                            
the jobs conducted  in this manner  between the years 1998  and 2002                                                            
amount  to  less  than  three  percent  of  the total  construction                                                             
projects of  the Department. Therefore,  he stated that legislation                                                             
that  would  prevent Rural  residents  from  working  these  limited                                                            
projects "is going a little bit too far."                                                                                       
                                                                                                                                
Senator   Dyson  voiced   appreciation   for  the   intent  of   the                                                            
legislation;  however, he understood  that this amendment  would not                                                            
preclude  the use  of Davis  Bacon wages.  In addition,  the use  of                                                            
local qualified  applicants  and equipment  would be beneficial.  He                                                            
questioned how limiting  the price of a contract would prevent State                                                            
government from utilizing State employees.                                                                                      
                                                                                                                                
Senator Cowdery explained  that the initial purpose for allowing use                                                            
of Force  Accounts  was to address  unforeseen  problems that  might                                                            
occur relating to a job  that was already under contract. The use of                                                            
Force Accounts  "was never intended"  to fund a job "from  scratch."                                                            
                                                                                                                                
Co-Chair Wilken  asked that Committee discussion focus  on Amendment                                                            
#1.                                                                                                                             
                                                                                                                                
Senator  Dyson  understood  that in  order  to  provide a  good  bid                                                            
package, such  things, as core samples are required.  Continuing, he                                                            
opined that the  development of a DOT Delivery Order  Contract would                                                            
be useful in  managing the many small  jobs that do not require  in-                                                            
depth investigation. Funding  of these jobs through the use of Force                                                            
Accounts would be more  cost efficient. The question is, what is the                                                            
threshold.  He agreed with Senator  Olson that were local  equipment                                                            
and labor available,  their use would be more economical.  Therefore                                                            
he  asked  the sponsor  whether  $250,000  is  the  right  threshold                                                            
limitation for Force Account work.                                                                                              
                                                                                                                                
Senator  Cowdery   supported  the  $250,000  limit.   Originally,  a                                                            
$100,000  limit was entertained.  Continuing,  he noted that  DOT is                                                            
responsible  for  providing contractors  with  such  things as  soil                                                            
analysis because  jobs that go to bid should not be  misrepresented.                                                            
A job that has a soil problem could become very expensive.                                                                      
                                                                                                                                
Senator Dyson clarified  that rather than referring to jobs in which                                                            
a contract has been awarded,  he is referring to small jobs in which                                                            
it would  not be  cost effective  to prepare  a bid  package and  go                                                            
thought the competitive bid process.                                                                                            
                                                                                                                                
Senator  Cowdery stated  that during  previous,  separate  Committee                                                            
discussions  with  local  contractors  in  Nome,  Bethel  and  other                                                            
communities,  testimony supported  a limit, as it would allow  local                                                            
contractors to participate in a competitive bid process.                                                                        
                                                                                                                                
Senator Dyson asked whether DOT could respond to his question.                                                                  
                                                                                                                                
Senator  Olson  stated  that  the  amendment   was  patterned  after                                                            
language  in  Administrative  Order  No.  199. The  purpose  of  the                                                            
amendment is to provide  an opportunity for local hire as opposed to                                                            
addressing Davis  Bacon wages. He referenced Order  language in this                                                            
regard on page two, section 3.(a) that reads as follows.                                                                        
                                                                                                                                
     3.(a)   Grant  agreements   for  projects   first  funded   for                                                            
     construction  after the date of this Order under  the following                                                            
     state programs  shall include a requirement for  the payment of                                                            
     prevailing  wages,  including  contributions  to  a pension  or                                                            
     retirement  account,  equal to  the prevailing  wages under  AS                                                            
     36.05,  as  modified  through   the  use  of the  progressive,                                                             
     graduated  pay scale developed under (b) of this  paragraph, on                                                            
     all public construction projects:                                                                                          
                                                                                                                                
Senator  Olson stated  that the inclusion  of this  language  in the                                                            
Order was  the reason that  contractors and  labor unions  supported                                                            
it. This language does address wage concerns.                                                                                   
                                                                                                                                
Senator Hoffman  noted that, based  on the Force Account  Report for                                                            
the years 1998  through 2002, less  than one half of one-percent  of                                                            
the jobs  depicted  are under the  $250,000  limit. Therefore,  were                                                            
this  amendment  not  adopted  it  would  "slam  the  door"  on  the                                                            
potential for local hire  in Rural Alaska, as, it could be said that                                                            
"basically  this bill"  would  not allow  the use  of Force  Account                                                            
projects  in rural Alaska  due to the high  cost of construction  in                                                            
those areas. He  reiterated that while there is a  lack of a skilled                                                            
workforce in  those areas, things  such as boardwalk projects  could                                                            
use local  hire and  therefore  benefit a community.  Therefore,  he                                                            
voiced support  for the amendment, which would preserve  "the status                                                            
quo"  of less  than  three-percent  of  available  DOT construction                                                             
projects and thereby provide  jobs and revenue to Rural areas. "This                                                            
is not asking too much."                                                                                                        
                                                                                                                                
Senator  B. Stevens  questioned  how  Administrative  Order No.  199                                                            
could relate to  Force Account projects conducted  in Rural areas in                                                            
1998 through  2002, as  it was not  enacted until  October 1,  2002;                                                            
specifically  that it is unknown whether  Davis Bacon wages  were or                                                            
were  not being  paid  during  that time.  He  also noted  that  the                                                            
legislation  would not prevent  DOT from  awarding three percent  or                                                            
more of its  projects to rural areas  regardless of whether  a Force                                                            
Account were utilized.                                                                                                          
                                                                                                                                
Co-Chair  Wilken  characterized  Senator  B. Stevens's  comments  as                                                            
pertaining  to the  bill in  general. Therefore,  he  stated that  a                                                            
further discussion  in this regard would continue  after discussions                                                            
relating to Amendment #1 are concluded.                                                                                         
                                                                                                                                
Senator  Dyson  asked  whether  DOT  has  "a  policy  or  threshold"                                                            
regarding how  minor construction projects in Rural  Alaska would be                                                            
addressed "on a Force Account  basis, and if so," is utilizing Force                                                            
Account funding  more efficient than  utilizing the competitive  bid                                                            
process.                                                                                                                        
                                                                                                                                
FRANK  RICHARDS,   State   Maintenance  and   Operations   Engineer,                                                            
Statewide  Maintenance Division,  Department  of Transportation  and                                                            
Public Facilities,  testified via teleconference from  Anchorage and                                                            
responded  that  the funding  source  of  a project  is  one of  the                                                            
primary determining  factors in both Rural and urban  area projects.                                                            
Before  any work is  advanced, the  Department must  conduct  a cost                                                            
analysis to determine what  method of construction would be the most                                                            
cost effective.                                                                                                                 
                                                                                                                                
Senator  Dyson  asked   whether  Amendment  #1  would   provide  the                                                            
Department, after  its cost analysis is conducted,  more flexibility                                                            
to address Rural construction projects.                                                                                         
                                                                                                                                
Mr. Richards  responded  that the  $250,000 ceiling  denoted in  the                                                            
Amendment "would  still limit" the  Department's ability  to perform                                                            
work.  Another   issue  would  be  the  definition   of  what  would                                                            
constitute  a Rural  area. Were  this designation  applied to  Rural                                                            
roads that  are part of  the State's continuous  highway system,  it                                                            
would be "severely limit" the Departments work efforts.                                                                         
                                                                                                                                
Senator  Dyson understood  that the  amendment  would eliminate  the                                                            
$250,000  limitation  on  construction   jobs  in  Rural  areas  not                                                            
connected to the highway system.                                                                                                
                                                                                                                                
