Legislature(2003 - 2004)

04/27/2004 09:02 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                              MINUTES                                                                                         
                     SENATE FINANCE COMMITTEE                                                                                 
                          April 27, 2004                                                                                      
                              9:02 AM                                                                                         
                                                                                                                                
                                                                                                                                
TAPES                                                                                                                       
                                                                                                                                
SFC-04 # 95,  Side A                                                                                                            
SFC 04 # 95,  Side B                                                                                                            
SFC 04 # 96,  Side A                                                                                                            
SFC 04 # 96,  Side B                                                                                                            
SFC 04 # 97,  Side A                                                                                                            
SFC 04 # 97,  Side B                                                                                                            
                                                                                                                                
CALL TO ORDER                                                                                                               
                                                                                                                                
Co-Chair Gary Wilken convened  the meeting at approximately 9:02 AM.                                                            
                                                                                                                                
PRESENT                                                                                                                     
                                                                                                                                
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Con Bunde, Vice Chair                                                                                                   
Senator Fred Dyson                                                                                                              
Senator Ben  Stevens                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Donny  Olson                                                                                                            
                                                                                                                                
Also Attending:  SENATOR GARY STEVENS;  SENATOR RALPH SEEKINS;  BILL                                                          
HOGAN, Director,  Division of Behavior Health, Department  of Health                                                            
and Social  Services;  GREY MITCHELL,  Director,  Division of  Labor                                                            
Standards & Safety,  Department of Labor and Workforce  Development;                                                            
MARY  JACKSON,  Staff   to  Senator  Tom  Wagoner;  GREG   O'CLARAY,                                                            
Commissioner,  Department of Labor and Workforce Development;  STEVE                                                            
VAN  SANT,   State  Assessor,   Division   of  Community   Advocacy,                                                            
Department of  Community and Economic Development;  DARWIN PETERSON,                                                            
Staff to  Senator Gary  Wilken; SHARON  BARTON, Director,  Permanent                                                            
Fund  Dividend  Division,  Department  of  Revenue;  MIKE  BARNHILL,                                                            
Assistant Attorney General,  Commercial/Fair Business Section, Civil                                                            
Division  (Juneau),  Department  of Law;  ROBERT  STORER,  Executive                                                            
Director, Permanent  Fund Corporation,  Department of Revenue;  MARC                                                            
ANTRIM, Commissioner,  Department of Corrections;  BRIAN HOVE, Staff                                                            
to Senator  Ralph Seekins;  RICHARD SCHMITZ,  Staff to Senator  John                                                            
Cowdery;  DEBORAH  FINK,  Representative,  Cash  Alaska;  PAT  LUBY,                                                            
Advocacy Director, AARP  Alaska; TIM KELLY, Former Senator, Lobbyist                                                            
for Cash  Alaska;  TOM BOUTIN,  Deputy Commissioner,  Department  of                                                            
Revenue and Spokesman, State Bond Committee                                                                                     
                                                                                                                                
Attending  via  Teleconference:   From  Offnet  Sites:   JEFF  JUDD,                                                          
Director  of  Operations,  Cook  Inlet  Housing  Authority;   HOWARD                                                            
LEVINE, Director  of Development,  Venture Development Group;  RANDY                                                            
HOFFBECK, Petroleum  Property Assessor, Tax Division,  Department of                                                            
Revenue;  ED SNIFFEN, Assistant  Attorney  General, Commercial/Fair                                                             
Business  Section, Civil  Division (Anchorage),  Department  of Law;                                                            
PAT  PITNEY,  Director  of  Budget  Development  and  Institutional                                                             
Planning, University  of Alaska; MARK  DAVIS, Director, Division  of                                                            
Banking,  Securities  & Corporations,  Department  of Community  and                                                            
Economic  Development;  STEVE  CLEARY,  Executive  Director,  Alaska                                                            
Public  Interest  Research  Group;  ANGELA LISTON,  Representative,                                                             
Alaska Catholic Conference;  JIM DAVIS, Representative, Alaska Legal                                                            
Services  Corporation;  DOCTOR  SCOTT  LUPER;  From  Anchorage:  DEE                                                            
HUBBARD; From Kodiak: LINDA  FREED, City Manager, City of Kodiak; TC                                                            
KAMAI, Chief  of Police, City of Kodiak;  From Seward: PHIL  SHEALY,                                                            
City Manager,  City of Seward; WILLARD DUNHAM, City  Council Member,                                                            
City of Seward                                                                                                                  
                                                                                                                                
SUMMARY INFORMATION                                                                                                         
                                                                                                                                
SB 364-LIMIT STATE AID FOR MENTAL HEALTH CARE                                                                                   
                                                                                                                                
The  Committee  heard  from  the Department  of  Health  and  Social                                                            
Services. The bill was reported from Committee.                                                                                 
                                                                                                                                
SB 278-LABOR & WORKFORCE DEVELOPMENT FEES                                                                                       
                                                                                                                                
The  Committee heard  from  the Department  of Labor  and  Workforce                                                            
Development,  adopted  one amendment,  and  reported  the bill  from                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 136-RESIDENTIAL PROPERTY TAX EXEMPTION                                                                                       
                                                                                                                                
The Committee  adopted a  committee substitute  and two amendments.                                                             
The bill was reported from Committee.                                                                                           
                                                                                                                                
SB 393-TAKE PERM FUND DIVIDEND FOR UNIV FEES                                                                                    
                                                                                                                                
The  Committee   heard  from  the  University  of   Alaska  and  the                                                            
Department of Revenue. The bill was held in Committee.                                                                          
                                                                                                                                
SB 379-PERM FUND BOARD PUBLIC MEMBER REMOVAL                                                                                    
                                                                                                                                
The Committee  heard from  the Department of  Law and the  Permanent                                                            
Fund Corporation.  A committee substitute  was adopted and  the bill                                                            
was reported from Committee.                                                                                                    
                                                                                                                                
SB 65-CORRECTIONAL FACILITY EXPANSION                                                                                           
                                                                                                                                
The  Committee heard  from  the bill's  sponsor,  the Department  of                                                            
Corrections, and  took public testimony. A committee  substitute was                                                            
adopted.  Four amendments  were considered  and three were  adopted.                                                            
The bill was held in Committee.                                                                                                 
                                                                                                                                
SB 313-FIRST SUPPLEMENTAL APPROPRIATION                                                                                         
                                                                                                                                
The Committee  adopted a committee  substitute and held the  bill in                                                            
Committee.                                                                                                                      
                                                                                                                                
SB 306-NATUROPATHIC MEDICINE                                                                                                    
                                                                                                                                
The Committee  heard from the sponsor and the industry.  A committee                                                            
substitute  and  two  amendments  were  adopted  and  the  bill  was                                                            
reported from Committee.                                                                                                        
                                                                                                                                
SB 272-DEFERRED DEPOSIT ADVANCES (PAYDAY LOANS)                                                                                 
                                                                                                                                
The Committee  heard from  the sponsor, the  Department of  Law, the                                                            
Department of  Commerce and Economic Development,  the industry, and                                                            
the public. The bill was held in Committee.                                                                                     
                                                                                                                                
SB 307-APPEAL BONDS: TOBACCO SETTLEMENT PARTIES                                                                                 
                                                                                                                                
This bill was scheduled but not heard.                                                                                          
                                                                                                                                
                                                                                                                                
     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 second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken communicated  that the Senate Rules Committee at the                                                            
Request of the Governor  sponsors this legislation which would limit                                                            
State aid  for mental health  care and provide  a mechanism  through                                                            
which to address  expenses associated with mental  health diagnosis,                                                            
evaluation and treatment (DET) programs.                                                                                        
                                                                                                                                
Co-Chair Wilken  recalled that, during the previous  hearing on this                                                            
bill, a question  was asked regarding  how the Legislature  would be                                                            
notified were the Department  to anticipate a shortage of funds with                                                            
which to address DET program expenses.                                                                                          
                                                                                                                                
BILL HOGAN, Director,  Division of Behavioral Health,  Department of                                                            
Health  and  Social  Services,  stated  that  the  Department  would                                                            
provide notification in the manner specified by the Legislature.                                                                
                                                                                                                                
Co-Chair Wilken asked whether  the bill should be amended to specify                                                            
that the  Department must  notify the Senate  President, Speaker  of                                                            
the House,  and Finance  Committee Co-chairs  were short funding  to                                                            
occur.                                                                                                                          
                                                                                                                                
Mr. Hogan responded that a formal request would be sufficient.                                                                  
                                                                                                                                
Senator Hoffman  suggested that the bill be amended,  as he attested                                                            
that,  in addition  to  the  Department's  funding  being  strained,                                                            
communities  and hospitals  would have "undue  burdens" placed  upon                                                            
them, particularly considering  the fact that the Alaska Psychiatric                                                            
Institute  (API) would  be downsized  to 72  beds in  July 2004.  He                                                            
pointed out that  the Department could not speak to  the impact this                                                            
might have on hospitals.  Therefore, he voiced a lack of support for                                                            
the legislation, were it not amended.                                                                                           
                                                                                                                                
Co-Chair Wilken  asked whether Senator Hoffman would  be offering an                                                            
amendment to address this concern.                                                                                              
                                                                                                                                
Senator Hoffman refrained from offering an amendment.                                                                           
                                                                                                                                
Co-Chair  Wilken  expressed  therefore,  for  the record,  that  the                                                            
intent  of the  Department would  be to  notify the  Speaker of  the                                                            
House, the Senate President,  and Finance Committee co-chairs were a                                                            
shortfall in funding for the DET program to occur.                                                                              
                                                                                                                                
Co-Chair  Green  moved to  report  the bill  and the  Senate  Health                                                            
Education and Social Services  Committee (HES) Letter of Intent from                                                            
Committee with  individual recommendations  and accompanying  fiscal                                                            
notes.                                                                                                                          
                                                                                                                                
There  being no  objection, CS  SB 364(HES)  and the  HES Letter  of                                                            
Intent was  REPORTED from  Committee with  negative $100,000  fiscal                                                            
note #1  dated February 6,  2004 from the  Department of Health  and                                                            
Social Services.                                                                                                                
                                                                                                                                
                                                                                                                                
     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 second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken commented  that this bill, which is sponsored by the                                                            
Senate Rules Committee  by Request of the Governor, would create two                                                            
new fees and increase  an existing fee charged by  the Department of                                                            
Labor  and  Workforce Development.   The adoption  of  Amendment  #1                                                            
during the bill's  initial hearing changed a fiscal  component, and,                                                            
as a result, a  new fiscal note has been provided  to the Committee.                                                            
The Version 23-GS2111\D  committee substitute, amended  by Amendment                                                            
#1, is before the Committee.                                                                                                    
                                                                                                                                
GREY  MITCHELL, Director,  Division  of  Labor Standards  &  Safety,                                                            
Department  of Labor and  Workforce Development  explained  that the                                                            
adoption of Amendment #1  deleted a proposed $100 flexible work plan                                                            
filing fee that would have  generated $24,000 in revenue. Therefore,                                                            
a new zero fiscal note,  dated April 26, 2004 from the Wage and Hour                                                            
Section of  the Division of Labor  Standards and Safety,  Department                                                            
of Labor and Workforce  Development, replaces the  fiscal note dated                                                            
April  15,  2004. He  noted  that  the new  fiscal  note's  analysis                                                            
provides the breakout of  the expenses associated with administering                                                            
the flexible work plan program.                                                                                                 
                                                                                                                                
Senator  Bunde  acknowledged  the information,  but  questioned  the                                                            
reason for  performing the "perfunctory  review" of the program,  as                                                            
it incurs an expense to the State.                                                                                              
                                                                                                                                
Co-Chair Green  commented that this  concern could be addressed  via                                                            
the Missions and Measures review process.                                                                                       
                                                                                                                                
Amendment  #2: This amendment  inserts the  following language  into                                                            
Section 1, subsection (b)  following the word "devise." on page one,                                                            
line nine.                                                                                                                      
                                                                                                                                
     The department  shall waive the inspection fee  if the owner or                                                            
     operator  of  the  device  uses  a  private  inspector  who  is                                                            
     certified  by a national organization  to inspect recreational                                                             
     devices and  provides the inspection report to  the department.                                                            
                                                                                                                                
Co-Chair Wilken moved and  objected to the adoption of Amendment #2.                                                            
This amendment  is the result of recent  action taken in  regards to                                                            
this bill's  companion bill,  HB 402-LABOR  & WORKFORCE DEVELOPMENT                                                             
FEES.                                                                                                                           
                                                                                                                                
GREG  O'CLARAY,  Commissioner,  Department  of Labor  and  Workforce                                                            
Development  explained that  the proposed  language in Amendment  #2                                                            
would address  a recreational industry  concern that arose  during a                                                            
House committee  hearing on the companion bill in  that a nationally                                                            
certified out-of-state  inspector was utilized, at great expense, to                                                            
inspect  recreational  equipment.  He  stated  that  the  Department                                                            
supports the amendment  and that, absent its adoption, a duplication                                                            
of payment might result.                                                                                                        
                                                                                                                                
Co-Chair Wilken removed his objection.                                                                                          
                                                                                                                                
Co-Chair  Green  asked  for confirmation  that  Amendment  #2  would                                                            
provide this exemption specifically to recreational equipment.                                                                  
                                                                                                                                
Commissioner O'Claray replied, "that is correct."                                                                               
                                                                                                                                
Senator Olson asked for  assurance that the national standards would                                                            
equal or exceed the State standard.                                                                                             
                                                                                                                                
Commissioner   O'Claray  understood  that  the  same   company  that                                                            
certifies  State  inspectors  certifies  the  national recreational                                                             
inspectors.                                                                                                                     
                                                                                                                                
In response to a question  from Senator Hoffman, Mr. Mitchell stated                                                            
that the business,  Golden Wheels Amusement Company,  which operates                                                            
amusement  rides  at fairs,  presented  this  concern.  The  Company                                                            
annually  hires a  national  certified  inspector to  inspect  their                                                            
rides.  These national  inspectors must  undergo  a higher level  of                                                            
training than  required of State inspectors. While  State inspectors                                                            
would accompany  the national inspector,  no fee would be  levied by                                                            
the  State  in that  regard,  as  the  private  inspector  would  be                                                            
charging an inspection fee.                                                                                                     
                                                                                                                                
There being no further objection, Amendment #2 was ADOPTED.                                                                     
                                                                                                                                
Co-Chair Green moved to  report the bill, as amended, from Committee                                                            
with individual recommendations and accompanying fiscal notes.                                                                  
                                                                                                                                
There  being  no  objection,  CS SB  278  (FIN)  was  REPORTED  from                                                            
Committee with  new zero fiscal note, dated April  26, 2004 from the                                                            
Wage  and Hour  Section, Division  of  Labor Standards  and  Safety,                                                            
Department  of Labor and  Workforce Development  and a new  $142,000                                                            
fiscal note,  dated April  26, 2004 from  the Mechanical  Inspection                                                            
Section,  Division  of Labor  Standards  and Safety,  Department  of                                                            
Labor and Workforce Development.                                                                                                
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 136                                                                                                        
     "An  Act increasing  an optional  exclusion  or exemption  from                                                            
     municipal taxation for residential property."                                                                              
                                                                                                                                
                                                                                                                                
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken stated  that  this bill,  sponsored  by the  Senate                                                            
Community  &  Regional  Affairs  Committee,   would  increase,  from                                                            
$10,000  to  $50,000,  the  amount  a  municipality  may  exempt  in                                                            
residential property taxation.                                                                                                  
                                                                                                                                
Co-Chair  Green moved  to adopt  the Version  23-LS0440\D  committee                                                            
substitute as the working document.                                                                                             
                                                                                                                                
Co-Chair Wilken explained  that the Version "D" committee substitute                                                            
would lower the proposed  municipality tax exemption from $50,000 to                                                            
$20,000.                                                                                                                        
                                                                                                                                
There  being no  objection, Version  D  was ADOPTED  as the  working                                                            
document.                                                                                                                       
                                                                                                                                
MARY  JACKSON,  Staff  to Senator  Tom  Wagoner,  noted  that  while                                                            
Senator  Wagoner is no  longer a  member of the  Senate Community  &                                                            
Regional Affairs  Committee, he continues his involvement  regarding                                                            
this  legislation and,  in  that manner,  supports  language in  the                                                            
Version "D" committee substitute.  In addition, she noted that he is                                                            
also supportive of two forthcoming amendments.                                                                                  
                                                                                                                                
Amendment #2:  This amendment inserts  new language into  the bill's                                                            
title, on page one, line two following "property" as follows.                                                                   
                                                                                                                                
     and  to an exemption  from and deferral  of municipal  property                                                            
     taxes on certain types of deteriorated property.                                                                           
                                                                                                                                
In addition,  new bill  sections are  inserted in  the bill  on page                                                            
one, following line eight as follow.                                                                                            
                                                                                                                                
     Sec. 2. AS 29.45.050(o) is amended to read:                                                                                
           (o) A municipality may by ordinance partially or totally                                                             
     exempt  all  or  some  types  of  deteriorated   property  from                                                            
     taxation  for up to  10 [FIVE] years  beginning on or  any time                                                          
     after   the   day  substantial   rehabilitation,   renovation,                                                             
     demolition,  removal, or  replacement of  any structure  on the                                                          
     property  begins.   A municipality   may  by  ordinance  permit                                                            
     deferral  of  payment   of  taxes  on  all  or  some  types  of                                                            
     deteriorated property  for up to five years beginning on or any                                                            
     time  after the  day  substantial rehabilitation,  renovation,                                                             
     demolition,  removal, or  replacement of  any structure  on the                                                          
     property  begins.  However, if  the ownership  of property  for                                                            
     which  a deferral  has  been granted  is transferred,  all  tax                                                            
     payments  deferred under  this subsection  are immediately  due                                                            
     and  the deferral  ends, or, if  ownership of  any part  of the                                                            
     property is transferred,  all tax payments are immediately due.                                                            
     The amount  deferred each year  is a lien on that property  for                                                            
     that  year. Only  one exemption  and only one  deferral  may be                                                            
     granted to the same  property under this subsection, and, if an                                                            
     exemption  and a  deferral are  granted to  the same  property,                                                            
     both may  not be in effect on the same portion  of the property                                                            
     during  the   same  time.  An  ordinance  adopted   under  this                                                            
     subsection  must include specific eligibility  requirements and                                                            
     require a  written application for each exemption  or deferral.                                                            
     In  this   subsection,  "deteriorated   property"  means   real                                                            
     property  that is commercial property not used  for residential                                                            
     purposes  or that is  multi-unit residential  property  with at                                                            
     least  eight  residential  units,  and that  meets  one of  the                                                          
     following requirements:                                                                                                  
          (1) within the last five years, has been the subject of                                                             
     an  order  by  a  government  agency  requiring  environmental                                                           
     remediation  of the property  or requiring  the property  to be                                                          
     vacated,  condemned, or demolished  by reason of noncompliance                                                             
     with laws, ordinances, or regulations;                                                                                     
          (2) has a structure on it not less than 15 years or age                                                               
     that  has undergone  substantial  rehabilitation,  renovation,                                                             
     demolition, removal,  or replacement, subject to any conditions                                                          
     prescribed in the ordinance; or                                                                                            
          (3) is located in a deteriorating or deteriorated area                                                                
     with boundaries that  have been determined by the municipality.                                                            
                                                                                                                                
