Legislature(2005 - 2006)SENATE FINANCE 532

05/01/2005 01:00 PM FINANCE

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Heard & Held
Moved SB 156 Out of Committee
Moved CSHB 182(FIN)(efdf) Out Committee
Heard & Held
Heard & Held
Heard & Held
Moved CSSB 135(JUD) Out of Committee
Heard & Held
Heard & Held
Heard & Held
Heard & Held
Heard & Held
Heard & Held
Scheduled But Not Heard
Heard & Held
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
Heard & Held
Heard & Held
                     SENATE FINANCE COMMITTEE                                                                                 
                            May 1, 2005                                                                                       
                             1:09 p.m.                                                                                        
CALL TO ORDER                                                                                                               
Co-Chair Green convened the meeting at approximately 1:09:00 PM.                                                              
Senator Lyda Green, Co-Chair                                                                                                    
Senator Gary Wilken, Co-Chair                                                                                                   
Senator Bert Stedman                                                                                                            
Senator Fred Dyson                                                                                                              
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Also Attending:  REPRESENTATIVE  NORM ROKEBERG;  REPRESENTATIVE  VIC                                                          
KOHRING;   MIKE  TIBBLES,   Deputy   Commissioner,   Department   of                                                            
Administration;  PHELAN  STRAUBE,  Staff  to  Senator  Ben  Stevens;                                                            
HEATHER  NORBREGA,  Staff  to  Representative  Norm  Rokeberg;  MIKE                                                            
PAWLOWSKI,  Staff  to Representative  Kevin  Meyer;  KAREN  LIDSTER,                                                            
Staff to Representative  John Coghill; DEAN GUANELI, Chief Assistant                                                            
Attorney General, Legal  Services Section-Juneau, Criminal Division,                                                            
Department  of Law;  LINDA HALL,  Director, Division  of  Insurance,                                                            
Department  of Commerce,  Community and  Economic Development;  KACI                                                            
SCHROEDER,   Staff  to  Representative   William  Thomas,   Jr.  and                                                            
Committee Aide to the House  Community & Regional Affairs Committee;                                                            
SALLY  SADDLER, Legislative  Liaison,  Department  of Community  and                                                            
Economic Development; CHERYL  FRASCA, Director, Office of Management                                                            
and Budget,  Office of the Governor;  DEVEN MITCHELL, Debt  Manager,                                                            
Treasury Division,  Department of Revenue; KEATH HILLIARD,  Staff to                                                            
Representative Mike Kelly;  SAM KITO JR., Chair, Legislative Liaison                                                            
Committee,  Alaska   Professional  Design  Council;   PAT  DAVIDSON,                                                            
Legislative   Auditor,  Legislative   Audit  Division,  Legislative                                                             
Agencies  & Offices;  BEN  MULLIGAN,  Staff to  Representative  Bill                                                            
Stoltze;  RANDY RUARO,  Assistant  Attorney General,  Legislation  &                                                            
Regulations  Sections, Department  of Law;  MARIE DARLIN, AARP;  IAN                                                            
FISK, Staff to Representative William Thomas, Jr.;                                                                              
Attending via  Teleconference: From  an Offnet Site: KATHRYN  DODGE,                                                          
Executive  Director,  North Star  Borough Alaska  Regional  Economic                                                            
Development Organization;                                                                                                       
SUMMARY INFORMATION                                                                                                         
SB 24-REEMPLOYMENT OF RETIREES                                                                                                  
The Committee  heard from the Department of Administration,  adopted                                                            
a committee substitute, and held the bill in Committee.                                                                         
SB 156-LAYOFF/NONRETENTION OF TEACHERS                                                                                          
The Committee  heard from the bill's  sponsor and reported  the bill                                                            
from Committee.                                                                                                                 
HB 182-WAGE & HOUR ACT: EXEC/PROF/ADMIN/SALES/DP                                                                                
The Committee  heard from the bill's  sponsor and reported  the bill                                                            
from Committee.                                                                                                                 
HB19-PESTICIDE & BROADCAST CHEMICALS                                                                                            
The Committee  heard from the bill's  sponsor. The bill was  held in                                                            
HB 15-LIQUOR LICENSES: OUTDOOR REC. LODGE/BARS                                                                                  
The Committee heard from  the bill's sponsor, adopted one amendment,                                                            
and held the bill in Committee.                                                                                                 
HB 91-INDECENT EXPOSURE TO MINORS                                                                                               
The Committee  heard from the bill's  sponsor and the Department  of                                                            
Law. The bill was held in Committee.                                                                                            
SB 108-INSURANCE                                                                                                                
The  Department  of Commerce,  Community  and  Economic Development                                                             
provided  an explanation  of  the bill,  and  the bill  was held  in                                                            
HB 119-AK REGIONAL ECONOMIC ASSISTANCE PROGRAM                                                                                  
The  Committee heard  from  the bill's  sponsor,  the Department  of                                                            
Commerce, Community  and Economic Development, and  a representative                                                            
of the Alaska  Regional Economic Development Organization.  The bill                                                            
was held in Committee.                                                                                                          
HB 136-DRUNK DRIVING TREATMENT PROGRAM                                                                                          
The Committee  heard from the bill's  sponsor. The bill was  held in                                                            
SB 121-STATE OF AK CAPITAL CORP.; BONDS                                                                                         
The  Committee  heard  from  the Office  of  the  Governor  and  the                                                            
Department of Revenue. The bill was held in Committee.                                                                          
SB 122-AMERADA HESS INCOME; CAPITAL INCOME ACCT.                                                                                
The  Committee  heard  from  the Office  of  the  Governor  and  the                                                            
Department of Revenue. The bill was held in Committee.                                                                          
SB 135-ASSAULT & CUSTODIAL INTERFERENCE                                                                                         
The Committee heard from  the bill's sponsor, the Department of Law,                                                            
and reported the bill from Committee.                                                                                           
HB 75-HUNTING, FISHING, TRAPPING                                                                                                
The Committee  heard from the bill's  sponsor and the industry.  The                                                            
bill was held in Committee.                                                                                                     
HB 35-EXTEND BD ARCHITECTS/ENGINEERS/SURVEYORS                                                                                  
The  Committee  heard  from  the bill's  sponsor,  the  Division  of                                                            
Legislative  Audit,   and  the  industry.  The  bill   was  held  in                                                            
HB 132-CRIMES AGAINST ELDERLY                                                                                                   
The Committee heard from  the bill's sponsor, the Department of Law,                                                            
and  took  public  testimony.  One  amendment   was  considered  but                                                            
withdrawn from consideration. The bill was HELD in Committee.                                                                   
HB 230-LOANS FOR COMMERCIAL FISHING TENDERS                                                                                     
The  Committee  heard  from  the  sponsor.  The  bill  was  held  in                                                            
SB 46-APPROP: CAPITAL BUDGET                                                                                                    
This bill was scheduled but not heard.                                                                                          
HB 156-COMMISSION ON AGING                                                                                                      
This bill was scheduled but not heard.                                                                                          
     CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 24(STA)                                                                      
     "An Act  relating to reemployment  of and benefits for  retired                                                            
     teachers and public  employees and to teachers or employees who                                                            
     participated   in  retirement   incentive   programs  and   are                                                            
     subsequently  reemployed as a  commissioner; and providing  for                                                            
     an effective date."                                                                                                        
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
MIKE TIBBLES,  Deputy Commissioner,  Department  of Administration,                                                             
testified in support of the bill.                                                                                               
Co-Chair  Wilken  moved  to adopt  CS  SS SB  24(FIN),  Version  24-                                                            
LS0211\X as the working document.                                                                                               
Co-Chair Green objected for explanation.                                                                                        
1:10:56 PM                                                                                                                    
Mr. Tibbles  informed  the Committee  that this  bill would  address                                                            
concerns  that have been  raised in the past  regarding the  State's                                                            
rehiring   of  retirees   practices.  The   Version  "X"   committee                                                            
substitute would  address "perceived abuses in the  past and offer a                                                            
solid  management   tool  going  forward   for  the  State,   school                                                            
districts, and municipalities".                                                                                                 
Mr. Tibbles  communicated  that the  practice  of rehiring  retirees                                                            
could  be  attributed  to  the  difficulty  the  State  has  had  in                                                            
recruiting  "specific   job  classifications"   such  as  Nurse  III                                                            
positions in  the Department of Health  and Social Services  Pioneer                                                            
Homes. One such position  was advertised for 34 days without success                                                            
of attracting  a qualified candidate. The "tool" being  addressed in                                                            
this legislation  was utilized  to rehire a  retired nurse  for that                                                            
position.  Another example  of a difficult  position to fill  is the                                                            
Children Services  Manager position which requires  a masters degree                                                            
and four  years of professional  "social  work experience  providing                                                            
programs  or services  focused on  serving children  at risk".  This                                                            
Range 21  position was advertised  for 21  days and "neither  of the                                                            
two  applicants   met  the   minimum  qualifications".   A   retired                                                            
individual was rehired  to fill this position as well. Retirees have                                                            
also  been  successfully  rehired  to fill  engineer  and  biologist                                                            
1:13:05 PM                                                                                                                    
Mr. Tibbles  stated that  "the two primary  concerns" regarding  the                                                            
rehiring of  retirees are the "cost  to the system" and that  hiring                                                            
retirees prevents "other  employees from moving up into higher level                                                            
Mr. Tibbles  communicated that the  work draft before the  Committee                                                            
would  allow  "a program  going  forward  that  meets  the  original                                                            
intent" and addresses these two concerns.                                                                                       
Mr.  Tibbles  stated  that this  bill  would  address  the  question                                                            
regarding "the potential  liability of what the State had told these                                                            
individuals coming back  from retirement", as the bill is "very very                                                            
clear … that the  program ends, the period of reemployment  ends, at                                                            
the  point that  the program  sunsets".  Intent Language  and  State                                                            
Statutes would also further clarify the program.                                                                                
Mr. Tibbles  continued  that  Sec. 2 of  Version  "X" would  require                                                            
rehired retirees  "to be covered by  their employer's active  health                                                            
plan".  In  the past,  employment  contracts  were  negotiated  that                                                            
allowed  the rehired  retiree  to  be covered  by  their  retirement                                                            
health  plans.   This  action   was  contrary   to  the  intent   of                                                            
experiencing  cost savings  in the retirement  health plan  systems.                                                            
Therefore,  Sec. 2,  which is specific  to the  Teachers  Retirement                                                            
System  (TRS),  would  clarify  that  a  rehired  retiree  would  be                                                            
offered,  and must accept,  the active health  insurance offered  to                                                            
other full time employees within that school district.                                                                          
1:14:54 PM                                                                                                                    
Co-Chair Green  asked the reason that the continuance  of retirement                                                            
health  benefits for  rehired retirees  was preferred  to  including                                                            
them on the active health insurance benefit.                                                                                    
Mr. Tibbles explained  that an employer would experience  an expense                                                            
of approximately  $830  per  month for  each employee  eligible  for                                                            
active health  insurance. Therefore,  allowing a rehired  retiree to                                                            
continue to be  covered by the retirement health plan  "would shift"                                                            
that  expense   from  the  employer   and  save  them  money.   This                                                            
legislation would prevent that from occurring going forward.                                                                    
Mr. Tibbles also conveyed  the understanding that many of the active                                                            
health  plans   have  higher  co-pays   and  deductibles   than  the                                                            
retirement  health   plans.  While  the  existing  retirement   plan                                                            
benefits would continue  to be available upon retirement, they would                                                            
be  suspended  during  the time  of  reemployment  and  the  rehired                                                            
employee  would be subject  to the conditions  of the active  health                                                            
plan provided to their co-workers.                                                                                              
1:16:09 PM                                                                                                                    
Co-Chair  Green characterized  this as being  "an integral  part" of                                                            
the proposed language in  that neither the employer nor the employee                                                            
would view  the rehiring "as a great  thing". The employer  would be                                                            
unable "to  shift the cost" to the  retirement medical plan  and the                                                            
employee  would be subject  to the conditions  of the active  health                                                            
coverage "which might have less generous benefits".                                                                             
1:16:52 PM                                                                                                                    
Mr. Tibbles  noted  that Sec.  4 of  the proposed  work draft  would                                                            
implement  a change  that is "consistent  with Sec.  2, although  it                                                            
does specify  that teachers coming  back on a part time basis  could                                                            
continue to receive  the retired medical benefit coverage".  To that                                                            
point,  he expressed  the  Department's  desire that  all  part-time                                                            
rehired  retirees would  "be offered  the same  health benefits"  as                                                            
other active employees  in that any employee working part-time hours                                                            
of  between  15  and  30 hours  a  week  would  be  provided  health                                                            
insurance but could be  required to pay half of the premium. Rehired                                                            
retirees  working  less than  15 hours  per  week who  might not  be                                                            
eligible  for any health  benefits would continue  to be covered  by                                                            
their retirement benefit.                                                                                                       
1:17:45 PM                                                                                                                    
Mr. Tibbles  communicated  that rehired retirees  working less  than                                                            
full-time would be assured of having access to health coverage.                                                                 
1:18:00 PM                                                                                                                    
Co-Chair Green  asked whether the part-time provisions  specified in                                                            
Sec.  4  could   be  utilized  as   "a  loophole  …  to   avoid  the                                                            
participation of the employer".                                                                                                 