Mr.  Richards  responded  that  were  the  amendment  to  allow  the                                                            
Commissioner to  remove constraints pertaining to  projects in Rural                                                            
areas that are not part  of a contiguous road system, the Department                                                            
would view it  as favorable. This would apply to villages  primarily                                                            
in Western  and Northwestern Alaska  as well as some communities  in                                                            
Southeast Alaska. However,  were it to apply to Rural places such as                                                            
Tok and  Northway  that are  on the  contiguous  highway system,  it                                                            
would be limiting.                                                                                                              
                                                                                                                                
Senator Dyson understood  therefore that the amendment would provide                                                            
the Department  more flexibility on projects that  are not connected                                                            
via the contiguous road system.                                                                                                 
                                                                                                                                
                                                                                                                                
SFC 04 # 62, Side B 09:51 AM                                                                                                    
                                                                                                                                
                                                                                                                                
[NOTE: Due  to a technical  malfunction, Side  B of Tape 62  did not                                                            
record; however,  the minutes continue, uninterrupted,  on Side A of                                                            
Tape 63.]                                                                                                                       
                                                                                                                                
                                                                                                                                
SFC 04 # 63, Side A 09:51 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator   Dyson  voiced   the  understanding,   however,  that   the                                                            
Department  is  uneasy  about the  lack  of a  definition  for  what                                                            
constitutes a Rural area."                                                                                                      
                                                                                                                                
Mr. Richards viewed Force  Accounts as being "a tool in the toolbox"                                                            
that  the   Department  could  use   to  support  its  maintenance,                                                             
construction   and  operation   responsibilities   to  the   State's                                                            
transportation system.                                                                                                          
                                                                                                                                
Mr. Richards  stated  that in response  to the  furor that  resulted                                                            
after the  Force Account  was utilized for  the St. Mary's  project,                                                            
the Department  worked with contractors and labor  unions to develop                                                            
Administrative  Order No.  199. As  a result, the  Order provided  a                                                            
framework through  which either the  Force Account or a competitive                                                             
bid process  would be utilized to  address Rural area projects  on a                                                            
fair basis.                                                                                                                     
                                                                                                                                
Senator  Olson  pointed  out  that while  there  is  some  ambiguity                                                            
regarding  the definition  of Rural,  the Amendment  is specific  to                                                            
off-road system construction projects.                                                                                          
                                                                                                                                
Senator  Hoffman  asked the  Department  for justification  for  its                                                            
analysis reflected  in fiscal note #1, dated February  18, 2003 that                                                            
specifies that  there would be "lost savings" exceeding  $25 million                                                            
were this legislation enacted.                                                                                                  
                                                                                                                                
In response  to a  question from  Co-Chair Wilken,  Senator  Hoffman                                                            
pointed  out that  the  answer to  this  question is  important,  as                                                            
adoption  of Amendment  #1 might  serve to continue  savings  rather                                                            
than negating them.                                                                                                             
                                                                                                                                
Mr. Richards  responded that the calculation  used to determine  the                                                            
$25 million potential  lost cost savings is based  on annual savings                                                            
of four  million dollars  for six years that  would result  were the                                                            
State to use Force  Account funding rather than conducting  projects                                                            
utilizing  the competitive  bid process,  based  on historical  cost                                                            
analyses.  He noted that most  of the money  that could be  saved is                                                            
federal money with a General Fund (GF) match.                                                                                   
                                                                                                                                
Senator Hoffman  declared that he supports the amendment  because he                                                            
"would rather save money than blow it."                                                                                         
                                                                                                                                
Senator  B. Stevens  asked,  for clarification,  the  amount of  the                                                            
total $505 million  surface transportation program  expenditures, as                                                            
specified  in the  2002 Force  Account  Report, that  were  directly                                                            
related  to  construction  projects.  He  stated  that  this  is  an                                                            
important element of the  equation, as, as depicted, the calculation                                                            
that only 2.23 percent  of the total $505 million was spent on Force                                                            
Account projects, could be misleading.                                                                                          
                                                                                                                                
Mr. Richards  affirmed  that the  total amount  would include  other                                                            
components.                                                                                                                     
                                                                                                                                
Senator  B.  Stevens  stressed  therefore,  that  the  2.23  percent                                                            
depicted is on the low  side as were funding for Shakwak, the Marine                                                            
Highway  System, Trails and  Recreation Access  for Alaska  (TRAAK),                                                            
and other federal components  removed, the percentage of money spent                                                            
for Force Account Construction projects would increase.                                                                         
                                                                                                                                
Mr. Richards affirmed that  the $505 million amount is all-inclusive                                                            
in that  it does  contain such  things as Shakwak,  federal  highway                                                            
funding, and  other Community Transportation  Program (CTP)  funding                                                            
for surface  transportation  projects. He also  noted that  the 2002                                                            
projects  listed  on the  Force  Account  Report comprise  the  2.23                                                            
percent.  It  is  important  to note,  that  while  the  State  does                                                            
contract out for  the majority of the cost of materials,  equipment,                                                            
and supplies,  the  benefits  to the State  of using  Force  Account                                                            
funding  is garnered from  savings associated  with State  personnel                                                            
and equipment costs.                                                                                                            
                                                                                                                                
Senator B.  Stevens understood that  and commented that the  purpose                                                            
of  his comments  was  to  clarify  that the  percentages  of  Force                                                            
Account construction  projects is actually higher  than depicted. He                                                            
also  noted  that  CTP  projects   in the   year  2002  amounted  to                                                            
approximately  $340 million.  For  further clarification,  he  asked                                                            
whether  projects in Southeast  Alaska communities  such as  Juneau,                                                            
Ketchikan,  Sitka,  and other  communities  that are  served by  the                                                            
Alaska Marine  Highway System rather than a contiguous  surface road                                                            
system, would be included under the auspice of this Amendment.                                                                  
                                                                                                                                
Mr. Richards reiterated  that the question of what  would constitute                                                            
"Rural" must be addressed.                                                                                                      
                                                                                                                                
Senator B. Stevens asked  the Amendment's sponsor whether the intent                                                            
of the  Amendment would  be to  include in  its Rural, off-the-road                                                             
system designation, communities  in Southeast Alaska that are served                                                            
by the Alaska Marine Highway System.                                                                                            
                                                                                                                                
Senator  Olson responded  that the  purpose of the  Amendment  is to                                                            
address the  high cost of transportation  construction in  Northwest                                                            
and Western Alaska. He  stated that he would either defer to or work                                                            
with the  bill's sponsor  to address questions  regarding  Southeast                                                            
Alaska communities.                                                                                                             
                                                                                                                                
Senator Hoffman  stated that the inclusion  of these communities  is                                                            
insignificant,  as, were their inclusion to equate,  for example, to                                                            
the 2002 CTP  program level of $340  million, their inclusion  might                                                            
increase Force Account expenditures "to a whopping 3.3 percent."                                                                
                                                                                                                                
Senator B.  Stevens pointed out that,  "there is nothing  to prevent                                                            
those projects from being included under the normal process."                                                                   
                                                                                                                                
AT EASE 10:00 AM/ 10:00 AM                                                                                                      
                                                                                                                                
Senator Olson stated that  there is no adversarial intent behind the                                                            
offering  of this amendment.  Its purpose is  to recognize  that the                                                            
bill raises  some concern and to make  its impact more palatable  by                                                            
furthering language  that was supported in Administrative  Order No.                                                            
199. He  stated that the  Amendment would  compliment the intent  of                                                            
the bill, which is to provide consideration for contractors.                                                                    
                                                                                                                                
Senator  Cowdery suggested  that adoption  of  this amendment  could                                                            
lead to increased  levels of Force  Account exemptions for  projects                                                            
in Rural Alaska.                                                                                                                
                                                                                                                                