     Sec. 3.  The uncodified law of  the State of Alaska  enacted in                                                            
     sec.  2, ch. 8, SLA  1999, as amended  by sec. 1, ch.  102, SLA                                                            
     2002, is amended to read:                                                                                                  
          Sec. 2. AS 29.45.050(o) is repealed July 1, 2010 [2006].                                                            
                                                                                                                                
     New language underlined [DELETED TEXT BRACKETED]                                                                         
                                                                                                                                
Senator B. Stevens moved for the adoption of Amendment #2.                                                                      
                                                                                                                                
Co-Chair Wilken objected for explanation.                                                                                       
                                                                                                                                
Senator  B.  Stevens  pointed  out that,  while  the  amendment  was                                                            
drafted to the  original version of the bill, it would  apply to the                                                            
Version  "D"  committee  substitute.   Amendment  #2  would  provide                                                            
additional  options to municipalities  as a result of the  following                                                            
three changes:  it would add the language  "demolition and  removal"                                                            
to the qualifying language;  would increase the tax exemption period                                                            
from  five years  to  ten years;  and  would  address environmental                                                             
remediation issues  that would require a property  to be vacated. He                                                            
also  noted that  the amendment  would  allow a  municipality,  on a                                                            
case-by-case  basis,  to expand  the property  qualification  period                                                            
from five years to seven years.                                                                                                 
                                                                                                                                
JEFF JUDD,  Director of  Operations, Cook  Inlet Housing  Authority,                                                            
testified via teleconference  from an offnet site and spoke in favor                                                            
of the bill; particularly  language would allow local property taxes                                                            
to be deferred  for up to  ten years. The  bill would enhance  local                                                            
communities,  non-profits and other  entities efforts to  revitalize                                                            
deteriorated properties.  Absent these kinds of options, the expense                                                            
associated  with improving deteriorating  properties would  be cost-                                                            
prohibitive. In  addition, in the long term, the resulting  gains in                                                            
assessed  values and corresponding  increased  property taxes  would                                                            
benefit local  municipalities and offset any lost  tax revenue. This                                                            
legislation   is  really   about  "economic   development  and   the                                                            
opportunity  to  create  healthy  neighborhoods,   vibrant  business                                                            
district environments,  quality affordable  housing development  and                                                            
ultimately  improved   property  assessed  values   and  higher  tax                                                            
revenues  for local  governments."  His organization  welcomes  this                                                            
taxation  exemption and  deferral  legislation, as  it would  enable                                                            
them to continue their efforts to revitalize deteriorated sites.                                                                
                                                                                                                                
Co-Chair Green asked for  confirmation that the bill would allow for                                                            
site improvement during the ten-year taxation exemption period.                                                                 
                                                                                                                                
Mr. Judd concurred.                                                                                                             
                                                                                                                                
Co-Chair   Green  asked   whether   the  tax   abatement  would   be                                                            
discontinued were no work undertaken.                                                                                           
                                                                                                                                
Mr.  Judd replied  that the  local  government would  establish  the                                                            
taxation  abatement/exemption   rehabilitation   parameters   within                                                            
existing and proposed law.                                                                                                      
                                                                                                                                
Senator  Bunde asked  whether municipalities  could  spin the  local                                                            
options provided by this amendment as "unfunded mandates."                                                                      
                                                                                                                                
Senator  B. Stevens  responded  no,  as the  municipality  would  be                                                            
required to approve  and establish the parameters  pertinent to each                                                            
abatement project.                                                                                                              
                                                                                                                                
HOWARD LEVINE,  Director of Development, Venture Development  Group,                                                            
testified via teleconference  from an offnet site and spoke in favor                                                            
of the bill  as "it would be the catalyst  for the redevelopment  of                                                            
under-utilized  and blighted  areas within  Alaska." Increasing  the                                                            
allowable  abatement period  from five years  to ten years  would be                                                            
beneficial  to developers  and property  owners.  The challenges  of                                                            
coordinating rehabilitation  activities are expensive and absent tax                                                            
abatement, the cost would  be prohibitive. His company would utilize                                                            
the  components   provided  by  this  legislation   to  enhance  its                                                            
redevelopment  projects. He  thanked the  Committee for considering                                                             
the bill.                                                                                                                       
                                                                                                                                
Co-Chair Wilken removed his objection.                                                                                          
                                                                                                                                
There being no further objection, Amendment #2 was ADOPTED.                                                                     
                                                                                                                                
Amendment  #1: This amendment  inserts the  following language  into                                                            
Section  1, subsection  (a)  of  the bill  on  page one,  line  six,                                                            
following the word "election."                                                                                                  
                                                                                                                                
     An exclusion or exemption authorized by this subsection may be                                                             
     applied with respect to taxes levied in a service area to fund                                                             
     the special services.                                                                                                      
                                                                                                                                
Co-Chair  Wilken  moved  to  adopt Amendment  #1  and  objected  for                                                            
explanation.                                                                                                                    
                                                                                                                                
Ms. Jackson informed the  Committee "that current statute is silent"                                                            
regarding the  taxation application of this exemption  in regards to                                                            
service  areas.  Therefore,  it  was  determined  by  the  House  of                                                            
Representatives  that language clarifying that a municipality  would                                                            
have  the  decision-making   authority  in  this  regard  should  be                                                            
included in the bill.                                                                                                           
                                                                                                                                
Ms. Jackson  explained  that the  Version "D"  committee  substitute                                                            
would allow a  municipality to provide a $20,000 tax  exemption on a                                                            
$100,000 house.  The $80,000 balance  would be taxable at  the local                                                            
mill rate. This amendment  would allow, by a vote of local residents                                                            
on an ordinance  presented by the local governing  assembly, whether                                                            
or not to collect  the mill rate supporting, for example,  emergency                                                            
services  in that  area, based  on the  full $100,000  value of  the                                                            
house or the $80,000 value of the house.                                                                                        
                                                                                                                                
Co-Chair Wilken removed his objection.                                                                                          
                                                                                                                                
There being no further objection, Amendment #1 was ADOPTED.                                                                     
                                                                                                                                
Co-Chair Wilken asked whether  the Department of Revenue spreadsheet                                                            
titled "Estimated State  Revenue Loss Due to Increased Allowance for                                                            
Residential  Exemption"  [copy on file]  dated January  20, 2004  is                                                            
current.                                                                                                                        
                                                                                                                                
RANDY  HOFFBECK,   Petroleum   Property  Assessor,   Tax   Division,                                                            
Department of  Revenue, testified via teleconference  from an offnet                                                            
site and replied that it is.                                                                                                    
                                                                                                                                
Co-Chair Wilken, noting  that the spreadsheet contains actuals based                                                            
upon a $10,000  exemption as well as projections for  both a $20,000                                                            
and $50,000  exemption, asked  upon which  of those projections  the                                                            
$389,182 "Estimated increased cost to state" is calculated.                                                                     
                                                                                                                                
Mr.  Hoffbeck  replied  that the  amount  is  based on  the  $20,000                                                            
exemption projection.                                                                                                           
                                                                                                                                
Co-Chair Wilken  expressed therefore that this spreadsheet  could be                                                            
recognized as the basis for a fiscal note.                                                                                      
                                                                                                                                
Mr. Hoffbeck concurred.                                                                                                         
                                                                                                                                
Co-Chair Wilken asked that  the Department of Revenue further refine                                                            
the spreadsheet so that the presentation is clearly defined.                                                                    
                                                                                                                                
Mr. Hoffbeck agreed.                                                                                                            
                                                                                                                                
Senator B. Stevens questioned  the reason for the Petroleum Property                                                            
Tax Division  of the  Department  of Revenue's  involvement in  this                                                            
process   as  the  bill   pertains  to   residential  property   tax                                                            
exemptions.                                                                                                                     
                                                                                                                                
Co-Chair Wilken  explained that any  change in the mill rate  of the                                                            
municipality  subject  to this  legislation  would  also affect  the                                                            
amount of money  the State might collect  via AS 43.56 (Oil  and Gas                                                            
Property).                                                                                                                      
                                                                                                                                
Senator  B. Stevens  acknowledged  the connection.  In addition,  he                                                            
understood  that the Municipality  of Anchorage is not specified  in                                                            
this  legislation,  as it  is not  one  of the  five municipalities                                                             
offering this tax exemption.                                                                                                    
                                                                                                                                
STEVE  VAN SANT,  State Assessor,  Division of  Community  Advocacy,                                                            
Department  of Community  and Economic Development,  explained  that                                                            
originally  the spreadsheet  was developed  to assist  the State  in                                                            
determining  the  amount  of  Oil  and Gas  revenue  that  would  be                                                            
affected  by the proposed  property tax exemption.  While there  are                                                            
five municipalities  currently offering this type  of exemption, the                                                            
spreadsheet  reflects only  four, as  the Bristol  Bay Borough  area                                                            
does not  have any  oil and gas  properties  within its boundaries.                                                             
Other communities could implement the exemption in the future.                                                                  
                                                                                                                                
Senator   B.  Stevens  asked   for  confirmation   that  only   five                                                            
municipalities currently grant this exemption.                                                                                  
                                                                                                                                
Mr.  Van  Sant  affirmed.  He  also  noted  that  the  exemption  is                                                            
currently limited to $10,000.                                                                                                   
                                                                                                                                
Senator  B.  Stevens  understood  that  other municipalities   could                                                            
implement this exemption.                                                                                                       
                                                                                                                                
Mr. Van Sant  affirmed that any municipality  could elect  to do so.                                                            
                                                                                                                                
Senator B. Stevens understood  therefore, that were this legislation                                                            
adopted, the  Municipality of Anchorage  could elect to implement  a                                                            
$20,000 property tax exemption.                                                                                                 
                                                                                                                                
Mr. Van Sant confirmed.                                                                                                         
                                                                                                                                
Senator  B.  Stevens commented  that  there  are  "tools  available"                                                            
through which tax relief could be provided to property owners.                                                                  
                                                                                                                                
Senator  Hoffman  asked  for confirmation  that,  were  the  $20,000                                                            
exemption allowed, the cost to the State would be $389,182.                                                                     
                                                                                                                                
Mr. Hoffbeck affirmed.                                                                                                          
                                                                                                                                
Co-Chair  Wilken  clarified   that  this  would  be  "the  potential                                                            
liability"  to the  State  were the  four  municipalities  currently                                                            
providing this exemption  to increase the exemption level to $20,000                                                            
and increase their mill rate to the maximum limit.                                                                              
                                                                                                                                
Mr. Van Sant clarified  that $389,182 would be the amount of revenue                                                            
lost to the  State were the four municipalities  to elect  to regain                                                            
the revenue lost  from the exemption by increasing  their local mill                                                            
rate. The Kenai  Peninsula Borough  also has a sales tax  that could                                                            
be utilized  to offset  its lost  revenue. Therefore,  the  $389,182                                                            
State revenue reduction would be a "worst case scenario."                                                                       
                                                                                                                                
Senator Bunde  asked whether  a revenue loss  to the State  would be                                                            
incurred were  the Municipality of Anchorage to provide  the $20,000                                                            
property tax exemptions.                                                                                                        
                                                                                                                                
Mr. Hoffbeck replied  that the overall effect on the  State would be                                                            
minimal  as the  oil and  gas property  within the  Municipality  of                                                            
Anchorage "is minuscule."                                                                                                       
                                                                                                                                
Senator Bunde,  referencing municipalities' concern  regarding State                                                            
revenue  sharing,  commented  that,  were  these  municipalities  to                                                            
increase their  exemption level and their mill rates  to the maximum                                                            
allowable  level,  it could  be likened  to  being a  State  subsidy                                                            
amounting   to  approximately   $100,000  for   each  of  the   four                                                            
communities.                                                                                                                    
                                                                                                                                
Mr. Hoffbeck  affirmed that  the amount would  vary between  $31,000                                                            
for the  North Slope Borough  and $133,000  for the Fairbanks  North                                                            
Star Borough.                                                                                                                   
                                                                                                                                
Co-Chair Green moved to  report the bill, as amended, from Committee                                                            
with individual recommendations and accompanying fiscal notes.                                                                  
                                                                                                                                
Senator Hoffman  voiced support for  the bill, as "it would  provide                                                            
more local control" to municipalities.                                                                                          
                                                                                                                                
Senator Bunde interjected "and more State money."                                                                               
                                                                                                                                
There  being  no  objection,  CS SB  136  (FIN)  was  REPORTED  from                                                            
Committee with  new zero fiscal note, dated April  28, 2004 from the                                                            
Department of  Revenue and new zero fiscal note, dated  February 11,                                                            
2004 from the Department of Community and Economic Development.                                                                 
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 393                                                                                                        
     "An  Act  relating  to  default on  tuition,  fees,  and  other                                                            
     charges of the University  of Alaska and to claims on permanent                                                            
     fund  dividends for  tuition, fees,  and other  charges of  the                                                            
     University of Alaska that are in default."                                                                                 
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken informed  the Committee  that this  bill, which  is                                                            
sponsored  by the  Senate  Finance Committee,  would  authorize  the                                                            
University  of Alaska  to  garnish an  individual's  Permanent  Fund                                                            
Dividend  (PFD) for  payment of  defaulted tuition  fees, and  other                                                            
fees owed to  the University. He noted  that Version 23-LS1945\A  is                                                            
before the Committee.                                                                                                           
                                                                                                                                
PAT  PITNEY,  Director  of  Budget  Development  and  Institutional                                                             
Planning, University  of Alaska, testified  via teleconference  from                                                            
an offnet  site and expressed  that "the  University is looking  for                                                            
every  way to  maximize  its  generated revenue."  This  bill  would                                                            
implement  a means  through which  the University  could collect  on                                                            
outstanding  loans in  a fashion  similar  to that  utilized by  the                                                            
Alaska Student  Loan Corporation (ASLC)  that allows it "to  garnish                                                            
PFDs for  past due or defaulted  debt." Language  in the bill  would                                                            
assure that  due process  would be observed.  This is a "safe  bill"                                                            
which would  allow the  University  to collect,  in the first  year,                                                            
approximately  $400,000. The  amount collected  would decrease  over                                                            
time as outstanding  debt is reduced. There are approximately  1,700                                                            
individuals  with outstanding University  debt. Through coordinated                                                             
efforts  with the Department  of Revenue's  Permanent Fund  Dividend                                                            
Division,  assurances  have  been  established  to insure  that  the                                                            
University's  PFD  garnishment  attachment  would align  with  other                                                            
Permanent Fund Dividend attachment policies.                                                                                    
                                                                                                                                
DARWIN  PETERSON, Staff  to  Senator Gary  Wilken,  Co-chair of  the                                                            
Senate  Finance  Committee  reiterated   that  the  University  debt                                                            
collection  process being  proposed is similar  to that utilized  by                                                            
the  ASLC. He  characterized  the  University's  current  collection                                                            
process  as being  "aggressive"  in  that five  separate  collection                                                            
notices  are sent  out  over a  six month  period,  with  additional                                                            
notices  offering deferred  payment plans  in addition to  utilizing                                                            
collection  agencies.  However,  regardless  of  these  efforts,  in                                                            
excess  of one million  dollars in  180-day or  longer debt  remains                                                            
outstanding. The  University estimates that of that  amount $800,000                                                            
is attributable  to students who collect  PFDs. In order  to provide                                                            
the maximum protection  to citizens, the proposed  methodology would                                                            
specify  that  extensive  notification,   warning,  and  an  appeals                                                            
process  must be  implemented prior  to garnishing  an individual's                                                             
PFD.                                                                                                                            
                                                                                                                                
Mr.  Peterson estimated  that  half of  the $800,000  original  debt                                                            
could be  collected the  first year were  this program implemented,                                                             
and that in subsequent  years, $100,000 could be collected annually.                                                            
The  proposed   legislation  would   provide  the  University   "one                                                            
additional  avenue" through  which  to collect,  rather than  "write                                                            
off", debt.                                                                                                                     
                                                                                                                                
SHARON   BARTON,  Director,   Permanent  Fund   Dividend   Division,                                                            
Department  of Revenue, stated that  the legislation being  proposed                                                            
is  "straight forward"  and  would not  present  any implementation                                                             
obstacles.  The  Division  would  experience   an  initial  one-time                                                            
expense related  to computer reprogramming  to allow the  University                                                            
garnishment.                                                                                                                    
                                                                                                                                
Senator   Bunde  questioned   how   University   tuition  could   be                                                            
delinquent, as he understood  that tuition is typically collected in                                                            
advance.                                                                                                                        
                                                                                                                                
Ms. Pitney  affirmed that the University's  policy is that  students                                                            
pay up front;  however, she allowed that the delinquency  process is                                                            
intensive in that when  the financial committee reviews students who                                                            
are past due  in their payments a  multitude of factors are  at play                                                            
such as students  being delinquent due to anticipated  financial aid                                                            
that does not occur; students  who "have an intent to pay" that does                                                            
not  transpire; and  essentially  the students  "are  looked at  and                                                            
accepted as a  risk that follows through at some point."  She opined                                                            
that the one million dollar  delinquency total, out of a $60 million                                                            
dollar total,  "relatively speaking  is a small amount."  Being able                                                            
to collect $400,000  of the one million dollar total  would be worth                                                            
the endeavor.  She noted that in addition to tuition  delinquencies,                                                            
other delinquent  charges included in the total include  such things                                                            
as dorm room damages and parking fees.                                                                                          
                                                                                                                                
Senator Bunde  encouraged the University  to strengthen its  tuition                                                            
bad  debt collection  policy  as holding  students  responsible  for                                                            
their obligation  is part  of the learning  experience. He  recalled                                                            
that financial  aid checks often identify  both the student  and the                                                            
school  in   order  to  insure  that   the  funds  would   be  spent                                                            
appropriately.                                                                                                                  
                                                                                                                                
Senator  Bunde  questioned   the  appropriateness   of  placing  the                                                            
garnishment   of  PFDs   for  University   delinquencies  ahead   of                                                            
garnishments  for domestic violence  delinquencies and Alaska  Court                                                            
matters, as denoted in  the payment priority list denoted in Section                                                            
2 of the bill on page two, beginning on line nine.                                                                              
                                                                                                                                
                                                                                                                                
SFC 04 # 95, Side B 09:49 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Ms. Pitney responded  that the rationale for placing  the University                                                            
garnishment  as number four  of eight is that  this would place  the                                                            
University's  garnishment  behind that  of the  Alaska Student  Loan                                                            
Corporation. This rationale was the impetus for its placement.                                                                  
                                                                                                                                
Senator Bunde  pointed out that there  "would be potential  costs to                                                            
the State" were the University  to maintain the number four position                                                            
on the garnishment  priority list,  as such things as Court  ordered                                                            
fines would be secondary to the University's garnishments.                                                                      
                                                                                                                                