Mr. Tibbles shared that  a situation in which an employer might hire                                                            
two  part-time  retirees  rather  than  one fulltime  one  had  been                                                            
considered.  The  conclusion was  that  recruiting  for a  part-time                                                            
position  would be more  difficult that recruiting  for a  full-time                                                            
position.  Furthermore, the  hiring of a  part-time rehired  retiree                                                            
would allow  for the upward  progression  of another individual,  as                                                            
was previously  mentioned  as a concern.  In addition, the  employer                                                            
would be required receive  approval of the position and to adhere to                                                            
the "tough  standards" included in  the bill prior to being  able to                                                            
rehire a retiree.                                                                                                               
1:19:07 PM                                                                                                                    
Co-Chair  Green asked  whether language  should be  included in  the                                                            
bill regarding  how the rehiring  of a less  than full time  retired                                                            
employee would "recoup the costs to the system".                                                                                
1:19:30 PM                                                                                                                    
Mr.  Tibbles  viewed  the costs  to  the  system  "in terms  of  the                                                            
unfunded  liability  and  how  we're paying  off  that  through  the                                                            
employees' wage base. There's  a provision in the bill that requires                                                            
an employer to contribute  the same past service rate for the rehire                                                            
as they do for all other employees."                                                                                            
Co-Chair  Green asked  for confirmation  that  that provision  would                                                            
include those employees working less than full-time.                                                                            
1:20:04 PM                                                                                                                    
Mr.  Tibbles  expressed  that  the language  in  Version  "X"  would                                                            
require  employers who are  currently contributing  for their  half-                                                            
time  employees to  do likewise  for  any rehired  retirees  working                                                            
halftime. He was unsure of the scale of those obligations.                                                                      
Co-Chair  Green  understood  therefore  that  the  bill  would  make                                                            
employers'  actions  regarding rehired  retired  halftime  employees                                                            
consistent with the current hiring and rehiring practices.                                                                      
Mr. Tibbles affirmed.                                                                                                           
1:20:34 PM                                                                                                                    
Senator Stedman  asked whether the  Department of Fish and  Game has                                                            
developed a plan  through which to address its "extensive  number of                                                            
rehires",  were  this  bill   not  to advance   or  were  a  shorter                                                            
termination date of the current practice implemented.                                                                           
Mr. Tibbles  replied that he has not  seen such a plan; however,  he                                                            
noted that the Division  of Personnel, Department of Administration,                                                            
would  be assisting  departments   in the  development  of  business                                                            
rules, hiring  practices  and recruitment  efforts. The Version  "X"                                                            
committee  substitute   would  provide  sufficient   time  for  this                                                            
activity to occur.                                                                                                              
Mr. Tibbles  continued that  any rehired retirees  who had  a waiver                                                            
prior to the November 3,  2004 notification that the current program                                                            
would  terminate would  be allowed  to continue  their waiver  until                                                            
December  2006.  Sufficient  time  would  be provided  in  which  to                                                            
develop such things as  transfer plans and to identify "the critical                                                            
components of  a job" in regards to "what is so specific  about that                                                            
position"  that makes it  difficult to recruit  for and to  transfer                                                            
some of those responsibilities to other employees.                                                                              
1:21:53 PM                                                                                                                    
Senator  Dyson  asked   whether  the  Alaska  State  Troopers   have                                                            
developed a plan to address its rehiring of retirees practice.                                                                  
Mr. Tibbles  stated  that his  response  to the  question about  the                                                            
Department of Fish and Game would apply here as well.                                                                           
1:22:10 PM                                                                                                                    
Mr.  Tibbles  stated  that  Sec. 5  of  Version  "X"  would  provide                                                            
conformity  and consistency language  pertaining to the rehiring  of                                                            
both the TRS  and Public Employee  Retirement System (PERS)  retired                                                            
employees, specifically commissioners.                                                                                          
Mr. Tibbles  continued that  Sec. 6 would  require all employers  to                                                            
contribute the same unfunded  liability rate for rehired retirees as                                                            
contributed for other employees.                                                                                                
Mr. Tibbles  communicated  that Sec.  7 is the  transition point  at                                                            
which the  language in  the bill moves  from the  TRS system  to the                                                            
PERS system.  Language in  Sec. 7(b), page  four, beginning  on line                                                            
27,  would affirm  that  any current  rehired  retiree's  employment                                                            
would terminate  when the current  program is repealed. "This  would                                                            
eliminate any  question in the future of whether or  not there is an                                                            
entitlement  for the employee beyond  the sunset date of  the bill …                                                            
Individuals on  the program" must decide by the termination  date of                                                            
the current  program as to  "whether they  want to continue  to stay                                                            
employed  and stop  their retirement  benefits or  to separate  from                                                            
service to continue to receive those retirement benefits".                                                                      
1:23:12 PM                                                                                                                    
Co-Chair  Green asked  for further  information  regarding the  time                                                            
frame  periods  pertinent   to  the  differing  groups   of  rehired                                                            
Mr. Tibbles clarified  that the rehired retirees could  be separated                                                            
into three  groups. The first group  would consist of those  rehired                                                            
prior  to November  3,  2004  who might  have  been hired  with  the                                                            
condition  that they could  remain in  the program  as long  as they                                                            
were continuously  employed. That  liability issue was addressed  by                                                            
notifying  those  individuals  that,  while  the  program  would  be                                                            
terminated,  their "window" would  be extended until December  2006.                                                            
Mr.  Tibbles stated  that  the  second group  of  individuals  would                                                            
consist of  those rehired  retirees hired  between November  4, 2004                                                            
and July  1, 2005.  Those individuals  were hired  knowing that  the                                                            
program would  terminate on July 1,  2005. The liability  issue that                                                            
applies  to the  first group  would not  apply to  this group.  This                                                            
group must make a decision  by July 1, 2005 as to whether they would                                                            
"continue  with   State  service"  and  pay  in  "and   defer  their                                                            
retirement benefits or separate from service".                                                                                  
Co-Chair Green  asked that the dates  pertinent to the second  group                                                            
to be restated.                                                                                                                 
Mr. Tibbles clarified that  these individuals must have been rehired                                                            
between November 4, 2004 and July 1, 2005.                                                                                      
Mr. Tibbles  continued  that the  third group  of individuals  would                                                            
consist of those "brought  back from retirement" after July 1, 2005,                                                            
which is the effective date of this Act.                                                                                        
Co-Chair  Green  understood   therefore  that  the  third  group  of                                                            
individuals  would not include anyone  who is currently rehired  and                                                            
in the system.                                                                                                                  
Mr. Tibbles concurred.                                                                                                          
Co-Chair  Green  concluded  therefore  that the  third  group  would                                                            
consist  of "anyone  hired after  July  1, '05 not  currently  under                                                            
1:25:01 PM                                                                                                                    
Senator  Stedman asked  for  further discussion  in  regards to  the                                                            
conditions applicable to retirees hired after July 1, 2005.                                                                     
Mr. Tibbles  communicated  that any  retiree rehired  after July  1,                                                            
2005  would  be required  to  "sign  a  waiver to  come  back  after                                                            
retirement".  They  would  "continue  to  receive  their  retirement                                                            
benefit,  and they  would  be allowed  to stay  in as  long as  they                                                            
remained  continuously  employed, or  the sunset  date of this  Act,                                                            
which would be July 1, 2009".                                                                                                   
Senator Stedman  asked the reason  for incorporating this  scenario.                                                            
1:25:47 PM                                                                                                                    
Mr. Tibbles explained that,  "the purpose of extending the window to                                                            
allow new  individuals  to come in  … is that"  there are many  jobs                                                            
that the State  is unable to fill.  This "management tool"  has been                                                            
used  successfully in  the past  to fill  difficult  to recruit  for                                                            
positions. The  provisions would insure that the individuals  coming                                                            
back would not  "be costing the system". It would  allow the program                                                            
to continue forward "in a consistent and controlled manner".                                                                    
1:26:24 PM                                                                                                                    
Senator  Stedman understood  therefore  that  were a  retiree to  be                                                            
rehired in  August 2005,  for example, that  individual would  "stop                                                            
receiving  all his retirement  benefits,  and go  right back  on the                                                            
payroll, and start paying back into the system".                                                                                
Mr. Tibbles responded that  a retired person rehired in August 2005,                                                            
for example,  would be offered "two  options": one would  be to come                                                            
back  and "pay  into the  system,  accrue additional  benefits,  and                                                            
defer their retirement  benefit. That exists now outside this bill".                                                            
This bill  would allow that  individual the  option "to continue  to                                                            
receive their pension benefit,  have the active health coverage from                                                            
their employer,  and not accrue any additional benefits  and not pay                                                            
the Normal Cost Rate going forward".                                                                                            
1:27:25 PM                                                                                                                    
Mr.  Tibbles  continued  that   Sec.  8 would   primarily  apply  to                                                            
municipalities.  It  would  require, in  a  manner similar  to  that                                                            
required  of  the TRS  system,  that  a municipality  must  adopt  a                                                            
resolution  demonstrating their recruitment  problem in certain  job                                                            
classifications. Policy  issues that must be adhered to include such                                                            
things as  that the person  being rehired  must have been  separated                                                            
from service  for a minimum  of 30-days and  that the position  must                                                            
have been recruited for a minimum of 30-days.                                                                                   
1:28:44 PM                                                                                                                    
Co-Chair Green  understood that the  administrator of the  plan must                                                            
approve the rehire.                                                                                                             
1:28:56 PM                                                                                                                    
Mr. Tibbles  affirmed. The  director of the  Division of  Retirement                                                            
and Benefits,  Department  of Administration  would  be required  to                                                            
review  the  qualifying  policy   and  Resolution.  It  would  be  a                                                            
coordinated  activity  to which  the  administrator  would have  the                                                            
ultimate authority.                                                                                                             
Co-Chair Green  asked whether this scenario would  also apply to TRS                                                            
Mr. Tibbles affirmed.                                                                                                           
1:29:21 PM                                                                                                                    
Mr.  Tibbles  stated   that  Sec.  9  would  address   the  unfunded                                                            
liability.  It would require PERS  employers to contribute  the same                                                            
past service  rate for  the rehired  retirees as  they do for  other                                                            
active employees.                                                                                                               
Senator Stedman  referred to language  in Sec. 8, and asked  whether                                                            
provisions  in  the bill  would  address  a situation  in  which  an                                                            
employee  retired  with  the  intention  of being  rehired  and  who                                                            
communicated that intention to other possible candidates.                                                                       
1:30:14 PM                                                                                                                    
Mr.  Tibbles   responded  that,  currently,   there  is   a  minimum                                                            
recruitment period of ten  days. The effort could also be limited to                                                            
internal  recruitment.  This  has occurred  in  the past,  with  the                                                            
outcome being that no qualified  candidate emerged. This legislation                                                            
would require  a statewide recruitment for a minimum  of 30 days and                                                            
"tough standards"  would  be applied. Therefore,  an individual  who                                                            
retired with  the intent  to be rehired would  be taking "a  gamble"                                                            
that no other  qualified candidates would emerge.  Another qualified                                                            
candidate could fill the position.                                                                                              
Senator  Stedman  communicated  awareness of  such  an event  having                                                            
occurred.  He  opined  that  the  scenario  he  presented  would  be                                                            
difficult to control  in a small area. Perhaps the  requirement that                                                            
a Statewide recruitment  effort must occur might address  the issue.                                                            
Mr. Tibbles stated that  Sec. 10 would specify the various effective                                                            
dates of the bill's provisions.                                                                                                 
1:31:50 PM                                                                                                                    
Mr.  Tibbles noted  the  Sec. 11  would  add a  PERS  report to  the                                                            
reporting   requirements.   In  addition,   it  would  require   the                                                            
Administration  to report  the efforts being  undertaken to  address                                                            
difficult to  recruit for job classifications.  Measures  to address                                                            
those  jobs might  include  changing business  rules  to allow,  for                                                            
instance, for fewer Engineer  V positions and more Engineer II, III,                                                            
and IV  positions  as Engineer  V positions  are  more difficult  to                                                            
recruit for.  Allowing for more Engineer  II, III, and IV  positions                                                            
would allow  more people  to become qualified  for advancement  over                                                            