Senator Olson  asked whether any federal highway penalties  might be                                                            
incurred  were the  amendment  adopted. He  also  asked whether  the                                                            
adoption  of  the bill  in  its current  form  might  incur  federal                                                            
penalties.                                                                                                                      
                                                                                                                                
Mr. Richards voiced being unaware of any penalties.                                                                             
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Dyson, Senator Olson, and Senator Hoffman                                                                     
                                                                                                                                
OPPOSED: Senator Bunde,  Senator B. Stevens, Co-Chair Green, and Co-                                                            
Chair Wilken                                                                                                                    
                                                                                                                                
The motion FAILED (3-4)                                                                                                         
                                                                                                                                
Amendment #1 FAILED to be adopted.                                                                                              
                                                                                                                                
DON VALESKE, Business Manager,  Public Employees Local 71, testified                                                            
via teleconference  from  Anchorage  and shared  that the  Committee                                                            
discussion and testimony  has clarified that this bill is limited to                                                            
construction   projects  rather   than  to   both  maintenance   and                                                            
construction projects which was his concern.                                                                                    
                                                                                                                                
Senator Olson  asked whether Mr. Valeske  supports the legislation.                                                             
                                                                                                                                
Mr. Valeske  commented that due to  the fact that the bill  does not                                                            
apply to maintenance  projects, he  does not have a position  on the                                                            
bill. However,  he noted that he is  supportive of local  hire as it                                                            
is beneficial  to local people and communities. He  noted that Local                                                            
71 members were involved in the St. Mary's project.                                                                             
                                                                                                                                
EDEN   LARSEN,   President   and  CEO,   Associated   Builders   and                                                            
Contractors,  testified via  teleconference from  an offnet  site in                                                            
support of the bill.                                                                                                            
                                                                                                                                
Co-Chair Wilken  noted that Members' bill packets  contain a written                                                            
comment [copy on file]  from the Associated Builders and Contractors                                                            
(ABC).                                                                                                                          
                                                                                                                                
Senator Hoffman asked the reason behind their support.                                                                          
                                                                                                                                
Ms. Larsen responded  that ABC's "fundamental principle"  is that an                                                            
"open and competitive  bidding process  is the best methodology  for                                                            
State procurements." Limits  on what the State could conduct through                                                            
the use  of Force Accounts  and the continuance  of the established                                                             
procurement process are appropriate.                                                                                            
                                                                                                                                
Senator Hoffman asked whether  ABC's position is mindful of the fact                                                            
that this  legislation  would serve  to lose the  State $25  million                                                            
dollars  in lost  savings over  the next  six year.  Continuing,  he                                                            
stressed  that no abuse of  the system has  been provided.  The fact                                                            
that Force  Account Construction projects  have cost the  State less                                                            
than three percent  of the total construction budget  and would save                                                            
the State  $25  million dollars  over the  next six  years makes  it                                                            
difficult  to understand why,  in these times  of a fiscal  dilemma,                                                            
anyone would support this legislation.                                                                                          
                                                                                                                                
Ms.  Larsen  responded  that  testimony  has been  provided  to  ABC                                                            
regarding the  fact that many small construction businesses  in off-                                                            
road  system  communities  have gone  out  of  business due  to  the                                                            
increased  usage of  Force Account  Construction  projects over  the                                                            
last eight  years. The  cost to  these communities  of losing  these                                                            
businesses and  their year-round employment opportunities  should be                                                            
a  consideration   in  "the   true  costs."   She  noted  that   the                                                            
justification  for using Force Account Construction  funding is that                                                            
money would be saved by  not being required to pay prevailing wages.                                                            
The ABC's  position is  that there  is a reason  for an established                                                             
wage scale  and that  this should  be considered  when allowing  the                                                            
State to avoid the competitive bid process.                                                                                     
                                                                                                                                
Senator Olson  asked the  number of people  in ABC who are  actively                                                            
involved in road construction.                                                                                                  
                                                                                                                                
Ms. Larsen  responded that  ABC has a minimum  of three contractors                                                             
who are actively involved in building roads and other roadwork.                                                                 
                                                                                                                                
Senator Olson  understood  Ms. Larsen to  say that some contractors                                                             
have  gone  out of  business  due  to  Force Account  Construction.                                                             
However,  he  countered  that  the  impetus  behind  the  number  of                                                            
contractors,  both in  rural Alaska  and on the  road system,  being                                                            
reduced is  that the number of State  road construction projects  in                                                            
the State have been diminishing.                                                                                                
                                                                                                                                
Ms. Larsen noted that she  is "only passing along" comments that ABC                                                            
has received from Rural contractors.                                                                                            
                                                                                                                                
Senator  Hoffman  and Senator  Olson  asked that  the  names of  the                                                            
businesses  that  have  gone out  of  business  in Rural  Alaska  be                                                            
provided.                                                                                                                       
                                                                                                                                
Ms.  Larsen   stated  that  she  would   attempt  to  acquire   this                                                            
information.                                                                                                                    
                                                                                                                                
JEFF ALLING, Representative,  ALCAN Builders Incorporated, testified                                                            
via teleconference from an offnet site in support of the bill.                                                                  
                                                                                                                                
Co-Chair Wilken  asked whether the  sponsor would be opposed  to the                                                            
legislation being subject to a four-year termination period.                                                                    
                                                                                                                                
Senator Cowdery responded he would not object.                                                                                  
                                                                                                                                
Conceptual Amendment  #2: This conceptual amendment  would establish                                                            
a termination date of June 30, 2008.                                                                                            
                                                                                                                                
Co-Chair Wilken moved to adopt Conceptual Amendment #2.                                                                         
                                                                                                                                
There being no objection, Conceptual Amendment # 2 was adopted.                                                                 
                                                                                                                                
Senator Bunde  moved to report the bill, as amended,  from Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
There being no objection,  CS SB 40(FIN) was REPORTED from Committee                                                            
with a zero  fiscal note, dated March  26, 2004 from the  Department                                                            
of Transportation and Public Facilities.                                                                                        
                                                                                                                                
AT EASE 10:15 AM / 10:16 AM                                                                                                     
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 306                                                                                                        
     "An Act relating to the practice of naturopathic medicine; and                                                             
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken explained  that this  bill, which  is sponsored  by                                                            
Senator Ralph  Seekins, would enact an Act relating  to the practice                                                            
of naturopathic  medicine.  Initially,  consideration  was given  to                                                            
implementing  a Board  to oversee  naturopathic  medicine;  however,                                                            
that is not  now being considered.  The Department of Community  and                                                            
Economic Development was  asked to explain the Department's Division                                                            
of Occupational  Licensing  flow  chart, titled  "Implementation  of                                                            
CSSB306(FIN)" [copy on  file] that depicts how licensed Naturopathic                                                            
Physicians would be monitored.                                                                                                  
                                                                                                                                
RICK   URION,  Director,   Division   of   Occupational   Licensing,                                                            
Department  of Community  and Economic Development,  clarified  that                                                            
the  Governor Frank  Murkowski  Administration  has  no position  in                                                            
regards  to  this   legislation.  Were  the  Legislature   to  adopt                                                            
regulations  in regards  to Naturopathic  medicine,  the  Department                                                            
would  implement  supporting  rules and  regulations.  However,  the                                                            
Department has  been regulating this profession and  numerous others                                                            
without assistance  from a Board, for approximately  seventeen years                                                            
and could continue to do so absent any new legislation.                                                                         
                                                                                                                                
Co-Chair Wilken asked the  current process through which a complaint                                                            
against a Naturopath might be reviewed.                                                                                         
                                                                                                                                