Co-Chair  Wilken characterized  the  University's  placement on  the                                                            
priority list as being "somewhat objective."                                                                                    
                                                                                                                                
Ms. Pitney agreed.                                                                                                              
                                                                                                                                
Co-Chair Green questioned  why this legislation is necessary, as she                                                            
understood  that, in addition to an  agency of the State  being able                                                            
to collect  such things  as child  support debt  from an  individual                                                            
through the PFD  garnishment process, anyone could  garnish anything                                                            
for a proven debt through the legal process.                                                                                    
                                                                                                                                
Co-Chair Green  also questioned whether the University's  collection                                                            
in this  manner is appropriate  or whether  the University's  fiscal                                                            
note, dated April 23, 2004  is correct as it indicates that it would                                                            
cost $400,000 to collect $400,000.                                                                                              
                                                                                                                                
Ms. Pitney  responded that  the fiscal note  might not be  correctly                                                            
presented,  as the  intent of  the University  would  be to add  one                                                            
staffing position to develop  the collection program the first year.                                                            
The associated  expense, she continued  would amount to $100,000  of                                                            
the anticipated  $400,000  revenue in  FY 05.  The $300,000  revenue                                                            
balance,  she  stated,  would be  distributed  to  other  University                                                            
components.  In subsequent years,  the cost of managing the  program                                                            
would be minimal.                                                                                                               
                                                                                                                                
Co-Chair Wilken  understood therefore  that the fiscal note  depicts                                                            
that, in FY 06, it would cost $30,000 to collect $350,000.                                                                      
                                                                                                                                
Ms. Pitney concurred that that is the intent.                                                                                   
                                                                                                                                
Co-Chair Green  opined that the fiscal note should  be re-worked, as                                                            
the intent is not properly reflected.                                                                                           
                                                                                                                                
Co-Chair Wilken stated that the fiscal note would be re-worked.                                                                 
                                                                                                                                
Co-Chair Green  restated her earlier  argument that due to  language                                                            
in Section 2, subsection  (b) on page two, beginning on line 26, the                                                            
University  is already qualified to  garnish an individual's  PFD as                                                            
it is an agency of the State.                                                                                                   
                                                                                                                                
Ms.  Pitney  clarified  that the  language  does  not apply  to  the                                                            
University  as it,  like the  Alaska  Student Loan  Corporation,  is                                                            
recognized as a separate  entity rather than an agency of the State.                                                            
Therefore, she clarified  that the language in Section 2, subsection                                                            
(b)(4) is required to allow  the University, as a separate entity of                                                            
the State, to collect outstanding debt via the PFD garnishment.                                                                 
                                                                                                                                
     (4) claims on defaulted tuition, fees, and other charges of                                                                
     the University of Alaska under AS 43.23.073;                                                                               
                                                                                                                                
Ms. Barton  could not speak  regarding whether  or not the  language                                                            
would be required;  however, she noted  that this legislation  would                                                            
provide the  University the authority  to garnish up to 100-percent                                                             
of an  individual's PFD  rather than "80-percent  which is  standard                                                            
for other garnishments not included under this exemption."                                                                      
                                                                                                                                
Co-Chair Green understood  therefore that absent this legislation, a                                                            
maximum of 80-percent could be garnished.                                                                                       
                                                                                                                                
Ms. Barton affirmed.                                                                                                            
                                                                                                                                
Senator B. Stevens understood  therefore that the entities specified                                                            
in Section  2,  subsection (b)  would be  entitled  to garnish  100-                                                            
percent of  a PFD, and that those  not listed could collect  up to a                                                            
maximum of 80-percent.                                                                                                          
                                                                                                                                
Senator  B.  Stevens  voiced  confusion  to  the  comment  that  the                                                            
University  would not qualify  as an agency  of the State under  the                                                            
language on line 26 of Section 2, subsection (b).                                                                               
                                                                                                                                
Co-Chair Wilken  expressed that clarification  would be forthcoming                                                             
regarding whether  or not the University  could be recognized  as an                                                            
agency of the State.                                                                                                            
                                                                                                                                
Senator B. Stevens asked  for confirmation that the priority listing                                                            
pertaining  to  garnishments   would  be  conducted   in  the  order                                                            
reflected in Section 2, subsection (b).                                                                                         
                                                                                                                                
Ms.  Barton  stated  that  a clarification   of the  intent  of  the                                                            
priority listings would be forthcoming.                                                                                         
                                                                                                                                
Co-Chair  Wilken ordered  the  bill HELD  in Committee  in order  to                                                            
further address the fiscal  note concern, the agency status concern,                                                            
and the priority list ranking order concern.                                                                                    
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 379(JUD)                                                                                            
     "An Act providing that public members of the Board of Trustees                                                             
     of the Alaska Permanent Fund Corporation may be removed only                                                               
     for cause; and providing for an effective date."                                                                           
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken explained  that this legislation, which is sponsored                                                            
by the  Senate Rules  Committee by  Request of  the Governor,  would                                                            
provide  the  process   through  which  an  Alaska  Permanent   Fund                                                            
Corporation Board  of Trustees public board member  could be removed                                                            
for cause.                                                                                                                      
                                                                                                                                
MIKE BARNHILL, Assistant  Attorney General, Commercial/Fair Business                                                            
Section,  Civil Division  (Juneau), Department  of Law, stated  that                                                            
under  current law,  a public  Board member  could  be removed  from                                                            
their position  on the Board for any  reason provided the  reason is                                                            
presented  in written  format. This  bill would  change the  current                                                            
scenario in that  a Board member trustee could only  be removed "for                                                            
cause."  He stated  that the  bill defines  "for cause"  to be  such                                                            
things as "inefficiency,  misconduct  in office, neglect  of duties,                                                            
and  conviction   while   in  office  of   crimes  involving   moral                                                            
turpitude." The current  process is detrimental to the effectiveness                                                            
of  the  Board  as  there  is value  in  maintaining  institutional                                                             
knowledge and continuity of management of the $28 billion fund.                                                                 
                                                                                                                                
Co-Chair  Wilken  asked  for  clarification  that  Mr.  Barnhill  is                                                            
speaking of language  in the Judiciary version of  the bill, Version                                                            
23-GS2142\D.                                                                                                                    
                                                                                                                                
Mr. Barnhill concurred.                                                                                                         
                                                                                                                                
Mr. Barnhill  stated that the bill  would allow the aggrieved  Board                                                            
member, through  a hearing  process, to present  witnesses  on their                                                            
behalf,  with the  final hearing  decision regarding  their  removal                                                            
being filed with the Lieutenant  Governor. He also noted that during                                                            
the  bill's   progression  through   various  committees,   numerous                                                            
questions  regarding  the  hearing  process arose.  In  response,  a                                                            
forthcoming  committee  substitute,  Version  23-GS2142\H  has  been                                                            
developed  that would  streamline the  process by  aligning it  with                                                            
other current  "removal for  cause" statutes  that do not require  a                                                            
hearing process,  as detailed  in the "Other  Alaskan Statutes  'For                                                            
Cause' Removal Provisions"  handout [copy on file] that was compiled                                                            
by the Department  of Law. The streamlined  process would,  were the                                                            
Member  to challenge  the  reason for  removal, involve  the  Alaska                                                            
Court System in the final determination process.                                                                                
                                                                                                                                
Co-Chair  Green moved  to adopt  the Version  23-GS2142\H  committee                                                            
substitute as the working document                                                                                              
                                                                                                                                
There being no  objection, the Version "H" committee  substitute was                                                            
adopted as the working document.                                                                                                
                                                                                                                                
ROBERT  STORER,  Executive  Director,  Permanent  Fund Corporation,                                                             
Department   of  Revenue,   explained   that  typically   it   takes                                                            
approximately  two years  for a  Board member  to become  thoroughly                                                            
educated  on Board  matters. The  six-member Board  consists of  two                                                            
Cabinet members  one of whom is the  Commissioner of the  Department                                                            
of Revenue, and  four members who are appointed by  the Governor and                                                            
who serve four-year, staggered  terms with one Board member position                                                            
expiring  on June  30th  of each  year.  The Alaska  Permanent  Fund                                                            
Corporation  has not  been afforded  the protection  of removal  for                                                            
cause, as have other Boards.                                                                                                    
                                                                                                                                
Mr. Storer shared  that on two different occasions,  five of the six                                                            
Board  Members have  been replaced  when a new  Administration  took                                                            
office. He could  not say that this has disadvantaged  the Permanent                                                            
Fund Corporation;  however,  due to the maturity  level of  the Fund                                                            
and  the  length  of  time  that  is  spent  regarding  the  various                                                            
investment approaches,  adoption of this policy would be beneficial.                                                            
The Corporation  believes  that "it  is very  important" that  Board                                                            
continuity  occurs in order  for the education  and knowledge  to be                                                            
gained in  some systemic  manner. He noted  that the Governor  Frank                                                            
Murkowski Administration  retained  two Board members and  appointed                                                            
others who had  a previous or related experience with  the Permanent                                                            
Fund Corporation.  This provided a very smooth transition  to occur.                                                            
Any  new  Administration  would  have the  ability  to  replace  two                                                            
members immediately,  one being the  Commissioner of the  Department                                                            
of Revenue  and the other  being the Cabinet  member. An  additional                                                            
replacement would be possible on June 30th of that year.                                                                        
                                                                                                                                
Mr. Storer  also  observed that  new Board  members  learn far  more                                                            
quickly  when  allowed  to  gleam  knowledge   from  existing  Board                                                            
members. While  numerous State boards  operate with the removal  for                                                            
cause component, he urged the Committee to support the bill.                                                                    
                                                                                                                                
Senator Hoffman,  noting that the  Version "D" committee  substitute                                                            
incorporated the  definition of "for cause" but the  Version "H" did                                                            
not,  asked whether  the definition  of  "for cause"  exists  within                                                            
State statute.                                                                                                                  
                                                                                                                                
Mr. Barnhill  responded that were  a lawsuit filed by the  aggrieved                                                            
Board  member,  the  Alaska  Court  System  would apply  a  test  to                                                            
determine whether the reason  was capricious, arbitrary, or illegal.                                                            
If the  determination  were that  none  of those  applied, then  the                                                            
determination  would be  that it was  valid. This  is a "common  law                                                            
defined term."                                                                                                                  
                                                                                                                                
Senator  Bunde spoke  in support  of the  bill as  should there  "be                                                            
mischief at foot"  and were a Governor to replace  all Board members                                                            
with people  he could control, there  might be a way to "manipulate                                                             
the dividend to the detriment…of  the overall investment goal of the                                                            
Permanent Fund."                                                                                                                
                                                                                                                                
Senator  Bunde  moved  to  report  the  bill   from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
                                                                                                                                
There  being  no  objection,  CS  SB  379(FIN)   was  REPORTED  from                                                            
Committee with zero fiscal  note #2, dated February 4, 2004 from the                                                            
Department  of Law and zero fiscal  note #3, dated February  6, 2004                                                            
from the Department of Revenue.                                                                                                 
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 65                                                                                                         
     "An  Act authorizing  the Department  of  Corrections to  enter                                                            
     into agreements with  municipalities for new or expanded public                                                            
     correctional  facilities in the  Fairbanks North Star  Borough,                                                            
     the Matanuska-Susitna  Borough, Bethel, and the Municipality of                                                            
     Anchorage."                                                                                                                
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  explained  that  this  bill  would  authorize  the                                                            
Department  of Corrections  to enter into  25-year lease  agreements                                                            
for additional  State correctional  beds with the Matanuska-Susitna                                                             
(Mat-Su) Borough, the Fairbanks  North Star Borough, Bethel, and the                                                            
Municipality of Anchorage.                                                                                                      
                                                                                                                                
Co-Chair  Green, the bill's  sponsor, expressed  that for more  than                                                            
four years,  she has  been advocating  for the  construction  of new                                                            
prisons  in the  State.  Discussions  have occurred  regarding  both                                                            
public   and  private   operated   facilities.   Contrary  to   most                                                            
discussions that place  private and public facilities in competition                                                            
with each other,  this legislation  would provide an opportunity  to                                                            
construct  new facilities  in the State without  advocating  for one                                                            
side  or the  other.  No  expansion  would occur  were  the  current                                                            
competitive  situation  to continue.  Some facilities  in the  State                                                            
operate at  one hundred percent capacity  on an on-going  basis, and                                                            
were this to continue,  it could present "a crisis" and a "dangerous                                                            
situation."                                                                                                                     
                                                                                                                                
AT EASE 10:10 AM / 10:11 AM                                                                                                     
                                                                                                                                
Co-Chair  Green  moved  to adopt  the  Version  23-LS0392\C  as  the                                                            
working document.                                                                                                               
                                                                                                                                
Co-Chair Wilken objected for explanation.                                                                                       
                                                                                                                                
Co-Chair Green  explained that Version  "C" would expand  the bill's                                                            
title to include  private prisons in the City of Whittier,  provided                                                            
the State could  not provide the service at the same  or lower cost.                                                            
In addition,  the bill's  title would  also be  expanded to  provide                                                            
consideration to the City of Dillingham and Kodiak's jails.                                                                     
                                                                                                                                
Co-Chair  Green  pointed out  that  the bill  would  also provide  a                                                            
termination  date  of July  1,  2009 as  specified  in  the bill  in                                                            
Section  1 on  page  two, lines  six  and nine.  By this  time,  the                                                            
Commissioner  of  the  Department  of  Corrections   must  authorize                                                            
construction  of the facilities on  the public side. Subsection  (2)                                                            
of Section  1 would allow for an increase  in the maximum  number of                                                            
beds that could be constructed in the Mat-Su Borough facility.                                                                  
                                                                                                                                
Co-Chair  Green noted that  new language  referencing a third  party                                                            
contractor  for a prison facility  in the City of Whittier  has been                                                            
added as reflected  by the entirety of Section 2,  beginning on page                                                            
three, line  five. She specified  that the  City of Whittier  prison                                                            
construction  must be  authorized by  July 1, 2006.  She also  noted                                                            
that  before  the project  could  be awarded  to  a third  party,  a                                                            
feasibility  study must  be conducted  in order  to affirm that  the                                                            
State  could not  perform  these services  for  the  same or  lesser                                                            
amount. Section 2 would  also mandate that a competitive bid process                                                            
be implemented  when awarding the  City of Whittier prison  facility                                                            
project to a third  party and that the City of Whittier  must adhere                                                            
to  the State  procurement  process  for  the acquisition  of  land,                                                            
design, construction,  and operation  of the facility. Furthermore,                                                             
the Commissioner  must approve the  facility design before  entering                                                            
into an agreement. Approval  of design, efficiency, safety measures,                                                            
and building  standards is necessary  as there is always  the chance                                                            
that a facility constructed  by a borough or city might, "in a short                                                            
period of time be turned over to the State."                                                                                    
                                                                                                                                
Co-Chair Green also noted  that the Whittier prison would be limited                                                            
to approximately  2,200 beds. Language in Section  2, subsection (4)                                                            
on page four,  beginning on page 15  is identical to language  in HB                                                            
55-CORRECTIONAL  FACILITIES  pertaining  to the  agreement with  the                                                            
City of Whittier.                                                                                                               
                                                                                                                                
Co-Chair  Green noted  that Section  3, on page  four, beginning  on                                                            
line 23 is also  new language. It would specify that,  in regards to                                                            
the construction  of a prison facility  in the cities of  Dillingham                                                            
and Kodiak,  the  State would  match the  expenditure  of the  local                                                            
entity by issuing a certificate of participation (COP).                                                                         
                                                                                                                                
Co-Chair  Green pointed  out  that new  Section 4,  located on  page                                                            
five,  beginning  on line  11,  would  provides  further  parameters                                                            
regarding the  State's COP agreement  with the cities of  Dillingham                                                            
and Kodiak. The  anticipated annual operating costs  associated with                                                            
providing  the additional  beds at  each facility  are specified  in                                                            
Section 4, line 24.                                                                                                             
                                                                                                                                
Co-Chair Green pointed  out that language in Section 6, on page six,                                                            
line   six  repeals   language   that   the   Legislature   approved                                                            
approximately  six years prior regarding  the Kenai facility,  which                                                            
was not furthered.                                                                                                              
                                                                                                                                
Co-Chair Green  stated that the difficult  aspect of developing  the                                                            
Department of Corrections  "draft" fiscal note, dated April 27, 2004                                                            
[copy  on  file]  was that  while  most  fiscal  notes  reflect  new                                                            
expenses,  the  Department  was  required  to  factor  out  expenses                                                            
associated  with  housing  inmates outside  of  the State.  This  is                                                            
further  explained  in the  fiscal note  analysis.  Inmates who  are                                                            
currently housed  in Arizona would be housed within  the State as of                                                            
the year  2009, and as a  result, that $13  million expense  must be                                                            
removed  from the  total $43  million expense  in  order to  compare                                                            
figures. The resulting  $27 million net expense would better reflect                                                            
the  true  cost  of increasing  the  number  of  in-State  beds.  In                                                            
addition,  some prison  facilities  in Palmer  might  be closed  and                                                            
operations moved  to a new facility. This would "allow  for a better                                                            
management" of funds.                                                                                                           
                                                                                                                                
Co-Chair Green  urged the Committee to realize that  each new "tough                                                            
on crime" bill  approved by the Legislature  would further  increase                                                            
the State's prison  population. In addition, each  new State Trooper                                                            
and new  State prosecutor  would also increase  the number  of those                                                            
who might be incarcerated.  One area that is also  authorized in the                                                            
bill, but  that was not  thoroughly discussed,  is the expansion  of                                                            
the federally  funded Municipality  of Anchorage  jail. The  City of                                                            
Seward is also  interested in requesting that its  number of beds be                                                            
increased.                                                                                                                      
                                                                                                                                
Co-Chair Green commented  that a forthcoming amendment would address                                                            
a  technical  error in  the  bill  and a  separate  amendment  would                                                            
address  Alaska  police  standard  certification   requirements  for                                                            
prison guards as this issue  is not currently addressed in the bill.                                                            
                                                                                                                                
Co-Chair Wilken removed his objection.                                                                                          
                                                                                                                                
There  being  no  further  objection,  the  Version   "C"  committee                                                            
substitute was ADOPTED as the working document.                                                                                 
                                                                                                                                
Amendment  #2:  This  technical  amendment   changes  $1,500,000  to                                                            
$2,000,000  to correct  a drafting error  in Section  4, line  14 on                                                            
page five of the Version "C" committee substitute.                                                                              
                                                                                                                                
Co-Chair Green moved for adoption.                                                                                              
                                                                                                                                
There being no objection, Amendment #2 was ADOPTED.                                                                             
                                                                                                                                
