Legislature(2003 - 2004)

04/26/2004 09:01 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 26, 2004                                                                                      
                              9:01 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-04 # 94, Side A                                                                                                             
SFC 04 # 94, Side B                                                                                                             
                                                                                                                              
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:01 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice-Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Ben Stevens                                                                                                             
Senator Donny Olson                                                                                                             
Senator Lyman Hoffman                                                                                                           
                                                                                                                                
Also  Attending:   LINDA  HALL,  Director,  Division  of  Insurance,                                                          
Department  of  Community  and  Economic  Development;  BILL  HOGAN,                                                            
Director, Division  of Behavioral  Health, Department of  Health and                                                            
Social  Services;  VERNER   STILLNER,  Legislative  Representative,                                                             
Alaska   Psychiatric  Association;   GREG   O'CLARY,  Commissioner,                                                             
Department  of  Labor  and  Workforce  Development;  GREY  MITCHELL,                                                            
Director,  Division of  Labor Standards  and  Safety, Department  of                                                            
Labor and  Workforce Development  RACHEL  LEWIS, Unclaimed  Property                                                            
Administrator, Division of Treasury, Department of Revenue;                                                                     
                                                                                                                                
Attending  via Teleconference:   From Fairbanks:  JEANNETTE  GRASTO,                                                          
Member, Alaska  Mental Health  Board and  the National Alliance  for                                                            
the Mentally Ill;  From Anchorage: VERA JAMES, Alaska  Native Health                                                            
Board; From  an offnet  location: JEFF  JESSEE, Executive  Director,                                                            
Alaska Mental Health Trust Authority;                                                                                           
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
HB 347-EXEMPT TAXIS FROM VEHICLE RENTAL TAX                                                                                     
                                                                                                                                
The Committee  heard  from the sponsor  and the  bill reported  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 311-INSURANCE & WORKERS' COMPENSATION SYSTEM                                                                                 
                                                                                                                                
The Committee  heard from the Department  of Community and  Economic                                                            
Development. Two amendments  were considered but not adopted and the                                                            
bill reported from Committee.                                                                                                   
                                                                                                                                
SB 364-LIMIT STATE AID FOR MENTAL HEALTH CARE                                                                                   
                                                                                                                                
The  Committee  heard  from  the Department  of  Health  and  Social                                                            
Services,  the Alaska Mental  Health Trust  Authority and  advocates                                                            
for the mentally ill. The bill was held in Committee.                                                                           
                                                                                                                                
SB 278-FEES:REC DEVICES/BOILERS/CERT. OF FITNESS                                                                                
                                                                                                                                
The  Committee heard  from  the Department  of Labor  and  Workforce                                                            
Development.  An amendment  was  adopted and  the bill  was held  in                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 368-TOBACCO TAX; LICENSING; PENALTIES                                                                                        
                                                                                                                                
After a brief discussion the bill was reported from Committee.                                                                  
                                                                                                                                
SB 231-DECREASE TIME TO CLAIM UNCLAIMED PROPERTY                                                                                
                                                                                                                                
The Committee  heard from the Department of Revenue.  Two amendments                                                            
were adopted and the bill was reported from Committee.                                                                          
                                                                                                                                
                                                                                                                                
     HOUSE BILL NO. 347                                                                                                         
     "An Act exempting taxicabs from the passenger vehicle rental                                                               
     tax; and providing for an effective date."                                                                                 
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  stated  this  bill,  "exempts  taxicabs  from  the                                                            
vehicle rental  tax. In the last year the Legislature  established a                                                            
ten-percent vehicle  rental tax on the lease or rental  of passenger                                                            
vehicles. House  Bill 347 exempts taxicabs from the  definition of a                                                            
passenger vehicle."                                                                                                             
                                                                                                                                
SUE  STANCLIFF,  staff  to Representative   Pete  Kott, had  no  new                                                            
testimony  to  offer, she  relayed  that  the sponsor  supports  the                                                            
action  taken at  the previous  hearing  of rescinding  adoption  of                                                            
Amendment #1.                                                                                                                   
                                                                                                                                
Co-Chair Green  offered a motion to  report the bill from  Committee                                                            
with individual recommendations and accompanying fiscal note.                                                                   
                                                                                                                                
Without objection  HB 347  MOVED from Committee  with a zero  fiscal                                                            
note #1 from the Department of Revenue.                                                                                         
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 311(JUD)                                                                                            
     "An  Act   providing  for  a   special  deposit  for   workers'                                                            
     compensation  insurers; relating  to the board of governors  of                                                            
     the Alaska  Insurance Guaranty Association; stating  the intent                                                            
     of  the legislature,  and setting out  limitations,  concerning                                                            
     the  interpretation,   construction,   and  implementation   of                                                            
     workers'  compensation  laws;  relating  to  restructuring  the                                                            
     Alaska  workers' compensation  system;  eliminating the  Alaska                                                            
     Workers'   Compensation  Board;  establishing   a  division  of                                                            
     workers'  compensation  within  the  Department  of  Labor  and                                                            
     Workforce  Development  and assigning  certain Alaska  Workers'                                                            
     Compensation   Board   functions  to   the  division  and   the                                                            
     Department  of Labor and Workforce Development;  establishing a                                                            
     Workers'  Compensation  Appeals Commission;  assigning  certain                                                            
     functions  of the  Alaska Workers'  Compensation  Board to  the                                                            
     Workers'  Compensation  Appeals  Commission  and  the  Workers'                                                            
     Compensation   Hearings  Board;  relating  to  agreements  that                                                            
     discharge   workers'  compensation  liability;   providing  for                                                            
     hearing examiners  and hearing panels in workers'  compensation                                                            
     proceedings;   relating   to  workers'   compensation   awards;                                                            
     relating  to an employer's failure  to insure and keep  insured                                                            
     or provide  security; providing  for appeals from compensation                                                             
     orders;   relating   to  workers'   compensation  proceedings;                                                             
     providing  for supreme court  jurisdiction of appeals  from the                                                            
     Workers'  Compensation  Appeals  Commission;  providing  for  a                                                            
     maximum amount  for the cost-of-living adjustment  for workers'                                                            
     compensation  benefits; providing for administrative  penalties                                                            
     for  employers  uninsured  or  without  adequate  security  for                                                            
     workers'  compensation;  relating  to assigned  risk pools  and                                                            
     insurers; and providing for an effective date."                                                                            
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this bill,  sponsored by  the Senate  Rules                                                            
Committee  at  the  request  of  the  Governor,   "changes  the  way                                                            
workmans'  compensation  disputes and  appeals  are resolved.  Under                                                            
Senate Bill  311, appeals [would be]  reviewed by the newly  created                                                            
workmans' comp commission."                                                                                                     
                                                                                                                                
Amendment #1: This amendment  deletes "Workers' Compensation Appeals                                                            
Commission" and  inserts "workers' compensation hearings  office" on                                                            
page  1, lines  9, 10 and  11, and  deletes "providing  for  supreme                                                            
court  jurisdiction  of  appeals  from  the  Workers'  Compensation                                                             
Appeals Commission;" on  page 2, lines 4-6. The amended title of the                                                            
bill reads as follows.                                                                                                          
                                                                                                                                
     An   Act  providing   for  a  special   deposit  for   workers'                                                            
     compensation  insurers; relating  to the board of governors  of                                                            
     the Alaska  Insurance Guaranty Association; stating  the intent                                                            
     of  the legislature,  and setting out  limitations,  concerning                                                            
     the  interpretation,   construction,   and  implementation   of                                                            
     workers'  compensation  laws;  relating  to  restructuring  the                                                            
     Alaska  workers' compensation  system;  eliminating the  Alaska                                                            
     Workers'   Compensation  Board;  establishing   a  division  of                                                            
     workers'  compensation  within  the  Department  of  Labor  and                                                            
     Workforce  Development  and assigning  certain Alaska  Workers'                                                            
     Compensation   Board   functions  to   the  division  and   the                                                            
     Department  of Labor and Workforce Development;  establishing a                                                            
     workers'  compensation   hearings  office;  assigning   certain                                                            
     functions  of the  Alaska Workers'  Compensation  Board to  the                                                            
     workers'   compensation  hearings   office  and  the   Workers'                                                            
     Compensation   Hearings  Board;  relating  to  agreements  that                                                            
     discharge   workers'  compensation  liability;   providing  for                                                            
     hearing examiners  and hearing panels in workers'  compensation                                                            
     proceedings;   relating   to  workers'   compensation   awards;                                                            
     relating  to an employer's failure  to insure and keep  insured                                                            
     or provide  security; providing  for appeals from compensation                                                             
     orders;   relating   to  workers'   compensation  proceedings;                                                             
     providing   for  a  maximum   amount  for  the  cost-of-living                                                             
     adjustment  for workers' compensation  benefits; providing  for                                                            
     administrative  penalties  for employers  uninsured or  without                                                            
     adequate  security  for  workers'  compensation;   relating  to                                                            
     assigned  risk  pools   and insurers;   and  providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
This  amendment   also   deletes  "Workers'   Compensation   Appeals                                                            
Commission" and  inserts "workers' compensation hearings  office" on                                                            
page 4, line 27,  29 & 30, page 5, line 6, and page  6, lines 20-21,                                                            
and deletes  "chair of  the commission" and  inserts "chief  hearing                                                            
officer"  on  page   7,  line  14.  This  amendment  also   replaces                                                            
references to  the "office of the commission" and  "commission" with                                                            
"hearings  office" and  replaces  references to  "commission  clerk"                                                            
with "chief hearing officer" where they appear in the bill.                                                                     
                                                                                                                                