Mr. Urion responded that  the Department's investigative staff would                                                            
address the  complaint, and, were  it deemed necessary, it  might be                                                            
forwarded to a hearing  officer. A multitude of different processes,                                                            
including  such  things  as  memorandums  of  agreement,  have  been                                                            
established  through  which  issues regarding  each  profession  are                                                            
addressed.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  asked  whether  the flow  chart  provided  by  the                                                            
Department  [copy  on  file]  would  depict  the  process  involving                                                            
naturopaths.                                                                                                                    
                                                                                                                                
Mr. Urion affirmed.                                                                                                             
                                                                                                                                
Co-Chair Wilken asked that the flow chart be explained.                                                                         
                                                                                                                                
Mr. Urion explained  that currently  when a complaint is  filed, the                                                            
Division's  investigative staff who,  based on a priority  list that                                                            
heavily ranks  Life/Safety issues,  would determine whether  charges                                                            
should be filed addresses  it. Were that the case, a hearing officer                                                            
would be  assigned,  a trial might  ensue, and  the hearing  officer                                                            
would  render a decision  including  the level  of punishment.  This                                                            
could include such things  as license removal, suspension and fines.                                                            
Were the defendant  to reject the  decision of the hearing  officer,                                                            
they have the right to appeal to a higher court.                                                                                
                                                                                                                                
Mr. Urion shared  that in situations in which there  is a Board, the                                                            
Board would have the authority to act on the complaint.                                                                         
                                                                                                                                
Co-Chair Wilken  asked whether the  Department, in conjunction  with                                                            
Naturopaths, developed the chart.                                                                                               
                                                                                                                                
Mr. Urion concurred.                                                                                                            
                                                                                                                                
Co-Chair  Wilken  asked whether  the  Division's  investigators  are                                                            
trained professionals.                                                                                                          
                                                                                                                                
Mr. Urion responded that  while none of the Division's investigators                                                            
are trained  in any of  the fields that  they investigate,  they are                                                            
trained investigators.  He noted however, that they  do consult with                                                            
the appropriate  medical professional  pertinent to each  situation.                                                            
He noted that  the Medical Board recently  adopted a procedure  that                                                            
specifies that complaints  dealing with such things as sexual abuse,                                                            
alcohol, or drug  misuse be immediately forwarded  to the Division's                                                            
investigators.  However, determinations regarding  standards of care                                                            
complaints  are determined  by the Board and  then forwarded  to the                                                            
investigators, who could  independently make a determination if they                                                            
so chose.                                                                                                                       
                                                                                                                                
Co-Chair  Wilken asked  for confirmation  that this  is the  current                                                            
practice relating to Medical Board.                                                                                             
                                                                                                                                
Mr. Urion affirmed.                                                                                                             
                                                                                                                                
Co-Chair Wilken  opined therefore that a procedure  akin to a triage                                                            
occurs at the investigative  level in that the investigator consults                                                            
with  a medical  professional.  The  investigator  would  receive  a                                                            
complaint from  a patient, and then the triage would  occur in which                                                            
it would be  determined whether the  complaint is serious  enough to                                                            
advance immediately to a hearing officer.                                                                                       
                                                                                                                                
Mr. Urion clarified  that in serious  cases, the state investigator                                                             
would  have the  authority  to make  the determination.   Complaints                                                            
regarding standards  of care might  require an investigative  review                                                            
that might include a medical professional.                                                                                      
                                                                                                                                
Co-Chair Wilken  understood that an  investigator would be  expected                                                            
to consult with the appropriate medical professional.                                                                           
                                                                                                                                
Mr. Urion  agreed.  He stated  that this  is the  current  procedure                                                            
utilized when reviewing complaints against naturopaths.                                                                         
                                                                                                                                
SENATOR RALPH  SEEKINS, the bill's  sponsor, noted that language  on                                                            
the bottom of the flow chart specifies that in the case of non-                                                                 
threatening  public safety issue or  a Standards of Care  complaint,                                                            
investigators could consult  with the Qualified Trade Association of                                                            
Naturopathic Physicians  (NP/QTA), which would consist of volunteers                                                            
from the field.                                                                                                                 
                                                                                                                                
Co-Chair  Wilken asked  whether this  organization  exists today  or                                                            
would be established by this legislation.                                                                                       
                                                                                                                                
Senator  Seekins responded  that while  this  organization does  not                                                            
currently  exist, its establishment  would  be clearly defined  in a                                                            
forthcoming committee substitute.                                                                                               
                                                                                                                                
Mr.  Urion declared  that  this would  be  an opportunity  in  which                                                            
government  and private enterprise  could work together to  regulate                                                            
an industry.  No professional entity  would benefit from  "condoning                                                            
bad behavior" within its profession.                                                                                            
                                                                                                                                
Co-Chair Wilken summarized  that the complaint process would be that                                                            
a wronged patient  would go to the State, It would  then be directed                                                            
to an investigator.  The investigator could consult  with the three-                                                            
member NP/QTA panel.                                                                                                            
                                                                                                                                
Senator  Olson questioned  "the wisdom" of  allowing naturopaths  to                                                            
have  their  own  board,  as  currently   the  process  provides  an                                                            
investigator   the  ability  to  consult   with  professionals.   In                                                            
addition,  he asked  whether  there could  be the  option of  having                                                            
naturopathic complaints heard by the eight-member Medical Board.                                                                
                                                                                                                                
Mr. Urion  voiced  concern to the  appropriateness  of having  these                                                            
complaints  heard  before  the Medical  Board  due to  the  negative                                                            
comments  the  medical field  has  made in  regard  to naturopaths.                                                             
Continuing, he noted that  at this point, the Division could monitor                                                            
the Naturopathic profession without implementation of a Board.                                                                  
                                                                                                                                
Senator Bunde  countered that  currently the  Board of Medicine  has                                                            
oversight  over  a  wide  range  of medical  professions   including                                                            
Physician Assistants  (PAs), Nurse  Practitioners (NPs),  Registered                                                            
Nurses  (RNs),  Oseopathics,  dentists,  and paramedics.  All  these                                                            
professions are included  under the term "physician" and, since this                                                            
bill would  expand that  term to  include Naturopaths,  it would  be                                                            
logical that they be included  in those professions monitored by the                                                            
Board.                                                                                                                          
                                                                                                                                
Senator Seekins responded  that he would not object to the inclusion                                                            
of a naturopath  on the Medical Board, were it suggested.  Inclusion                                                            
of a  naturopath  on the  Board would  provide some  insight to  the                                                            
Board regarding  Standards of Care for the profession.  However, due                                                            
to  the  fact  that  naturopathic  medicine  presents  competition,                                                             
naturopaths "have a fear  that there may be some objection "from the                                                            
more recognized medical professions.                                                                                            
                                                                                                                                
Co-Chair Wilken recalled  that, until a few years ago when they were                                                            
granted voting rights,  Physician Assistants were ex officio members                                                            
of  the  Medical  Board.  Perhaps  this  might  be  an  option  with                                                            
naturopaths.                                                                                                                    
                                                                                                                                
AT EASE 10:28 AM / 10:28 AM                                                                                                     
                                                                                                                                
Senator  Olson   clarified  earlier   information  regarding   which                                                            
professions the State Medical  Boards oversees. While it does govern                                                            
paramedics, physicians,  and physician assistants,  it does not have                                                            
direct  regulatory oversight  in regards  to  dentists, nurses,  and                                                            
nurse practitioners.                                                                                                            
                                                                                                                                
Senator Olson also noted  that when he, a medical doctor, was on the                                                            
State Medical  Board, its seven-person membership  consisted of five                                                            
physicians  and  two  lay  people.  He  subsequently  supported  the                                                            
representation of a PA  on the Board due to their increasing numbers                                                            
in the State.  He noted that the number of naturopaths  in the State                                                            
is limited.                                                                                                                     
                                                                                                                                