MARC ANTRIM, Commissioner,  Department of Corrections,  informed the                                                            
Committee  that,  while this  "compromised"  legislation  would  not                                                            
provide all the  remedies that are desired, both the  Department and                                                            
Governor  support its  passage  as the  need for  additional  prison                                                            
"housing is so  great." He detailed the growth in  prison population                                                            
numbers,  as reflected  in  the Department's  chart  titled  "Inmate                                                            
Population Statistics"  [copy on file], and commented  that there is                                                            
no indication  that  the increasing  prison population  trend  would                                                            
change. Were the current  rate of prison population increase and the                                                            
current circumstances  to continue,  it is anticipated that  half of                                                            
State's inmate population would be housed outside of the State.                                                                 
                                                                                                                                
DEE HUBBARD,  Resident  of Sterling,  testified  via teleconference                                                             
from Anchorage and applauded  the efforts exerted in the development                                                            
of  the  committee   substitute,   specifically  the  inclusion   of                                                            
procurement  code  language  and the  inclusion  of the  Kodiak  and                                                            
Dillingham jail components.  She urged the Committee to consider the                                                            
addition of Statute language,  as adopted by other states, regarding                                                            
private  prison contract  monitoring,  compliance  auditing, use  of                                                            
force  guidelines, contract  enforcement  and fines,  and  emergency                                                            
notification   plans  to  include  such  things   as  who  would  be                                                            
responsible  for expenses associated  with searching for  an escaped                                                            
inmate.  These types  of things  should be incorporated  into  State                                                            
Statute. She  could provide pertinent  information to the  Committee                                                            
in these regards.                                                                                                               
                                                                                                                                
Co-Chair Green  asked Ms. Hubbard to provide the information  to her                                                            
office.                                                                                                                         
                                                                                                                                
LINDA  FREED,   City  Manager,   City  of   Kodiak,  testified   via                                                            
teleconference  from  Kodiak  and  thanked the  bill's  sponsor  for                                                            
providing   the  City  the   opportunity   to  participate   in  the                                                            
development of the committee  substitute. The focus of her testimony                                                            
would be  the financing of  the City's proposed  jail facility.  She                                                            
noted that  the City currently  operates the  jail on a contractual                                                             
basis with the  State in an old contractor's office/garage  building                                                            
that was  built in the  1940s. The building,  which also houses  the                                                            
City's police  department, is unsafe  and expensive to operate.  The                                                            
City  has  committed  to  constructing  a  new  20  or  22-bed  jail                                                            
facility, probably  at the same site, at an estimated  cost of up to                                                            
$3.5 million.  The City  "already subsidizes  the operation"  of the                                                            
current jail facility even  though the contract with the State is in                                                            
effect. The proposed 50-50  State/local match that would be required                                                            
to construct  the new State  jail facility  would exceed the  City's                                                            
fiscal ability.  However,  construction would  be possible  were the                                                            
City able to secure a three  million dollar bonded indebtedness. The                                                            
City has  made a  commitment to  the bill's sponsor  "that they  are                                                            
willing to bond  and pay for the construction costs  of the facility                                                            
up  front." At  the  current  four-percent  interest rate,  a  three                                                            
million dollar  twenty-year bond indebtedness  annual payback  would                                                            
be $220,745. Therefore,  the request is that the State  would assist                                                            
the City  in finding  "a  mechanism" through  which  the City  could                                                            
"construct a new  jail for the State of Alaska" and  assist the City                                                            
in satisfying  the  bonded indebtedness  debt  "up to  a maximum  of                                                            
three million dollars."                                                                                                         
                                                                                                                                
TC  KAMAI,  Chief  of Police,  City  of  Kodiak  Police Department,                                                             
testified via teleconference  from Kodiak regarding the difficulties                                                            
the  City faces  in operating  the  current aging  and "deplorable"                                                             
facility; particularly  in regards to meeting the standards required                                                            
by the State contract.  He likened the escalating annual maintenance                                                            
expenses of  the facility "to putting  band-aids on an open  wound."                                                            
The jail must be replaced.                                                                                                      
                                                                                                                                
Senator Olson  asked regarding the jail's incarceration  statistics.                                                            
                                                                                                                                
Chief Kamai responded that  the monthly occupancy rate of the 16-bed                                                            
facility is 80-percent.  This morning the jail held  13 individuals.                                                            
                                                                                                                                
Senator Olson asked for a total number per year.                                                                                
                                                                                                                                
Chief Kamai  responded that the jail  houses an average of  1,200 to                                                            
1,300 incarcerations per year.                                                                                                  
                                                                                                                                
SENATOR  GARY  STEVENS  thanked the  bill's  sponsor  for  including                                                            
community jails  in the committee substitute. Though  his experience                                                            
as a former City  of Kodiak Mayor, he could attest  to the condition                                                            
of the  City jail,  the oldest jail  in the State.  He stressed  the                                                            
timeliness of  this legislation, as the City is moving  forward with                                                            
its plans to replace  the jail with a multi-public  safety building.                                                            
He applauded  the City's  willingness to  commit to paying  up-front                                                            
for the building,  and supported the  City's request that  the State                                                            
commit to assisting with the building's associated bond service.                                                                
                                                                                                                                
PHIL  SHEALY,   City  Manager,   City  of   Seward,  testified   via                                                            
teleconference  from Seward  and shared that  the City supports  the                                                            
committee   substitute's    "comprehensive   package    to   address                                                            
correctional  facility  needs  in  the  State for  years  to  come."                                                            
However,  the  one  missing  component  is that  of  addressing  the                                                            
State's  maximum-security  facility needs.  Therefore, he  requested                                                            
that  expansion  of the  City of  Seward's  Spring Creek  Prison  be                                                            
considered in that regard.                                                                                                      
                                                                                                                                
WILLARD DUNHAM,  City Council Member, City of Seward,  testified via                                                            
teleconference  from Seward and reminded  the Committee that,  while                                                            
the  Spring Creek  facility  can currently  house  350 inmates,  the                                                            
building  and the  site  were designed  to  allow for  an  expansion                                                            
ability to house  700. He noted that this could be  accomplished for                                                            
a reasonable amount.  Therefore, he requested that  this facility be                                                            
added into the  feasibility study language. He also  stated that the                                                            
facility  currently  houses   500  inmates  and  site  expansion  is                                                            
required. The Department  of Corrections would support the expansion                                                            
of maximum-security improvements at the site.                                                                                   
                                                                                                                                
                                                                                                                                
SFC 04 # 96, Side A 10:38 AM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr.  Dunham noted  that  the bonds  that were  sold  to support  the                                                            
construction  of this facility would  be paid off in the  year 2006,                                                            
and, in light  of the current interest rate level,  he stressed that                                                            
this would  be a  good time to  reissue those  bonds. Another  valid                                                            
reason to expand  the facility is  the fact that Seward is  the site                                                            
of the Alaska Vocational  & Technical Institute, which could provide                                                            
training for correctional  officers and inmates. Therefore, he urged                                                            
the Committee  to include the community of Seward  in the bill as he                                                            
assured the Committee that  the City would be willing "to assist the                                                            
Department  on all fronts." The only  thing negative about  the bill                                                            
is  the fact  that  the  City  of Seward'  prison  facility  is  not                                                            
included.                                                                                                                       
                                                                                                                                
Senator G. Stevens  agreed that the Spring Creek facility  should be                                                            
considered  in this legislation as  it is the only maximum-security                                                             
facility  in the  State and  has been  designed  for expansion.  The                                                            
facilities currently incorporated  into the bill are medium security                                                            
or lower,  and pre-sentencing  facilities.  He therefore urged  that                                                            
the facility be included.                                                                                                       
                                                                                                                                
Co-Chair Green  noted that further amendments would  be forthcoming.                                                            
                                                                                                                                
Co-Chair  Wilken ordered  the  bill HELD  in Committee  for  further                                                            
consideration.                                                                                                                  
                                                                                                                                
[Note: SB 65 was re-addressed later in the meeting.]                                                                            
                                                                                                                                
RECESS 10:41 AM / 4:04 PM                                                                                                       
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 313                                                                                                        
     "An Act making supplemental and other appropriations; amending                                                             
     appropriations; making an appropriation to capitalize a fund;                                                              
     and providing for an effective date."                                                                                      
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Green noted  that Members  have been  provided a  detailed                                                            
Office of Management  and Budget spreadsheet  [copy on file],  dated                                                            
April 23, 2004 regarding the FY 2004 supplemental appropriation.                                                                
                                                                                                                                
Senator  Dyson moved  to  adopt the  Version  23-GS2153\I  committee                                                            
substitute as the working document.                                                                                             
                                                                                                                                
There being no  objection, the Version "I" committee  substitute was                                                            
ADOPTED as the working document.                                                                                                
                                                                                                                                
Co-Chair Green expressed  that this legislation must be addressed in                                                            
short  order  as some  Departments  might  be  reaching,  "in  their                                                            
minds," a "crisis" budgetary  situation. She noted that some federal                                                            
authority  and  corporate   funds  are  available   to  support  the                                                            
supplemental.  She asked Members to review the committee  substitute                                                            
and contact  her office  regarding  concerns or  amendments, as  the                                                            
intent is to move the bill from Committee expeditiously.                                                                        
                                                                                                                                
The Bill was HELD in Committee.                                                                                                 
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 65                                                                                                         
     "An  Act authorizing  the Department  of  Corrections to  enter                                                            
     into agreements with  municipalities for new or expanded public                                                            
     correctional  facilities in the  Fairbanks North Star  Borough,                                                            
     the Matanuska-Susitna  Borough, Bethel, and the Municipality of                                                            
     Anchorage."                                                                                                                
                                                                                                                                
                                                                                                                                
[Note: This bill was heard earlier in the meeting.]                                                                             
                                                                                                                                
Co-Chair Wilken noted that  the bill was again before the Committee.                                                            
                                                                                                                                
Amendment  #3: This  amendment inserts  new language  into the  bill                                                            
title  on page  one,  line  one, following  "An  Act."  The  amended                                                            
language would read as follows.                                                                                                 
                                                                                                                                
     An Act relating to  correctional officers, parole officers, and                                                            
     probation officers;…                                                                                                       
                                                                                                                                
In addition,  the bill inserts  new bill sections  into the  bill on                                                            
page one, following line twelve, as follows.                                                                                    
                                                                                                                                
     Section 1. AS 18.62.290(2) is amended to read:                                                                             
          (2) "correctional officer" means a person                                                                             
                (A) appointed by the commissioner of corrections                                                              
     whose primary duty  under AS 33.30 is to provide custody, care,                                                            
     security,  control,   and  discipline  of  persons  charged  or                                                            
     convicted   of  offenses  against  the  state   or  held  under                                                            
     authority of state law; or                                                                                               
                (B) employed in a correctional facility in this                                                               
     state  whose   primary  duty  is  to  provide  custody,   care,                                                          
     security,  control,   and  discipline  of  persons  charged  or                                                          
     convicted of offenses or held under authority of law;                                                                    
     Sec. 2. AS 18.65.290(5) is amended to read:                                                                              
          (5) "parole officer" means a person appointed by the                                                                  
     commissioner  of  corrections  or employed  by  a correctional                                                           
     facility  in this state  to perform  the duties of supervising                                                           
     the parole of prisoners under AS 33.16;                                                                                    
     Sec. 3. AS 18.65.290(7) is amended to read:                                                                                
          (7) "probation officer" means a person appointed by the                                                               
     commissioner  of  corrections  or employed  by  a correctional                                                           
     facility  in this state  to perform the  duties of a  probation                                                          
     officer under AS 33.05.                                                                                                    
                                                                                                                                
     New Text Underlined [BRACKETED TEXT DELETED]                                                                             
                                                                                                                                
Other changes resulting  from this amendment are: deleting "$14,600"                                                            
and replacing  it  with "$11,600"  on page  two,  line 25;  deleting                                                            
"sec.  4" and replacing  it  with "sec.  7" on page  four, line  29;                                                            
deleting "sec. 4" and replacing  it with "sec. 7" on page five, line                                                            
nine; and deleting  "sec. 3" and replacing it with  "sec. 6" on page                                                            
five, line 14 and on page five, line 31.                                                                                        
                                                                                                                                
Co-Chair  Green moved to  adopt the amendment.  She noted that  this                                                            
amendment would  incorporate standards  into the bill pertaining  to                                                            
staff training  and certification.  In addition, she noted  that the                                                            
amendment  would also  present  a technical  change  to correct  the                                                            
annual  maximum allowable  lease  payment per  bed at  a new  prison                                                            
facility.                                                                                                                       
                                                                                                                                
Senator  Dyson  asked  whether  State  statutes  currently   contain                                                            
adequate screening  procedures or  training for prison chaplains  as                                                            
there was a recent news  report regarding inappropriate conduct of a                                                            
State prison chaplain.                                                                                                          
                                                                                                                                
MARK  ANTRIM, Commissioner,  Department  of  Corrections,  responded                                                            
that even were  more stringent screening in place,  "there are still                                                            
bad people"  and bad things  could happen.  The Department  supports                                                            
the  prison chaplaincy  program.  Furthermore,  he  shared that  the                                                            
chaplain in  question had more than  twenty years of experience  and                                                            
had been highly recommended.                                                                                                    
                                                                                                                                
Senator  Dyson  asked  whether  the  Department  might  require  any                                                            
additional  statutory authority  in regards  to the prison  chaplain                                                            
program.                                                                                                                        
                                                                                                                                
Commissioner Antrim responded no.                                                                                               
                                                                                                                                
There being no objection, Amendment #3 was ADOPTED.                                                                             
                                                                                                                                
Co-Chair Green  noted that Amendment #4 would not  be offered as its                                                            
contents were embodied in Amendment #3.                                                                                         
                                                                                                                                
Amendment #5:  This amendment deletes  the word "and" in  the bill's                                                            
title on page one line three.                                                                                                   
                                                                                                                                
In addition,  the bill's title is  further amended to read,  on page                                                            
one, line four, as follows.                                                                                                     
                                                                                                                                
     Anchorage and the City of Seward; relating to the development                                                              
     and financing of privately operated correctional….                                                                         
                                                                                                                                
Furthermore  the amendment  also inserts a  new subsection  into the                                                            
bill on page two, line five as follows.                                                                                         
                                                                                                                                
     (5) Seward - expansion of the existing Spring Creek                                                                        
     Correctional Center by up to 144 beds.                                                                                     
                                                                                                                                
Senator B.  Stevens moved to adopt  Amendment #5, at the  request of                                                            
Senator Gary Stevens.                                                                                                           
                                                                                                                                
Co-Chair Wilken objected for explanation.                                                                                       
                                                                                                                                
Senator B. Stevens read the amendment.                                                                                          
                                                                                                                                
Senator  Gary Stevens  explained that  the City  of Seward's  Spring                                                            
Creek  Correctional  Facility  is  the  most logical  locale  for  a                                                            
maximum-security  facility expansion,  as it  is currently  the only                                                            
maximum-security  prison in  the State and,  as it was designed  for                                                            
expansion, it would be the most economical choice.                                                                              
                                                                                                                                
Co-Chair Green  suggested that the  amendment be changed  to further                                                            
reflect the  distinction between a  public and private correctional                                                             
facility.                                                                                                                       
                                                                                                                                
Co-Chair Wilken  stated that the language in Amendment  #5 should be                                                            
reworked.                                                                                                                       
                                                                                                                                
Amendment-to-Amendment  #5: This friendly amendment to the amendment                                                            
changes the originally proposed language as follows.                                                                            
                                                                                                                                
The language "and  the City of Seward;" is inserted  into the bill's                                                            
title on page one, line four, following the word "Anchorage".                                                                   
                                                                                                                                
In  addition,  for consistency  purposes,  the  words  "City of"  is                                                            
inserted  before  the word  "Seward"  in  new subsection  (5)  being                                                            
offered. This language would read as follows.                                                                                   
                                                                                                                                
     (5)  City of Seward  - expansion of  the existing Spring  Creek                                                            
     Correctional Center by up to 144 beds.                                                                                     
                                                                                                                                
Co-Chair Wilken moved to amend Amendment #5.                                                                                    
                                                                                                                                
Senator  Olson suggested  that consideration  be given to  including                                                            
the City of Kotzebue prison facilities in the legislation.                                                                      
                                                                                                                                
Co-Chair Wilken  asked that Senator  Olson consider presenting  that                                                            
issue as a separate amendment.                                                                                                  
                                                                                                                                
There  being  no  objection,  the  Amendment  to  Amendment  #5  was                                                            
ADOPTED.                                                                                                                        
                                                                                                                                
Co-Chair Wilken offered  a motion to adopt Amendment #5, as amended.                                                            
                                                                                                                                
There being no objection, Amendment #5, as amended, was ADOPTED.                                                                
                                                                                                                                
Amendment  #6: This  amendment deletes  all material  in Section  4,                                                            
page five,  lines 13 through 17 and  replaces it with the  following                                                            
language.                                                                                                                       
                                                                                                                                
     MUNICIPAL  JAIL FACILTIES. (a)  Each of the following  projects                                                            
     is  approved   to  receive  $3,000,000   of  the  proceeds   of                                                            
     certificates  of participation authorized under  sec. 3 of this                                                            
     Act,  on the  condition  that the  municipality,  in which  the                                                            
     project is located,  provides all funds over this amount needed                                                            
     for  the  upgrade,   expansion  or  replacement   of  the  jail                                                            
     facilities.                                                                                                                
                                                                                                                                
In addition, language in  Section 4, subsection (a)(2) on page five,                                                            
line 21 is amended to read as follows.                                                                                          
                                                                                                                                
     existing 16-bed facility with a new facility up to 22 beds.                                                              
                                                                                                                                
     New Text Underlined [BRACKETED TEXT DELETED]                                                                             
                                                                                                                                
Senator B. Stevens moved to adopt Amendment #6.                                                                                 
                                                                                                                                
Co-Chair Wilken and Co-Chair Green objected                                                                                     
                                                                                                                                
Senator  B. Stevens  explained  that the  effect  of this  amendment                                                            
would be to increase the  amount of the Certificate of Participation                                                            
(COP) from  two million to  three million  dollars. In addition,  he                                                            
noted that  any expenses  above this  amount to  upgrade, expand  or                                                            
renovate a facility  would be borne by the municipality.  The effect                                                            
of this language would be to remove the State match language.                                                                   
                                                                                                                                
Senator B. Stevens  continued that the amendment would  also provide                                                            
a  technical  change  to qualify  that  the  current  16-bed  Kodiak                                                            
Community Jail  would be replaced with up to a new  22-bed facility.                                                            
                                                                                                                                
Co-Chair  Green  stated  that  the  original   proposal  would  have                                                            
required  a  50-percent   State/municipality   match  with  a  total                                                            
projected per  facility maximum of  four million dollars.  She noted                                                            
that upon further  review, it was  determined that construction  for                                                            
proposed  new jail  facilities  would cost  less  than four  million                                                            
dollars. Therefore,  the legislation was changed to  specify a State                                                            
maximum  expenditure  of two  million dollars  and  a local  maximum                                                            
expenditure of  $1.5 million. With the understanding  that the local                                                            
municipality  would use  these funds  to construct  a new jail,  the                                                            
State would sign a contract  specifying that it would be responsible                                                            
for the operating costs of the facility on a long-term basis.                                                                   
                                                                                                                                