time.  Rather  than  focusing  on  filling  the  current  positions,                                                            
efforts could be undertaken "to fill the need".                                                                                 
Mr.  Tibbles  stated   that  Secs.  14  and  15  outline   the  date                                                            
determinations regarding  the three aforementioned groups of retired                                                            
rehires.  He read the Sec.  15 language as  depicted on page  seven,                                                            
line 27 through page eight line seven as follows.                                                                               
     Sec. 15.  The uncodified law of the State of  Alaska is amended                                                            
     by adding a new section to read:                                                                                           
     WAIVER  OF APPLICABILITY  OF  SEC. 7  OF THIS  ACT FOR  RETIRED                                                            
     EMPLOYEES  WHO MADE AN  ELECTION UNDER  AS 39.35.150(B)  OR (E)                                                            
     BEFORE NOVEMBER  3, 2004, AND CONDITIONS APPLICABLE  TO SERVICE                                                            
     FROM  JULY 1,  2005 THROUGH  DECEMBER  31, 2006.  From July  1,                                                            
     2005,  through  December 31,  2006, the  amendment  made to  AS                                                            
     39.35.150(b) by sec.  7 of this Act does not apply to a retired                                                            
     employee  who  was  rehired  and  made  an  election  under  AS                                                            
     39.35.150(b)  or (e)  before November  4, 2004, if that  person                                                            
     continues to serve  in the same position. However, this section                                                            
     does not apply to  employees who are required to provide health                                                            
     and medical benefits  under AS 39.35.150(b), as amended by sec.                                                            
     7  of  this  Act,  regardless  of  whether  a  member  receives                                                            
     retirement medical benefits under this section.                                                                            
Mr. Tibbles stated  that this language would allow  retirees rehired                                                            
prior to November 3, 2004,  before the notice went out regarding the                                                            
program's  ending,  and who  were  told they  could  continue  their                                                            
employment,  to continue  their  employment through  December  2006.                                                            
Those being paid  solely out of the retirement health  account would                                                            
be the  exception, as that  aspect would  be discontinued and  their                                                            
employer would  be required to cover them through  the active health                                                            
Co-Chair Green  understood therefore that that coverage  would occur                                                            
"in the meantime".                                                                                                              
Mr. Tibbles concurred.                                                                                                          
1:34:27 PM                                                                                                                    
Mr. Tibbles  stated that Sec. 17 would  change the termination  date                                                            
from July 1, 2005 to July 1, 2009.                                                                                              
Co-Chair   Green   understood   that  some   amendments   would   be                                                            
Mr. Tibbles  affirmed that  some clarifying  language pertaining  to                                                            
the termination  dates and the continuing  employment terms  for the                                                            
three different  rehired retirees  groups, specified in Sec.  14 and                                                            
Sec. 15, is being developed.                                                                                                    
1:35:33 PM                                                                                                                    
Co-Chair Wilken  noted that a fiscal  note pertinent to Version  "X"                                                            
would  also be  forthcoming.  To that point,  he  asked whether  the                                                            
fiscal  note would  reflect the  provisions being  considered  in SB
141-PUBLIC   EMPLOYEE/TEACHER   RETIREMENT/BOARDS    and  how   that                                                            
legislation might impact the PERS and TRS systems.                                                                              
Mr. Tibbles responded that  that impact was detailed in the analysis                                                            
section of the previous  Department of Administration fiscal note #1                                                            
dated March  7, 2005. That  analysis anticipated  a $106,000  a year                                                            
impact in regards  to the TRS component.  No impact was anticipated                                                             
on the  PERS  side until  the point  at which  the  program had  500                                                            
participants.  There  are currently  211  participants  in the  PERS                                                            
program.  There is an expectation  that the  PERS participant  level                                                            
would decrease under the new sideboards specified in this bill.                                                                 
Co-Chair Wilken asked that  a fiscal note specific to Version "X" be                                                            
developed  that specifically  addresses the  impact to the  PERS and                                                            
TRS systems. Those expenses should be considered.                                                                               
Co-Chair Wilken noted that  while he supports the bill, he would not                                                            
care to add to PERS/TRS expenses.                                                                                               
1:38:10 PM                                                                                                                    
Co-Chair  Green agreed.  Continuing,  she voiced  the understanding                                                             
that following  the signing of the  Governor's Administrative  Order                                                            
concerning  the rehire of retired  employees and the implementation                                                             
of  the Department  of  Administration's  review,  the  rehiring  of                                                            
retirees scenario "really changed".                                                                                             
Mr. Tibbles  stated that since the  Governor's Administrative  Order                                                            
was  released  on March  8,  2005,  not  a single  rehire  has  been                                                            
approved for  the State of Alaska.  The first question asked  by the                                                            
Department's  Administrator when a  department submits a  request is                                                            
"how  many  qualified  individuals  did  you  receive  through  your                                                            
recruitment  process".  It has been  demonstrated  in every case  to                                                            
date that there  has been a qualified  pool of applicants  to choose                                                            
from, and therefore, all requests have been denied.                                                                             
Co-Chair  Green understood  that in the State  of Alaska  situation,                                                            
the  Administrator's  "word  would  be final";  however,  she  asked                                                            
whether  this would  be the  case in  regards to  municipalities  or                                                            
school  districts  "that  really had  their  mind  set on  hiring  a                                                            
certain  retired  person".  To that  point,  she asked  whether  the                                                            
Administrator's decision could be challenged.                                                                                   
Mr.  Tibbles   specified   that  the  Statute   would  provide   the                                                            
administrator  "the proper  authority to deny  somebody coming  back                                                            
and continuing their retirement  benefits if they don't meet the new                                                            
requirements  laid out in the bill".  He was uncertain to  the steps                                                            
that could  be taken were someone  to challenge the administrator's                                                             
position in Court.                                                                                                              
Co-Chair  Green  requested  that  clarification  as  to  the  proper                                                            
authority in this regard be provided.                                                                                           
Co-Chair Green removed her objection to Version "X".                                                                            
There  being no  other objection,  Version  "X" was  ADOPTED as  the                                                            
working document.                                                                                                               
The bill  was HELD  in Committee  in order  to consider forthcoming                                                             
1:41:09 PM                                                                                                                    
     SENATE BILL NO. 156                                                                                                        
     "An Act relating to notification to teachers of layoff or                                                                  
AT EASE: 1:41:39 PM / 1:41:50 PM                                                                                            
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
PHELAN STRAUBE,  Staff to Senator  Ben Stevens, the bill's  sponsor,                                                            
informed  the  Committee  that  this  bill  would  address  what  is                                                            
referred to "as  the pink slip problem by aligning  tenured teachers                                                            
with  non-tenured  teachers  within  the  law".  Currently,  tenured                                                            
teachers  must be notified  by March  16th of  each year that  "they                                                            
would not be retained  for the following school year".  "Non-tenured                                                            
teachers must be notified  by the last day of the school term". This                                                            
legislation  would align  the two  schedules by  specifying that  in                                                            
both cases,  the termination  notification  must be received  by the                                                            
end of the school term.                                                                                                         
1:42:32 PM                                                                                                                    
Co-Chair  Green inquired  as to how  this issue  was brought  to the                                                            
attention of the Legislature.                                                                                                   
Mr. Straube  replied that  the primary issue  is that neither  local                                                            
city/school  assemblies'  budgets  nor the  State's  budget for  the                                                            
following fiscal year are  completed by March 16th of each year. The                                                            
requirement  that notification must  be provided by that  date leads                                                            
to a sense  of instability on the  part of teachers and speculation                                                             
on the part of the school  districts in regards to the funding level                                                            
they would receive for the following school year.                                                                               
Co-Chair   Green  ascertained   therefore   that   the  March   16th                                                            
notification date has proven to be more harmful than beneficial.                                                                
Mr. Straube  agreed. "It  creates instability  for teachers  and for                                                            
school districts; it unnecessarily scares parents and teachers."                                                                
Co-Chair Green asked whether  this issue has ever been "challenged."                                                            
Mr. Straube had not discovered  any challenge during his research on                                                            
the issue. The  practice was created in the 1960s  "and has not been                                                            
addressed since".                                                                                                               
Co-Chair Green  stated that while this is "a long-standing  policy",                                                            
it is  inconsistent  with budget  cycles  and is  not beneficial  to                                                            
those concerned.                                                                                                                
Co-Chair  Wilken  moved  to  report the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
There being  no objection,  the SB 156 was  REPORTED from  Committee                                                            
with previous  zero fiscal  note #1, dated  April 18, 2005  from the                                                            
Department of Education and Early Development.                                                                                  
1:45:02 PM                                                                                                                    
     CS FOR HOUSE BILL NO. 182(FIN)(efd fld)                                                                                    
     "An Act amending the  Alaska Wage and Hour Act as it relates to                                                            
     the employment of  a person acting in a supervisory capacity or                                                            
     in  an administrative,  executive,  or  professional  capacity;                                                            
     relating to definitions  under the Alaska Wage and Hour Act and                                                            
     providing  definitions for persons employed in  administrative,                                                            
     executive, and professional  capacities, for persons working in                                                            
     the  capacity of an  outside salesman,  for persons working  in                                                            
     the capacity  of a salesman employed  on a straight  commission                                                            
     basis,   and   for  persons   that  perform   computer-related                                                             
     occupations;   directing  retrospective   application   of  the                                                            
     provisions  of this Act to work performed before  the effective                                                            
     date of this  Act for purposes of claims filed  on or after the                                                            
     effective  date  of this  Act,  and disallowing  retrospective                                                             
     application for purposes of claims for that work that are                                                                  
     filed before the effective date of this Act."                                                                              
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
HEATHER NORBREGA, Staff  to Representative Norm Rokeberg, the bill's                                                            
sponsor, informed  the Committee that this bill, which  would change                                                            
the  definition   of  administrative,   executive,  and   profession                                                            
capacities, is a duplicate  of SB 131, which had previously reported                                                            
from Committee with the  lone difference between the two bills being                                                            
that, unlike  SB 131, which specified  an effective date  of July 1,                                                            
2005, this bill  has no effective date as the effective  date failed                                                            
approval on the House floor.                                                                                                    
AT EASE: 1:47:35 PM / 1:47:36 PM                                                                                            
Co-Chair  Green  questioned  the  reason  the  bill  is  before  the                                                            
committee  considering  the  fact  that  SB 131  had  reported  from                                                            
Committee and advanced to the Senate Rules Committee.                                                                           
Ms. Norbrega understood  that "the theory" was to  have at least one                                                            
Senate committee referral on the bill.                                                                                          
REPRESENTATIVE NORM ROKEBERG,  the bill's sponsor, affirmed that the                                                            
Committee  was familiar  with the  bill's language.  Continuing,  he                                                            
requested that the Committee  act with "due diligence" in regards to                                                            
action on the bill.                                                                                                             
Co-Chair Green asked for  confirmation that the language of the bill                                                            
is identical to that of SB 131.                                                                                                 
Ms. Norbrega affirmed  that the lone difference is  that HB 182 does                                                            
not contain the July 1, 2005 effective date.                                                                                    
At EASE: 1:49:04 PM / 1:49:26 PM                                                                                            
Co-Chair  Wilken  moved  to  report the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
There being no objection,  CS HB 182(FIN)(efd fld) was REPORTED from                                                            
Committee  with zero fiscal  note #1, dated  March 1, 2005  from the                                                            
Department of Labor and Workforce Development.                                                                                  
1:49:44 PM                                                                                                                    
     CS FOR HOUSE BILL NO. 19(FIN)                                                                                              
     "An Act relating to pesticides and broadcast chemicals; and                                                                
     providing for an effective date."                                                                                          
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Co-Chair Green  asked the bill's sponsor to recap  the nature of the                                                            
question  that arose during  the Committee's  first hearing  on this                                                            
MIKE PAWLOWSKI,  Staff  to Representative  Kevin  Meyer, the  bill's                                                            
sponsor,  stated  that the  question  pertained to  the Committee's                                                             
perception  that  the March  18, 2005  Department  of Environmental                                                             
Conservation  (DEC) $221,600  fiscal  note #2  that accompanied  the                                                            
bill was  incomplete. A new  $221,600 DEC  fiscal note, dated  April                                                            
22, 2006  that explains  how the  amounts were  determined has  been                                                            
Co-Chair Green acknowledged.  She understood that in the future, the                                                            
number of pesticide  registrations  would change due to such  things                                                            
as attrition and  users' decisions not to re-register  products that                                                            
were seldom utilized.                                                                                                           
Mr. Pawlowski  affirmed that the fiscal  note "assumes" there  could                                                            
be  "up to  a 40-percent  drop  rate  in the  State"  of  registered                                                            