This  amendment   also  deletes  from  Section  10,  new   sections:                                                            
23.30.007, 23.30.008, and 23.30.009, on page 8 line 16 through page                                                             
11, line 30 and inserts new language to read as follows.                                                                        
                                                                                                                                
          Sec. 23.30.007. Workers' compensation hearings office.                                                                
     (a)  There  is  established  in the  Department  of  Labor  and                                                            
     Workforce Development  a workers' compensation hearings office.                                                            
     The  hearing   examiners  and   hearing  panel  hear   original                                                            
     petitions  when a claim  is filed under  this chapter  and have                                                            
     jurisdiction  to hear appeals from decisions  and orders of the                                                            
     director.                                                                                                                  
          (b) The commissioner shall appoint a chief hearing                                                                    
     officer and hearing examiners.                                                                                             
          (c) The chief hearing officer may                                                                                     
                (1) employ and supervise hearing office staff,                                                                  
     hearing  examiners, and hearing  panels and appoint  a hearings                                                            
     office clerk;                                                                                                              
                (2) establish and implement a time management system                                                            
      for the hearings office, staff, and hearing examiners;                                                                    
                (3) assign the work of the hearing examiners,                                                                   
     hearing  panels, and  staff so  that hearings  and appeals  are                                                            
     resolved   as  expeditiously   and  competently  as   possible,                                                            
     including  designating  hearing examiners  to hear preliminary                                                             
     matters; and                                                                                                               
                (4) prepare and annual budget of the hearings office                                                            
     and hearing panels.                                                                                                        
          (d) The hearings office, in its administrative capacity,                                                              
     shall   maintain,  index,   and  make   available  for   public                                                            
     inspection  the final  administrative  decisions and orders  of                                                            
     the   hearing  examiners   and  hearing   panels.  To   promote                                                            
     consistency  among  legal  determinations,  the  chief  hearing                                                            
     officer  may  review  and circulate  among  the  other  hearing                                                            
     examiners  the  drafts  of  formal  decisions,  decisions  upon                                                            
     reconsideration, and  other legal opinions of the other hearing                                                            
     examiners  of the hearings office. The drafts  are confidential                                                            
     documents and are not subject to disclosure.                                                                               
          (e) The hearings office, in its administrative capacity,                                                              
     may  adopt regulations  implementing its  authority and  duties                                                            
     under this  chapter, including rules of procedure  and evidence                                                            
     for proceedings before  hearing examiners and hearing panels in                                                            
     workers'  compensation   proceedings  under  AS  23.30.090  and                                                            
     23.30.110 and for  the adjudication of all claims and petitions                                                            
     under this chapter.  The provisions of AS 44.62 (Administrative                                                            
     Procedure  Act) apply  to the  adoption of  regulations by  the                                                            
     hearings office.                                                                                                           
          (f) The hearings office, in its administrative capacity,                                                              
     may  adopt  and  alter  an official  seal  and  do  all  things                                                            
     necessary,  convenient,  or desirable to  carry out the  powers                                                            
     expressly granted or necessarily implied in this chapter.                                                                  
                                                                                                                                
This amendment also deletes all language on page 32, line 3 through                                                             
line 16, following "defense" in Section 55, amending Sec.                                                                       
23.30.108(c).                                                                                                                   
                                                                                                                                
This amendment also deletes ", but is not a public employee for                                                                 
purposes of AS 23.40" from page 35, line 16, in Section 58 that                                                                 
adds a new Sec. 23.30.112. Hearing examiners.                                                                                   
                                                                                                                                
This amendment also deletes Section 63 and Section 64 on page 38,                                                               
line 14, through page 43, line 1 and inserts new bill sections to                                                               
read as follows.                                                                                                                
                                                                                                                                
     Sec. 63. AS 23.30.125(a) is amended to read:                                                                               
          (a) A compensation order becomes effective when filed                                                                 
     with the  director [IN THE OFFICE OF THE BOARD]  as provided in                                                          
     AS 23.30.110,  and, unless proceedings to suspend  it or set it                                                          
     aside  are instituted  as provided in  (c) of this section,  it                                                            
     becomes final on the 31st day after it is filed.                                                                           
                                                                                                                                
     Sec. 64. AS 23.30.125(c) is amended to read:                                                                               
          (c) If not in accordance with law, a compensation order                                                               
     filed  by a hearing  examiner or hearing  panel as provided  in                                                          
     (a) of  this section may be suspended  or set aside,  in whole,                                                          
     or  in part,  through injunction  proceedings  in the  superior                                                            
     court  brought  by a  party in  interest against  the  division                                                          
     [BOARD]  and all other parties  to the proceedings [BEFORE  THE                                                            
     BOARD].  The payment of  the amounts required  by an award  may                                                            
     not be stayed  pending final decision in the  proceeding unless                                                            
     upon application  for an interlocutory injunction  the court on                                                            
     hearing, after not  less than three days' notice to the parties                                                            
     in  interest  and the  director  [BOARD],  allows  the stay  of                                                          
     payment,  in whole or in part,  where irreparable damage  would                                                            
     otherwise  ensue  to  the  employer.  The order  of  the  court                                                            
     allowing a stay must  [SHALL] contain a specific finding, based                                                          
     upon  evidence   submitted  to  the  court  an  identified   by                                                            
     reference  to it, that irreparable  damage would result  to the                                                            
     employer, and specifying the nature of the damage.                                                                         
                                                                                                                                
     Sec. 65. AS 23.30.125(d) is amended to read:                                                                               
          (d) If an employer fails to comply with a compensation                                                                
     order making  an award that has become final,  a beneficiary of                                                            
     the  award   or  the  director   [BOARD]  may  apply   for  the                                                          
     enforcement  of the order to  the superior court. If  the court                                                            
     determines  that the  order was made  and served in  accordance                                                            
     with law,  and that the employer  or the officers or  agents of                                                            
     the  employer have failed  to comply with  it, the court  shall                                                            
     enforce  obedience to  the order  by writ of  injunction  or by                                                            
     other  proper  process  to enjoin  upon  the employer  and  the                                                            
     officers and agents  of the employer compliance with the order.                                                            
                                                                                                                                
     Sec. 66. AS 23.30.125(f) is amended to read:                                                                               
          (f) Subject to an employer's or employee's burden of                                                                  
     proof,  a finding  of  fact made  by  the hearing  examiner  or                                                          
     hearing  panel [BOARD]  as a  part of a  compensation order  is                                                          
     conclusive   unless  the  court   specifically  finds   that  a                                                            
     reasonable  person could not  have reached the conclusion  made                                                            
     by the hearing examiner or hearing panel [BOARD].                                                                        
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
This amendment  also deletes Section 75 amending AS  23.30.155(f) on                                                            
page 47, lines 13-20.                                                                                                           
                                                                                                                                
Senator Hoffman moved for adoption.                                                                                             
                                                                                                                                
Co-Chair Green and Co-Chair Wilken objected.                                                                                    
                                                                                                                                
Senator  Hoffman recalled  an equal amount  of testimony  supporting                                                            
and  opposing  this   amendment.  He  stated  that  most   testimony                                                            
recognized the benefits  of some provisions of the bill. However, he                                                            
was  not convinced  from  the testimony  that  the creation  of  the                                                            
appeals commission  would save money  and result in lower  insurance                                                            
premiums.  He  referenced  page  two  of fiscal  note  #3  from  the                                                            
Department  of Labor and Workforce  Development projecting  the cost                                                            
of the appeals commission  at $1.2 million. He commented that it was                                                            
unfortunate  that all  Members were  not present  to hear  testimony                                                            
from three  individuals  who have  worked in the  field of  workers'                                                            
compensation  for a  combined period  of over 50  years. He  relayed                                                            
this testimony  expressing  concern with the  proposal to replace  a                                                            
judge with three commissioners.                                                                                                 
                                                                                                                                