Co-Chair  Green  continued  that  historically  when  a State/local                                                             
participation  agreement is in place, more participation  on part of                                                            
the local entity  has been required.  Therefore, in this  situation,                                                            
the State,  and in particular, the  Legislature, has agreed,  "to be                                                            
more generous" in its participation  commitment. She stated that the                                                            
goal  is  to  make  local  jail facility   projects  affordable  and                                                            
incorporate local participation.                                                                                                
                                                                                                                                
Co-Chair  Green appreciated  the  local community  representatives'                                                             
comments regarding  their willingness to improve their  local prison                                                            
facilities;   however,  she  asserted   that  the  intent   of  this                                                            
legislation  was to  have  local participation  and  have the  State                                                            
assist  in  providing  funding  without  burdening  the  State.  She                                                            
advised that the  funding streams for the local prison  enhancements                                                            
would be  "a different  funding stream" than  normally utilized  for                                                            
prisons "when entities  go to bond" and arrange "for the State to do                                                            
the  lease/purchase  on  the  other  facilities."  She  warned  that                                                            
careful  consideration  must be applied  to this  endeavor as  other                                                            
communities  might come  forward and  ask that  the State  construct                                                            
prison   facilities  in   their  communities   with  limited   local                                                            
participation.  She stressed  that while this  would be a  Committee                                                            
policy  call, the intent  would be  to not have  a State  commitment                                                            
that "we cannot afford."                                                                                                        
                                                                                                                                
Co-Chair  Wilken  understood  that  were the  existing  language  in                                                            
effect, the community of  Dillingham would be required to provide at                                                            
least  $1.5  million  toward  construction   of  a  new  jail.  Were                                                            
Amendment #6 adopted, the  State's obligation would be three million                                                            
dollars  and the City  of Dillingham  would be  responsible for  any                                                            
expense above the three million dollar amount.                                                                                  
                                                                                                                                
Co-Chair Green concurred.                                                                                                       
                                                                                                                                
Co-Chair  Wilken understood,  therefore,  that were  the project  to                                                            
cost three million dollars  or less, the community would receive the                                                            
facility "au gratis."                                                                                                           
                                                                                                                                
Co-Chair Green  affirmed. In addition,  she stated that adoption  of                                                            
the amendment  would also require  further changes in the  committee                                                            
substitute in that the  $4,000,000 amount specified in Sec. 3, lines                                                            
28  and  30  on  page  four  must  be  changed  to  $6,000,000.  She                                                            
reiterated that  adoption of this amendment would  serve to increase                                                            
"State exposure."                                                                                                               
                                                                                                                                
Commissioner  Antrim noted that he  could not comment in  regards to                                                            
the amendment, as it is not in his field of expertise.                                                                          
                                                                                                                                
Senator G. Stevens  appreciated Co-Chair Green's comments  regarding                                                            
the affordability of the  project and the local participation issue.                                                            
He stressed that the City  of Kodiak would be willing to provide the                                                            
upfront  costs of  constructing  a new  22-bed, $3.5  million  jail;                                                            
however, he voiced that  the City would appreciate knowing what base                                                            
level the State  would commit to in  regards to the debt  service as                                                            
the City would  be obligating to bond the total project  and pay any                                                            
associated expenses  above that specified amount.  He noted that the                                                            
annual debt  payment is projected  to be approximately $220,000  per                                                            
year  for the duration  of  the bond.  In addition,  he stated  that                                                            
separate,  annual  operating  costs  would be  associated  with  the                                                            
project.  He reminded  the  Committee  that  the City  is  currently                                                            
paying approximately  $3,000 more, annually, than  what the State is                                                            
contributing  for  the  current  Kodiak   jail.  In  conclusion,  he                                                            
stressed that,  "there is a disinclination for the  City council" to                                                            
invest "that much money into a State jail."                                                                                     
                                                                                                                                
Senator Hoffman  stated that since  consideration is being  given to                                                            
changing the language  regarding the capacity of the  Kodiak jail to                                                            
be  "up  to 22-beds,"  he  would  consider  proposing  that  similar                                                            
language be applicable to the Dillingham jail.                                                                                  
                                                                                                                                
Co-Chair  Wilken  asked that  that  component  of the  amendment  be                                                            
addressed  after  the portion  of  the amendment  dealing  with  the                                                            
financial arrangement is rectified.                                                                                             
                                                                                                                                
Senator Hoffman suggested that the amendment be divided.                                                                        
                                                                                                                                
Co-Chair  Wilken  noted that  a separate  amendment  addressing  the                                                            
Dillingham jail could be submitted for consideration.                                                                           
                                                                                                                                
Co-Chair  Green  asked  regarding  the  process  undertaken  by  the                                                            
Department of  Corrections for projecting operating  costs for local                                                            
jail facilities;  specifically whether the contracts  were developed                                                            
on a cost  per day basis.  It would be in  the best interest  of the                                                            
State to keep local facilities viable.                                                                                          
                                                                                                                                
Commissioner Antrim responded  that each local contract is developed                                                            
on  an  annual  basis,  based  on a  variety  of  factors  for  each                                                            
community.  While the Department  does have  negotiating  abilities;                                                            
this ability is subject  to Legislative appropriation. He also noted                                                            
that, "any  increases  awarded to  this program  over the years  has                                                            
been done so proportionately"  to the original level,  and that, "in                                                            
some cases, there was not  a lot of rational basis for some of those                                                            
figures."                                                                                                                       
                                                                                                                                
Co-Chair  Green asked  the Commissioner  whether  other communities                                                             
might come forward with  a request for inclusion, were this language                                                            
adopted.                                                                                                                        
                                                                                                                                
Commissioner Antrim responded that this could be possible.                                                                      
                                                                                                                                
Co-Chair  Wilken  declared that  were  this amendment  adopted,  the                                                            
State might "have three million dollar jails all over State."                                                                   
                                                                                                                                
Senator B. Stevens offered a motion to withdraw the amendment.                                                                  
                                                                                                                                
There  being   no  objection,  Amendment   #6  was  WITHDRAWN   from                                                            
consideration.                                                                                                                  
                                                                                                                                
Co-Chair  Wilken ordered  the  bill HELD  in Committee  in order  to                                                            
further consider this and other amendments.                                                                                     
                                                                                                                                
[NOTE: This bill was addressed later in the meeting.]                                                                           
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 306                                                                                                        
     "An Act relating to the practice of naturopathic medicine; and                                                             
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
This  was the third  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair  Wilken  explained  that  this  legislation   would  update                                                            
current law pertaining  to the practice of naturopathic medicine and                                                            
would  allow naturopaths  to  conduct  minor surgery  and  prescribe                                                            
controlled  substantive   medication.  He  noted   that  the  bill's                                                            
sponsor,  Senator  Ralph  Seekins,  has developed  a  new  committee                                                            
substitute.                                                                                                                     
                                                                                                                                
Co-Chair  Green moved to  adopt Version 23-LS1572\S  as the  working                                                            
document.                                                                                                                       
                                                                                                                                
Co-Chair Wilken objected for explanation.                                                                                       
                                                                                                                                
BRIAN  HOVE, Staff  to Senator  Ralph Seekins,  the bill's  sponsor,                                                            
apologized to  the Committee for the fact that Senator  Seekins, who                                                            
has conducted  most  of the work  on the committee  substitute,  has                                                            
been delayed and could  not testify on its behalf until later in the                                                            
meeting.                                                                                                                        
                                                                                                                                
Co-Chair Wilken  ordered the bill  SET ASIDE in order to  allow time                                                            
for the bill's sponsor to arrive.                                                                                               
                                                                                                                                
[NOTE: The bill was re-addressed later in the meeting.]                                                                         
                                                                                                                                
                                                                                                                                
     CS FOR SENATE BILL NO. 272(L&C)                                                                                            
     "An  Act relating  to certain  monetary advances  in which  the                                                            
     deposit or  other negotiation of checks to pay  the advances is                                                            
     delayed  until a  later date;  and providing  for an  effective                                                            
     date."                                                                                                                     
                                                                                                                                
                                                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Committee.                                                                                                                      
                                                                                                                                
Co-Chair Wilken  noted that this legislation, which  is sponsored by                                                            
the Senate Rules  Committee, would require the Division  of Banking,                                                            
Securities  and Corporations, Department  of Community and  Economic                                                            
Development  "to  license  and  supervise  Alaska's  payday  lending                                                            
establishments."  He  noted that,  "39 states  and  the District  of                                                            
Columbia  specifically  regulate  this  service."  The  Version  23-                                                            
LS1516\U committee substitute is before the Committee.                                                                          
                                                                                                                                
RICHARD SCHMITZ,  Staff to  Senator John Cowdery,  the Chair  of the                                                            
Senate Rules Committee,  stated that this legislation would regulate                                                            
"payday  lenders" which  is a term  used to  identify business  that                                                            
lend less  than $500 on  short-term loan  basis, typically  for less                                                            
than two weeks.                                                                                                                 
                                                                                                                                
ED SNIFFEN,  Assistant  Attorney General,  Commercial/Fair  Business                                                            
Section, Civil  Division (Anchorage),  Department of Law,  testified                                                            
via teleconference  from an offnet site in Anchorage  and noted this                                                            
bill  would  regulate the  payday  lender  industry  by instituting                                                             
"fairly  significant"  licensing  requirements   including  bonding,                                                            
auditing, and regulatory  authority. The issue being most debated in                                                            
this  bill "deals"  with "the  fundamental  principal  of how  these                                                            
loans" would  originate. Payday lenders  have operated in  Anchorage                                                            
"for quite some time" and  typically charge $15 in interest per each                                                            
$100 loan amount.  The Version "U" committee substitute  would limit                                                            
payday lending  to a maximum of $500 and would allow  the loan to be                                                            
rolled over  two times as compared  to the $1,000 maximum  and four-                                                            
time rollover proposed in the original version of the bill.                                                                     
                                                                                                                                
Mr. Sniffen  explained  that a rollover  occurs when  a loan  is not                                                            
paid when  due and is "rolled  over" for another  two weeks  with an                                                            
additional  $15 per  $100 charge levied.  A provision  in this  bill                                                            
would require  a payday lender to offer a borrower  the option of up                                                            
to a six-month  payment plan at no  additional fee or charge  at the                                                            
conclusion of a rollover  period were a loan unpaid at that time. He                                                            
expressed  that  "significant   consumer  protection"   language  is                                                            
incorporated  into the  bill to  "provide protection  that does  not                                                            
currently exist."                                                                                                               
                                                                                                                                
Mr. Sniffen  allowed  that such things  as a  pending lawsuit  being                                                            
advanced by Alaska Legal  Services against payday lenders challenges                                                            
"the legality  of these transactions  under Alaska Usery  Statutes,"                                                            
has  caused  confusion  regarding  this  legislation.  The  Banking,                                                            
Securities  and Corporations  Division  "is  not as  optimistic"  as                                                            
Alaska  Legal Services  is about  the outcome  of  that lawsuit.  He                                                            
stated   that,  "there   is  no   current  indication   that   these                                                            
transactions are currently  illegal," and he reminded that they have                                                            
been available "for quite some time."                                                                                           
                                                                                                                                
Mr. Sniffen  commented  that while  some groups  are furthering  the                                                            
adoption of  the Model Act, no other  state has adopted it  or would                                                            
likely  be  adopting it  in  this  regard, as  "it  contains  fairly                                                            
significant   restrictions   that   would  essentially   put   these                                                            
businesses out of business."                                                                                                    
                                                                                                                                
Mr. Sniffen  pointed  out that  this legislation,  when compared  to                                                            
regulations of the 44 states  that currently regulate this industry,                                                            
would be viewed  as "one of the more  restrictive" in that  it would                                                            
implement a  monetary limit and a  minimum two-week lending  period.                                                            
In addition,  this legislation  is the only  one that would  require                                                            
lenders  to  provide  the  aforementioned  payment  plan  option  to                                                            
borrowers.                                                                                                                      
                                                                                                                                
Mr.  Sniffen also  communicated  that  there  is opposition  to  the                                                            
lending  fee   which  would  be  considered   "enormous,"   were  it                                                            
calculated in terms of  an annual percentage rate (APR). The $15 fee                                                            
for a $100 loan combined  with the five-dollar origination fee would                                                            
amount to a  520-APR; a $300 loan  would equate to a 433-APR;  and a                                                            
$500 loan  would equate to  a 416-APR. He  noted that these  figures                                                            
would not change  were a rollover to occur, as both  the fee and the                                                            
amount  of time  would be  doubled. The  largest fee  charged on  an                                                            
annual  basis, he shared,  would therefore  equate  to a maximum  of                                                            
520-APR. While  some states have implemented  a 60-percent  interest                                                            
rate cap, "most  states do not" have  a specified limit and  the fee                                                            
being charged in Alaska  could be considered to be "at the low end."                                                            
                                                                                                                                
Mr. Sniffen conveyed  that the Division's view is  that, rather than                                                            
the $15  fee creating  consumer  harm, financial  management is  the                                                            
issue. Extending the length  of the loan from 14-days to 30-days has                                                            
been discussed  as it would  "half the interest  rate … the  lenders                                                            
might have  some problems  with that  and it  would effectively  put                                                            
them out of  business." He stated  that the industry could  speak to                                                            
that concern.                                                                                                                   
                                                                                                                                
Mr. Sniffen discounted  comparisons of the payday lender industry to                                                            
the credit  card industry,  as,  he contended,  they are  completely                                                            
different  kinds   of  loans.  In  summary,  this  legislation   was                                                            
carefully  developed after  weighing  the input  from the  industry,                                                            
consumer  groups, and other  interested parties.  In conclusion,  he                                                            
stated that the Department supports the legislation.                                                                            
                                                                                                                                
Senator   Bunde  asked   regarding  the   bill's  business   license                                                            
requirements;   specifically   how  the  licensing   fee  would   be                                                            
determined.                                                                                                                     
                                                                                                                                
Mr. Sniffen understood  that the licensing fee could total a maximum                                                            
of $2,000. The Division  of Banking, Security and Corporations would                                                            
determine the amount.                                                                                                           
                                                                                                                                
Senator Bunde asked that the fee structure be further explained.                                                                
                                                                                                                                
MARK   DAVIS,   Director,   Division  of   Banking,   Securities   &                                                            
Corporations,  Department  of Community  and  Economic Development,                                                             
testified via  teleconference from  an offnet site in Anchorage  and                                                            
explained that  a biannual, maximum $1,000 per year  fee, or a total                                                            
two-year fee  of $2,000, could be  levied as depicted in  Section 3,                                                            
Sec. 06.50.080, page five, lines 12 through 16 of the bill.                                                                     
                                                                                                                                
Senator  Bunde asked  whether  these fees  would  offset the  actual                                                            
costs associated with managing the program.                                                                                     
                                                                                                                                
Mr. M. Davis responded  that these fees "would capture approximately                                                            
80-percent"  of the Department's associated  licensing expenses.  He                                                            
noted that the Department  was concerned that these businesses would                                                            
not pay  a higher  fee  during the  initial implementation  of  this                                                            
legislation.                                                                                                                    
                                                                                                                                
Senator Bunde,  noting that  there are not  an exorbitant number  of                                                            
payday lenders operating  in the State, asked whether the Department                                                            
could enforce the fee or force the business to close.                                                                           
                                                                                                                                
                                                                                                                                
SFC 04 # 96, SIDE B 04:49 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Mr.  M.  Davis  continued  that  this  legislation  would  serve  to                                                            
characterize  these  businesses  as financial  institutions  and  as                                                            
such, once they were licensed,  their license must be maintained. As                                                            
such, the  powers of the  State's banking  codes would be in  effect                                                            
and the State "could prevent them from being in operation."                                                                     
                                                                                                                                
Senator Bunde  asked, therefore, the reason that the  fees could not                                                            
recoup the overall expense associated with the program.                                                                         
                                                                                                                                
Mr.  M. Davis  expressed  that were  the fee  higher  than a  $2,000                                                            
biannual  fee,  it  would serve  to  discourage  the  industry  from                                                            
applying for  a license. This would  prevent the State from  getting                                                            
"a handle on this … completely unregulated industry".                                                                           
                                                                                                                                
Senator Bunde  voiced that while he supports this  legislation as it                                                            
would  regulate the  industry, the  State should  not subsidize  20-                                                            
percent of the cost of its licensing program.                                                                                   
                                                                                                                                
Senator Bunde  suggested that an amendment  be developed  to address                                                            
this  concern.  Other  licensing  fees,  such as  those  charged  to                                                            
barbers and hair  dressers, fully compensate the State  for the cost                                                            
of their licensing programs.                                                                                                    
                                                                                                                                
Co-Chair Wilken  asked that Senator Bunde work with  the Division to                                                            
address this concern.                                                                                                           
                                                                                                                                
Senator  Bunde  stated  that  rather than  serving  to  legalize  an                                                            
illegal  industry as  some people  "have been  mislead" to  believe,                                                            
this legislation  would establish  a licensing program for  a legal,                                                            
but un-regulated  industry that has been operating  in the State for                                                            
a significant  amount  of time.  Furthermore, while  the bill  would                                                            
regulate the industry,  it would not promote it, would not establish                                                            
a new industry,  and does not "do  anything to prohibit people  from                                                            
making poor financial judgment."                                                                                                
                                                                                                                                
DEBORAH FINK,  Representative, Cash  Alaska, provided the  Committee                                                            
with a chart titled "Comparison  of CSSB272 to Current Law" [copy on                                                            
file] that  compares the provisions  of the proposed legislation  to                                                            
current industry  practices. Agreeing that misinformation  about the                                                            
industry does  exist she affirmed Senator Bunde's  remarks that this                                                            
legislation  would serve  to regulate  the industry  rather than  to                                                            
legalize  the loans.  Approximately  twenty  payday  lenders in  the                                                            
Municipality  of Anchorage  area operate  under the  Small Loan  Act                                                            
Exemption,  which  was  established  in  the  State  in  1955.  This                                                            
Exemption  originally  specified that  a maximum  of  $100 could  be                                                            
loaned. The  intent of the Act was  to exempt these loans  "from any                                                            
kind  of interest"  or term  limit because  the  Legislature at  the                                                            
time, realized  that these  loans were expensive  to provide  due to                                                            
the fact that  they involved "a high  risk population." In  1980, as                                                            
the result of an Attorney  General challenge, a Superior Court judge                                                            
ruled  that the  original  "Legislative  intent of  exempting  those                                                            
loans from limits  and interest was exactly what they  meant to do."                                                            
Shortly  after that ruling,  the Legislature  increased the  maximum                                                            
loan  amount  to  $200,  and  in  1993,   "after  a  great  deal  of                                                            
discussion", the amount was increased to $500.                                                                                  
                                                                                                                                