products. However,  several chemical  manufacturing companies  argue                                                            
that  a  significantly  lower  amount of  pesticides  would  be  un-                                                            
registered than the amount  projected by the Department. As a result                                                            
of utilizing  the Department's  projections,  "the level of  receipt                                                            
support  services  divided by  the number  of  registered  chemicals                                                            
could lead  to a lower  fee on the manufacturers".  Therefore,  "the                                                            
fiscal note is based on a worst-case scenario".                                                                                 
Co-Chair  Green ascertained  therefore,  that the  State would  fare                                                            
better, revenue-wise, were its projections incorrect.                                                                           
1:52:03 PM                                                                                                                    
Co-Chair Green ordered the bill HELD in Committee.                                                                              
1:53:08 PM                                                                                                                    
     CS FOR HOUSE BILL NO. 15(L&C) am                                                                                           
     "An  Act  relating   to  outdoor  recreation  lodge   alcoholic                                                            
     beverage  licenses; relating  to transfer  of certain  beverage                                                            
     dispensary  licenses issued before June 6, 1985;  and providing                                                            
     for an effective date."                                                                                                    
This was  the second  hearing for  this bill in  the Senate  Finance                                                            
Co-Chair Green  recalled that the lingering issue  on this bill "was                                                            
the definition of businesses".                                                                                                  
MIKE PAWLOWSKI,  Staff  to Representative  Kevin  Meyer, the  bill's                                                            
sponsor,  agreed  that including  the  definition of  businesses  in                                                            
Statute  would be  appropriate, as  it would  clarify any  ambiguity                                                            
that  might exist  between  a  privately  owned lodge  for  personal                                                            
benefit and  a lodge owned  for profit. Inclusion  of the latter  is                                                            
the intent of the bill's sponsor.                                                                                               
Conceptual Amendment #2:  This amendment inserts the word "licensed"                                                            
between the  words "a" and  "business" in  Sec. 2(c) page one,  line                                                            
14. The amended language would read as follows.                                                                                 
     (c) In this section, "outdoor recreation lodge" means a                                                                    
     licensed business that provides…                                                                                           
[NOTE: This  amendment was  inadvertently  referred to as  Amendment                                                            
#1.  It should  be  correctly  referred  to as  Amendment  #2, as  a                                                            
separate amendment, Amendment  #1, had been adopted during the April                                                            
28, 2005 hearing on this bill.]                                                                                                 
Co-Chair Wilken moved the Amendment.                                                                                            
There being no objection, Conceptual Amendment #2 was ADOPTED.                                                                  
Co-Chair Green ordered the bill HELD in Committee.                                                                              
1:55:49 PM                                                                                                                    
     HOUSE BILL NO. 91 am                                                                                                       
     "An Act relating to indecent exposure."                                                                                    
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
KAREN LIDSTER,  Staff to  Representative John  Coghill, stated  that                                                            
the bill is best presented  by the language in the Sponsor Statement                                                            
that reads as follows.                                                                                                          
     Several young  girls in Delta Junction were subjected  to a man                                                            
     exposing  himself to them in  the parking lot of a local  store                                                            
     last summer.  He was apprehended and arrested.  In a background                                                            
     check  it was  reported that  he had  a prior  conviction  of a                                                            
     similar  incident  in Arizona.  When  arrested  in the  Arizona                                                            
     case, police reported  that he matched the description of a man                                                            
     reported  for the same  activity several  times but they  could                                                            
     never catch him.                                                                                                           
     In the  Delta Junction incident,  the local magistrate  charged                                                            
     him with  three felonies but  because of the circumstances,  he                                                            
     could not  be convicted of a felony. He plea-bargained  down to                                                            
     one misdemeanor.                                                                                                           
     Children  are  more vulnerable  and  innocent  than adults  and                                                            
     children  fall prey to  sex offender  more easily than  adults.                                                            
     This legislation makes  repeat convictions of indecent exposure                                                            
     within the  observation of a person under the  age of sixteen a                                                            
1:58:02 PM                                                                                                                    
Senator Dyson  voiced being "intrigued about the circumstances  that                                                            
kept" the offender  from being charged. To that point,  he asked how                                                            
this bill would address those circumstances.                                                                                    
Ms. Lidster responded  that, "the difference between  a felony and a                                                            
misdemeanor in an act of  this nature is whether or not the offender                                                            
touches  himself".  This  is  the reason  that  the  Delta  Junction                                                            
offender  "could only  be charged  with a misdemeanor  ….it  appears                                                            
that it's possible that  this person had been suspect of doing these                                                            
kinds of things previously  but seemed to understand" the line "that                                                            
should not  be crossed". This bill  would correct this situation  by                                                            
specifying  that if an individual  had previously been convicted  of                                                            
indecent exposure  before a minor, regardless of whether  the person                                                            
touched themself or not, they could be charged with a felony.                                                                   
Co-Chair Green  asked whether this legislation had  been referred to                                                            
the Senate Judicial Committee.                                                                                                  
Ms. Lidster  affirmed  that the bill  had reported  from the  Senate                                                            
Judiciary Committee without any changes.                                                                                        
Co-Chair  Green  stressed  the  importance  of  the  fact  that  the                                                            
Judiciary Committee  had heard this  legislation, as that  committee                                                            
has, as  a matter of  course, thoroughly  discussed the misdemeanor                                                             
verses felony issue.                                                                                                            
Ms.  Lidster  affirmed.  She  noted   that  the  bill's  sponsor  is                                                            
conscious of  "not ratcheting up penalties".  The bill does  specify                                                            
that  there must  be an  "intent  to frighten  or  shock a  person",                                                            
specifically  minors   in  this  case.  There  must  also  be  total                                                            
disregard  "for the person  that this  is happening  in front  of as                                                            
opposed to sometimes stopping  alongside the road" and inadvertently                                                            
being observed.                                                                                                                 
AT EASE: 2:01:16 PM /2:01:17 PM                                                                                             
Ms.  Lidster specified  that,  "an  offender  commits  the crime  of                                                            
indecent  exposure in the  second degree  if the offender  knowingly                                                            
exposes the  offender's genitals in  the presence of another  person                                                            
with   reckless  disregard   for   the  offensive,   insulting,   or                                                            
frightening affect the act may have."                                                                                           
Co-Chair  Green  asked whether  such  language  was included  in  AS                                                            
Ms. Lidster affirmed its inclusion.                                                                                             
In  response  to   a  question  from  Senator  Olson,   Ms.  Lidster                                                            
understood  that parents would be  protected from this penalty  were                                                            
their actions  not intended  "to frighten  and have total  disregard                                                            
for the affect of the act on the children".                                                                                     
Senator  Olson inquired  to a situation  in which  a minor might  be                                                            
exposed to a child being borne.                                                                                                 
Ms. Lidster voiced that  the purpose of the bill would be to address                                                            
intentional episodes of indecent exposure.                                                                                      
2:03:44 PM                                                                                                                    
Co-Chair Green  asked whether the  concerns begin raised  by Senator                                                            
Olson  might   be  addressed   by  further   clarification   of  the                                                            
"knowingly" or "intentional"  act language or "the shock" element in                                                            
the  bill.  Care  should  be taken  not  "to  exonerate  all  family                                                            
members" in this regard.                                                                                                        
DEAN  GUANELI,  Chief Assistant  Attorney  General,  Legal  Services                                                            
Section-Juneau,  Criminal Division, Department of  Law, informed the                                                            
Committee that he had "never  heard of indecent exposure prosecution                                                            
being leveled  against somebody in a family situation".  However, he                                                            
agreed that  a family member  should not "be  exempt from the  law".                                                            
Continuing, he  noted that there is a relationship  between indecent                                                            
exposure and child abuse  as well as "indecent exposure and grooming                                                            
activities". "Sadly, a lot of that goes on in the family."                                                                      
Mr. Guaneli  voiced the hope that  were "there two parents  present,                                                            
one would be watching out for the children".                                                                                    
Mr. Guaneli  determined that it would  be difficult to imagine  that                                                            
such situations  would "come to the attention of authorities  unless                                                            
they are  particularly  egregious  circumstances that  we would  not                                                            
want to exempt  from the coverage  of the law". He was unsure  as to                                                            
"how to draft  in some sort of an exemption that wouldn't  sweep too                                                            
broadly and protect activity that we don't want to protect".                                                                    
2:05:59 PM                                                                                                                    
Senator  Dyson  noted that  the  term "masturbate"  is  included  in                                                            
Section  1(a)(1), page  one, line  eight of HB  91(am), Version  24-                                                            
LS0098\A.A.  The  inclusion of the word "and" in Section  1(a), page                                                            
one,  line  six,  indicates  that  the  act  of  masturbation   must                                                            
accompany  the offense  in order for  it to  deemed as first-degree                                                             
indecent  exposure.  This  would  "limit  the application".   Family                                                            
members should be prosecuted were that activity to occur.                                                                       
Ms.  Lidster  responded  that the  intent  of  bill was  to  prevent                                                            
someone who  continues to knowingly  expose himself or herself  to a                                                            
minor,  and  who knows  that  they  could  only  be charged  with  a                                                            
misdemeanor  were they to  not touch themselves,  from simply  being                                                            
charged  with a misdemeanor.  Evidence has  concluded that  indecent                                                            
exposure offenders elevate their offenses overtime.                                                                             
Co-Chair Green  pointed out that the  word "or" in Section  1(a)(1),                                                            
page one, line  nine would negate  Senator Dyson's concern  that the                                                            
felony charge  could not be levied  unless masturbation accompanied                                                             
the indecent exposure act.                                                                                                      
Co-Chair Green ordered the bill HELD in Committee.                                                                              
2:08:59 PM                                                                                                                    
     CS FOR SENATE BILL NO. 108(L&C)                                                                                            
     "An  Act relating  to the  regulation of  insurance,  insurance                                                            
     licensing,  surplus lines, insurer  deposits, owner-controlled                                                             
     and contractor-controlled  insurance programs,  health discount                                                            
     plans,  third-party  administrators, and  self-funded  multiple                                                            
     employer welfare arrangements and self-funded governmental                                                                 
     plans; and providing for an effective date."                                                                               
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Co-Chair  Green conveyed  that the  purpose of this  hearing  was to                                                            
hear an explanation of the bill.                                                                                                
LINDA  HALL,   Director,  Division   of  Insurance,  Department   of                                                            
Commerce, Community and  Economic Development, stated that this bill                                                            
would propose  statutory changes that  would make the regulation  of                                                            
insurance  more efficient  for the Division,  make regulations  more                                                            
uniform   for  the  insurance   industry,   and  provide   increased                                                            
protection to Alaskan consumers.  Expressing that many of the bill's                                                            
sections were "very technical",  she stated that her testimony would                                                            
review the bill's components  by generalized topic area, rather than                                                            
in a detailed manner.                                                                                                           
Co-Chair  Green noted  that  Members'  packets include  a  Sectional                                                            
Analysis of the CS SB 108(L&C),  Version 24-GS1083\Y [copy on file].                                                            
Ms. Hall  stated that one  issue addressed  in the bill would  be to                                                            
change licensing  regulations in order  to streamline the  licensing                                                            
processes  and  further  the  efforts to  conform  to  the  National                                                            
Association of  Insurance Commission Models and National  Standards.                                                            
Sec. 2  and Sec. 3 would  remove the requirement  that the  Division                                                            
notify  an insurer's  agent of the  suspension or  revocation  of an                                                            
Insurer's Certificate  of Authority. Such notification  would become                                                            
the responsibility  of the  insurer. While  Sec. 8 and Sec.  9 would                                                            
eliminate  the  requirement   that  insurers  or  agents  must  file                                                            
appointments  with the Division,  they would  require that  insurers                                                            
provide  written   notification  when  an  agent's  appointment   is                                                            
terminated "for cause".                                                                                                         
2:11:57 PM                                                                                                                    
Co-Chair  Green  asked  for  further  clarification   regarding  the                                                            
termination process.                                                                                                            
Ms. Hall  clarified  that when  an insurance  company terminates  an                                                            
agent's appointment,  they must notify the agent in  writing of that                                                            
Ms. Hall continued that  Sec. 10 would allow the Division to conduct                                                            
license renewals via such  things as electronic mail. Currently non-                                                            
resident    new   license    applications    could   be    conducted                                                            
electronically,  and efforts to allow resident and  renewal licenses                                                            
to  be conducted  electronically  would  be  completed  in the  near                                                            
future. The Division would  also endeavor to provide notification of                                                            