Senator  Hoffman   told  of  the  approximate  35   to  50  workers'                                                            
compensation  cases  heard  in superior  court.  He  calculated  the                                                            
number  of cases the  three member  commission would  hear to  be "a                                                            
fraction"  of  the  approximately  600  cases heard  annually  by  a                                                            
superior  court judge. He  also pointed out  the proposed salary  of                                                            
the  three   commissioners,  one   at  a  Range  30F  salary   would                                                            
significantly exceed the salary paid to one judge.                                                                              
                                                                                                                                
Senator  Hoffman  also  was  unconvinced  that less  time  would  be                                                            
required for workers'  compensation claims with the  creation of the                                                            
commission.  Since the system is unproven,  he informed that  he had                                                            
suggested the  legislation should  have a lapse date, at  which time                                                            
the  process would  be  evaluated.  He stated  this  suggestion  was                                                            
rebuffed.                                                                                                                       
                                                                                                                                
Senator  Hoffman  supported  Sections  1  through  7  of  the  bill.                                                            
However, he asserted that  with the major deficits facing the State,                                                            
the additional  $1.2 million expense of the proposed  commission are                                                            
unwarranted since no savings has been proven.                                                                                   
                                                                                                                                
Co-Chair Wilken questioned the $1.2 million amount.                                                                             
                                                                                                                                
Senator Hoffman  cited page  two of page four  of the Department  of                                                            
Labor and  Workforce Development  fiscal noted  dated 2/9/04,  which                                                            
projects personal  services costs at $1,183,900 associated  with the                                                            
new positions.                                                                                                                  
                                                                                                                                
Co-Chair Wilken  informed of an updated fiscal noted  4/20/04, which                                                            
projects the amount to be $627,000.                                                                                             
                                                                                                                                
Senator  Hoffman pointed  out the personal  services amount  remains                                                            
listed as  $1,183,900, as  shown on page two  of the updated  fiscal                                                            
note.                                                                                                                           
                                                                                                                                
Co-Chair Wilken  clarified the existing  $938,000 allocated  for the                                                            
workers' compensation  appeals process  must be deducted.  He listed                                                            
two cost  components in the  updated fiscal  note: $627,000  for new                                                            
workforce and $198,000 for appellate courts.                                                                                    
                                                                                                                                
Senator  Hoffman   agreed;  however  was  not  convinced   from  the                                                            
testimony  that  this  legislation  would  streamline  the  workers'                                                            
compensation process.  He noted that experts in this  matter predict                                                            
the changes  would  add time  and expense  to the  process. He  also                                                            
remarked  that  the  Alaska  Supreme Court  has  no  flexibility  in                                                            
determining  which cases it would  hear, and as testified  to by the                                                            
Alaska  Court System,  costs  for that  branch of  government  would                                                            
likely increase.                                                                                                                
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Hoffman and Senator Olson                                                                                     
                                                                                                                                
OPPOSED: Senator Dyson,  Senator B. Stevens, Senator Bunde, Co-Chair                                                            
Green and Co-Chair Wilken                                                                                                       
                                                                                                                                
The motion FAILED (2-5)                                                                                                         
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment  #2: This amendment  deletes language  from Section  64 on                                                            
page 40, lines  28-31 and inserts  new language to read as  follows.                                                            
                                                                                                                                
     Sec.  23.30.128.  Commission  proceedings. (a)  The  commission                                                            
     shall review all discretionary  actions and findings of fact by                                                            
     a hearing  examiner, hearing  panel, or the director  under the                                                            
     substantial  evidence standard of review. The  commission shall                                                            
     review  the conclusions of law  by a hearing examiner,  hearing                                                            
     panel,  or  the director  using  the commission's  independent                                                             
     judgment. A hearing  panel's findings regarding the credibility                                                            
     of testimony  of a witness are  binding on the commission.  The                                                            
     findings  of  the  hearing  panel,  if  not set  aside  by  the                                                            
     commission, are conclusive.                                                                                                
                                                                                                                                
Senator Olson moved for adoption.                                                                                               
                                                                                                                                
Co-Chair Green objected.                                                                                                        
                                                                                                                                
Senator  Olson  commented  this legislation  is  the result  of  the                                                            
financial burden  that workers' compensation insurance  has incurred                                                            
for  businesses,  particularly  small businesses.  He  stressed  the                                                            
worker's compensation system  must be reviewed and revised to become                                                            
more efficient.  He outlined  the current  practice of due  process,                                                            
notably that the appellate  court does not consider new evidence but                                                            
rather whether  the lower court operated  correctly. He pointed  out                                                            
that  this  legislation  would  allow  the  proposed  commission  to                                                            
consider  new evidence,  resulting  in  essentially  two trials.  He                                                            
agreed with the intent  that the workers' compensation system should                                                            
be streamlined  and argued that the  proposed process would  instead                                                            
"clog up the  system". He questioned  the ability of the  commission                                                            
to  preserve  the  "standard  of review"  and  operate  under  these                                                            
circumstances.  He  asserted  the  proposed   commission  would  add                                                            
"another layer of government."                                                                                                  
                                                                                                                                
Co-Chair  Green  reviewed  testimony   from  an assistant   attorney                                                            
general  with the  Department  of Law,  who disagreed  with  Senator                                                            
Olson on this  matter, in that the  role of the proposed  commission                                                            
would not establish new precedent in the appeal process.                                                                        
                                                                                                                                
Senator  Olson  acquiesced  that  Kristin   Knudsen,  affirmed  that                                                            
currently  the  superior court  could  hear  new testimony,  but  he                                                            
pointed  out that  in  actuality only  five  percent  of cases  have                                                            
allowed new evidence to be introduced.                                                                                          
                                                                                                                                
Co-Chair  Wilken noted  Ms.  Knudsen was  available  to testify  via                                                            
teleconference.                                                                                                                 
                                                                                                                                
Senator  Bunde  compared  the appeals  process  to  the legislative                                                             
committee process with  himself as the chair of the Senate Labor and                                                            
Commerce Committee and  Co-Chair Wilken, chair of the Senate Finance                                                            
Committee, hearing much of the same testimony.                                                                                  
                                                                                                                                
Senator  Dyson appreciated  the  efforts of  Senator  Olson to  save                                                            
money  and streamline  the workers'  compensation  process.  Senator                                                            
Dyson relayed that many  friends who incurred workplace injuries and                                                            
became   involved  in   the  workers'   compensation   system   were                                                            
unsatisfied  with  the  appeals  process.  He  commented  that  many                                                            
injuries  worsen  over  time  and  that   he favored   allowing  new                                                            
information  about  the  worsening  injuries  to be  considered.  He                                                            
therefore did not support adoption of the amendment.                                                                            
                                                                                                                                
Senator Hoffman  stated that Senator  Bunde is correct in  comparing                                                            
the  workers'  compensation  appeals   process  to  the legislative                                                             
committee process,  but stressed the processes are  long and costly.                                                            
He opined  this legislation  would not streamline  the process,  but                                                            
rather delay proceedings.                                                                                                       
                                                                                                                                
Senator  Hoffman requested  demonstration of  the savings  testified                                                            
to. He cited that data  shows 50 percent of cases are awarded to the                                                            
employer and  50 percent are awarded  to the employee. He  therefore                                                            
concluded  that savings  would  only be  realized  with fewer  cases                                                            
awarded to employees.                                                                                                           
                                                                                                                                
Senator Olson  stressed the entire  appellate system is intended  to                                                            
review  decisions made  at lower  levels  to ensure  laws have  been                                                            
followed,  etc. He agreed  that new evidence  would be helpful,  but                                                            
reiterated it would "bog down the system".                                                                                      
                                                                                                                                
LINDA  HALL,   Director,  Division   of  Insurance,  Department   of                                                            
Community and  Economic Development,  cited language in Section  64,                                                            
adding Sec. 23.30.128(b),  on page 41, lines 6 & 7  of bill, "Except                                                            
as provided in  (c) of this section, new or additional  evidence may                                                            
not be received with respect to the appeal."                                                                                    
                                                                                                                                
Senator  Olson  acknowledged  this  point;   however,  remarked  his                                                            
amendment addresses language  in Sec. 23.30.128(a) on page 40, lines                                                            
28 and  29, "The  commission may  review de  novo all discretionary                                                             
actions,  findings of fact,  and conclusions  of law by the  hearing                                                            
examiner, hearing  panel, or the director  in hearing, determining,                                                             
or otherwise acting on any compensation claim or petition."                                                                     
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator Hoffman and Senator Olson                                                                                     
                                                                                                                                