Co-Chair  Wilken noted that  there are currently  27 Naturopaths  in                                                            
the State.                                                                                                                      
                                                                                                                                
Senator  Seekins   countered  that   any  board  that  regulates   a                                                            
profession should have,  as part of its membership, a representative                                                            
of each  profession in order  to negate such  things as "hostility"                                                             
against that profession.                                                                                                        
                                                                                                                                
Co-Chair Wilken  asked for confirmation that PAs were,  at one time,                                                            
ex officio members of the Board.                                                                                                
                                                                                                                                
Senator Olson  specified that PAs  were diligent in attending  every                                                            
meeting even  before they had representation  on the Board.  In that                                                            
regard, once  they were admitted  to the  Board, they became  voting                                                            
members. He agreed  with Senator Seekins that representation  at the                                                            
Board level is important.                                                                                                       
                                                                                                                                
Co-Chair Wilken pointed  out that the definition of minor surgery is                                                            
included in the  bill in Section 13, subsection (6),  page six, line                                                            
19 and reads as follows.                                                                                                        
                                                                                                                                
     (6) "minor surgery"                                                                                                        
          (A) means the use of                                                                                                  
                (i) operative, electrical, or other methods for                                                                 
     surgical repair and  care incidental to superficial lacerations                                                            
     and  abrasions  or  superficial  lesions,  and the  removal  of                                                            
     foreign bodies located in superficial tissues; and                                                                         
                (ii) antiseptics and local anesthetics in connection                                                            
     with  methods  authorized   under  (i)  of this  subparagraph;                                                             
     definition;                                                                                                                
          (B) does not include use of general or spinal                                                                         
     anesthetics,  major surgery,  surgery of the body cavities,  or                                                            
     specialized   surgery,   such  as  plastic   surgery,   surgery                                                            
     involving  the eyes, or surgery  involving tendons,  ligaments,                                                            
     nerves, or blood vessels.                                                                                                  
                                                                                                                                
Co-Chair  Wilken   asked  Senator  Olson  to  address   his  concern                                                            
regarding allowing naturopaths to conduct "further tests."                                                                      
                                                                                                                                
Senator Olson voiced the  understanding that one of the reasons that                                                            
naturopaths are  requesting prescriptive authority  is because their                                                            
position is that they have  similar education and training levels to                                                            
that  of  medical  doctors.  However,  while  many  of  the  initial                                                            
educational  courses were  the same, there  was a "divergence  later                                                            
on" as the  foundation of the naturopathic  delivery system  was one                                                            
of being "basically drug free."                                                                                                 
                                                                                                                                
Senator Olson  voiced that,  with the care  of the patient  in mind,                                                            
there is  concern that in  the continuance  of their care,  limiting                                                            
prescriptive  treatment to medical  doctors would be appropriate  to                                                            
the balance. He noted that  there has been an abiding identification                                                            
within  the  medical  profession  that  medical  doctors   prescribe                                                            
medication.  In order  to  expand rather  than  restrict  naturopath                                                            
prescriptive  authority,  it  could be  suggested  that naturopaths                                                             
should be required  to qualify for  Part One, Two, and Three  of the                                                            
National  Medical Board examination  rather  than being required  to                                                            
pass only Parts  One and Two. Part  Three is the section  that tests                                                            
prescriptive knowledge.  Therefore, their ability  to pass all three                                                            
sections of the  examination would indicate that their  training was                                                            
comparable to that of a  medical doctor and would allow them to have                                                            
prescriptive authority.                                                                                                         
                                                                                                                                
Senator Seekins,  being respectful of Senator Olson,  clarified that                                                            
rather   than  seeking  to   be  recognized   as  medical   doctors,                                                            
naturopaths  are seeking to have prescriptive  rights that  are less                                                            
than a  PA and  NP. This  was clarified  in Amendment  #1 which  the                                                            
Committee  during its  first  hearing on  the bill.  That  amendment                                                            
inserted  a  new  subsection   into  Section  11,  subsection   Sec.                                                            
08.45.120 on page five, line 16 that reads as follows.                                                                          
                                                                                                                                
     (4) after becoming registered with the federal Drug                                                                        
     Enforcement Administration, prescribe only those controlled                                                                
     substances allowed under Schedules III, IV, and V.                                                                         
                                                                                                                                
Senator  Olson clarified  that  a PA  could only  practice  medicine                                                            
under a collaborative  agreement and  direct oversight by  a medical                                                            
doctor (MD). Were  something to go wrong, the MD would  also be held                                                            
liable.                                                                                                                         
                                                                                                                                
Senator Bunde  asked how an NP's training would differ  from that of                                                            
a PA in this regard.                                                                                                            
                                                                                                                                
Senator Olson stated that  while he is familiar with PA requirements                                                            
and the associated  prescriptive limitations, he is  unfamiliar with                                                            
the requirements for a NP.                                                                                                      
                                                                                                                                
Senator Seekins shared  that he is familiar with the NP requirements                                                            
as his wife is a nurse and a close friend is a NP.                                                                              
                                                                                                                                
                                                                                                                                
SFC 04 # 63, Side B 10:40 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Senator  Seekins  noted  therefore,  that NPs  could  prescribe  all                                                            
levels of prescriptive  medications  as they have a higher  level of                                                            
training   than  PAs.   "It  would   be  inconceivable"   that   any                                                            
practitioner … would not  seek assistance from other caregivers when                                                            
encountering serious situations.                                                                                                
                                                                                                                                
Co-Chair  Wilken noted  that concerns  have been  raised due  to the                                                            
understanding that Naturopathic  Doctors (ND) would not have medical                                                            
malpractice insurance.  He referred the Committee to Item #3 on page                                                            
two of  a letter [copy  on file]  dated February  24, 2004 from  Dr.                                                            
Scott Luper,  ND that Co-Chair  Wilken had  received in response  to                                                            
comments in a letter [copy  on file] dated February 9, 2004 that Co-                                                            
Chair Wilken  had received  from Tom Wilson,  PA-C. The comment  and                                                            
response, as written in Dr. Luper's letter are as follow.                                                                       
                                                                                                                                
     #3.  The  bill is  too  broad. Currently  one  could  prescribe                                                            
     antibiotics  to dangerous heart  medications, to chemotherapy.                                                             
     Allopathic  M.D.  would most  likely not  prescribe  medication                                                            
     outside of  their specialty, as it would be considered  outside                                                            
     of the  "standard of care". If  a bill were passed a  formulary                                                            
     would be much more acceptable and safe.                                                                                    
                                                                                                                                
     3). Response:  Mr. Wilson suggests that an ND  might be tempted                                                            
     to prescribe  outside of their  training/education and  that an                                                            
     MD "would  most likely not" prescribe inappropriately.  This is                                                            
     not  realistic.  A good  "DOC" is  a good  "DOC".  NDs will  be                                                            
     liable for malpractice  on par with MD's and under the auspices                                                            
     of the Div. of Occupational Licensing.                                                                                     
                                                                                                                                
DR. SCOTT LUPER,  Naturopathic Doctor, testified via  teleconference                                                            
from  Fairbanks   and  clarified  that  NDs  are  able   to  acquire                                                            
malpractice  insurance  and that ND  malpractice  insurance is  less                                                            
costly  that MD  malpractice  insurance  due to  the  fact that  the                                                            
complaints  against them are  fewer. He stated  that, while  he pays                                                            
$3,000 a year,  the majority of his  ND colleagues pay between  $600                                                            
and $2,000 annually.                                                                                                            
                                                                                                                                
Co-Chair  Wilken surmised  that NDs carry  malpractice insurance  in                                                            
line with their standards of care.                                                                                              
                                                                                                                                