renewals by electronic means.                                                                                                   
Ms. Hall communicated that  several sections of the bill address the                                                            
issue "of surplus  lines". Major changes  in the Division's  surplus                                                            
line Statutes  were provided for by legislation that  was enacted in                                                            
the  year 2004.  This  bill would  "clean  up requiring  some  minor                                                            
changes in documents that  are required to be signed by surplus line                                                            
brokers and  changes in documents  that are required to be  filed in                                                            
order to allow  "alien insurers to  report at the same time  as they                                                            
do their stockholder reports".                                                                                                  
Ms. Hall noted that the  bill would also eliminate unused provisions                                                            
regarding the  use of safety deposit  boxes for insurers'  deposits.                                                            
Ms.  Hall stated  that  language in  Sections  21, 22  and 24  would                                                            
address  "a fairly  new  phenomena called  Health  Discount  Plans".                                                            
During  the years  2000 to 2002  there were  approximately  "200,000                                                            
programs that resulted  in $252,000,000 in unpaid claims nationally.                                                            
In order to  protect Alaskans from  illegal products", the  Division                                                            
is seeking "to  add some specific authority to regulate  these types                                                            
of  plans".  Language  in this  bill  would  enhance  current  trade                                                            
practice authority to clarify  that such plans "could not be sold in                                                            
Alaska  unless they  are licensed  by the Division  and the  carrier                                                            
providing them  is licensed". She  had recently signed "a  cease and                                                            
desist  order  against  an  entity   that  was  providing  a  health                                                            
insurance  discount plan in  our State".  The Division had  received                                                            
complaints  from consumers  who had  authorized that  plan to  debit                                                            
their checking  accounts and who had been assured  that their health                                                            
providers participated  in the health discount plan even though they                                                            
did not.  "Consumers  are being ripped  off by  scam artists."  Such                                                            
plans  typically  advertise  on television  or  fax  information  to                                                            
offices  and offer  low rates.  Their advertising  is misleading  in                                                            
that, while it utilizes  health insurance terminology, the plan does                                                            
not provide health insurance.                                                                                                   
Ms. Hall stressed  that she regarded  this component of the  bill as                                                            
being very  important. The  Division's Consumer  Protection  Program                                                            
Press  is developing  press releases  to  alert the  public to  this                                                            
2:16:43 PM                                                                                                                    
Co-Chair  Green  asked  whether  Legislators   might  have  received                                                            
notification  of this issue by a doctor's  office approximately  six                                                            
weeks earlier.                                                                                                                  
Ms. Hall  assured that  that was  quite possible.  The Division  had                                                            
notified  the   Alaska  Medical  Association   of  these   types  of                                                            
activities in the summer  of 2004. They in turn "had issued an alert                                                            
to  Alaska  physicians  to watch  for  these".  She noted  that  the                                                            
Division  is actively pursuing  other plans  that are targeting  the                                                            
Co-Chair Green  asked whether identities  of the offenders  could be                                                            
Ms. Hall stated  that the group to  which she had recently  signed a                                                            
cease and desist order  was named Signature Health Group Health Care                                                            
Advantage  or  Signature  HCA.  She  noted  that  the  Division  has                                                            
developed press releases that identify this entity.                                                                             
Co-Chair  Green asked whether  the Division  anticipates that  there                                                            
could be other such entities.                                                                                                   
Ms. Hall affirmed there  would be. This is a national issue and some                                                            
of the work being  conducted by the Division is in  cooperation with                                                            
other state  regulators in  an effort to  prevent the entities  from                                                            
moving from one state to another.                                                                                               
2:17:24 PM                                                                                                                    
Co-Chair  Green asked whether  the term "health  discount plan"  was                                                            
new terminology.                                                                                                                
Ms.  Hall affirmed  that  it was.  As health  insurance  costs  have                                                            
increased,  there has  been  an increase  of plans  offering  health                                                            
discounts.  Some plans are  offered by insurance  companies  and are                                                            
legitimate.  However, it  should be  noted that  these plans  do not                                                            
provide medical  coverage; they might  provide such things  as a 20-                                                            
percent  discount for  a visit to  a participating  doctor or  a 20-                                                            
percent discount on a drug  prescription with a provider. Some plans                                                            
might  advertise   no  waiting  periods   and  allow  coverage   for                                                            
preexisting  conditions;  such  things  "are  problematic  for  some                                                            
individuals in the health insurance arena".                                                                                     
2:18:15 PM                                                                                                                    
Co-Chair  Green  understood  therefore   that  a legitimate   health                                                            
discount  plan  would have  a  list  of providers  who  would  offer                                                            
discounts, similar to a coupon book.                                                                                            
Ms.  Hall affirmed.  However,  she  noted that  the  plans that  the                                                            
Division has investigated  do not have such service  provider lists.                                                            
Co-Chair Green  disclosed a conflict  of interest in the  discussion                                                            
as her husband  sells insurance, albeit  not health discount  plans.                                                            
Furthermore,  she  would  be  willing to  remove  herself  from  the                                                            
discussion  and  abstain  from voting  were  that  the will  of  the                                                            
Ms. Hall noted  that one of the more technical sections  of the bill                                                            
deals  with Third  Party Administrators  (TPA),  which are  entities                                                            
that administer health  insurance programs. Aetna is the third party                                                            
administrator  for  the State's  Select  Benefits  health  insurance                                                            
program. Third party administrators  are not required to be licensed                                                            
in the same manner  as insurance salesmen or companies  are; however                                                            
they must register  with the Division. This bill would  require that                                                            
these administrators  must  "file certification  if they are  exempt                                                            
from the State's registration  process". Provisions would also allow                                                            
the Division's director  "to immediately suspend registration if the                                                            
TPA  was financially  impaired".  Some  states  have had  TPAs  that                                                            
collect  premiums, administer  the program,  and pay the  providers.                                                            
While this  practice has  not, of yet, been  experienced in  Alaska,                                                            
the Division  would like  to insure  that the  State would have  the                                                            
ability  to  stop   a  TPA  from  operating  were  they   to  become                                                            
financially impaired.                                                                                                           
2:20:59 PM                                                                                                                    
Ms. Hall directed the Committee's  attention to Sec. 31, which would                                                            
allow the Division  to establish requirements regarding  the State's                                                            
bargaining  union   health  trusts.  Current  Statutory   provisions                                                            
provide that  "if an entity is not  regulated by another  regulatory                                                            
body,  they  would be  subject  to  regulation  by the  Division  of                                                            
Insurance."  The federal  government under  the Employee  Retirement                                                            
Income  Security  Act  (ERISA)  regulates  many  self-funded  plans;                                                            
however, it  should be noted that  government plans are exempt  from                                                            
ERISA. To that  point, the Division has been requesting  information                                                            
from the Union Health Trust  since March 2004. The information being                                                            
requested  would allow the  Division "to conduct  a legal review  of                                                            
whether or not they are  regulated by another entity or whether they                                                            
should come under  the purview" of the Division. This  bill contains                                                            
language  that  she viewed  as  being  a policy  decision  that  the                                                            
Legislature  should make  in that  it would propose  that the  union                                                            
health trusts must provide  such things "as financial statements and                                                            
actuarial  opinions  both  on the  level  of contribution  rate  and                                                            
reserves for claims" to the Division.                                                                                           
Ms. Hall continued  that this bill  "has generated some discussion"                                                             
that would be appropriately discussed by this Committee.                                                                        
2:23:20 PM                                                                                                                    
Ms.  Hall stated  that,  "there  are 19,000  State  employees  whose                                                            
health  coverage  is  provided  through  one of  five  union  health                                                            
trusts. A substantial amount  of general fund monies are contributed                                                            
to the health  trust for the provision  of health coverage."  In the                                                            
year  2004,  the Alaska  State  Employees  Association  (ASEA),  for                                                            
example,  managed  $56,000,000  of general  fund money.  The  Public                                                            
Employees  Local 71  managed approximately  $12,000,000  of  general                                                            
fund money.  The policy decision being  introduced to the  Committee                                                            
"is  whether  there should  be  some  level of  oversight  of  those                                                            
funds". Such oversight  would require the trusts to  incur actuarial                                                            
opinion  expenses of approximately  $40,000  to $50,000.  Therefore,                                                            
the  $50,000 expense  that  might be  associated  with acquiring  an                                                            
actuarial   opinion  that  could   affirm  that  ASEA's   "reserving                                                            
practices are  such that would allow  for continued solvency"  would                                                            
amount to seven-tenths  of a percent  of the State's and  employee's                                                            
contribution rate.  The cost of such an opinion from  Local 71 would                                                            
amount  to approximately  one-third  of a percent.  She opined  that                                                            
"this would be good public  policy but it is not something" that the                                                            
Division should do without Legislative concurrence.                                                                             
2:25:21 PM                                                                                                                    
In response  to a question from Co-Chair  Green, Ms. Hall  expressed                                                            
that 19,000 State  employees' insurance coverage is  managed by five                                                            
union health trusts. This number would not include dependents.                                                                  
Co-Chair  Green understood  therefore, that  since these five  plans                                                            
are governmental  plans,  they would  not be required  to report  to                                                            
ERISA. They also do not report to the Division of Insurance.                                                                    
Ms. Hall replied that that is the Division's determination.                                                                     
2:26:15 PM                                                                                                                    
Ms. Hall  stated that  the last  major component  of the bill  would                                                            
address project  owner or contractor controlled insurance  programs.                                                            
This  information is  located in  Sections  23 and 25  of the  bill.                                                            
These  types  of  insurance   programs  typically  accompany   large                                                            
construction  projects such as the  Trans Alaska Pipeline  System. A                                                            
single  program is written  to provide  the insurance  needs  of the                                                            
subcontractors  and  the  primary  contractor.  The rules  for  such                                                            
programs are included in  the Divisions Worker Compensation Manuals.                                                            
The  Division  has  determined  the  need  to  codify  these  rules.                                                            
Attempts  have  been  made to  expand  such  programs  into  general                                                            
operation  and maintenance  functions.  The Division  believes  such                                                            
action  would  have  "a  detrimental   affect"  on  both  the  small                                                            
insurance marketplace currently  existing in the State as well as to                                                            
small individual  subcontractor programs. Such action  would make it                                                            
less and less attractive  to insurance companies to conduct business                                                            
in the State. In addition,  subcontractors who have either their own                                                            
self-insured or  fully insured insurance programs,  would experience                                                            
diminished  ability to support  those insurance  programs were  they                                                            
required to utilize  payroll monies to support a project's  on-going                                                            
maintenance program insurance.                                                                                                  
2:28:02 PM                                                                                                                    
Ms. Hall  noted that  Sec. 23,  beginning  on page  13, line 29  and                                                            
continuing through  page 15, line twelve is the predominate  section                                                            
regarding this issue.                                                                                                           
Co-Chair Green understood Sec. 23 to include new language.                                                                      
Ms. Hall affirmed. It would expand and codify existing rules.                                                                   
Co-Chair Green determined  that this section would apply to an owner                                                            
controlled  insurance program or a  contractor controlled  insurance                                                            
program. She asked for an example of such a program.                                                                            
Mr. Hall  responded  that the best  example of  an owner  controlled                                                            
insurance  program would  have been  the Trans  Alaska Pipeline.  In                                                            
these cases,  "the liability and the  workers compensation  coverage                                                            
were  all provided  in  one  package." The  Division  considers  "it                                                            
appropriate"  for either the  owner or the  general contractor  of a                                                            
large construction project  to purchase the insurance plan. However,                                                            
"the line is drawn"  at the point where the concept  "is expanded to                                                            
cover large on-going operations".                                                                                               
Co-Chair  Green understood  therefore  that the desire  it that  the                                                            
program "should not morph" into an ongoing insurance program.                                                                   
Ms. Hall affirmed.                                                                                                              
Ms.  Hall  stated  that  the  bill  contains  "a  few miscellaneous                                                             
sections.  Sec. 27  sets the  standards  for rate  making in  health                                                            
insurance at the  same statutory standards" the State  currently has                                                            
for  all  lines  of  insurance.  "The  rates  cannot  be  excessive,                                                            
inadequate  or unfairly discriminatory."  Section 1 would  allow the                                                            
Division  director to examine  or require  documents from  producers                                                            
provided  there was  "reasonable cause".  Sections  29 and 30  would                                                            
authorize  the Director's  designee to accept  financial  statements                                                            