OPPOSED: Senator B. Stevens,  Senator Bunde, Senator Dyson, Co-Chair                                                            
Green and Co-Chair Wilken                                                                                                       
                                                                                                                                
The motion FAILED (2-5)                                                                                                         
                                                                                                                                
The amendment FAILED to be adopted.                                                                                             
                                                                                                                                
Senator   Dyson  expressed   his   conflicting   support  for   this                                                            
legislation,  commenting  that most  of the provisions  would  be an                                                            
improvement  over the current system,  although he remained  concern                                                            
about "other contentious  areas." He relayed a discussion  he had in                                                            
which he learned  that the law and structure of either  system would                                                            
be adequate depending  on the quality, experience  and commitment of                                                            
the  people  entrusted  to  implement   it.  He  remarked  that  the                                                            
Administration  must employ  fair and qualified  staff. He  surmised                                                            
that if operated correctly,  the new provisions would streamline the                                                            
system. He charged the  Murkowski Administration with recruiting and                                                            
employing the best possible staff.                                                                                              
                                                                                                                                
Senator   Hoffman  informed   he  would  be   voting  against   this                                                            
legislation.  He  stressed  that  as  an  employer,  he  must  "make                                                            
payroll" and  that he failed to recognize  any savings created  from                                                            
these changes.  Rather, he  asserted this  legislation would  create                                                            
"bigger government and not even better government."                                                                             
                                                                                                                                
Co-Chair  Green stated that  the current  system is inefficient  and                                                            
cumbersome,  noting that  some cases  are pending  for over a  year,                                                            
with no superior court hearing scheduled.                                                                                       
                                                                                                                                
Senator  Olson commented  that workers'  compensation  is a  "sticky                                                            
quagmire" that as an employer,  he must pay into. He assured that he                                                            
has  the welfare  of his  employees  at heart  but that  there is  a                                                            
better way to address the issue.                                                                                                
                                                                                                                                
Co-Chair Green  offered a motion to  report the bill from  Committee                                                            
with individual  recommendations,  accompanying  fiscal notes  and a                                                            
new fiscal note.                                                                                                                
                                                                                                                                
There was  no objection  and CS  SB 311 (JUD)  MOVED from  Committee                                                            
with zero fiscal  notes #1 and #2  from the Department of  Community                                                            
and  Economic  Development  and  Department  of  Law, respectively,                                                             
indeterminate fiscal note  #4 from the Department of Administration,                                                            
fiscal note #5  for $198,800 from the Alaska Court  System and a new                                                            
fiscal note for $627,000  dated 4/20/04 from the Department of Labor                                                            
and Workforce Development.                                                                                                      
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 364(HES)                                                                                            
     "An  Act relating  to liability  for expenses  of placement  in                                                            
     certain  mental  health  facilities;  relating  to  the  mental                                                            
     health  treatment  assistance  program;  and providing  for  an                                                            
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this bill,  sponsored by  the Senate  Rules                                                            
Committee at the  request of the Governor, "provides  a mechanism to                                                            
help  contain  the costs  of  Designated  Evaluation  and  Treatment                                                            
program.  The DET  program provides  psychiatric  inpatient care  to                                                            
certain persons  enabling them to  receive care close to  their home                                                            
and  family."  He  noted  the  Senate  Health  and  Social  Services                                                            
Committee adopted a letter of intent.                                                                                           
                                                                                                                                
JEANNETTE  GRASTO,  Member,  Alaska  Mental  Health  Board  and  the                                                            
National  Alliance for  the Mentally  Ill-Alaska,  and the  National                                                            
Alliance   for   the    Mentally   Ill-Fairbanks,   testified    via                                                            
teleconference  from Fairbanks  about her  advocacy for people  with                                                            
mental illness.  She read her testimony into the record  as follows.                                                            
                                                                                                                                
     SB  364  represents   a  major  philosophical  change   without                                                            
     discussion.  It conflicts  with the  principles articulated  in                                                            
     Alaska  Statute  47.36.055 and  a shared  vision  too [of]  our                                                            
     current  plan  for  mental health  services.  It  violates  the                                                            
     principle   that  services  will  be  provided   in  the  least                                                            
     restrictive  setting  and  as close  to  the client's  home  as                                                            
     possible. If changes  in policy are going to be made, it should                                                            
     be  made   with  discussion   and  input  from  mental   health                                                            
     consumers,  mental health  courts, hospitals,  the Division  of                                                            
     Behavioral Health and other stakeholders.                                                                                  
                                                                                                                                
     The utilization  review section  of this bill would  allow more                                                            
     efficient  use of resources and appears to be  a positive step,                                                            
     but savings  from improved management should  be used for added                                                            
     service capacity.                                                                                                          
                                                                                                                                
     The  rest of  the bill  represents  a giant  step backward.  In                                                            
     Fairbanks  we are so grateful to have the capacity  and quality                                                            
     of  programs  that  we currently  have  at  Fairbanks  Memorial                                                            
     Hospital  for DET beds  in our mental  health unit. These  beds                                                            
     are  a critical part  of the community-based  services  we rely                                                            
     on. Before this unit  was expanded to 20 beds, many Fairbankans                                                            
     in  acute need have  spent up  to three days  in jail and  then                                                            
     were  transported  to  API [Alaska  Psychiatric  Institute]  in                                                            
     Anchorage  300  miles  away from  their  families  and  natural                                                            
     support  system.   This  was  a terrible   situation  for  both                                                            
     consumers  and  their  families  and  often  exacerbated  their                                                            
     illness and  symptoms. It seems like the dark  ages now looking                                                            
     back on it. We've come so far.                                                                                             
                                                                                                                                
     Our State is currently  trying to expand DET beds so people can                                                            
     access  services in their  community and  that was a  consensus                                                            
     decision by the mental  health community. API is downsizing and                                                            
     could  be reserved  for  the most  complex people  whose  needs                                                            
     can't  be met  locally. And  communities would  be expected  to                                                            
     take care of their own whenever possible.                                                                                  
                                                                                                                                
     The people we're talking  about in this bill are among the most                                                            
     vulnerable  of Alaskans. They're either a danger  to themselves                                                            
     or others  or they're gravely disabled and unable  to take care                                                            
     of themselves.  They're  the poorest of  the poor without  even                                                            
     disability   income   or  Medicaid.   Alaska   clearly  has   a                                                            
     responsibility to  take care of these vulnerable people. I also                                                            
     think its  discriminatory because we're denying  them access to                                                            
     a  community  system  of care  that  everyone else  uses.  They                                                            
     become   second-class    citizens   even   among   an   already                                                            
     marginalized group.                                                                                                        
                                                                                                                                
     Maybe  you think  it  doesn't matter  because  it won't  affect                                                            
     anybody  you  know. But  mental  illness  affects  one in  five                                                            
     Alaskan  families. It isn't rare  and the treatment  for mental                                                            
     illness  is more effective  than heart  disease or cancer.  I'm                                                            
     always  amazed how  many of  my friends  are struggling  either                                                            
     with mental illness  themselves or with a family member. And it                                                            
     really  is a crisis when it happens  to you. It isn't  uncommon                                                            
     when mental  illness first strikes, a person  is unable to work                                                            
     and  has no  other income  and is  indigent  until they  either                                                            
     return to work or qualify for disability income.                                                                           
                                                                                                                                
     Finally,  many DET patients are involuntarily  committed. Is it                                                            
     appropriate  to  take  away the  civil  rights of  an  indigent                                                            
     individual  and then  not cover their  treatment? What  kind of                                                            
     state are  we becoming if we pretend to be broke?  If Alaska is                                                            
     so broke we cannot  take care of these most vulnerable Alaskans                                                            
     then  it is imperative  that we have  a sound fiscal plan  that                                                            
     guarantees we can  serve their needs. Cuts to State budget must                                                            
     never come from need.                                                                                                      
                                                                                                                                
Co-Chair Wilken thanked the witness for her on-going volunteer work                                                             
with the mentally disabled.                                                                                                     
                                                                                                                                
VERA JAMES, Alaska Native Health Board, testified via                                                                           
teleconference from Anchorage as follows.                                                                                       
                                                                                                                                
     The ANHB  is the over-arching voice representing  229 federally                                                            
     recognized  tribes. As part of its mission the  AHNB strives to                                                            
     promote  the  mental  wellbeing  and  pride  of  Alaska  Native                                                            
     people. Some  of these people seek mental health  treatment and                                                            
     not all patients of  mental health facilities are covered under                                                            
     insurance  or other third-party resources, including  Medicaid,                                                            
     to pay for the cost of evaluation or treatment.                                                                            
                                                                                                                                