Dr.  Luper  affirmed.   He  noted  that  the  standard   ND  medical                                                            
malpractice   coverage  would  provide   one  million  dollars   per                                                            
occurrence and three million dollars total.                                                                                     
                                                                                                                                
Senator  Bunde surmised  that  MDs pay  higher  medical malpractice                                                             
insurance due to the fact  that they write prescriptions and perform                                                            
surgeries. Therefore, he  opined that ND's rates might increase were                                                            
this legislation adopted.                                                                                                       
                                                                                                                                
Dr. Luper responded that  this has been investigated and it has been                                                            
determined that the rates  would not increase. He further noted that                                                            
the  Alaskan ND  rates  are comparable  to  those being  charged  in                                                            
states that  provide NDs prescriptive  and minor surgery  authority.                                                            
                                                                                                                                
Dr.  Luper  disclosed that  in  order  to address  the  question  of                                                            
safety, he  had conducted  a survey of states  that license  NDs. He                                                            
had  acquired the  number  of ND disciplinary  actions  in  Arizona,                                                            
Oregon, Hawaii  and Connecticut. ND  disciplinary actions  including                                                            
such things as  license suspensions and other punishing  actions are                                                            
approximately  half of  the amount  pertaining to  allopathic  or MD                                                            
disciplinary  actions. In  Arizona, for  instance, the disciplinary                                                             
rate for MDs is about one  percent of those licensed, and about half                                                            
a percent for  NDs. Nationwide the  rate for NDs is .34 percent.  No                                                            
disciplinary  action has occurred  against NDs in Alaska  during the                                                            
seventeen years in which  they have been licensed in the State. This                                                            
is a reason why the rates  are low and is a testament to the quality                                                            
and care provided by the  profession. He clarified that there are 39                                                            
licensed NDs in the State.                                                                                                      
                                                                                                                                
BARRY CHRISTENSEN,  Practicing Community Pharmacist  and Legislative                                                            
Chair, Alaska Pharmacists  Association, testified via teleconference                                                            
from an offnet site to  voice concern on behalf of the Association's                                                            
200 plus  members  in regards to  the prescriptive  authority  being                                                            
proposed in the  bill for NDs. He informed the Committee  that while                                                            
he heard reference  to Amendment #1, he is unaware  of its contents.                                                            
                                                                                                                                
Co-Chair  Wilken informed  the testifier that  Amendment #1  removed                                                            
the  requirement  regarding  Prescriptive  Schedules  I and  II  and                                                            
retained Schedules  III, IV, and V  in the authority being  proposed                                                            
for NDs.                                                                                                                        
                                                                                                                                
Mr.  Christensen  addressed  the  position  that  NDs  education  is                                                            
"equivalent  or  nearly  equivalent"  to  that  of  an  MD  because,                                                            
similarly,  they also have  a four-year degree.  "While this  may be                                                            
true in  an academic  sense, our  membership has  had little  if any                                                            
interaction with  naturopaths during our professional  training" but                                                            
have  had extensive  training  with  PAs,  NPs,  and MDs  "and  have                                                            
developed  good  working   professional  relationships   with  these                                                            
professionals.  This  relationship is  very important  when  working                                                            
with  patients   and  recognizing   "problems   with  dosing,   drug                                                            
interactions and drug abuse."  He questioned the fact that while the                                                            
definition  of naturopathy  that is  included in  the bill does  not                                                            
include  medicine,   the  bill  would   provide  full  prescriptive                                                             
authority  to  NDs.  He  noted  that  most   states  that  allow  ND                                                            
prescribing  provide  NDs with  limited prescriptive  authority.  He                                                            
stated  that  pharmacists  would   be more  comfortable   with  this                                                            
legislation  were NDs required  to work  collaboratively with  other                                                            
licensed  prescriptors.  Lastly,  he raised  concern  regarding  the                                                            
prescriptive authority  of controlled substances,  or narcotics, and                                                            
stated that  control of such substances  should be closely  guarded.                                                            
Absent  a presciptor-based   narcotic tracking  system,  this  issue                                                            
would continue  to be "the  number one" concern  of pharmacists.  He                                                            
assured  that while there  is no  reason to believe  that NDs  would                                                            
abuse this prescriptive  authority, increasing their availability by                                                            
expanding   the  number  of  prescriptors   would  provide   another                                                            
potential avenue for narcotic abusing patients.                                                                                 
                                                                                                                                
Mr.  Christensen stated  that  while the  amendment  would limit  ND                                                            
prescriptive  authority  to  Schedule  III,  IV,  and V  drugs,  the                                                            
majority  of  narcotic  drugs  are  included  in  those categories.                                                             
Therefore, the Membership would continue to voice concerns.                                                                     
                                                                                                                                
Senator Olson  asked, for clarification, the Association's  position                                                            
on Amendment #1.                                                                                                                
                                                                                                                                
Mr. Christensen  responded that a  majority of the Membership  would                                                            
continue  to  have  problems  primarily  due  to  the  inclusion  of                                                            
Schedule III, which encompasses  narcotic painkillers. He noted that                                                            
since he was unaware of  the amendment prior to this, the membership                                                            
has not been conferred with in its regard.                                                                                      
                                                                                                                                
Senator Olson  asked the percent of patients who might  be receiving                                                            
prescriptive  relief  from  either  Schedule  II  through V  or  III                                                            
through V.                                                                                                                      
                                                                                                                                
Mr. Christensen responded  that the majority of people who take pain                                                            
relievers are utilizing  Schedule III drugs, as it is the outpatient                                                            
pain drug  of choice.  A written  prescription is  not required  for                                                            
Schedule  III drugs  whereas  one is required  for  Class II  drugs.                                                            
Therefore,   he  estimated   that   approximately   70  percent   of                                                            
individuals  who  are taking  painkillers  are taking  Schedule  III                                                            
drugs. Schedule  IV drugs  are anti-anxiety  rather than  painkiller                                                            
types of drugs.                                                                                                                 
                                                                                                                                
Senator Bunde voiced that  it would be an inconvenience were someone                                                            
to seek  naturopathic  care and  then discover  that  they would  be                                                            
required to go  to another medical professional were  a prescription                                                            
drug required  to treat,  for instance,  high blood  pressure  or an                                                            
antibiotic  such as penicillin. He  asked what which schedule  these                                                            
types of prescriptions are included.                                                                                            
                                                                                                                                
Mr. Christensen  responded  that antibiotics  are  "not a  scheduled                                                            
narcotic" and  therefore are not regulated  by the Drug Enforcement                                                             
Administration.  They are  instead classified  as a prescription  by                                                            
the  Food  and  Drug  Administration   (FDA)  and  would  require  a                                                            
prescription.  A narcotic-based  pain  reliever such  as Tylenol  #3                                                            
would be a Schedule III drug.                                                                                                   
                                                                                                                                
Senator  Olson clarified  that the  drugs included  in "Schedules  I                                                            
through V are  those that are directly related to  the potential for                                                            
abuse by either  a patient or a patient prescriptor."  An antibiotic                                                            
would not fall in this category.                                                                                                
                                                                                                                                
Senator Seekins understood  that as part of a pharmacist's training,                                                            
they are taught how to recognize signs of abuse or mistakes.                                                                    
                                                                                                                                
Mr. Christensen affirmed.                                                                                                       
                                                                                                                                
Senator Seekins understood  therefore that "even now" in the medical                                                            
profession, abuse does occur.                                                                                                   
                                                                                                                                
Mr. Christensen agreed.                                                                                                         
                                                                                                                                