within 45 days after the end of each quarter.                                                                                   
Co-Chair Green  ascertained that some sections of  the bill are new,                                                            
some are "creative",  and some would  allow the State to  align with                                                            
nationwide practices.                                                                                                           
Ms. Hall stated  that the majority of the bill would  serve "to keep                                                            
Alaska statutory language  in conformity" with national trends. This                                                            
has been  an on-going  effort;  otherwise, the  State's regulations                                                             
might discourage business.                                                                                                      
2:31:43 PM                                                                                                                    
Senator  Dyson  asked  whether   State  law  should  be  changed  to                                                            
accommodate health savings  accounts (HSAs), particularly in regards                                                            
to State employees.                                                                                                             
Ms.  Hall responded  that  in  terms of  insurance  regulation,  the                                                            
answer is no.  The Division has conducted  analyses in this  regard.                                                            
"Companies are  beginning to offer HSAs more readily  than they were                                                            
before."  She  could  not  speak  to  the  matter   involving  State                                                            
employees.   "The  plans  could  be   very  beneficial  to   Alaskan                                                            
consumers." No changes in the insurance title would be required.                                                                
2:32:45 PM                                                                                                                    
Senator Dyson  understood therefore  that there would be  no need to                                                            
include language  in this "omnibus insurance bill  to encourage HSAs                                                            
to go forward in this State".                                                                                                   
Ms.  Hall   stated  that   this  issue  had   been  discussed.   The                                                            
determination was that such inclusion would be unnecessary.                                                                     
Senator  Dyson,  having been  absent  for a  portion  of Ms.  Hall's                                                            
comments, asked  whether language  in Sec. 31 regarding Self-funded                                                             
Governmental Plans, had been addressed.                                                                                         
Ms. Hall affirmed that she had addressed that section.                                                                          
Senator Dyson  specifically asked that the major benefit  that would                                                            
be derived  by including the bargaining  unit trust plans  under the                                                            
Division's purview, be identified.                                                                                              
Ms.  Hall  responded  that  the major  benefit  would  be  that  the                                                            
Division would  be provided a financial  statement and an  actuarial                                                            
analysis that determined  that the contribution rates "were adequate                                                            
for payments"  and that  the reserving practices  would continue  to                                                            
allow the program "to remain solvent".                                                                                          
Senator  Dyson asked  whether  the Division  had  concerns that  the                                                            
funds had either been mismanaged or misused.                                                                                    
Ms. Hall responded  that, "there is no indication  that anything has                                                            
been misused. That is not the purpose of this legislation."                                                                     
Senator  Dyson continued  however, that, "there  is the possibility                                                             
that they are inadequately funded or actuarially not sound."                                                                    
Ms. Hall responded that, "that is a possibility".                                                                               
The bill was HELD in Committee.                                                                                                 
AT EASE: 2:35:05 PM / 2:35:34 PM                                                                                            
     CS FOR HOUSE BILL NO. 119(FIN)                                                                                             
     "An Act extending the termination date of the Alaska regional                                                              
     economic assistance program; and providing for an effective                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
KACI SCHROEDER,  Staff  to Representative  William  Thomas Jr.,  the                                                            
bill's  sponsor,  and  Committee  Aide  to  the  House  Community  &                                                            
Regional   Affairs  Committee,   explained   that  the  bill   would                                                            
reauthorize the  Alaska Regional Economic Development  Organizations                                                            
(ARDORs) assistance program  through 2010. This program, which began                                                            
in 1988, currently  provides approximately $50,000  annually to each                                                            
of  the  eleven   ARDORs  in  existence   today.  These   non-profit                                                            
organizations  are comprised "of local  volunteers working  together                                                            
to  promote  economic  development  within   their  regions".  ARDOR                                                            
activities   include  working   with  other   economic  development                                                             
activities  in their regions, collecting  and distributing  economic                                                            
information, and being  a liaison between the region, the State, and                                                            
the federal government.                                                                                                         
Ms. Schroeder  noted that  each ARDOR could  use the funds  they are                                                            
provided, as they  deem appropriate. The Legislature  has repeatedly                                                            
reauthorized the ARDOR program since its inception.                                                                             
Co-Chair Wilken opined  that while some ARDORs are doing a good job,                                                            
others are simply  taking the money and "having meetings".  He noted                                                            
that he had  previously expressed  concern in this regard,  and that                                                            
he  was pleased  that  three  ARDORs  had dissolved.  As  a  result,                                                            
additional  funds had  been provided  to the  remaining ARDORs  that                                                            
"are trying  to do a good job". Nonetheless,  he preferred  that the                                                            
ARDOR program  be extended  three years rather  than the  five-years                                                            
proposed  in this legislation,  as a shorter  timeframe would  allow                                                            
for more Legislative oversight of the ARDOR activities.                                                                         
Co-Chair Wilken also asked  whether some component of the program is                                                            
being expanded as a halftime  position appears to have been added in                                                            
the  Department  of Commerce,  Community  and  Economic Development                                                             
$650,000 Fiscal Note #2 dated April 6, 2005.                                                                                    
Ms. Schroeder deferred  to the Department of Commerce, Community and                                                            
Economic Development.                                                                                                           
2:40:35 PM                                                                                                                    
KATHRYN  DODGE, Executive  Director,  Fairbanks  North Star  Borough                                                            
Alaska Regional  Economic  Development Organization,  testified  via                                                            
teleconference from an  offnet site in support of the bill on behalf                                                            
of the 11 ARDORs existing  in the State. The bill would allow ARDORs                                                            
to continue their economic  development activities. In addition, the                                                            
proposal to  extend the program for  a five-year period rather  than                                                            
the historical  every-other year reauthorization period  would allow                                                            
the program to  concentrate on development activities  as opposed to                                                            
concentrating  on whether or not the program would  be reauthorized.                                                            
Ms. Dodge disclosed  that ARDORs return nine dollars  for each State                                                            
dollar  "invested"  in the  program. In  addition,  the program  has                                                            
implemented an  accountability program which "defines  what a highly                                                            
performing  ARDOR  does; measures  and  rewards the  activities  and                                                            
programs";  and assists ARDORS in  improving their performance.  She                                                            
urged that the bill be moved out of Committee.                                                                                  
Co-Chair Green  commented that while ARDORs have accomplished  "some                                                            
very   good  things",   she,   like   Co-Chair  Wilken,   has   some                                                            
reservations.  Rather than the program continuing  as an entitlement                                                            
program, she would prefer  it being a competitive grant program. The                                                            
Department  of  Commerce, Community  and  Economic  Development  and                                                            
other program  analysts have  communicated  to her that the  initial                                                            
program funding  was intended to be  "start-up" money; there  was no                                                            
intent to support the program indefinitely. She agreed with Co-                                                                 
Chair  Wilken   that  the   reauthorization   timeframe  should   be                                                            
shortened.  While some mechanism  might currently  exist, she  would                                                            
like a process instilled  through which both the Legislature and the                                                            
Department would  be provided information about the  ARDOR decision-                                                            
making process,  activity follow-up  procedures, and the  end result                                                            
of the activities.                                                                                                              
2:42:56 PM                                                                                                                    
SALLY  SADDLER,   Legislative  Liaison,   Department  of   Commerce,                                                            
Community and Economic  Development, communicated that approximately                                                            
one-third   of  the  Department's   professional  local   government                                                            
specialists provide support  and coordination for the ARDOR program.                                                            
The  half-position  referenced  by  Co-Chair  Wilken  would  provide                                                            
administrative  staff to support those  individuals. The  Department                                                            
focused  on the accountability  concern for  approximately  the past                                                            
one-and-a-half years, and  as a result, a performance accountability                                                            
system has been  developed. The system has been implemented  and has                                                            
provided incentives  for performing ARDORS, while  placing the "non-                                                            
performing ARDORs  on a two-year notice that their  funding might be                                                            
in jeopardy".                                                                                                                   
Co-Chair  Green asked whether  funding has  ever been withheld  from                                                            
any ARDOR.                                                                                                                      
Ms. Saddler  responded in  the negative,  as the performance  system                                                            
was  just recently  implemented.  A  non-performing  ARDOR would  be                                                            
provided a one  to two-year timeframe in which to  "correct, remedy,                                                            
and improve performance" before any action would be taken.                                                                      
Co-Chair  Green  asked  that  a sample  of  the  performance  system                                                            
guideline be provided.                                                                                                          
Ms. Saddler  responded that  she would provide  a copy of the  "FY06                                                            
ARDOR Tier  Application" [copy on  file], which lists "the  criteria                                                            
for the different"  ARDOR tiers. Funding  is based upon tier  level.                                                            
Co-Chair Green ordered the bill HELD in Committee.                                                                              
2:45:04 PM                                                                                                                    
     HOUSE BILL NO. 136                                                                                                         
     "An  Act  restricting  the  authority  of a  court  to  suspend                                                            
     execution of a sentence  or grant probation in prosecutions for                                                            
     driving while under  the influence and prosecutions for refusal                                                            
     to submit  to a chemical test; and allowing a  court to suspend                                                            
     up  to 75 percent  of the  minimum fines  required for  driving                                                            
     while  under  the influence  and  for refusal  to  submit to  a                                                            
     chemical test if the defendant successfully completes a court-                                                             
     ordered treatment program."                                                                                                
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
REPRESENTATIVE  NORM  ROKEBERG,  the bill's  sponsor,  informed  the                                                            
Committee  that this bill  would accomplish  three things.  First it                                                            
would  increase  the percent  of  a fine  that  could  be waived  or                                                            
reduced in the Therapeutic  Court from the current 50-percent to 75-                                                            
percent. This would "enhance  the ability" of an offender to pay for                                                            
the cost of therapy counseling  and other activities that they would                                                            
be required to participate in under State law.                                                                                  
Co-Chair Green  asked for confirmation that the proposed  25-percent                                                            
reduction "wouldn't  be through the Court; it would  be independent"                                                            
of the Court.                                                                                                                   
Representative  Rokeberg explained  that the Court would  impose the                                                            
fine  mandated  by   State  Statute,  and,  upon  the  individual's                                                             
completion of  the therapeutic program, a portion  of the fine could                                                            
be waived  or suspended.  Thus,  the individual  could utilize  that                                                            
money to pay for  their program participation. He  stressed that the                                                            
intent would  not be to waive or suspend  the entirety of  the fine.                                                            
Representative  Rokeberg  stated  that  the bill  would  also  allow                                                            
felony  Driving  Under the  Influence  (DUI)  cases to  utilize  the                                                            
Statutory authority  provided to the Therapeutic Courts.  Two felony                                                            
DUI  Court pilot  programs  had been  previously  authorized by  the                                                            
Legislature  and  are currently  operating  in the  Municipality  of                                                            
Anchorage.  This bill  would provide  those felony  DUI courts  "the                                                            
same authority"  as  provided to the  District Court  so they  could                                                            
reduce  their  fines  by  75-percent   as  an  incentive  for  their                                                            
offenders  to participate  in Wellness  Court  programs. The  effort                                                            
currently being exercised by the two courts is uncodified law.                                                                  
Co-Chair  Green asked  whether individuals  who  committed a  felony                                                            
could participate in the Wellness Court.                                                                                        
Representative  Rokeberg expressed  that while  the majority  of the                                                            
individuals in  the Wellness Court had committed misdemeanors,  some                                                            
felons have been allowed in the program.                                                                                        
Co-Chair Green  acknowledged. To that  point, she conveyed  that she                                                            
had heard  this  issue being  discussed by  people in  "some of  the                                                            
auxiliary departments".  They become "nervous" when  individuals who                                                            
had committed a felon participate  in the program, as "they consider                                                            
that a very different circumstance than the misdemeanor."                                                                       
Representative Rokeberg  stressed that the two aforementioned courts                                                            
are  pilot   programs.  "They   are  subject   to  renewal   by  the                                                            
Legislature."  The two courts must  be provided "the same  tools" at                                                            
the  felony  level  as exists  at  the  District  Court  level.  The                                                            
authority to continue  the pilot programs would continue  to be with                                                            
the Legislature.                                                                                                                
Co-Chair Green  asked for confirmation that the intent  would not be                                                            
to change  "the misdemeanor  court to a felony  court" and  that two                                                            
separate levels would be "clearly defined".                                                                                     
Representative   Rokeberg  affirmed.  He  referenced   previous  DUI                                                            
legislation he  had sponsored that had provided Statutory  authority                                                            