     The  Alaska Native Health  Board therefore  urges the  state of                                                            
     Alaska  to provide financial  assistance  for the liability  of                                                            
     expenses   of  patient  placement  in  certain   mental  health                                                            
     facilities.  The ANHB  supports the implementation  of  SB 364,                                                            
     which  mandates that those needing  mental health treatment  be                                                            
     eligible for financial assistance under the Act.                                                                           
                                                                                                                                
JEFF  JESSEE,  Executive   Director,  Alaska  Mental   Health  Trust                                                            
Authority,  testified  via teleconference  from  an offnet  location                                                            
that  the   Authority  supports  many   provisions  in  this   bill,                                                            
specifically  the "management tools"  the Department is seeking.  He                                                            
gave  examples  of  adequate  notice  and  timely  applications  for                                                            
services  provided.  He spoke  in  favor of  efforts  to ensure  the                                                            
Department  does not pay more for  treatment and evaluation  than is                                                            
necessary.                                                                                                                      
                                                                                                                                
Mr. Jessee however,  expressed concern that in the  event it appears                                                            
inadequate  funds were  available during  a fiscal  year to  provide                                                            
necessary  services the  Department  of Health  and Social  Services                                                            
could  cease  payment.  He  predicted   this  would  result  in  the                                                            
transportation  of many  patients  from areas  of the  state to  the                                                            
Alaska Psychiatric  Institute  (API). He reminded  that the  new API                                                            
facility  was  constructed   specifically  upon  the   premise  that                                                            
services  would be available  and would expand  over time.  He noted                                                            
that facilities  in Fairbanks and Anchorage are equipped  to provide                                                            
diagnosis.                                                                                                                      
                                                                                                                                
Mr.  Jessee  informed  that  designated  evaluation   and  treatment                                                            
facilities  are  expensive  to  operate  and must  have  a  yearlong                                                            
business plan.  He furthered that  hospitals must have certainty  of                                                            
funding  and  that a  hospital  considering  undertaking  a  capital                                                            
investment  must consider the possibility  that a major fund  source                                                            
might not be guaranteed  year round. He also pointed out that as the                                                            
program  expands  to  more  communities,   funds  would  be  divided                                                            
further,  as is occurring  with  the community  mental health  block                                                            
grants. He warned that  if a facility, such as the program operating                                                            
in Juneau were  to close for a portion of the year,  the State would                                                            
incur  the cost  of transporting  patients  to the  API facility  in                                                            
Anchorage.                                                                                                                      
                                                                                                                                
                                                                                                                                
SFC 04 # 94, Side B 09:48 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr. Jessee continued that  this proposal would do significant damage                                                            
to the  emergency system  in the  state. He  recommended that  these                                                            
sections be omitted from the bill, especially Section 2.                                                                        
                                                                                                                                
Mr.  Jessee  emphasized  that  other provisions   of this  bill  are                                                            
positive, in that they  would support additional management tools if                                                            
the Department found them necessary.                                                                                            
                                                                                                                                
Senator Hoffman asked how  a patient would be cared for if this bill                                                            
were implemented and the API facility was at capacity.                                                                          
                                                                                                                                
Mr. Jessee  deferred to the Department.  However, he predicted  this                                                            
would be a significant  problem, noting the limited number of "beds"                                                            
licensed for  mental health care.  He reported that in instances  of                                                            
high occupancy,  patients  are released  at the  first opportunity,                                                             
which  is often  not  advisable treatment  and  that  many of  these                                                            
patients must be readmitted.                                                                                                    
                                                                                                                                
Senator  Hoffman asked  if  capacity limits  would  be reached  more                                                            
often under the provisions of this legislation.                                                                                 
                                                                                                                                
Mr. Jessee affirmed that  facilities would reach capacity sooner. He                                                            
spoke to  the difficulties  of releasing patients  from API  who are                                                            
not Anchorage residents.  He explained the importance of a patient's                                                            
community in outpatient treatment.                                                                                              
                                                                                                                                
Co-Chair Wilken recalled  these issues were discussed when this bill                                                            
was heard  in the Senate  Health and Social  Services Committee.  He                                                            
noted  the   letter  of  intent  adopted   by  that  committee   and                                                            
recommended  the Senate Finance Committee  also adopt the  letter to                                                            
express  the  intent that  alternative  revenue  sources  should  be                                                            
secured so that the level of services would not be affected.                                                                    
                                                                                                                                
BILL HOGAN, Director,  Division of Behavioral Health,  Department of                                                            
Health and  Social Services reaffirmed  the State is responsible  to                                                            
pay  the cost  of  diagnosis,  evaluation  and treatment  for  those                                                            
individuals  who  are  financially  eligible  and  who  need  to  be                                                            
involuntarily  committed to  non-State operated  hospitals.  He read                                                            
testimony into the record as follows.                                                                                           
                                                                                                                                
     The  costs of  these services  and the  related transportation                                                             
     have increased  dramatically over the past several  years. From                                                            
     FY  01  through  FY  03, the  costs  have  increased  over  100                                                            
     percent.  The rationale for those  increases has to  do with an                                                            
     increase  in the  average  daily Medicaid  rate as  well as  an                                                            
     increase  in the total number of beds utilized  between [FY] 01                                                            
     and [FY] 03.                                                                                                               
                                                                                                                                
     The intent  of SB 364 is to reaffirm  the importance  of DET as                                                            
     the cornerstone  our foundation of our community  mental health                                                            
     system,  but  at the  same time  give us  a mechanism  to  more                                                            
     adequately   manage   diagnosis,   evaluation   and   treatment                                                            
     services.  The  bill would  give us  the capability  through  a                                                            
     registration  process  - through hospitals  having to  register                                                            
     people  who come  into their  facilities within  24 hours  - at                                                            
     least  a  better mechanism  to  manage  costs.  Currently  it's                                                            
     possible  that someone might  be admitted to a DET service  and                                                            
     the  State would  not be notified  for up  to six months  after                                                            
     admission.  This legislation would require notification  within                                                            
     24  hours. It  also would  give us  the capability  of "day  8"                                                            
     which  is a critical day when  trying to stabilize individuals                                                             
     who serious psychiatric  problems or symptoms. It would give us                                                            
     the  capability  of  actively  working with  the  hospitals  to                                                            
     ensure that  if the person needs to be in the  hospital that we                                                            
     would  actively or proactively  work with the hospital.  If the                                                            
     person  did not need to be in  the hospital, we would  actively                                                            
      work to develop a discharge plan to leave the hospital.                                                                   
                                                                                                                                
     Again,  as  you've  heard  we have  worked  actively  with  our                                                            
     partners,  including  the  Alaska State  Hospital  and  Nursing                                                            
     Association, the Alaska  Mental Health Board, the Alaska Mental                                                            
     Health Trust  [Authority], various advocates,  and then members                                                            
     and  clients, to  come up with  language that  is for the  most                                                            
     part is acceptable to all parties.                                                                                         
                                                                                                                                
     The  one  sticking  point  continues  to be  Section  2,  which                                                            
     essentially  stipulates that  we will only fund the  service up                                                            
     to the  appropriation from the  legislature. As Senator  Wilken                                                            
     has pointed out, in  out letter of intent, we clearly commit to                                                            
     looking  at all other possible  funding sources to ensure  that                                                            
     we  are  able  to  adequately  fund  this particular   service.                                                            
     However if we are  not able to come up with additional dollars,                                                            
     in  the worst case  scenario,  an individual  would have  to be                                                            
     sent  to API. Let me  also point out  that we want to  actively                                                            
     and will  continue to actively  work with our community  mental                                                            
     health  providers to find alternative  community facilities  or                                                            
     programs   for  individuals  before  they   would  have  to  be                                                            
     transferred to API.                                                                                                        
                                                                                                                                
Senator Hoffman asked the Division's intent in implementing this                                                                
legislation.                                                                                                                    
                                                                                                                                
Mr. Hogan listed the first priority as locating services within the                                                             
patient's community. He stated the Department would try to locate                                                               
alternative  placement   if  no  services  were  available   in  the                                                            
patient's community and  API was at capacity. He stressed the intent                                                            
to ensure patients receive hospital care if needed.                                                                             
                                                                                                                                
Senator Hoffman  asked how services  would be delivered to  patients                                                            
residing in  a community without a  treatment facility in  the event                                                            
API had no vacancies.                                                                                                           
                                                                                                                                