Ms.  Fink expressed  that,  while the  industry has  been  "happily"                                                            
operating  for numerous years  without regulation,  due to  the fact                                                            
that it is a very  popular and busy business, "it  is probably time"                                                            
that regulations  be enacted. She  characterized the loans  as being                                                            
"real  simple and  real small"  loans that  range from  $100 to  the                                                            
average of $300. They are  designed to be paid off within two weeks.                                                            
Were this legislation enacted,  a $300 loan would cost an individual                                                            
a total of  $350, including the five-dollar  origination  fee, which                                                            
would be  a one-time fee  that would be calculated  "as part  of the                                                            
interest".  She further clarified  that the five-dollar origination                                                             
fee would not  be re-charged were the loan to roller  over. This and                                                            
some other incorrect information  are included in a letter from AARP                                                            
[copy not provided] that was submitted in regards to this bill.                                                                 
                                                                                                                                
Ms. Fink  stated that  this legislation  would serve  to regulate  a                                                            
completely  un-regulated  industry;  would  align the  maximum  loan                                                            
amount of $500  with that currently in effect by the  Small Loan Act                                                            
Exemption;  would limit the  rollover to two  times rather  than the                                                            
current  unlimited  amount; would  establish  licensing provisions;                                                             
would establish  a licensing fee;  and other provisions.  She voiced                                                            
support for the bill in its current form.                                                                                       
                                                                                                                                
Senator Bunde  asked Ms. Fink her position regarding  increasing the                                                            
licensing fee to more than $1,000 per year.                                                                                     
                                                                                                                                
Ms. Fink  stated that  in order  to provide the  service, a  license                                                            
would be  required, and  due to the  fact that  this is a  "healthy"                                                            
industry, businesses would pay it.                                                                                              
                                                                                                                                
Senator Hoffman  asked whether  requiring both  a maximum number  of                                                            
days for a loan term in  addition to the specified minimum loan term                                                            
would be beneficial.                                                                                                            
                                                                                                                                
Ms. Fink responded  that only the minimum loan term  is specified in                                                            
the bill in response  to consumer groups' concerns  specific to that                                                            
aspect.                                                                                                                         
                                                                                                                                
STEVE CLEARY,  Executive Director,  Alaska Public Interest  Research                                                            
Group (AKPIRG),  testified via teleconference  from an offnet  site,                                                            
and stated  that the organization  does not support the bill  in its                                                            
current form,  as it would  serve "to legalize  interest rates  that                                                            
are unfair  and predatory  to vulnerable  consumers." He  referenced                                                            
Mr.  Sniffen's  remarks  relating  to  problems  with  individuals'                                                             
financial  management and  noted that  his organization  is  working                                                            
with financial  institutions  in the State  in order to educate  and                                                            
encourage  people   to  establish  savings  and  bank   accounts  by                                                            
utilizing  such  things  as their  Permanent  Fund  Dividend  checks                                                            
rather  than  opting  to  use  payday  loans.  Usery  Statutes  have                                                            
historically  been  established  to  protect  consumers  from  being                                                            
"gouged  or loan sharked,"  and  he noted that  regulations  prevent                                                            
banks  and other  financial  entities  from charging  high  interest                                                            
rates.  He   argued  that  the  interest   rates  allowed   by  this                                                            
legislation "are not commensurate  with other" established financial                                                            
industry rates.  The State of Georgia has implemented  a maximum 60-                                                            
percent  APR interest  rate  on its  payday loan  industry:  similar                                                            
provisions  would be  preferred "to  just letting  the industry  run                                                            
wild." Noting  Ms. Fink's  position that the  $15 per $100  loan fee                                                            
would  be at the  limit  of where  her business  could successfully                                                             
operate, he  reminded the Committee  that this is the fee  currently                                                            
being utilizing. Therefore,  the five-dollar origination fee allowed                                                            
under  the   proposed  legislation,   would  be  additional   money.                                                            
Financial  institutions  are  required  to adhere  to  the Truth  in                                                            
Lending  Act in  that they  must  depict their  loans  using an  APR                                                            
basis. Were  one to examine  payday lenders  application  paperwork,                                                            
the  APR  listed  on  them  would  reflect  interest  rates  in  the                                                            
thousands of percent. Most  payday loan consumers need the money and                                                            
thereby are subject to  "outrageous interest rates." Noting that the                                                            
payday loan  industry attests  that lower  interest rates would  put                                                            
them out  of business,  he suggested  that a  compromise be  reached                                                            
that, rather  than changing  the amount  of money  to be  collected,                                                            
would  increase,  by two  weeks, the  amount  of time  in which  the                                                            
consumer  could repay the  loan. He stated  that this would  provide                                                            
people, such as those who  are only paid monthly, a better chance to                                                            
repay  the loan.  Therefore, he  asked that  a 30-day  loan term  be                                                            
considered.                                                                                                                     
                                                                                                                                
Mr. Cleary stated  that while the payday loan industry  is on record                                                            
that they could  not afford lengthening  the payback term  they have                                                            
not  provided  a reason  as  to why  it would  be  unaffordable.  He                                                            
recalled  Ms. Fink's testimony  before the  Senate Labor &  Commerce                                                            
Committee in which she  stated that most people come in for just one                                                            
loan. Therefore,  he questioned  why a 30-day  loan period  would be                                                            
unacceptable.                                                                                                                   
                                                                                                                                
Mr. Cleary  declared  that a loan  rollover "is  the most  dangerous                                                            
part of  this," as were a  person to rollover  a $300 loan,  without                                                            
paying any portion  of it off, six times, they could  owe as much in                                                            
interest  as they  do  in principle."  This,  he declared,  is  when                                                            
consumers "really  get gouged by these and really  get in a cycle of                                                            
debt that is bad  for our society and is not good  for the business"                                                            
and  could  tie  up Court  time.  Therefore,  in  order  to  provide                                                            
protection  to these "vulnerable  consumers,"  the Committee  should                                                            
consider reducing  the allowable number  of loan rollovers  from two                                                            
to one. In  summary, he asked that  these amendments be considered,                                                             
and were they not, the Committee should not support the bill.                                                                   
                                                                                                                                
PAT LUBY, Advocacy  Director, AARP Alaska, testified  in Juneau, and                                                            
stated that  AARP participated  years prior,  in the development  of                                                            
the  Model  Act legislation.  The  problem  associated  with  payday                                                            
lenders is  that loans cannot be paid  off incrementally;  they must                                                            
be paid off  in entirety. While people  are allowed to make  partial                                                            
payments on their  credit card balances, payday lenders  require the                                                            
entire amount to be paid  or the entire balance must be rolled over.                                                            
The  original  bill would  have  established  a higher  payday  loan                                                            
amount of $1,000 and four  rollovers. He agreed with Senator Bunde's                                                            
and others'  comments  that "this is  an industry  that ought  to be                                                            
regulated," as  many people are at risk. He allowed  that the people                                                            
who use payday  lenders might not be the State's most  sophisticated                                                            
citizens; they are people  who need money in a hurry; and who might,                                                            
two weeks later,  continue to be in  financial trouble and  would be                                                            
required to  roll the loan over. He  pointed out that were  the two-                                                            
time rollover language  in this legislation adopted there is nothing                                                            
that  would prevent  an  individual  from  going to  another  payday                                                            
lender  and  borrowing  from  them.  He  noted  that  the  State  of                                                            
Arizona's regulations  require a payday lender to  determine whether                                                            
a consumer already has  outstanding payday loans by simply calling a                                                            
company called  Telecheck. He stated that credit card  companies are                                                            
profitable  while operating at an  18-APR; therefore, he  questioned                                                            
the reason  that payday lenders  must have  a 400-percent profit  in                                                            
order to be successful.                                                                                                         
                                                                                                                                
Mr. Luby  characterized this  legislation as  an industry bill,  and                                                            
stated  that the fact  that the  industry is  requesting  regulation                                                            
should raise a "red flag."                                                                                                      
                                                                                                                                
Mr.  Luby  referenced  the  Division  of  Banking,   Securities  and                                                            
Corporation's  fiscal note that projects  that the number  of payday                                                            
lenders is expected to  substantially increase. As a result, two new                                                            
staffing  positions  would  be  required  in order  to  license  and                                                            
investigate the  industry. He argued however, that  this legislation                                                            
would  create  "a  regulatory  environment"  that  would  discourage                                                            
rather than encourage new  operators. This would serve to assist the                                                            
businesses  that currently support  the regulation of the  industry.                                                            
Were the  number of  payday lenders  to not  increase as  projected,                                                            
insufficient  funds  would  be  collected  to  offset  the  cost  of                                                            
operating  the  program.   Therefore,  rather  than   assisting  the                                                            
consumer, this  legislation would  serve to enhance the position  of                                                            
the businesses supporting this bill.                                                                                            
                                                                                                                                
Mr. Luby  stressed that AARP  agrees that  this is an industry  that                                                            
must be regulated.  AARP attorneys are participating  in the pending                                                            
Alaska Legal Services lawsuit,  and he voiced optimism that the suit                                                            
could be  won. The  Judge hearing  that case  has already  indicated                                                            
that he  would wait to see  what the Legislature  would do,  as were                                                            
this legislation  enacted,  no lawsuit  would ensue.  He asked  that                                                            
action on  this bill be  delayed until after  the Court proceedings                                                             
conclude.  He stated  that, at that  time, were  the Legislature  to                                                            
determine that  further regulations should be developed,  AARP would                                                            
be willing to  participate in the endeavor to assure  that consumers                                                            
are adequately protected.                                                                                                       
                                                                                                                                
ANGELA   LISTON,   Representative,   Alaska   Catholic  Conference,                                                             
testified  via teleconference   from an  offnet site  and  supported                                                            
Senator  Bunde's comments  that  this is  an industry  that must  be                                                            
regulated. However, she  spoke against the level of fees proposed in                                                            
the legislation  "on behalf of the working poor who  find themselves                                                            
desperate  for cash" in order  to pay for  such things as rent,  car                                                            
repairs,  and  unforeseen  medical  needs.  She  strongly  supported                                                            
AKPIRG's  suggestion that  this legislation  be amended  to allow  a                                                            
minimum 30-day loan term  as it might allow a person to repay a loan                                                            
without being  required to  roll the loan  over. This might  help to                                                            
prevent  the  increasing  burden  of chronic  debt.  She  urged  the                                                            
Committee  to  emphasize with  the  working  poor and  realize  that                                                            
regulation of  this industry would be "a huge step  in promoting the                                                            
common  good." Allowing  these  interest rates  to  continue "is  an                                                            
exploitation of the working poor."                                                                                              
                                                                                                                                
JIM  DAVIS,  Representative,  Alaska  Legal  Services  Corporation,                                                             
testified via teleconference  from an offnet site and expressed that                                                            
"Alaska  Legal Services represents  low income  Alaskans in  various                                                            
civil  matters including  consumer  law matters."  He addressed  six                                                            
issues including the pending  lawsuit that Alaska Legal Services has                                                            
filed  in Anchorage  on behalf  of  a client  that is  based on  the                                                            
premise  that  a business  must  operate  under  the  State's  Usery                                                            
Statutes  unless  explicitly  exempted  from  the  Statute.  Because                                                            
payday lenders  are not exempt, they  are in violation of  the Usery                                                            
Statute law. The  Superior Judge hearing this case  understands that                                                            
the industry  advanced this  legislation in  an attempt to  halt the                                                            
lawsuit. Therefore,  the Judge ruled that he "would  not rule on the                                                            
legality of the  lawsuit until after the Legislature  adjourned" due                                                            
to concern that, were the  Court to rule that payday lenders were in                                                            
violation  of the  law, the  ruling  would be  moot as  it would  be                                                            
argued  that  the  Legislature  changed  the  law  in  this  regard.                                                            
Therefore,  the lawsuit  is  on hold  pending this  legislation.  In                                                            
addition, this  legislation was not brought forward  until after the                                                            
lawsuit was filed.                                                                                                              
                                                                                                                                
Mr. J.  Davis submitted  that this  is not good  legislation,  as it                                                            
would allow  low income  Alaskans to carry  loans carrying  interest                                                            
rates ranging  between 400 and 1000 percent. The claim  that this is                                                            
a consumer protection  bill is questionable, as these  high interest                                                            
rates could  be argued as  otherwise. "It  is a very strange  world"                                                            
when a consumer  protection bill legalizes high interest  rates such                                                            
as  these.  This is  in  effect "loan  sharking."  He  recalled  Mr.                                                            
Sniffen's comments  that specified that "because payday  lenders are                                                            
making these loans, its  legal." He argued that on many occasions in                                                            
this State,  that has  not been the  case. He  recalled that  in the                                                            
1980s  many lenders  provided  loans by  placing  liens on  people's                                                            
permanent  fund  dividend   checks.  He  stated  that  this  was  "a                                                            
disguised transaction charging  ridiculous rates of interest against                                                            
Alaskans  and of  which was  stopped after  the Courts  ruled it  as                                                            
being illegal.                                                                                                                  
                                                                                                                                
Mr.  J. Davis  further  alleged  that  due  to "the  fact  that  Mr.                                                            
Sniffen's  department  is understaffed,"  it  has not  been able  to                                                            
present this business  practice to the Court System.  This scenario,                                                            
he  continued,  only   proves  that  Mr.  Sniffen's  department   is                                                            
understaffed  and  not  that  this practice  is  legal.  Absent  the                                                            
introduction  of this  legislation,  the Superior  Court would  have                                                            
already ruled it as being illegal.                                                                                              
                                                                                                                                
Mr. J. Davis commented  that it has been argued that  the monitoring                                                            
provisions of this legislation  would "fix the problem." The pending                                                            
lawsuit is  a testament that  the provisions  of the bill would  not                                                            
work, as  the case  involves a woman  who took  out one $500  payday                                                            
loan,  could not  pay it  back, and  had to  roll  it over  numerous                                                            
times. As a result, her  loan went into default; she was sued by the                                                            
lender,  and subsequently  lost her  case in Court.  He stated  that                                                            
this scenario regularly occurs.                                                                                                 
                                                                                                                                
Mr. J. Davis cited  a North Carolina banking entity  as stating that                                                            
"consumers  generally   take  these  loans  out  to  satisfy  sudden                                                            
financial  needs, find  themselves  unable to  meet their  budgetary                                                            
needs on their  next payday, take  additional loans, and  get caught                                                            
up on  a never-ending  cycle of  high fees and  interest." He  noted                                                            
that an Illinois  study indicated  that 77-percent of consumers  who                                                            
took these loans repeatedly  fell into the rollover scenario and got                                                            
deeper in debt.                                                                                                                 
                                                                                                                                
Mr.  J. Davis  stated  that this  legislation  would  not fix  these                                                            
problems and that limiting  the number of loans would only encourage                                                            
a borrower to go to another  payday lender. No mechanism is in place                                                            
through which,  either a payday lender  or the Division of  Banking,                                                            
Securities  and Corporations  would  be able to  determine how  many                                                            
loans  a person  has taken  out. He  declared that  the question  is                                                            
whether the State  would desire to approve loans with  high interest                                                            
rates and allow people to get deeper in debt.                                                                                   
                                                                                                                                
Mr. J.  Davis pointed  out that the  bill does  not contain  any APR                                                            
disclosure provisions,  which are required when someone signs up for                                                            
a credit card or bank loan.  He opined that there are better options                                                            
out there and  that a better bill  could be developed were  consumer                                                            
advocacy groups such as AARP involved in the process.                                                                           
                                                                                                                                
Mr. Schmitz  spoke, on behalf of the  bill's sponsor, in  support of                                                            
legislation.  During his research  on this subject, he became  aware                                                            
that  there is  a difference  between interest  rates  and fees.  He                                                            
stated that  were one to write an  insufficient fund check  on their                                                            
bank account,  the bank would typically  assess up to a $25  fee. He                                                            
declared that  perhaps an eighteen-dollar  fee would be reasonable,                                                             
as most people  who borrow are fairly  responsible and are  one-time                                                            
users.  This is contrary  to testimony  that most  consumers  are in                                                            
rollover  scenarios.  He also  stated  that consumer  protection  is                                                            
provided by the  rollover limit and payment plan option  provided in                                                            
the bill.                                                                                                                       
                                                                                                                                
Senator Bunde wished that  he "could propose an amendment that would                                                            
prohibit Alaskans  from making poor financial decisions."  He stated                                                            
that this bill  would not require Alaskans to utilize  this service.                                                            
The service  is driven by  demand. He concluded  that this  industry                                                            
has provided a service  for some time, and were it not regulated, he                                                            
assumed that an underground business might occur.                                                                               
                                                                                                                                
TIM KELLY,  Former Senator, Lobbyist  for Cash Alaska, informed  the                                                            
Committee  that the  Alaska  Legal Services  testimony  misstated  a                                                            
point of fact  as, he continued, the bill contains  three mechanisms                                                            
though which a consumer  could be notified regarding the APR: a sign                                                            
must be placed  in the business window  in this regard; there  is an                                                            
ARP disclaimer  on  the paperwork  that  the consumer  signs; and  a                                                            
federal APR  disclosure requirement  mandates that this information                                                             
must be provided to the consumer.                                                                                               
                                                                                                                                
Co-Chair Wilken ordered the Bill HELD in Committee.                                                                             
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 65                                                                                                         
     "An  Act authorizing  the Department  of  Corrections to  enter                                                            
     into agreements with  municipalities for new or expanded public                                                            
     correctional  facilities in the  Fairbanks North Star  Borough,                                                            
     the Matanuska-Susitna  Borough, Bethel, and the Municipality of                                                            
     Anchorage."                                                                                                                
                                                                                                                                
                                                                                                                                
[Note: SB 65 was heard two times previously in this meeting.]                                                                   
                                                                                                                                
Co-Chair Green reminded  the Committee that, earlier in the meeting,                                                            
an amendment had been offered  but withdrawn from consideration that                                                            
would change  the bill's  language regarding  the State's and  local                                                            
entity's  financial commitment  regarding  the  construction of  new                                                            
jail facilities in Kodiak and Dillingham.                                                                                       
                                                                                                                                
Co-Chair  Wilken   clarified  that   the  referenced  amendment   is                                                            
Amendment #6.                                                                                                                   
                                                                                                                                
Amendment  #6: This  amendment deletes  all material  on page  five,                                                            
Section 4,  lines 13 through 17 and  replaces it with the  following                                                            
language.                                                                                                                       
                                                                                                                                
     MUNICIPAL  JAIL FACILTIES. (a)  Each of the following  projects                                                            
     is  approved   to  receive  $3,000,000   of  the  proceeds   of                                                            
     certificates  of participation authorized under  sec. 3 of this                                                            
     Act,  on the  condition  that the  municipality,  in which  the                                                            
     project is located,  provides all funds over this amount needed                                                            
     for  the  upgrade,   expansion  or  replacement   of  the  jail                                                            
     facilities.                                                                                                                
                                                                                                                                
In addition, language in  Section 4, subsection (a)(2) on page five,                                                            
line 21 is amended to read as follows.                                                                                          
                                                                                                                                
     existing 16-bed facility with a new facility up to 22 beds.                                                              
                                                                                                                                
     New Text Underlined [BRACKETED TEXT DELETED]                                                                             
                                                                                                                                