to the  misdemeanor  courts. Those  courts currently  operate  under                                                            
codified law.                                                                                                                   
[NOTE:  Due to  static  in the  recording,  some  of Representative                                                             
Rokeberg's remarks were inaudible.]                                                                                             
Representative  Rokeberg noted that the third provision  proposed in                                                            
this  legislation would  require  that the  Courts  must impose  the                                                            
mandated  minimum DUI  fine levels.  The  minimum fine  for a  first                                                            
offense  DUI is  a minimum  of $1,500.  To this  point, "an  obscure                                                            
older Court of Appeals  case", Curtis v. State, has been utilized to                                                            
allow the courts to suspend  a portion or all of the fines specified                                                            
in State Statute.  This bill "would basically repeal  that case" and                                                            
require that the fines  authorized by the Legislature be imposed. He                                                            
noted that the First Judicial  District in Southeast Alaska has been                                                            
"the  biggest   offender"   in  this  regard.   The  Juneau   Empire                                                            
newspaper's  Court reports  consistently reflect  the fact  that the                                                            
majority of DUI fines are suspended.                                                                                            
2:50:35 PM                                                                                                                    
Co-Chair  Green asked whether  any other  Statutes exist that  would                                                            
prevent  a judge from  exercising  his or her  discretion to  impose                                                            
fines below the specified minimum fine level.                                                                                   
Representative  Rokeberg  understood  that there  were; however,  he                                                            
deferred to the Department of Law in that regard.                                                                               
Co-Chair Green stated that  further information in this regard would                                                            
be sought.                                                                                                                      
Representative  Rokeberg  characterized  this as a  "good bill"  and                                                            
requested that it be reported from Committee.                                                                                   
Co-Chair  Green voiced  the need  to know whether  "instructing  the                                                            
Court to do this and no less than this" was common practice.                                                                    
Representative  Rokeberg  responded  that  a significant  number  of                                                            
hearings  were conducted  in conjunction  with previous legislation                                                             
that increased  DUI fine levels, mindful  of the fact that  there is                                                            
"a point  of diminishing  returns".  To that point,  the public  "is                                                            
very  concerned"  about  such  behavior,  and,  the  intent  of  the                                                            
Legislature  was to mandate $1,500  as being the minimum  fine for a                                                            
first offense  DUI, with there to be no Court discretion  allowed in                                                            
this regard. However,  after that legislation became  effective, the                                                            
Curtis v. State  case was utilized  by the Court as a means  through                                                            
which to lower fines below  the level authorized by the Legislature.                                                            
He  understood  that there  are  those  who conduct  what  could  be                                                            
likened  to "judge  shopping"  in the  First Judicial  District,  as                                                            
defense  councils  are  aware  of which  judges  are  stricter  than                                                            
others. This situation  "has cost the judicial system" a significant                                                            
amount  of money.  Revenues  would increase  were  the minimum  fine                                                            
levels upheld, even were  a portion of the fines suspended or waived                                                            
for those participating  in the Wellness Court programs. The bill is                                                            
accompanied by several  zero fiscal notes as well as a Department of                                                            
Law fiscal note  that depicts an increase in revenue  as a result of                                                            
mandating  the  minimum  fine  level, even  with  the  allowance  of                                                            
increasing  the amount of a fine that  could be suspended  or waived                                                            
in the Therapeutic  Court, as that would affect "a  relatively small                                                            
number  of  people".  The  Public  Defenders  Office's  fiscal  note                                                            
reflects  that this bill  would incur an  indeterminate increase  in                                                            
its expenses.  Nonetheless  the overall impact  of this legislation                                                             
would be to increase revenue.                                                                                                   
Co-Chair  Green asked  whether  the State  is the  recipient of  any                                                            
National  Highway Traffic  Safety  Administration  funding, as  that                                                            
entity is often involved in these sorts of efforts.                                                                             
Representative  Rokeberg   noted  that  there  is  consideration  of                                                            
expanding   the  pilot  program  to   include  the  communities   of                                                            
Ketchikan,  Juneau, and  Fairbanks.  The Wellness  Court program  is                                                            
anticipated  to   generate  a  significant  amount   of  money.  The                                                            
Therapeutic   Court  concept   is  receiving   significant   federal                                                            
government support because  it is producing results in "breaking the                                                            
revolving  door cycle"  of DUI  behavior. People's  lives are  being                                                            
changed.  This effort  is also  saving  money in  the Department  of                                                            
Corrections and other State programs.                                                                                           
Co-Chair Green  understood that a  felony DUI is issued at  the time                                                            
of a third offense.                                                                                                             
2:55:27 PM                                                                                                                    
Representative  Rokeberg affirmed  that it would be a third  offense                                                            
conviction within a ten-year period.                                                                                            
Co-Chair   Green   asked  regarding   the   DUI   Court   procedure;                                                            
specifically who might  be "the contact point" between court visits.                                                            
Representative  Rokeberg responded  that each  Court might  have its                                                            
own procedure;  however,  the typical "template"  would include  the                                                            
judge and the  Court's case coordinator  who oversees each  person's                                                            
treatment  program. Historically,  the case  coordinator might  have                                                            
been a Department  of Corrections  Probation Officer (PO);  however,                                                            
through a cooperative  effort between the Department  of Corrections                                                            
and the Department  of Health and  Social Services, a transition  is                                                            
occurring  at  the  felony  level   in  which  an  employee  of  the                                                            
Department's   Alcohol  Safety  Action   Program  (ASAP)   and  case                                                            
coordinators  might  absorb  some  of the  workload  from  the  POs.                                                            
Additional   cooperation  would  be   required  from  the   District                                                            
Attorneys in  the Department of Law  and the Public Defender  Agency                                                            
and  private  councilors  in regards  to  the  admissions  screening                                                            
procedure.  "Not just everybody  gets into  these various  programs.                                                            
They have to have potentiality."                                                                                                
Representative Rokeberg  stated that one of "the new features" would                                                            
be the use of pharmacological  drugs that has been proven successful                                                            
"in  helping  people  break  their  dependency  on  alcohol".  "Some                                                            
controversy" has accompanied  this treatment. Nonetheless, he voiced                                                            
concern that  this type of treatment  is not frequently utilized  in                                                            
the  two Anchorage  felony  pilot programs.  He also  disclosed  the                                                            
existence  of a "cultural  problem"  at the felony  level and  "some                                                            
resistance"  on the part  of the Department  of Corrections  and the                                                            
Department  of Law prosecutors. To  that point, he ascertained  that                                                            
that resistance is "breaking down".                                                                                             
2:58:21 PM                                                                                                                    
Representative   Rokeberg  continued   that  the  findings   of  the                                                            
Anchorage  pilot program  indicate  that,  with the  support of  the                                                            
various agencies, the program would work.                                                                                       
Senator Dyson  voiced concern about the inability  of the Department                                                            
of Law's  Civil  Division's  computers to  link information  to  the                                                            
Department's  Criminal Division. As  a result, a judge might  not be                                                            
aware  of the  complete  situation.  Currently, the  Civil  Division                                                            
prints out their information  and someone carries it to the Criminal                                                            
Division, who  must enter it into  their computer. The Court  System                                                            
is addressing  this; however, this  significant administrative  link                                                            
"has not been working well".                                                                                                    
Representative  Rokeberg  responded that  he had  investigated  this                                                            
issue  four  years  earlier when  he  was  the Chair  of  the  House                                                            
Judiciary Committee.  It has been frustrating that  "the Legislature                                                            
seems to be  unable to impress upon  the bureaucracy that  we are in                                                            
the 21st Century now. Technology  works and the only way we're going                                                            
to save money is to increase our productivity."                                                                                 
Co-Chair  Green  understood   that  some  of  this  issue  would  be                                                            
addressed in the FY 06 budget.                                                                                                  
Senator Dyson affirmed.                                                                                                         
Representative Rokeberg  urged the Finance Committee to support such                                                            
action, as it would be  necessary in order to increase productivity.                                                            
"The private sector does it all the time."                                                                                      
Co-Chair Green stated that support would be sought.                                                                             
Co-Chair Green ordered the Bill HELD in Committee.                                                                              
3:00:56 PM                                                                                                                    
     SENATE BILL NO. 121                                                                                                        
     "An Act establishing  the State of Alaska Capital  Corporation;                                                            
     authorizing  the  issuance  of bonds  by  the State  of  Alaska                                                            
     Capital  Corporation  to finance  capital  improvements in  the                                                            
     state; and providing for an effective date."                                                                               
     SENATE BILL NO. 122                                                                                                        
     "An Act establishing  the Alaska capital income  account within                                                            
     the  Alaska  permanent  fund;  relating  to deposits  into  the                                                            
     account;  relating to certain  transfers regarding the  Amerada                                                            
     Hess  settlement  to offset  the effects  of  inflation on  the                                                            
     Alaska  permanent fund; and providing  for an effective  date."                                                            
This was  the first hearing  for these bills  in the Senate  Finance                                                            
CHERYL FRASCA, Director,  Office of Management and Budget, Office of                                                            
the Governor,  informed the Committee  that these bills contain  the                                                            
Governor's  proposal pertaining to  funding provided by the  lawsuit                                                            
that the State  brought in the 1970s against oil companies  over the                                                            
valuation  of  the  State's  royalty  oil  and  gas.  The  case  was                                                            
eventually  settled in  the mid  1990's. During  the 15-year  appeal                                                            
process,  the oil companies  asked  the federal  courts to move  the                                                            
case outside of  Alaska. The argument was that because  all Alaskans                                                            
are  potential  jurors, they  would  be biased  because  they  would                                                            
potentially  benefit  from the  proceeds  going into  the  Permanent                                                            
Fund. The federal  court asked the Alaska Legislature  to attempt to                                                            
resolve this issue.                                                                                                             
Ms.  Frasca continued  that  two separate  Legislative  pieces,  one                                                            
under the  Governor Steve  Cowper Administration  and one under  the                                                            
Governor Walter  Hickel Administration,  were passed to address  the                                                            
concern. One prevented  the interest earnings from  the Amerada Hess                                                            
settlement  from counting  toward the calculation  of the  Permanent                                                            
Fund Dividend  (PFD).  That effort  served to  remove the  potential                                                            
bias, and the lawsuit was ultimately settled out of Court.                                                                      
Ms. Frasca stated  that the money from the settlement  was deposited                                                            
into the Permanent Fund,  and its balance, as of the end of FY 2004,                                                            
amounted to  approximately $424,000,000.  The proposal contained  in                                                            
SB 122-AMERADA HESS INCOME;  CAPITAL INCOME ACCT. would establish an                                                            
income  account  and the  proposal  in SB  121-STATE  OF AK  CAPITAL                                                            
CORP.;   BONDS  would   establish   a  corporation   through   which                                                            
$30,000,000 in annual earnings  would be leveraged to issue bonds to                                                            
fund State  capital  projects. The  capital projects  that would  be                                                            
funded  by the Capital  Corporation  bond revenue  were included  as                                                            
such in the  capital budget the Murkowski  Administration  presented                                                            
in December 2004.                                                                                                               
Ms. Frasca noted that Deven  Mitchell with the Department of Revenue                                                            
would be presenting  information pertinent to SB 121,  regarding the                                                            
Capital Corporation structure.                                                                                                  
3:04:48 PM                                                                                                                    
DEVEN  MITCHELL,  Debt Manager,  Treasury  Division,  Department  of                                                            
Revenue,  expressed  that  tremendous  work has  been  conducted  in                                                            
regards  to  the  structure  of  the  Alaska  Capital  Corporation;                                                             
specifically in consideration  that it's structure should not impact                                                            
the  State's credit  rating.  The process  would  first involve  the                                                            
establishment of the Alaska  Capital Income Account, as specified in                                                            
SB 122,  as a  subaccount  of the  Permanent Fund  Earnings  Reserve                                                            
Account  (ERA). "The  money doesn't  flow  to the  general fund  and                                                            
therefore  it can  be construed  as  being self-supporting  and  not                                                            
included  in the  State's net  tax supported  debt.  This is a  very                                                            
important feature of the proposal."                                                                                             
Mr.  Mitchell  stated that,  "money  in the  Alaska  Capital  Income                                                            
Account would  then be  available for annual  appropriation  for any                                                            
legitimate  purpose  including   to  the  State  of  Alaska  Capital                                                            
Corporation".  The Alaska Capital Corporation would  be a new public                                                            
corporation created in  the Department of Revenue. The Corporation's                                                            
Board would include  the State Bond Committee supported  by existing                                                            
Department  of Revenue  staff.  "The Corporation  would  be able  to                                                            
enter  into operating  leases  that  would  provide for  the  annual                                                            
transfer  of   money  from  the  Capital   Income  Account   to  the                                                            