Mr.  Hogan  replied this  scenario  occasionally  occurs.  In  these                                                            
instances, he  stated that efforts are made to make  space available                                                            
at API for that individual.                                                                                                     
                                                                                                                                
Senator Olson asked the number of licensed beds at API.                                                                         
                                                                                                                                
Mr. Hogan answered 92 beds.                                                                                                     
                                                                                                                                
Senator Olson asked the occupancy rate over the last year.                                                                      
                                                                                                                                
Mr.  Hogan  replied  the  75-80  average  daily  censuses  show  the                                                            
facility averages 75 to 80 percent capacity.                                                                                    
                                                                                                                                
Senator Olson expressed  concern that if space were not available at                                                            
mental  health facilities,  patients  would be admitted  to a  local                                                            
hospital  that is not  equipped for  the special  needs of  patients                                                            
with  mental  illnesses.  He  relayed  his  experience   that  these                                                            
patients  often require  protection  from themselves,  and at  times                                                            
must be restrained.  He remarked that  most doctors are not  trained                                                            
in psychiatry  and would  be required to provide  care they  are not                                                            
qualified to administer.                                                                                                        
                                                                                                                                
Mr. Hogan responded  that the intent would not be  to transfer those                                                            
patients who  are perceived to be  a danger to themselves  or others                                                            
or who  have been  involuntarily  committed. Rather,  he stated  the                                                            
intent would be  to stabilize patients so they could  be transferred                                                            
to their community.                                                                                                             
                                                                                                                                
Senator  Hoffman   asked  if  the  Department  has  considered   the                                                            
financial risks of liability for failure to provide services.                                                                   
                                                                                                                                
Mr. Hogan indicated  extensive discussion within the  Department and                                                            
with  the Department  of Law  has occurred.  He  furthered that  the                                                            
procedures  of other states  is being researched  and that  he would                                                            
provide information on the findings.                                                                                            
                                                                                                                                
Co-Chair  Wilken  cited  the  analysis  in the  fiscal  note,  which                                                            
reports that the  Designated Evaluation and Treatment  (DET) program                                                            
would no  longer receive  $724,900 federal  funding beginning  in FY                                                            
05. He surmised this is the impetus of this legislation.                                                                        
                                                                                                                                
Mr. Hogan  affirmed that  the program would  receive a reduction  of                                                            
$700,000 in FY  05, according to the Governor's proposed  budget. He                                                            
expressed intent to secure  alternative funding for this program and                                                            
told of  options. He  emphasized the  need for  this legislation  to                                                            
improve management of the program.                                                                                              
                                                                                                                                
VERNER STILLNER, Legislative Representative, Alaska Psychiatric                                                                 
Association, read his testimony into the record as follows.                                                                     
                                                                                                                                
     The mental health  system can best be judged when it is under a                                                            
     state  of emergency.  And such  an emergency  in mental  health                                                            
     system  is  covered by  this  piece  of legislation.  In  other                                                            
     words, when an individual,  due to mental illness, is dangerous                                                            
     to self or  others, or gravely disabled and unable  to care for                                                            
     themselves,  a physician  or a mental  health professional  can                                                            
     petition  the  court for  a 72-hour  hold. And  an involuntary                                                             
     hospitalization  takes place. Currently that  can take place in                                                            
     Palmer,  Ketchikan,  Cordova,  Homer,  Valdez,  Sitka,  Bethel,                                                            
     Kodiak, Juneau and  Fairbanks. And then if the individual needs                                                            
     to be  committed for  a 30-day evaluation,  a longer period  of                                                            
     time,  that   individual  can  be  hospitalized   at  Fairbanks                                                            
     Memorial  Hospital or Bartlett  Regional Hospital, or  the API.                                                            
                                                                                                                                
     My concern  about this piece  of legislation is that  there may                                                            
     be  an unfunded  mandate.  In other  words, you  don't fund  an                                                            
     emergency  system in my estimation  with a letter of  intent. I                                                            
     predict  that  when the  Committee of  next  fiscal year  comes                                                            
     around and  the money has expired for this kind  of payment for                                                            
     these  hospitals  I've  mentioned,  the  hospitals  will  start                                                            
     saying "no" and pointing to the API.                                                                                       
                                                                                                                                
     The cuts  in the budget that  are proposed in the House  and in                                                            
     the  Senate,  cut  the  budget  for  institutional   care,  for                                                            
     community   care  and  for  transport   of  patients   to  such                                                            
     facilities.   So  my  concern  is  that  if  these  systems  of                                                            
     designated  evaluation  treatment facilities  are not  properly                                                            
     assured  of funding,  they  will start  saying  "no" and  start                                                            
     shifting  people to the API.  And the API by next year  will be                                                            
     downsized  to a bed census of  72 capacity. And I predict  that                                                            
     the  current census  will be  all that they  currently will  be                                                            
     able to  do and these hospitals  will be left with individuals                                                             
     to evaluate and treat and possibly not be compensated for.                                                                 
                                                                                                                                
     I support  the administrative  procedures in this provision  to                                                            
     better  manage  those   monies,  in  other  words,  that  these                                                            
     hospitals  have  to  notify  the  Department  when  someone  is                                                            
     admitted.  All that I  think needs to  be greatly improved  and                                                            
     there are  some cost savings there. But I'm concerned  that the                                                            
     bill  currently  the  way it  is  funded,  will be  a  unfunded                                                            
     mandate  to hospitalize individuals  in an emergency  basis and                                                            
     therefore  I think  the mental  health of  the communities  and                                                            
     also the public health of the community may be compromised.                                                                
                                                                                                                                
Senator Hoffman  understood the witness testified  that the capacity                                                            
of API would be reduced in the year 2005.                                                                                       
                                                                                                                                
Mr. Stillner affirmed the new facility would contain 72 beds.                                                                   
                                                                                                                                
Mr. Hogan  clarified  the facility  would contain  74 beds with  the                                                            
ability  to increase to  80 beds in  the event  of an emergency.  He                                                            
informed  that the  new facility  is scheduled  to open  in July  1,                                                            
2005.                                                                                                                           
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 278(L&C)                                                                                            
     "An  Act relating to  fees for the  inspection of recreational                                                             
     devices,  including instructional devices, for  certificates of                                                            
     fitness   for  electrical  wiring  and  plumbing,   for  filing                                                            
     voluntary flexible  work hour plan agreements, and for licenses                                                            
     for boiler operators;  relating to the building safety account;                                                            
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this bill,  sponsored by  the Senate  Rules                                                            
Committee at the request  of the Governor, "creates two new fees and                                                            
increases  existing  fees charged  by the  Department  of Labor  and                                                            
Workforce Development."                                                                                                         
                                                                                                                                
GREG  O'CLARY,  Commissioner,  Department  of  Labor  and  Workforce                                                            
Development, testified  this legislation relates to user fees, which                                                            
have not been increased for ten years.                                                                                          
                                                                                                                                
GREY MITCHELL,  Director,  Division of Labor  Standards and  Safety,                                                            
Department  of Labor and Workforce  Development, outlined  the bill.                                                            
Section  1,  he stated  would  establish  a fee  for  amusement  and                                                            
recreational devices  for each inspection performed.  These fees, he                                                            
informed, would  pay the cost of inspector travel  and certification                                                            
for testing  that must  occur outside Alaska,  and subsequently  pay                                                            
the cost to maintain the inspection services.                                                                                   
                                                                                                                                
Mr. Mitchell  detailed that  Section 2 would  impose a $200  fee for                                                            
boiler operator  licenses, pointing  out that no fees currently  are                                                            
imposed for this license  and the fee would support the program that                                                            
administers testing and issues the licenses.                                                                                    
                                                                                                                                
Mr.  Mitchell  next  informed  that Section  3  would  increase  the                                                            
existing license fee by  $20 for electricians and plumbers from $160                                                            
to $200 for a  two-year. He reported this fee was  last increased in                                                            
the year 1993  and the increased revenues  would pay the  cost of an                                                            
additional  electrical  inspector  position,  which along  with  the                                                            
current two positions,  would provide "a good coverage area" for the                                                            
State  with  one inspector   located in  Southeast  Alaska,  one  in                                                            
Southcentral and  the third located in the Northern  areas. He noted                                                            
the number of plumbing inspectors would not change.                                                                             
                                                                                                                                
Mr. Mitchell then  explained that Section 4 relates  to a filing fee                                                            
and qualified that the  revenues from this fee would not be utilized                                                            
to support  inspection services,  but would  rather be deposited  to                                                            
the State general fund.                                                                                                         
                                                                                                                                
Commissioner  O'Clary interjected  that Co-Chair Green has  proposed                                                            
an amendment to Section 4.                                                                                                      
                                                                                                                                