Co-Chair Wilken  stated that the bill would be HELD  in Committee in                                                            
order  to  develop   a  committee  substitute  that  would   include                                                            
Amendment  #1 and clarify  language regarding  the voluntary  review                                                            
committee.                                                                                                                      
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 298(TRA)                                                                                            
     "An Act relating to the use of off-road vehicles within five                                                               
      miles of the right-of-way of the James Dalton Highway."                                                                   
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
SENATOR  RALPH  SEEKINS,  the  bill's  sponsor,   stated  that  this                                                            
legislation  would  serve to  address  concerns regarding  a  letter                                                            
[copy  on file],  date  stamped January  20,  2004 from  the  United                                                            
States  Department  of  the Interior's  Bureau  of  Land  Management                                                            
received  by trappers  who operate  trap  lines north  of the  Yukon                                                            
river bridge.                                                                                                                   
                                                                                                                                
Co-Chair Wilken stated  that this legislation would allow the use of                                                            
off-road  vehicles  within five  miles of  the right-of-way  of  the                                                            
James Dalton Highway south of Mile 235.                                                                                         
                                                                                                                                
Senator  Seekins  declared  that, unless  State  law is  changed  to                                                            
accommodate the use of  motorized vehicles in this area, individuals                                                            
would have a May 1, 2004  deadline to change to non-motorized access                                                            
of the area.  Use of the  area by trappers  and others on  motorized                                                            
vehicles  should not be eliminated  "due to  a quirk in State  law."                                                            
Addressing  this  issue in  a  manner that  would  allow  continuing                                                            
access  to the  area on motorized  vehicles  is the  intent of  this                                                            
legislation.  He  stated  that  he has  discussed  this  issue  with                                                            
trappers, the Alyeska Pipeline  Authority, and other affected users.                                                            
In order to address the  variety of questions that have been raised,                                                            
he asked  that the bill  be referred to  a subcommittee, chaired  by                                                            
Senator Olson.                                                                                                                  
                                                                                                                                
Co-Chair  Wilken  stated   that  SB  298  would  be  assigned  to  a                                                            
subcommittee.                                                                                                                   
                                                                                                                                
Senator Bunde  stated that there has been a history  of over zealous                                                            
Alaska  State   Trooper  enforcement   in  the  affected   area.  He                                                            
encouraged  the  subcommittee  to investigate  the  opportunity  for                                                            
people to use existing  mining trails and roads in the area, outside                                                            
of the Alaska  pipeline corridor.  He noted that there are  numerous                                                            
differences  of  opinions  regarding  the legality  of  using  these                                                            
roads.                                                                                                                          
                                                                                                                                
Senator Olson  stated that it is troubling that there  is an agency,                                                            
and  in  this  case  a  federal  agency,  that  is  working  against                                                            
traditional users and is  threatening to burn down cabins that often                                                            
provide shelter  and have saved lives  of hikers, downed  pilots and                                                            
others  in need  of protection  against  the elements  of nature  in                                                            
remote areas of the State.                                                                                                      
                                                                                                                                
Co-Chair Wilken appointed Senator Olson chair of subcommittee.                                                                  
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
                                                                                                                                
     CS FOR SENATE JOINT RESOLUTION NO. 3(JUD)                                                                                  
     Proposing an amendment to the Constitution of the State of                                                                 
     Alaska relating to an appropriation limit and a spending                                                                   
     limit.                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the sixth  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Senator  Dyson informed  the Committee  that  the appropriation  and                                                            
spending limit  formula that has been  developed was based  on State                                                            
budgets  that  had   been  adopted  for  the  past  several   years.                                                            
Unfortunately,  due to the fact that  these budgets were  relatively                                                            
flat,  when the  formula was  applied,  the unintended  result  is a                                                            
flatter budget  than is practical  for State operations.  The Office                                                            
of Management and Budget would further explain this situation.                                                                  
                                                                                                                                
Co-Chair  Wilken clarified  that the working  document is  committee                                                            
substitute Version 23-LS0296\B,  as amended by Amendments #1 and #4.                                                            
Following  action on some  forthcoming amendments,  a new  committee                                                            
substitute would be developed.                                                                                                  
                                                                                                                                
CHERYL  FRASCA, Director,  Office  of Management  and Budget  (OMB),                                                            
Office  of  the Governor,  informed  the  Committee  that  with  the                                                            
assistance  of  the   Division  of  Legislative  Finance,   OMB  has                                                            
developed  a spreadsheet  titled  "CS  SJR 3"  [copy  on file]  that                                                            
depicts the outcome of the currently drafted formula.                                                                           
                                                                                                                                
BRUCE  TANGEMAN,  Fiscal   Analyst,  Legislative  Finance   Division                                                            
pointed out that the formula  results are depicted beginning on line                                                            
"9" which is titled "Avg Growth (existing base yrs)".                                                                           
                                                                                                                                
Ms. Frasca expressed that  the information specifies that for fiscal                                                            
years 2007,  2008, and  2009 there  would be zero  annual growth,  a                                                            
slight increase in FY 10  and then marginal growth in the subsequent                                                            
years.  She noted  that while  the State  has been  able to  control                                                            
expenses  for  such things  as  Medicaid  in the  near  term, it  is                                                            
unlikely that  this would be possible  in future years. A  realistic                                                            
growth level for  Medicaid and K-12 spending in the  future would be                                                            
approximately $100 million.                                                                                                     
                                                                                                                                
Co-Chair  Wilken  understood   therefore  that  the  aforementioned                                                             
section  of  the  chart  depicts  the  outcome  of  the  formula  as                                                            
currently drafted,  using an annual inflation rate  of three percent                                                            
and a one percent population  growth rate. In FY 06, the State would                                                            
be projected  to experience  an  additional general  fund growth  of                                                            
$428 million dollars with no further gain until FY 10.                                                                          
                                                                                                                                
LUCKY  SCHULTZ, Staff  to Senator  Dyson, affirmed  that is  correct                                                            
with the exception  being that the $428 million would  reflect total                                                            
appropriations  minus  exemptions  rather  than  being specifically                                                             
general funds.                                                                                                                  
                                                                                                                                
Mr. Shultz stated that  the reason the annual growth is reflected as                                                            
zero  in several  of  the fiscal  years  is  that this  Senate  bill                                                            
contains  "a no ratchet down  provision." The  House version  of the                                                            
bill does not include this provision.                                                                                           
                                                                                                                                
Ms.  Frasca   stated  that  the  Administration   is  offering   for                                                            
consideration  the formula beginning  on line 23 of the spreadsheet                                                             
titled "2 yr  growth (adjusted base  yrs)". This formula  reflects a                                                            
$56 million increase  in total appropriation growth  in FY 06 and an                                                            
average of approximately $105 million going forward.                                                                            
                                                                                                                                
Co-Chair Wilken  noted that the spreadsheet  depicts four  different                                                            
scenarios.                                                                                                                      
                                                                                                                                
Ms. Frasca  stated  that in  addition to  the four  scenarios  being                                                            
depicted  in a line item  format section,  there is a corresponding                                                             
chart format at the bottom of the spreadsheet.                                                                                  
                                                                                                                                
Senator  Hoffman understood  that  the Public  Employees  Retirement                                                            
System/Teachers  Retirement  System (PERS/TRS)  obligation would  be                                                            
approximately  $56 million  in  FY 06.  In that  case, the  proposed                                                            
formula would  reflect flat growth.  Therefore, a detailed  analysis                                                            
of the PERS/TRS obligation  projections should be developed in order                                                            
for the  Committee  to understand  its impact.  Particularly as  the                                                            
number of retiring  State employees  is expected to increase  in the                                                            
next few years.                                                                                                                 
                                                                                                                                