TOM  BOUTIN,   Deputy  Commissioner,   Department  of  Revenue   and                                                            
Spokesman,  State Bond Committee,  commented that that he  had never                                                            
"seen  State debt  issued with  a kicker  from any  entity" be  it a                                                            
municipality  or any other.  The fact that  a municipality  would be                                                            
contributing something  akin to "a credit enhancement or money for a                                                            
State project"  would not be a matter of consideration  to the State                                                            
Bond Committee  or the Department of Revenue, as he  understood that                                                            
all of these projects would constitute a State lease debt.                                                                      
                                                                                                                                
Co-Chair  Green   interjected  that   rather  than  this   amendment                                                            
pertaining to State lease/purchase  debt, it would apply strictly to                                                            
the operating  expenses associated  with the  Kodiak and  Dillingham                                                            
jails.                                                                                                                          
                                                                                                                                
Co-Chair  Wilken  understood that  the  amendment would  pertain  to                                                            
construction  costs of the  facilities as  opposed to the  operating                                                            
costs.                                                                                                                          
                                                                                                                                
Co-Chair Green  understood "that the payment the State  makes is for                                                            
operating costs."                                                                                                               
                                                                                                                                
Mr. Boutin responded that  the entirety of the projects specified in                                                            
the Version "C"  committee substitute would qualify  for State lease                                                            
debt and therefore would  be rated on the State's credit. "Whether a                                                            
leased project is a capital  lease or an operating lease relies upon                                                            
financial   accounting  standards   for  Rule  13."  Therefore,   he                                                            
considered  all the projects  as State lease  debt and that  some of                                                            
the projects  have "a credit enhancement  of a municipality  kicking                                                            
in some  money." He  reiterated that  he had never  seen this  done,                                                            
"anywhere in the nation"  or the State of Alaska. This does not mean                                                            
that it  "is a bad  thing," but  he opined that  attorneys would  be                                                            
required  "to craft" the  language, as, were  a municipality  to use                                                            
their  general  obligation  ability to  fund  their portion  of  the                                                            
money, the  project would  be considered "part  of the security  for                                                            
the debt and  there "would have to  be a clear segmentation  so that                                                            
the general  obligation of the municipality  didn't run to  the part                                                            
of the project that the municipality was funding."                                                                              
                                                                                                                                
Co-Chair Wilken voiced  that, under the bill's current language, the                                                            
State would  provide, upfront,  a two million  dollar capital  grant                                                            
with an expectation  of a $1.5 million grant being  forthcoming from                                                            
the municipality. Amendment  #6 would change the language to provide                                                            
three million dollars in  State funding with no expectation of local                                                            
match funding.                                                                                                                  
                                                                                                                                
Senator  B. Stevens  stated  that the  amendment  would establish  a                                                            
three million  dollar ceiling  on the State's  participation  in the                                                            
municipality's  construction  of a  local  jail, and  that any  cost                                                            
above that would  become the responsibility of the  municipality. He                                                            
pointed  out that in  Section 3,  subsection (a)  of the bill,  page                                                            
five, lines  one and two, the total  rental obligation of  the State                                                            
on an  annual basis  would be limited  to $400,000.  He stated  that                                                            
this might  be the issue  that Co-Chair Green  is referring  to when                                                            
"saying that the  maximum obligation that the State  would be on the                                                            
line  for would  be  the  $400,000  and the  municipality  would  be                                                            
responsible for  the reimbursement for the debt retirement  of three                                                            
million."                                                                                                                       
                                                                                                                                
Mr. Boutin  replied that currently  there is no financial  structure                                                            
like that available.  Continuing,  he re-emphasized that  this would                                                            
be recognized  as State lease  debt, which  is rated on the  State's                                                            
credit.  He  stated  "the State's  credit  would  be  the  principle                                                            
enhancement,  but he reiterated that  "the project itself  is always                                                            
part of the  credit" in order to provide  the bond holders  with the                                                            
ability,  "in the  event of  a non-appropriation,"  to  take over  a                                                            
portion of the project.                                                                                                         
                                                                                                                                
Senator B. Stevens recalled  that the question regarding the rewrite                                                            
of the original  language is whether Amendment #6  would require the                                                            
monetary amount  to be increased to $6,000,000 in  Section 3 on page                                                            
four, line  27 and the $4,000,0000  amount  on line 30 of that  same                                                            
section to be increased to $8,000,000.                                                                                          
                                                                                                                                
Co-Chair Green concurred.                                                                                                       
                                                                                                                                
Mr. Boutin replied that it would require a linear change.                                                                       
                                                                                                                                
Senator  B.  Stevens  understood  therefore  that  were $3,000,0000                                                             
specified for each of the  Kodiak and Dillingham projects, the total                                                            
amount  required  would  be  $6,000,000.   The  total  cost  of  the                                                            
financial commitment would not exceed $8,000,000.                                                                               
                                                                                                                                
Mr. Boutin  shared that one of the  three financial rating  agencies                                                            
has expressed  that the State should not commit to  a maturity lease                                                            
debt term exceeding 15-years.                                                                                                   
                                                                                                                                
Senator B.  Stevens asked  whether the City  of Kodiak or the  State                                                            
would repay the bond debt reimbursement.                                                                                        
                                                                                                                                
Ms. Freed  stated that, due  to the fact that  this is a State  jail                                                            
operated  by the City  of Kodiak,  the premise is  that the  City of                                                            
Kodiak  would bond  for the  total  construction  costs through  the                                                            
City's general  obligation bonding  capacity with the understanding                                                             
that the  State would  repay  the debt service  up  to a maximum  of                                                            
three million  dollar total construction  costs. She clarified  that                                                            
the City would  be responsible for  any construction expense  beyond                                                            
the three million dollar amount.                                                                                                
                                                                                                                                
Senator B. Stevens expressed that this clarifies the issue.                                                                     
                                                                                                                                
Co-Chair Green  understood the City  of Kodiak's position.  However,                                                            
she  shared  that historically  when  a  local  entity bonds  for  a                                                            
project,  a  State   lease/purchase  agreement   is  in  place  that                                                            
specifies  that the city  would own the building  until the  debt is                                                            
paid. Continuing,  she stated that this arrangement  would differ in                                                            
that, while the  City of Kodiak or Dillingham would  secure the bond                                                            
and agree to  pay anything beyond  the State's three million  dollar                                                            
obligation, when  the project were paid off, the City  would own the                                                            
facility.  She  expressed  therefore,  that there  are  two  funding                                                            
mechanisms  in this bill, as, with  the exception of the  Kodiak and                                                            
Dillingham jails, the State would own the facilities.                                                                           
                                                                                                                                
Co-Chair  Green  asked  whether  the  current   jail  facilities  in                                                            
Dillingham  and  Kodiak  are  counted  against  the  State's  credit                                                            
rating.                                                                                                                         
                                                                                                                                
Mr.  Boutin  responded  in the  negative.  He  reiterated  that,  as                                                            
written, all the projects  in this bill would be recognized as State                                                            
debt, regardless  of whether or not the lessee owns  the facility at                                                            
the end  of the lease term.  Continuing, he  stated that this  could                                                            
result  in meeting  one of four  criteria  in Rule  13 in which  the                                                            
lessee, not  the leasor, "is on the  hook." Therefore, he  concluded                                                            
that regardless of whether  the City of Kodiak utilizes its GO bonds                                                            
to  fund  the construction   of the  jail  facility,  the  bill,  as                                                            
drafted, revolves around State lease debt.                                                                                      
                                                                                                                                
Co-Chair Wilken understood  that this is because of the Certificates                                                            
of Participation specified in the bill.                                                                                         
                                                                                                                                
Mr. Boutin  responded that  this is because  the lease term  clearly                                                            
meets one of  four criteria for financial  accounting standards  for                                                            
Rule 13.                                                                                                                        
                                                                                                                                
                                                                                                                                
SFC 04 # 97, Side A 05:37 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Co-Chair Green recalled  that during a conversation she had with the                                                            
Standard  & Poor credit  rating company  regarding what constituted                                                             
State debt,  they had asked what the  State is doing to house  State                                                            
prisoners. She  informed them that the State is paying  to have them                                                            
housed  in   a  facility  in  Arizona.   They  responded   that  the                                                            
construction  of  a prison  within  the State  to house  those  same                                                            
prisoners would  not be counted against  the State bonding  capacity                                                            
because its operating money  that is currently being spent and which                                                            
"would be spent in the  future." Therefore, she suggested that since                                                            
the State is  currently housing prisoners  in Kodiak and  Dillingham                                                            
that  this  would  constitute  "only  an  addition  to  the  current                                                            
facility." She  stressed that more bed space has been  identified as                                                            
being necessary  in Kodiak and, therefore,  the State would  only be                                                            
paying  for an  increase of  six beds  at that  facility. She  asked                                                            
therefore   whether  the  "replacement   facility  "  term   is  the                                                            
determining factor in regards  to whether the State should simply be                                                            
paying for six new beds.                                                                                                        
                                                                                                                                
Mr. Boutin responded  that were the State to address  this situation                                                            
in a manner  similar to that of housing  prisoners in Arizona,  then                                                            
the Certificate of Participation  language, lease language, and bond                                                            
proceeds should  not be components of the bill. He  stated that were                                                            
the City of  Kodiak to utilize GO  bonding to build a facility  that                                                            
would be  open to housing  any entities'  prisoners, then,  he would                                                            
agree that it would not be considered State debt.                                                                               
                                                                                                                                
Co-Chair  Wilken  asked  the  relationship  of  this  discussion  to                                                            
Amendment #6.                                                                                                                   
                                                                                                                                
Senator  B. Stevens  responded  that the  issue being  discussed  is                                                            
"embodied in  the bill itself;" whereas  the amendment would  simply                                                            
serve to change numbers  in the bill. He explained that the adoption                                                            
of Amendment  # 2 served to increase  the amount of the proceeds  of                                                            
the certificates  of participation.  This would again be  amended by                                                            
the adoption  of Amendment #6. However,  Mr. Boutin's testimony  has                                                            
served to  address issues  embodied in the  body of the bill  rather                                                            
than relating to Amendment #6.                                                                                                  
                                                                                                                                
Co-Chair Wilken  understood that Amendment #6 would  allow the State                                                            
to  issue certificates  of  participation  to build  an under-three                                                             
million dollar  jail anywhere in the  State were one desired  by the                                                            
municipality,  with no local contribution  requirement. Continuing,                                                             
he stated that the Version  "C" committee substitute states that the                                                            
State would assist  a municipality to build a $3.5  million facility                                                            
of  which  the  local  municipality  responsibility  would  be  $1.5                                                            
million.                                                                                                                        
                                                                                                                                
Co-Chair  Wilken   concluded  therefore,  that  were   amendment  #6                                                            
adopted,  there   would  be  $3  million  jails  being  constructed                                                             
everywhere in the State.                                                                                                        
                                                                                                                                
Senator B.  Stevens responded that  the Amendment raises  a question                                                            
in regards  to  Section 3,  page five,  lines two  and three,  which                                                            
specifies a $6,000,000  limit on the total COP payment. He therefore                                                            
understood  that  the language  in  Amendment  #6 would  require  an                                                            
additional  change in that  regard as the  $6 million dollar  amount                                                            
would only provide  funding for the Kodiak and Dillingham  projects.                                                            
                                                                                                                                
Co-Chair  Green  agreed  that   the  $6 million   amount  should  be                                                            
increased to allow  that any other municipality wishing  to pursue a                                                            
new jail facility  be provided for,  as she declared, were  no local                                                            
match participation  required,  this would  be very "attractive"  to                                                            
many communities.                                                                                                               
                                                                                                                                
Senator  Hoffman countered  that  the bill's  language specifically                                                             
identifies to which communities the proposal would apply.                                                                       
                                                                                                                                
Senator  Hoffman   requested  that  consideration   be  provided  to                                                            
dividing  one  portion  of the  Amendment  into  two parts:  one  to                                                            
address  language  in Section  4 Subsection  (1)  and  the other  to                                                            
address Section (4) Subsection (2) as affected by Amendment #6.                                                                 
                                                                                                                                
Co-Chair  Green argued that  the costs associated  with these  jails                                                            
has not  been calculated  on  an "up to"  a certain  number of  beds                                                            
basis, but  rather that  the costs were  calculated to specifically                                                             
reflect the  costs associated  with a 22-bed  Kodiak facility  and a                                                            
25-bed Dillingham  facility.  Therefore, she  stated that she  would                                                            
concur were the intent  to express the entirety of the expenses in a                                                            
per bed manner.                                                                                                                 
                                                                                                                                
Senator Hoffman  pointed out  that were the  amendment adopted,  the                                                            
details relating  to the  Kodiak and Dillingham  jails would  not be                                                            
consistent  as one would  specify "up to"  a certain number  of beds                                                            
and the other would not.                                                                                                        
                                                                                                                                
Co-Chair Wilken  ordered Amendment  #6 to be divided into  Amendment                                                            
6A and 6B.                                                                                                                      
                                                                                                                                
Amendment  #6A: This amendment  deletes all  material on page  five,                                                            
Section 4,  lines 13 through 17 and  replaces it with the  following                                                            
language.                                                                                                                       
                                                                                                                                
     MUNICIPAL  JAIL FACILTIES. (a)  Each of the following  projects                                                            
     is  approved   to  receive  $3,000,000   of  the  proceeds   of                                                            
     certificates  of participation authorized under  sec. 3 of this                                                            
     Act,  on the  condition  that the  municipality,  in which  the                                                            
     project is located,  provides all funds over this amount needed                                                            
     for  the  upgrade,   expansion  or  replacement   of  the  jail                                                            
     facilities.                                                                                                                
                                                                                                                                
Co-Chair Wilken  asked whether this amendment could  result in there                                                            
being three  million dollar jails  constructed all around  the State                                                            
in the years to come.                                                                                                           
                                                                                                                                
Commissioner  Antrim voiced that this  is "a valid concern"  in that                                                            
the State  would be financing  their construction.  In addition,  he                                                            
reminded  that this  amendment applies  to local  rather than  State                                                            
jail facilities.                                                                                                                
                                                                                                                                
Co-Chair Wilken  stated therefore  that the State would be  required                                                            
to pay to have State prisoners held in that local facility.                                                                     
                                                                                                                                
Commissioner  Antrim affirmed that  the basis of the community  jail                                                            
program is  that the State  contract with  the local entity  to hold                                                            
State prisoners.                                                                                                                
                                                                                                                                
Co-Chair  Wilken asked whether  the cost  per prisoner differs  from                                                            
community to community based on the local economics.                                                                            
                                                                                                                                
Commissioner  Antrim affirmed that  operating costs are a  factor in                                                            
the amount paid.                                                                                                                
                                                                                                                                
Co-Chair Green  informed "that every other community  jail is a city                                                            
jail: the State did not  build them, the State pays operating costs,                                                            
and should not have to build non-State owned facilities."                                                                       
                                                                                                                                
Senator B. Stevens  stated that Amendment #6A would  simply serve to                                                            
change  the  ceiling  embodied  in  the bill.  In  response  to  the                                                            
argument that the State  would be building $3 million jails all over                                                            
the State, it could be  argued that the State would be building $3.5                                                            
million jails  all over the State of which $2 million  would be paid                                                            
for by the State. Therefore,  he opined that the amendment would not                                                            
change  what is  embodied  in the  bill with  the  exception of  the                                                            
required match  and the level to which the State would  participate.                                                            
                                                                                                                                
Co-Chair  Wilken   remarked  that   the  issue  pertains   to  local                                                            
participation.                                                                                                                  
                                                                                                                                
Co-Chair   Green   reminded   that  the   original   estimates   for                                                            
constructing  the Kodiak  and Dillingham  jails  were approximately                                                             
$3.5 million.  The State's two million dollar commitment,  which she                                                            
declared lowered local  participation to less than half of the total                                                            
amount,  was considered  "very, very  generous."  While it could  be                                                            
argued that  increasing the  amount to three  million dollars  would                                                            
not  be  significantly   more,  that   increase  would  negate   the                                                            
requirement  for the local  participation.  She voiced concern  that                                                            
this amendment "keeps this section from working."                                                                               
                                                                                                                                
Senator B. Stevens moved to adopt Amendment #6A.                                                                                
                                                                                                                                
Co-Chair Green objected.                                                                                                        
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator B. Stevens                                                                                                    
                                                                                                                                
OPPOSED:  Senator Dyson,  Senator  Hoffman, Senator  Olson,  Senator                                                            
Bunde, Co-Chair Green, and Co-Chair Wilken                                                                                      
                                                                                                                                
The motion FAILED (1-6)                                                                                                         
                                                                                                                                
Amendment #6A FAILED to be adopted.                                                                                             
                                                                                                                                
Amendment  #6B:  This  amendment   amends  language  in  Section  4,                                                            
subsection (a)(2) on page five, line 21 to read as follows.                                                                     
                                                                                                                                
     existing 16-bed facility with a new facility up to 22 beds.                                                              
                                                                                                                                
     New Text Underlined [BRACKETED TEXT DELETED]                                                                             
                                                                                                                                
Senator B. Stevens moved to adopt Amendment #6B.                                                                                
                                                                                                                                
Co-Chair Wilken and Co-Chair Green objected.                                                                                    
                                                                                                                                
Co-Chair  Green would  be willing  to work  with  the Department  of                                                            
Revenue and the  various involved communities to develop  the proper                                                            
language pertaining to this section.                                                                                            
                                                                                                                                
Senator Dyson asked Co-Chair Green to summarize her concern.                                                                    
                                                                                                                                
Co-Chair  Green explained  that the calculations  pertaining  to the                                                            
costs of the facilities  are based on a total bed  count rather than                                                            
an up-to bed count scenario.  The concern is that were no additional                                                            
beds added when  constructing a new Kodiak jail, the  State would be                                                            
required to pay  the amount stated in the bill that  pertains to the                                                            
larger number.                                                                                                                  
                                                                                                                                
Commissioner  Antrim affirmed that  the numbers denoted in  the bill                                                            
are precise numbers.                                                                                                            
                                                                                                                                
Amendment  to Amendment #6B:  This amendment  to the amendment  adds                                                            
the words "up to" before  "25-bed facility" in Section 4, Subsection                                                            
(a) (1) on page  five, line 19 that pertains to the  Municipality of                                                            
Dillingham.                                                                                                                     
                                                                                                                                
Senator Hoffman moved to adopt the amendment-to-the-amendment.                                                                  
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
Senator B. Stevens pointed out that language in Section 1, page                                                                 
two, lines three through 30 is consistent with the language                                                                     
proposed in the amendment to the amendment.                                                                                     
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator B. Stevens, Senator Bunde                                                                                     
                                                                                                                                
OPPOSED: Senator Hoffman, Co-Chair Green, Senator Dyson, and Co-                                                                
Chair Wilken                                                                                                                    
                                                                                                                                
ABSENT: Senator Olson                                                                                                           
                                                                                                                                
The motion FAILED (2-4-1)                                                                                                       
                                                                                                                                
The motion to adopt the Amendment-to-Amendment #6B FAILED to be                                                                 
adopted.                                                                                                                        
                                                                                                                                