Mr. Mitchell  continued that Sections  5 and 6 would establish  that                                                            
the fees  charged in Sections  1 through 3  would be deposited  into                                                            
the Building  Safety  Account, a  sub-account of  the State  general                                                            
fund utilized  for the mechanical  inspection sections programs.  He                                                            
remarked  this  office  operates   "as  close  as  you  can  get  in                                                            
government, like  a business", explaining that the  fees charged are                                                            
directly used to fund the services provided.                                                                                    
                                                                                                                                
Mr.  Mitchell  concluded   with  Section  7  that  establishes   the                                                            
effective date.                                                                                                                 
                                                                                                                                
Senator Olson  asked the number of  people who would be affected  by                                                            
the fees  imposed in Section  1 for inspection  of recreational  and                                                            
amusement vehicles.                                                                                                             
                                                                                                                                
Mr. Mitchell replied  that approximately 50 businesses  in the State                                                            
operate  recreational  devises. He  noted this  includes  businesses                                                            
that operate go-carts,  ski lifts and bumper cars. He stated that an                                                            
amendment  to the  companion  legislation  adopted by  the House  of                                                            
Representatives  would exempt from the fee a company  such as Golden                                                            
Wheels,  the largest  operator, to  employ inspectors  from  out-of-                                                            
state. He relayed the Department  would support such an amendment to                                                            
the Senate bill as well.                                                                                                        
                                                                                                                                
Senator Olson  referenced the $100  filing fee for applications  for                                                            
flexible work  schedules proposed  in Section 4. He asked  if public                                                            
employers  would  be subject  to this  fee as  well  as the  private                                                            
sector. He exampled prison guards working 12-hour shifts.                                                                       
                                                                                                                                
Mr. Mitchell responded  this legislation would only apply to private                                                            
businesses,  noting the current exemption  in the statute  requiring                                                            
overtime  pay for flexible  work hour  plans. He  used workweeks  of                                                            
four 10-hour  days as an example.  He stated this legislation  would                                                            
impose a  fee for applications  for the exemption.  He reported  the                                                            
Department   received  approximately   200  such  applications   the                                                            
previous year.                                                                                                                  
                                                                                                                                
Senator Bunde clarified  the provisions of Section 4 would not apply                                                            
to State  negotiated  union contracts  that allow  State workers  to                                                            
work less than 40 hours per week.                                                                                               
                                                                                                                                
Mr. Mitchell affirmed.                                                                                                          
                                                                                                                                
Amendment #1:  The amendment deletes "for filing voluntary  flexible                                                            
work hour plan  agreements," from  the title of the bill  on page 1,                                                            
lines 2 and 3. The amended language reads as follows.                                                                           
                                                                                                                                
     "An  Act relating to  fees for the  inspection of recreational                                                             
     devices,  including instructional devices, for  certificates of                                                            
     fitness  for electrical wiring  and plumbing, and for  licenses                                                            
     for boiler operators;  relating to the building safety account;                                                            
     and providing for an effective date."                                                                                      
                                                                                                                                
This  amendment also  deletes Section  4 from  the bill  on page  2,                                                            
lines 7 - 10, which read as follows.                                                                                            
                                                                                                                                
     Sec. 4. AS  23.10.060 is amended by adding a  new subsection to                                                            
     read:                                                                                                                      
          (f) An employer shall pay a nonrefundable fee of $100 for                                                             
     each  voluntary  flexible  work hour  plan agreement  that  the                                                            
     employer  files  with  the department  under  (d)(14)  of  this                                                            
     section.                                                                                                                   
                                                                                                                                
Co-Chair Green moved for adoption.                                                                                              
                                                                                                                                
Co-Chair Wilken objected for discussion purposes.                                                                               
                                                                                                                                
Co-Chair Green  explained that current statute require  employers to                                                            
pay employees  overtime pay for work  performed beyond 40  hours per                                                            
week or eight  hours per day. She noted this statute  also allows an                                                            
employer  and  an  employee  to mutually  agree  to  an alternative                                                             
arrangement, such  as four ten-hour workdays within  a week, without                                                            
overtime  compensation, provided  that the  employer submits  to the                                                            
Department of Labor and  Workforce Development a "voluntary flexible                                                            
work  plan". She  opposed  the provision  in this  legislation  that                                                            
would impose  a $100 filing  fee to the employer,  as it involves  a                                                            
voluntary agreement between the employer and employee.                                                                          
                                                                                                                                
Co-Chair  Wilken calculated  the fiscal  note  for this legislation                                                             
would become zero if this amendment were adopted.                                                                               
                                                                                                                                
Commissioner  O'Clary  informed that  a zero  fiscal  note would  be                                                            
acceptable to the Department.                                                                                                   
                                                                                                                                
Co-Chair  Wilken  removed  his  objection  to the  adoption  of  the                                                            
amendment.                                                                                                                      
                                                                                                                                
Senator Bunde  understood that fees  are intended to equal  the cost                                                            
of processing licenses,  permits, etc. He surmised therefore that if                                                            
this  amendment  passes, flexible  work  plans  would  no longer  be                                                            
required or filed  with the Department to negate any  expense to the                                                            
Department.                                                                                                                     
                                                                                                                                
Commissioner  O'Clary replied that  the notification would  continue                                                            
to  be required  but  that  no  fees  would be  collected  for  this                                                            
service.                                                                                                                        
                                                                                                                                
Senator Bunde asked what  the Department does with the flexible work                                                            
plan notifications.                                                                                                             
                                                                                                                                
Mr. Mitchell reaffirmed  that the flexible work plans would still be                                                            
required through  regulation. He stated that the Department  reviews                                                            
these  plans  to  ensure  they  meet  the  intent  of  the  overtime                                                            
exemption provisions.                                                                                                           
                                                                                                                                
Senator Bunde  remarked that administering  this program  must incur                                                            
an expense to the Department.                                                                                                   
                                                                                                                                
Mr.  Mitchell  affirmed  that  staff time  is  spent  reviewing  and                                                            
approving the flexible work plans.                                                                                              
                                                                                                                                
Senator Bunde asked the cost.                                                                                                   
                                                                                                                                
Mr. Mitchell did not know the exact amount.                                                                                     
                                                                                                                                
Senator  Bunde  opined  that  the  cost  should  be  determined  and                                                            
reflected in the fiscal note.                                                                                                   
                                                                                                                                
Co-Chair Green pointed  out this amendment would maintain the status                                                            
quo of the program, as no fees are currently collected.                                                                         
                                                                                                                                
Co-Chair  Wilken  removed  his  objection  to the  adoption  of  the                                                            
amendment.                                                                                                                      
                                                                                                                                
Senator Bunde objected.  He asserted that the fiscal note should not                                                            
be zero,  but rather should  reflect the  cost of administering  the                                                            
program.                                                                                                                        
                                                                                                                                
Co-Chair Wilken asked the approximate range of the cost.                                                                        
                                                                                                                                
Commissioner   O'Clary  qualified   that  any   estimate  would   be                                                            
speculation and very approximate.                                                                                               
                                                                                                                                
Mr. Mitchell calculated  that approximately 200 to 250 flexible work                                                            
plans are filed  each year and that  depending upon the complexity,                                                             
each plan  could require  up to  one-half hour  to review. He  noted                                                            
that simpler plans could  be reviewed in ten minutes. He pointed out                                                            
however,  that  staff  time  is only  a  portion  of  the  program's                                                            
expenses and that  office space and other expenses  are incurred. He                                                            
estimated the program would cost approximately $2500 per year.                                                                  
                                                                                                                                
Co-Chair Wilken asked if  the margin of error would be approximately                                                            
$1000.                                                                                                                          
                                                                                                                                
Mr. Mitchell agreed this was a fair assessment.                                                                                 
                                                                                                                                
Senator Bunde  calculated  the cost per filing  to be approximately                                                             
$10.                                                                                                                            
                                                                                                                                
Mr. Mitchell agreed this is an approximate amount.                                                                              
                                                                                                                                
Senator Bunde requested an updated fiscal note.                                                                                 
                                                                                                                                
Co-Chair  Wilken suggested  the Committee  adopt  the amendment  and                                                            
hold the bill to await an updated fiscal note.                                                                                  
                                                                                                                                