Ms. Frasca stated  that the numbers presented on the  chart "are not                                                            
the result  of an analysis of what  spending could be … in  terms of                                                            
spending  pressures."   For  example,  in  the  FY  05  budget,  the                                                            
Administration   covered  the  increase  in  PERS/TRS   expenses  by                                                            
absorbing   the  expenses   through  reductions   in  other   areas.                                                            
Acknowledging  that a formula  would specify  a spending limit,  she                                                            
stated  that the  budget would  continue  to be  under pressure  and                                                            
choices would  be required. This bill  is not intended to  allow for                                                            
uncontrolled  spending,  but  rather  would  require  the  State  to                                                            
examine  how  its money  would  be  spent. There  would  "always  be                                                            
competing  wants and competing  needs. This  would be the  challenge                                                            
going forward."                                                                                                                 
                                                                                                                                
Co-Chair  Wilken understood  that  the PERS  expectation  for FY  06                                                            
would be approximately $100 million.                                                                                            
                                                                                                                                
Ms. Frasca responded that  that would be the amount including school                                                            
district  and local government  expenses,  in addition to  Executive                                                            
branch expenses. She agreed  that these costs would continue through                                                            
the next five years unless  the State's financial market investments                                                            
were to rebound.                                                                                                                
                                                                                                                                
Co-Chair Wilken  informed that a detailed  PERS/TRS presentation  is                                                            
scheduled for April 6, 2004.                                                                                                    
                                                                                                                                
Senator Dyson stated that  in order to arrive at a workable formula,                                                            
"fiddling"  with the base  numbers has had  to occur. He asked  that                                                            
Ms. Frasca  explain  the changes  that have  been made  to the  base                                                            
years.                                                                                                                          
                                                                                                                                
Ms Frasca pointed  out that part of the challenge  includes the fact                                                            
that the total  spending for FY 04  has not yet been concluded,  and                                                            
that  the budget  for  FY  05 has  not  been  finalized.  Therefore,                                                            
"crafting  a limit  for going forward"  by utilizing  the  look-back                                                            
mechanism is difficult.                                                                                                         
                                                                                                                                
Senator  Dyson  voiced  that it  might  be that  "the  fiddled  with                                                            
numbers" would not be far from reality.                                                                                         
                                                                                                                                
Mr. Tangeman declared  that the numbers, as depicted  in the current                                                            
formula,  beginning  on line  nine of  the spreadsheet  titled  "Avg                                                            
Growth  (existing  base  years),"  are  not  too far  from  what  is                                                            
expected. FY  06 calculations are  based on FY 02, FY 03,  and FY 04                                                            
appropriations   which  each  reflect  $100  million  appropriation                                                             
reductions.  Therefore the first year  is based on years  of reduced                                                            
appropriations.  "Plugging  set numbers  for  FY 04 and  FY 05"  was                                                            
conducted  "in  order  to  alleviate  the  question  of  what  might                                                            
actually  happen  at  the  end of  this  Session  to  allow  uniform                                                            
growth." Therefore,  the inclusion of $100 million  in appropriation                                                            
growth for  FY 04 and FY 05 would  probably be close to where  those                                                            
budgets would  "end up." This would  provide a better idea  of where                                                            
FY 06  would actually  be. The PERS/TRS  obligations  for FY  04 are                                                            
approximately  $3.1 billion, and the  FY 05 budget submitted  by the                                                            
Governor  calculates  that  $2.9 billion  would  be  required.  This                                                            
reflects a substantial  decrease. Were an amendment  specifying that                                                            
the PERS/TRS  appropriation  for  FY 04 and  FY 05  be between  $3.3                                                            
billion  and  $3.4  billion  adopted,  it  would  allow  "plenty  of                                                            
headroom  for  the PERS/TRS  issue  going  forward" as  the  current                                                            
projection  for  FY  05  is  $2.9  billion.  This  would  allow  for                                                            
increased growth going forward.                                                                                                 
                                                                                                                                
Co-Chair  Wilken stated that  were a forthcoming  amendment  adopted                                                            
that  would   repeal  this  legislation   in  four  years,   perhaps                                                            
consideration  could be given  to setting  aside the PERS/TRS  issue                                                            
for a few years.                                                                                                                
                                                                                                                                
Senator  Bunde   pointed  out  that  even  were  a  spending   limit                                                            
established, the entirety  of that money would not be required to be                                                            
appropriated.  However,  he noted  that the Legislature  "has  never                                                            
left  a dollar  on the table,"  as such  things  as public  pressure                                                            
would be ever-present.  Therefore, he contended that the upper limit                                                            
"would also be the base."                                                                                                       
                                                                                                                                
Co-Chair Wilken acknowledged the remark.                                                                                        
                                                                                                                                
Senator Hoffman disagreed.  He stated that the State currently has a                                                            
spending  limit that  is substantially  higher  than  what is  being                                                            
appropriated today.                                                                                                             
                                                                                                                                
Co-Chair  Wilken pointed out  that the State  currently has  "a huge                                                            
deficit and a slush fund that allows us to do that."                                                                            
                                                                                                                                
Senator B.  Stevens declared  that were the  PERS/TRS obligation  to                                                            
increase  to a  level exceeding  the  limit, the  Legislature  could                                                            
recognize it  as an "extraordinary  circumstance" and address  it in                                                            
such a manner "as the situation,  which created it, occurred outside                                                            
the realm of the  control of the Administration or  the Legislature,                                                            
or control of anybody for  that matter." Therefore, he asked whether                                                            
the PERS/TRS  situation  might qualify  under the  parameters  of an                                                            
extraordinary circumstance definition.                                                                                          
                                                                                                                                
Mr. Schultz responded that  this question had been asked previously,                                                            
and that  upon investigation,  it was discovered  that the  State of                                                            
Connecticut    specifically    does   not    define   extraordinary                                                             
circumstances  as they desired the  interpretation to be  left up to                                                            
the Governor and the Legislature.  An extraordinary circumstance has                                                            
not been invoked in that  State since this directive was established                                                            
in 1992.                                                                                                                        
                                                                                                                                
Co-Chair  Wilken  stated  that  further  discussion   regarding  the                                                            
extraordinary circumstance issue must ensue.                                                                                    
                                                                                                                                
Senator  Dyson asked for  further Committee  feedback regarding  the                                                            
appropriateness  of placing  a Statewide ballot  measure before  the                                                            
people that  would be "based on numbers  that have been adjusted  in                                                            
order to make  the formula work." While the argument  is compelling,                                                            
the formula  must  work and  be practical  into  the future  without                                                            
being less  credible. Provided  no objection  to this approach  were                                                            
forthcoming,  a new  committee substitute  would  be developed  that                                                            
would encompasses  the Administration's  proposal.  In addition,  he                                                            
noted his intention  to specify a four-year termination  date in the                                                            
legislation.  However, he noted  that at the  end of this  four-year                                                            
period, there  would be two alternatives:  the first being  that the                                                            
"ineffective spending"  limit that is currently in  the Constitution                                                            
would be  re-instituted  along with the  Constitutional requirement                                                             
that  specifies that  one-third  of the  budget be  appropriated  to                                                            
support  capital  projects  or that  those  two components  and  the                                                            
formula  terminate   in  four  years.  The  second   choice  is  his                                                            
preference.                                                                                                                     
                                                                                                                                
Co-Chair  Wilken suggested  that the Committee  consider  additional                                                            
amendments and then develop a committee substitute.                                                                             
                                                                                                                                
Senator Bunde,  responding to Senator Dyson's request  for Committee                                                            
feedback,  stated that  he would prefer  a system  based on  reality                                                            
rather than theory.  He would also support abolishment  of all three                                                            
components at the end of four years.                                                                                            
                                                                                                                                
The bill was HELD in Committee for further consideration.                                                                       
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 11:27 AM                                                                          

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