AT EASE: 6:00 PM / 6:01 PM                                                                                                      
                                                                                                                                
Due to Committee confusion regarding the subject of the previous                                                                
roll call vote, Co-Chair Green moved to rescind the Committee                                                                   
action.                                                                                                                         
                                                                                                                                
There being no objection, Committee action on the Amendment-to-                                                                 
Amendment #6B was RESCINDED.                                                                                                    
                                                                                                                                
Senator Hoffman moved to adopt the Amendment-to-Amendment #6B.                                                                  
                                                                                                                                
Co-Chair Wilken objected.                                                                                                       
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator B. Stevens, Senator Hoffman, and Senator Olson                                                                
                                                                                                                                
OPPOSED: Senator Bunde, Senator Dyson, Co-Chair Green, and Co-Chair                                                             
Wilken                                                                                                                          
                                                                                                                                
The motion FAILED (3-4)                                                                                                         
                                                                                                                                
The action to adopt Amendment-to-Amendment #6B FAILED.                                                                          
                                                                                                                                
Amendment #6B was again before the Committee.                                                                                   
                                                                                                                                
Co-Chair Wilken maintained his objection to Amendment #6B.                                                                      
                                                                                                                                
A roll call was taken on the motion.                                                                                            
                                                                                                                                
IN FAVOR: Senator B. Stevens and Senator Bunde                                                                                  
                                                                                                                                
OPPOSED:  Senator Hoffman,  Senator Dyson,  Co-Chair Green,  and Co-                                                            
Chair Wilken                                                                                                                    
                                                                                                                                
ABSENT: Senator Olson                                                                                                           
                                                                                                                                
The motion FAILED (2-4-1)                                                                                                       
                                                                                                                                
Amendment #6B FAILED to be adopted.                                                                                             
                                                                                                                                
Co-Chair Wilken ordered the bill HELD in Committee.                                                                             
                                                                                                                                
                                                                                                                                
     SENATE BILL NO. 306                                                                                                        
     "An Act relating to the practice of naturopathic medicine; and                                                             
     providing for an effective date."                                                                                          
                                                                                                                                
                                                                                                                                
[NOTE: This bill was heard earlier in the meeting.]                                                                             
                                                                                                                                
Co-Chair  Wilken  stated  that  this  bill  would   change  Statutes                                                            
pertaining  to naturopathic  medicine.  He  noted that  a  committee                                                            
substitute, Version 23-LS1572\S,  has been presented for discussion.                                                            
                                                                                                                                
SENATOR RALPH  SEEKINS, the bill's  sponsor, explained that  changes                                                            
in the  Version "S" committee  substitute  include: eliminating  the                                                            
temporary  license  language in  the bill  which  would, in  effect,                                                            
require a naturopath  to be fully licensed in the  State before they                                                            
could begin  practicing; clarifying  the authorized activities  that                                                            
could  be  conducted  by  a  naturopath;  and,  providing  that  the                                                            
naturopath  has   registered  with  the  Federal  Drug  Enforcement                                                             
Administration  (FDEA),  has  successfully  completed  pharmacology                                                             
training at an approved  naturopathic college, and "has entered into                                                            
a collaborative  agreement"  with a  person or  persons licensed  to                                                            
practice  medicine  under applicable  Alaska  Statutes,  they  could                                                            
prescribe   controlled   substance   medication.   He  stated   that                                                            
provisions  allowing minor  surgery have not  been altered  nor were                                                            
any provisions  altered  that would  allow a person  to conduct  any                                                            
other diagnostic testing  beyond what they are currently licensed to                                                            
do.   Explanatory  prescription   drug   language   has  also   been                                                            
incorporated.                                                                                                                   
                                                                                                                                
Senator  Seekins  stated  that  Statute  language  and  the  details                                                            
required  of the collaborative  naturopath/physician  agreement  are                                                            
referenced in  Section 10, Sec. 08.45.125 on page  six, beginning on                                                            
line 19  of the bill and  continue through  line 21, page seven.  He                                                            
read Section 10 to the Committee.                                                                                               
                                                                                                                                
Senator  Seekins  stated  that  Section  10  addresses  physicians'                                                             
concerns regarding the prescribing of drugs and patient care.                                                                   
                                                                                                                                
Senator Bunde  asked the particulars of minor surgery  that could be                                                            
performed by a naturopath.                                                                                                      
                                                                                                                                
Senator Seekins  expressed that language  in Section 10,  Sec. 08.45                                                            
120, subsection  (6), page six, lines  one through three,  addresses                                                            
minor  surgery. He  described  minor surgery  as  treatment of  such                                                            
things as  abrasions, and  that the naturopath  must have  undergone                                                            
training in their  educational process and provide  proof of such to                                                            
the Division of Occupational  Licensing, Department of Community and                                                            
Economic  Development.  Therefore, he  commented  that the  Division                                                            
would be responsible for  determining what level of surgery could be                                                            
performed.                                                                                                                      
                                                                                                                                
Senator Bunde  responded that a medical  board might be required  to                                                            
review  a naturopath's   qualification  level.  He asked  whether  a                                                            
naturopath would be able to administer sutures.                                                                                 
                                                                                                                                
Senator Seekins  stated that a naturopath  would be able  to perform                                                            
minor surgery limited to one or two sutures.                                                                                    
                                                                                                                                
SCOTT LUPER,  Doctor, testified  via teleconference  from an  offnet                                                            
site in Fairbanks  and informed the  Committee that the State  would                                                            
allow  Naturopathic  physicians   (NP)  to  practice  provided  they                                                            
graduate  from a  naturopathic  college and  pass  a national  Board                                                            
examination that tests their ability to perform minor surgery.                                                                  
                                                                                                                                
Senator   Bunde   acknowledged;   however,   opined   that   because                                                            
naturopaths  are not required  to participate  in an intern  program                                                            
such as that required of  medical physicians, their medical training                                                            
does not equate to that required of medical doctors.                                                                            
                                                                                                                                
Senator Bunde  asked whether the collaborative agreement  that would                                                            
be required between  a naturopath and a medical doctor  is a one-to-                                                            
one arrangement  or whether,  for example  a retired medical  doctor                                                            
might  participate  in  such  an agreement   with a  dozen  or  more                                                            
naturopaths.                                                                                                                    
                                                                                                                                
Senator Seekins  stated that  the bill's  language specifies  that a                                                            
collaborating doctor must  be an actively practicing, State licensed                                                            
doctor.                                                                                                                         
                                                                                                                                
Senator Olson  understood  therefore that a  physician could  have a                                                            
collaborative agreement with more than one naturopath.                                                                          
                                                                                                                                
Senator Seekins affirmed.                                                                                                       
                                                                                                                                
Co-Chair  Green asked  whether a fiscal  note would  be required  to                                                            
address language in Section  9, subsection (c) on page four, line 26                                                            
that states  that, while the three-member  naturopathic peer  review                                                            
committee would serve without  compensation, they would be "entitled                                                            
to  travel  and  per   diem  expenses  authorized   for  boards  and                                                            
commissions."                                                                                                                   
                                                                                                                                
Co-Chair Wilken asked whether this is new language.                                                                             
                                                                                                                                
Senator Seekins understood that this is existing language.                                                                      
                                                                                                                                
Senator  Olson  expressed  that  both  subsections  (b)(2)  and  the                                                            
entirety  of subsection  (c) in Section  9, on  page four, were  new                                                            
language.                                                                                                                       
                                                                                                                                
Senator Seekins  concurred that this might be correct.  The original                                                            
intent  of  the  bill  was  to  be revenue   neutral.  However,  the                                                            
Department  suggested that  an amendment  be  entertained to  delete                                                            
language in subsection  (c), page four, line 28, that specifies that                                                            
the three-member  naturopathic  peer  review committee  should  meet                                                            
quarterly  as the Department  has determined  that, considering  the                                                            
low number  of complaints, meeting  quarterly would not be  required                                                            
at this  point in  time. The  Commissioner of  the Department  feels                                                            
that the cost of the Board  would be minimal as their meetings could                                                            
be conducted via teleconference.                                                                                                
                                                                                                                                
Co-Chair  Wilken, understanding  that the majority  of Section  9 is                                                            
new language, asked what the Section would do.                                                                                  
                                                                                                                                
Senator Olson asked for  clarification which language the Department                                                            
would like to have amended.                                                                                                     
                                                                                                                                
Senator  Seekins clarified  that the  Department  suggests that  the                                                            
word  "quarterly"  be  removed  from  subsection  "c"  so  that  the                                                            
language would  read "The committee shall meet to  review complaints                                                            
filed  with  the division  under  this  chapter."  rather  than  the                                                            
current  language  "The committee  shall  meet quarterly  to  review                                                            
complaints  filed  with  the  division  under  this  chapter."  This                                                            
change, he  stated, would  alleviate the need  for a fiscal  note as                                                            
the three-member  naturopathic peer  review committee could  conduct                                                            
meetings via teleconference.                                                                                                    
                                                                                                                                
Co-Chair Wilken suggested  that language on lines 26 through line 28                                                            
of that  Section should  also be  eliminated as  it pertains  to the                                                            
travel  and per diem  expense authorization.  He  stated that,  over                                                            
time,  were   more  meetings  required,   this  language   could  be                                                            
revisited.                                                                                                                      
                                                                                                                                
Senator Seekins  suggested that language  on line 26 that  specifies                                                            
that they would  serve on the committee without compensation  should                                                            
remain in the bill. However,  he agreed that the travel and per diem                                                            
language could  be eliminated. The  language on lines 26  through 29                                                            
reads as follows.                                                                                                               
                                                                                                                                
     …The  committee members  serve without  compensation for  their                                                            
     work on  the committee but are  entitled to the travel  and per                                                            
     diem expenses authorized  for boards and commissioners Under AS                                                            
     39.20.180.  The  committee   shall  meet  quarterly  to  review                                                            
      complaints filed with the division under this chapter…                                                                    
                                                                                                                                
Co-Chair Green  moved to adopt Version "S" as the  working document.                                                            
                                                                                                                                
There being no  objection, the Version "S" committee  substitute was                                                            
ADOPTED as the working document.                                                                                                
                                                                                                                                
Senator Seekins  stated that subsection "c" was modified  in Version                                                            
"S" at the request of the Director of the Division of Licensing.                                                                
                                                                                                                                
Amendment  # 2: This  amendment  deletes the  following language  in                                                            
Section  9, subsection  (c)  beginning  on  line 27  and  continuing                                                            
through line 28.                                                                                                                
                                                                                                                                
     … but are entitled to the travel and per diem expenses                                                                     
     authorized for boards and commissioners Under AS 39.20.180.                                                                
                                                                                                                                
In addition,  the amendment deletes  the word "quarterly"  following                                                            
the  word "meet"  in  Section  9, subsection  (c)  on  line 28.  The                                                            
amended language reads as follows.                                                                                              
                                                                                                                                
     The committee shall meet to review complaints filed with the                                                               
     division under this chapter.                                                                                               
                                                                                                                                
Co-Chair Wilken moved to adopt Amendment #2.                                                                                    
                                                                                                                                
Co-Chair  Green asked  whether this  language is  atypical to  other                                                            
committee language.                                                                                                             
                                                                                                                                
Senator Seekins  affirmed that this  language is applicable  to most                                                            
committee language.                                                                                                             
                                                                                                                                
Senator Olson concurred.                                                                                                        
                                                                                                                                
Co-Chair Wilken voiced  concern that, were this language retained, a                                                            
fiscal note would be required.                                                                                                  
                                                                                                                                
Senator Seekins voiced  acceptance to the removal of the language as                                                            
proposed  in the  amendment.  The  adoption of  this  bill would  be                                                            
welcome  to the  naturopath  community and  this  language would  be                                                            
acceptable were it to further the bill's progress.                                                                              
                                                                                                                                
Senator Olson voiced concern  that a telephonic meeting, rather than                                                            
a face-to-face  meeting,  might  not be  the appropriate  manner  in                                                            
which  to best serve  the naturopathic  defendant  were a  complaint                                                            
filed. He would  desire a face-to-face  meeting in order  to observe                                                            
"the body language" of both the defendant and the witnesses.                                                                    
                                                                                                                                
Co-Chair Wilken  noted that forthcoming  amendment #3 might  address                                                            
Senator Olson's concerns.                                                                                                       
                                                                                                                                
Co-Chair  Wilken stated  that  the adoption  of Amendment  #2  would                                                            
allow this bill  to move forward without requiring  a fiscal note to                                                            
be developed.                                                                                                                   
                                                                                                                                
There being no objection, Amendment #2 was ADOPTED.                                                                             
                                                                                                                                
Conceptual Amendment  #3: This conceptual amendment  would allow the                                                            
bill's drafter  to insert  language in the  bill that would  address                                                            
Committee concerns regarding  allowing the peer review group to meet                                                            
via two-way conference or teleconference.                                                                                       
                                                                                                                                
Co-Chair Green moved to adopt Conceptual Amendment #3.                                                                          
                                                                                                                                
Co-Chair Green stated that  the desire of this amendment would be to                                                            
allow  the Committee  to  best  operate utilizing  teleconferencing                                                             
technology assisted  with transmittal of information  via facsimile.                                                            
                                                                                                                                
Senator  Olson  continued  to  voice  concern  that  a face-to-face                                                             
meeting would be more desired.                                                                                                  
                                                                                                                                
Senator  Seekins interjected  that  this amendment  concerns a  peer                                                            
review  committee  and  that  the  naturopath  defendant  could,  as                                                            
detailed  in Section  9, subsection  (c), page five,  lines two  and                                                            
three, either  accept the recommendations  of the peer committee  or                                                            
request a hearing before  the division, which he stated, "would be a                                                            
more formal procedure at that time."                                                                                            
                                                                                                                                
Doctor Luper recalled that  Rick Urion, the Director of the Division                                                            
of Occupational  Licensing, had communicated  that were a  complaint                                                            
filed, he would contact  the peer committee members and "discuss the                                                            
merits of  the complaint"…  and were the  complaint to have  merits,                                                            
the Division  would investigate  it and conduct  a hearing,  via the                                                            
Departments established method.                                                                                                 
                                                                                                                                
                                                                                                                                
SFC 04 # 97, Side B 06:25 PM                                                                                                    
                                                                                                                                
                                                                                                                                
Doctor  Luper continued  therefore,  that the  participation of  the                                                            
naturopathic  physician  peer  committee  would  be  to  assist  "in                                                            
weeding out the various complaints."                                                                                            
                                                                                                                                
Senator   Olson   asked  how   disciplinary   action   regarding   a                                                            
naturopathic license would occur.                                                                                               
                                                                                                                                
Doctor Luper  stated that  the Division  of "Occupational  Licensing                                                            
would be the final  arbitrator on that." He stated  that the role of                                                            
the peer committee would  be advisory in regards to the substance of                                                            
the complaint.                                                                                                                  
                                                                                                                                
There being no objection, Conceptual Amendment #3 was ADOPTED.                                                                  
                                                                                                                                
Senator  Bunde  voiced  discomfort  with the  possibility  that  one                                                            
doctor  could have  a collaborative  agreement  with  more than  one                                                            
naturopath.  He asked  how  a doctor's  oversight  of a physician's                                                             
assistant (PA) is conducted.                                                                                                    
                                                                                                                                
Senator   Seekins  responded   that  he   researched  collaborative                                                             
agreements  on a national  basis. PA collaborative  agreements  have                                                            
"substantially  less" requirements  than  the one  proposed in  this                                                            
bill for  Naturopaths. He  also noted that  no oversight  agreements                                                            
are  required   for  Nurse   Practitioners,   "who  have   unlimited                                                            
prescriptive  authority and have no  supervision and have  about the                                                            
same amount of pharmacology  training as naturopaths do." The intent                                                            
of the  collaborative agreement  in this bill  is that a  naturopath                                                            
would  develop an  agreement  with a  physician  whom he  or she  is                                                            
comfortable  communicating  with. While no  limitation language  was                                                            
found  during  his  national  review,  this  bill  would  require  a                                                            
physician review protocol  to be specified, as he allowed that there                                                            
might be a physician who  might not be too attentive. While he would                                                            
not object to  a reasonable limit being imposed, he  believed that a                                                            
physician  would   choose  to  be  near  where  the  naturopath   is                                                            
practicing.                                                                                                                     
                                                                                                                                
Co-Chair Wilken,  commenting that  Senator Bunde has "raised  a good                                                            
issue,"  asked whether  the sponsor  would desire  the bill held  in                                                            
Committee in order to further  address the issue or whether he would                                                            
desire  to address  the  issue after  the  bill transmits  from  the                                                            
Senate to  the House of  Representatives.  Continued halting  of the                                                            
bill,  this  late  in the  Legislative  session,  might  negate  its                                                            
passage.                                                                                                                        
                                                                                                                                
Senator Bunde understood  that delaying the bill could undermine its                                                            
progress; therefore,  he stated that  he would further research  the                                                            
issue and might offer an  amendment during its Senate floor hearing.                                                            
                                                                                                                                
Senator Seekins  voiced willingness  to work  with Senator  Bunde in                                                            
this regard.                                                                                                                    
                                                                                                                                
Co-Chair  Wilken noted  that, as an  alternative  to a Senate  floor                                                            
amendment,  a statement of concern  could accompany the bill  to the                                                            
House. The resulting action would require Senate concurrence.                                                                   
                                                                                                                                
Senator Bunde  stated that a level  of confidence in the  other body                                                            
would be required in that instance.                                                                                             
                                                                                                                                
Senator Olson  asked regarding  language in  Section 10, page  five,                                                            
line 25, regarding pharmacology  training. The federal Food and Drug                                                            
Administration  (FDA), rather than  the DEA, has the most  authority                                                            
over non-scheduled drugs.                                                                                                       
                                                                                                                                
Senator Seekins responded  that non-scheduled/prescription drugs are                                                            
addressed  in the collaborative  agreement,  in that each drug  that                                                            
might  be  prescribed  must  have an  established  protocol  in  the                                                            
collaborative agreement.                                                                                                        
                                                                                                                                
Senator  Olson understood,  therefore,  that both  FDA and DEA  drug                                                            
requirements are addressed under the collaborative agreement.                                                                   
                                                                                                                                
Senator Seekins affirmed.  He noted that Section 10, subsection (4),                                                            
on line 21 on  page five is applicable to controlled  substances and                                                            
that prescriptive  "or legend"  drugs are  addressed in Section  10,                                                            
subsection (8) on page six, line eight.                                                                                         
                                                                                                                                
Co-Chair Green moved to  report the bill, as amended, from Committee                                                            
with individual recommendations and accompanying fiscal notes.                                                                  
                                                                                                                                
There  being  no  objection,  CS  SB  306(FIN)   was  REPORTED  from                                                            
Committee  with zero  fiscal  note, dated  April 28,  2004 from  the                                                            
Department of Community and Economic Development.                                                                               
                                                                                                                                
ADJOURNMENT                                                                                                                 
                                                                                                                                
Co-Chair Gary Wilken adjourned the meeting at 06:33 PM.                                                                         

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