Without objection the amendment was ADOPTED.                                                                                    
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 368                                                                                                        
     "An Act relating  to taxes on cigarettes and  tobacco products;                                                            
     relating  to tax stamps on cigarettes;  relating to  forfeiture                                                            
     of  cigarettes  and  of  property   used  in the  manufacture,                                                             
     transportation,  or sale of unstamped  cigarettes; relating  to                                                            
     licenses  and  licensees  under  the  Cigarette  Tax  Act;  and                                                            
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this bill,  sponsored by  the Senate  Rules                                                            
Committee at the  request of the Governor, "increases  the cigarette                                                            
tax from a  dollar a pack of 20 cigarettes  to two dollars  per pack                                                            
and tobacco  tax from  75 percent  to 100 percent  of the  wholesale                                                            
cost. In addition, SB 368  allows the Department of Public Safety to                                                            
seize and  dispose of  assets used  in cigarette  smuggling and  tax                                                            
evasion activities."                                                                                                            
                                                                                                                                
Co-Chair  Wilken noted CS  SB 378 23-GS2116\I  incorporates  the six                                                            
amendments  adopted  at the  previous  hearing  and makes  no  other                                                            
changes.                                                                                                                        
                                                                                                                                
Senator Hoffman commented this is a "bad, bad bill."                                                                            
                                                                                                                                
Co-Chair Green expressed  concern about the forfeiture provisions of                                                            
this legislation.  She stressed the important to decide  whether the                                                            
intent of this legislation  is to generate revenue for the State, or                                                            
for advocacy  groups, or  to change behavior.  She stated she  would                                                            
oppose this bill.                                                                                                               
                                                                                                                                
Senator Bunde  offered a motion to  report SB 368, as amended,  from                                                            
Committee with  individual recommendations  and accompanying  fiscal                                                            
notes.                                                                                                                          
                                                                                                                                
Without  objection SB  368 (FIN)  MOVED from  Committee with  fiscal                                                            
note #1 for $828,100 from  the Department of Revenue and fiscal note                                                            
#2 for $206,400 from the Department of Public Safety.                                                                           
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 231(STA)                                                                                            
     "An Act relating to unclaimed property; and providing for an                                                               
     effective date."                                                                                                           
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  this bill,  sponsored by  the Senate  Rules                                                            
Committee at the request  of the Governor, "shortens the time period                                                            
after which certain  unclaimed property is presumed  to be abandoned                                                            
and must  be transferred  to the custody of  the State. Senate  Bill                                                            
231 conforms  to the most current  Uniform Unclaimed Property  Act."                                                            
                                                                                                                                
RACHEL  LEWIS,   Unclaimed  Property   Administrator,  Division   of                                                            
Treasury, Department  of Revenue,  testified this legislation  would                                                            
shorten  dormancy   periods  for   unclaimed  property.   This,  she                                                            
informed, would  provide the State the opportunity  to locate owners                                                            
of unclaimed property  quicker, and would allow companies  that hold                                                            
"uncashed" checks  and banks with inactive accounts  to "clean those                                                            
off  their  books" in  a  timely manner.  She  stated  that  holding                                                            
unclaimed property  creates a liability for companies  and banks and                                                            
that the State  would become the active custodian  for these assets.                                                            
She also noted  that this legislation  would allow assets  to become                                                            
the property  of the State sooner  to the benefit of all  residents.                                                            
She explained  that  these funds  could  be used  for schools,  road                                                            
projects and other programs  until the owner submits a claim for the                                                            
assets.                                                                                                                         
                                                                                                                                
Co-Chair Wilken amendment explanations                                                                                          
                                                                                                                                
Amendment #2:  This amendment changes  the language in Section  5 on                                                            
page 3, lines 14 - 30 to read as follows.                                                                                       
                                                                                                                                
     Sec. 5.  AS 34.45 is amended  by adding a new section  to read:                                                            
          Sec. 34.45.175. Certain property distributed in insurance                                                             
     company   reorganizations.    (a)   The   following    property                                                            
     distributable  in the  course of a  demutualization or  related                                                            
     reorganization of  an insurance company is deemed abandoned two                                                            
     years  after the date of demutualization  or reorganization  as                                                            
     follows:                                                                                                                   
                (1) money that remains unclaimed and the owner has                                                              
     not  otherwise  communicated  with  the  holder  or  its  agent                                                            
     regarding  the property as evidenced  by a memorandum  or other                                                            
     record on file with the holder or its agent;                                                                               
                (2) stock or other equity interest if                                                                           
                     (A) the instruments or statements reflecting                                                               
          the  distribution  are  either  mailed  to the  owner  and                                                            
          returned  by  the post  office  as undeliverable,  or  not                                                            
          mailed  to the owner  because of  an address on the  books                                                            
          and  records of the holder that is known  to be incorrect;                                                            
          and                                                                                                                   
                     (B) the owner has not otherwise communicated                                                               
          with  the holder  or its agent  regarding the property  as                                                            
          evidenced  by a  memorandum or other  record on file  with                                                            
          the holder or its agent.                                                                                              
          (b) Property that is not subject to (a) of this section                                                               
     is  reportable   as  otherwise  provided  in   AS  34.45.110  -                                                            
     34.45.780.                                                                                                                 
                                                                                                                                
Co-Chair Wilken moved for  adoption and objected for an explanation.                                                            
                                                                                                                                
Ms.  Lewis noted  that  the  legislation  contains a  definition  of                                                            
demutualization  that "did  not fit  the stylistic  needs of  Alaska                                                            
statutes." This amendment,  she stated was drafted by the Department                                                            
of Law to better conform the definition to Alaska statutes.                                                                     
                                                                                                                                
Co-Chair Wilken removed  his objection and the amendment was ADOPTED                                                            
without objection.                                                                                                              
                                                                                                                                
Amendment #3:  This amendment inserts two new bill  sections on page                                                            
8, following line 14 to read as follows.                                                                                        
                                                                                                                                
     Sec. 14. AS 34.45.320(d) is amended to read:                                                                               
          (d) the holder of an equity [OWNERSHIP] interest under AS                                                           
     34.45.200  shall  deliver  a duplicate  certificate,  or  other                                                            
     evidence   of  ownership   if   the  holder   does  not   issue                                                            
     certificates of ownership,  to the department. Upon delivery of                                                            
     a duplicate  certificate  to the department,  the holder  and a                                                            
     transfer  agent, registrar,  or other  person acting for  or on                                                            
     behalf  of a holder  in executing or  delivering the  duplicate                                                            
     certificate  is relieved of all  liability, in accordance  with                                                            
     the  provisions of AS  34.45.330 to  every person, including  a                                                            
     person acquiring  the original certificate or  the duplicate of                                                            
     the certificate  issued to the  department, for loss  or damage                                                            
     resulting  to a  person  by the issuance  and  delivery to  the                                                            
     department of the duplicate certificate.                                                                                   
                                                                                                                                
     Sec. 15. AS 34.45.330(c) is amended to read:                                                                               
          (c) A holder who has delivered property [, INCLUDING A                                                                
     CERTIFICATE   OF   AN   OWNERSHIP   INTEREST  IN   A   BUSINESS                                                            
     ASSOCIATION,]  other  than  money to  the department  under  AS                                                            
     34.45.110  - 34.45.430  [,] may reclaim  the property if  it is                                                            
     still in  the possession of the department, without  payment of                                                            
     a fee  or other charge,  upon filing  proof that the owner  has                                                            
     claimed the property from the holder.                                                                                      
                                                                                                                                
     New Text Underlined [DELETED TEXT BRACKETED]                                                                             
                                                                                                                                
Co-Chair Wilken moved for  adoption and objected for an explanation.                                                            
                                                                                                                                
Ms. Lewis  explained this  amendment reflects  recommendations  from                                                            
the Division of  Legal and Research Services to address  grammar and                                                            
punctuation.                                                                                                                    
                                                                                                                                
Co-Chair Wilken removed his objection.                                                                                          
                                                                                                                                
Co-Chair  Green asked if  this amendment  would insert new  language                                                            
into the bill.                                                                                                                  
                                                                                                                                
Ms. Lewis replied that the Department of Law recommended against                                                                
utilizing "ownership" and "equity" in the same sentence and this                                                                
amendment therefore delineates the two words.                                                                                   
                                                                                                                                
Co-Chair Wilken noted this amendment was submitted at the request                                                               
of the Division of Legal and Research Services.                                                                                 
                                                                                                                                
Without objection the amendment was ADOPTED.                                                                                    
                                                                                                                                
Co-Chair Green offered a motion to report SB 231, as amended from                                                               
Committee with individual recommendations and accompanying fiscal                                                               
note.                                                                                                                           
                                                                                                                                
There was no objection and CS SB 231 (FIN) MOVED from Committee                                                                 
with fiscal note #2 for $60,000 from the Department of Revenue.                                                                 
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 10:33 AM                                                                          

Document Name Date/Time Subjects