Corporation,  subject to annual appropriation."  The bond  structure                                                            
being proposed  is a flexible  amortization-type  of bond  issuance,                                                            
often referred to as a  "turbo" structure. It would require interest                                                            
only payments  for up  to a 40-year  schedule  with a final  balloon                                                            
payment at  the end. This structure  would also allow for  "a paying                                                            
down  of  principal  in  the  short  years   as  you  had  principal                                                            
available".  It  would  allow  for volatility  in  the  market.  The                                                            
historical  realized  return of  the Permanent  Fund  over the  past                                                            
twenty  years has  been 8.94 percent;  the current  realized  return                                                            
assumption  is 7.04 percent.  Were a 7.04  percent return  realized,                                                            
approximately  $29,800,0000   a  year  would  be  generated  by  the                                                            
settlement  funds.  That  "anticipated   revenue  stream"  could  be                                                            
leveraged  over  17 years  to obtain  the  $340 million  in  capital                                                            
projects being proposed.                                                                                                        
Mr. Mitchell  qualified  however, that  it would  be unrealistic  to                                                            
anticipate  "a  flat  7.04 percent  return  a  year".  Returns  have                                                            
fluctuated from  a low of 1.15 percent to "double-digit  percents in                                                            
other years";  thus the need  to address  the volatility issue.  The                                                            
proposed turbo  structure concept has been deemed  acceptable by the                                                            
State's   credit  agencies.   It  has  also   been  discussed   with                                                            
underwriters,  and while  the various underwriters  "have  different                                                            
ideas on how the  actual implementation of the program  might occur,                                                            
there seems to  be a consensus that there are means  of dealing with                                                            
the revenue  stream, the  volatile revenue  stream, insuring  a high                                                            
probability of ability  to pay". He noted that "one important credit                                                            
feature"  of this proposal  is that  the Corporation  would have  "a                                                            
moral obligation  on a reserve  fund". A  "moral obligation  is that                                                            
there would be a reserve requirement…"                                                                                          
Mr. Mitchell  stated  that one  component  of the tax  code "is  the                                                            
maximum  annual  service,  and, if  there  is ever  a  draw on  that                                                            
reserve   fund,  then   the  Board   is  charged   with   requesting                                                            
replenishment  from  the  Legislature".   The  State  currently  has                                                            
approximately  $1.1 billion  in outstanding  bonds that have  such a                                                            
moral  obligation  associated   with  them.  This  in  effect  would                                                            
establish "a  floor" in regards to  the bond issuance. He  explained                                                            
how the  State's investment  grade credit  rating could be  affected                                                            
were bonds sold without such a floor.                                                                                           
3:11:05 PM                                                                                                                    
Ms. Frasca informed the  Committee that further information could be                                                            
found  in the  Office  of Management  and  Budget  background  paper                                                            
titled  "Use  of  the  Amerada  Hess  Settlement   to  Fund  Capital                                                            
Projects"  [copy   on  file]  included  in  Members'   packets.  The                                                            
schematics  of the  two  proposals  are located  on  page seven  and                                                            
3:11:30 PM                                                                                                                    
Senator Dyson asked whether  it would be possible "to issue too many                                                            
bonds and overload the system".                                                                                                 
Mr.  Mitchell responded  that  regardless  of whether  the  question                                                            
pertained  to the State's  overall bonding  or specifically  to this                                                            
proposal, the  answer would be "yes". To that point,  the Department                                                            
of Revenue "has  a strong desire to maintain the State's"  AA credit                                                            
rating. In order  to maintain that credit rating "outside  analysts"                                                            
are utilized  to review  the State's  action on  a continual  basis.                                                            
While  some states'  debt  management department  might  be able  to                                                            
develop "a  debt capacity based on  projected revenues for  the next                                                            
twenty  years", such  action would  be impossible  in Alaska  as the                                                            
State's primary  source of  revenue is extremely  volatile.  This is                                                            
the  reason  for requiring  large  reserves  in  such funds  as  the                                                            
Constitutional  Budget   Reserve.  Therefore,  in  response  to  the                                                            
question as  to whether there would  be a limitation on the  State's                                                            
ability  to leverage,  this proposal  would be  recognized as  being                                                            
sustainable. It  could survive a very negative earnings  scenario or                                                            
cash flow scenario.  On a broader scope, it would  provide the State                                                            
money that would not impact the State's credit rating.                                                                          
3:13:40 PM                                                                                                                    
Co-Chair Wilken  voiced being "surprised"  that on the 111th  day of                                                            
the  Legislative  Session,  even though  it  has been  discussed  by                                                            
Legislators and  the Administration, the status of  this legislation                                                            
is as it was on the first  day of the Session. While he has no issue                                                            
with utilizing  Amerada Hess earnings,  he does have a problem  with                                                            
"the complicated  system"  being proposed.  He  would support  using                                                            
Amerada Hess  earnings for the debt  retirement account as  it would                                                            
provide   approximately   $30,000,000   to   support   this   year's                                                            
$140,000,000  debt to fund schools,  harbors, and other needs.  That                                                            
action would be "perfectly defensible".                                                                                         
Co-Chair  Wilken deemed the  activities associated  with the  Alaska                                                            
Corporation Income Account  and the Capital Corporation, as depicted                                                            
on the aforementioned schematics,  as being "unnecessary". A simpler                                                            
solution would be to move  the money from the Amerada Hess Fund into                                                            
the Debt Retirement Fund.                                                                                                       
Co-Chair  Wilken  shared  his  objection  to some  of  the  projects                                                            
proposed to be funded in  this manner, because doing so would amount                                                            
to committing "15-year  money" to fund three-year projects. While he                                                            
voiced  support for  the array  of projects,  funding  them in  this                                                            
manner  would not  be  considered "good  fiscal  management".  Other                                                            
funding sources are available.                                                                                                  
3:16:16 PM                                                                                                                    
Co-Chair   Wilken  continued   that   he  could   not  support   the                                                            
establishment  of a new  bureaucracy through  which to fund  capital                                                            
projects,  as it  would not  be necessary.  The  Amerada Hess  money                                                            
could be  deposited into  an account that  is currently utilized  to                                                            
fund bonds.                                                                                                                     
3:16:57 PM                                                                                                                    
Ms. Frasca  appreciated  Co-Chair  Wilken's comments.  She  reminded                                                            
that  the  Administration  had  provided   its  budget  proposal  in                                                            
December  2004 and that  work on it  had begun  as early as  October                                                            
2004.  The options  through which  to fund the  infrastructure  were                                                            
uncertain at that  time. She recognized that "shifting"  the Amerada                                                            
Hess funding  to the Debt  Retirement Fund  was an option;  however,                                                            
that Fund would  be utilized to fund  prior years' obligations.  The                                                            
desire  with this  legislation  was to  finance and  develop  future                                                            
infrastructure needs. "We  share the same goals in terms of where we                                                            
want to  go, and the  question is  how best to  finance it."  At the                                                            
time the budget  was being developed,  this was considered  the best                                                            
option as  it met the criteria  and did  not jeopardize the  State's                                                            
credit rating. It is still considered "a good mechanism".                                                                       
3:18:16 PM                                                                                                                    
Co-Chair Green  stated that the question is how to  best balance the                                                            
funds that are available.  There is a "different feel to this year's                                                            
budget" than  in previous years, because,  other than Department  of                                                            
Transportation  and Public Facilities  transportation and  federally                                                            
funded projects,  the amount of capital budget projects  was held to                                                            
a minimum. There are numerous  funds out there and efforts should be                                                            
exerted  to  reach  a  balance  in  utilizing  the  funds  that  are                                                            
Co-Chair  Green voiced  appreciation  for the  information that  has                                                            
been provided.                                                                                                                  
Senator Stedman  voiced that he holds a similar position  to that of                                                            
Co-Chair Wilken.                                                                                                                
The bills were HELD in Committee.                                                                                               
3:20:00 PM                                                                                                                    
     CS FOR SENATE BILL NO. 135(JUD)                                                                                            
     "An Act relating to the crimes of assault and custodial                                                                    
     interference; and providing for an effective date."                                                                        
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
Senator Dyson, the bill's  sponsor, stated that he had sponsored the                                                            
bill  on behalf  of the  Governor  Frank Murkowski  Administration.                                                             
Therefore,  he would defer to the  Department of Law to present  the                                                            
merits of the bill.                                                                                                             
3:21:42 PM                                                                                                                    
DEAN  GUANELI,  Chief Assistant  Attorney  General,  Legal  Services                                                            
Section-Juneau,  Criminal Division,  Department of Law, stated  that                                                            
this bill  would address  "two  child protection  matters that  were                                                            
made necessary  by a  couple of  opinions by the"  State's Court  of                                                            
Appeals.  One case involved  a woman who went  to work and  left her                                                            
new boyfriend to baby-sit  her nine-month old infant child. When she                                                            
returned,  she discovered  that the  infant was  bruised around  its                                                            
head and face.  She called the hospital and was told  to observe the                                                            
child  for  a few  hours.  She  eventually  took  the child  to  the                                                            
hospital.  A  Cat Scan  was  conducted  on the  child  to  determine                                                            
whether  there might  be  internal  injuries and  a  blood test  was                                                            
administered.  The child recuperated  without any lasting  injuries.                                                            
Based on  law that existed  at the time  the boyfriend, who  claimed                                                            
that  the  child's  actions caused  it  to  fall  out of  bed,  "was                                                            
prosecuted for assault".  The Department of Law believed a provision                                                            
of State law would  allow a person who assaulted child  to the point                                                            
where medical  attention were required, to be charged  with a felony                                                            
offense.  The State "Court  of Appeals  took a  very narrow  view of                                                            
what  the  term  treatment  meant  and  said  that  mere  tests  for                                                            
diagnosing what's wrong  with the child", even if the test is fairly                                                            
extensive,  would not constitute medical  treatment. The  tests that                                                            
were  administered  were  considered  as a  medical  diagnosis,  and                                                            
therefore, the individual  could only be charged with "a misdemeanor                                                            
instead of a felony assault".                                                                                                   
Mr. Guaneli  informed the Committee  that the State of Alaska  has a                                                            
serious problem with assaults  against small children including such                                                            
things  as "shaken  baby  syndrome".  The Department  believes  that                                                            
people  who react  angrily  against  such  things as  crying  babies                                                            
"really  need the  kind of felony  level supervision  and  probation                                                            
that a felony prosecution provides".                                                                                            
Mr. Guaneli  stated that  Section 1  of the bill  "would change  the                                                            
provision of  assault in the third  degree" which is a felony  level                                                            
of assault,  "to make it  clear that if the  level of injury  to the                                                            
child would cause  a reasonable caregiver to seek  medical attention                                                            
in the form of diagnosis  or treatment that that would be sufficient                                                            
to establish a  felony level assault". The goal would  be to protect                                                            
children  as much  as possible  and to  ensure that  the people  who                                                            
injure  a child seriously  enough to  go to the  hospital should  be                                                            
placed "under the appropriate form of supervision".                                                                             
3:25:25 PM                                                                                                                    
Mr. Guaneli stated that  Sec. 2 of the bill would address situations                                                            
involving  child custody  disputes in which  a non-custodial  parent                                                            
with visitation  rights might leave  the State with the child.  This                                                            
situation in not  uncommon, and the custodial parent  might not hear                                                            
from either the  child or the other parent "for months  or sometimes                                                            
years".  The Department's  position  has been "that  the parent  who                                                            
took the child couldn't  tell the jury later that" that there action                                                            
was to protect the child.  However, a recent Court of Appeals ruling                                                            
allowed  that argument.  That ruling  related to a  case in  which a                                                            
father with visitation  rights had repeatedly told  the Alaska State                                                            
Troopers and the  Department of Health and Social  Services that the                                                            
"child wasn't being cared  for"; however, no evidence supported that                                                            
claim. The  father eventually "took  the child and left the  State".                                                            
Upon being  caught, the father  was allowed  to explain to  the jury                                                            
that he had acted to protect his child.                                                                                         
Mr. Guaneli stated that  Sec. 2 would reverse that Court of Appeals'                                                            
ruling. Current  State Statute specifies that if "something  is done                                                            
out of  necessity because  it would  prevent the  greater harm  from                                                            
occurring",  then it would be "an  affirmative defense to  a crime".                                                            
This bill would  allow that "affirmative  defense of necessity  in a                                                            
custodial interference  prosecution, but only if you  hold the child                                                            
for a maximum of 24 hours  or until you have an opportunity to go to                                                            
the police".                                                                                                                    
Mr. Guaneli  stated that this approach  has been utilized  for other                                                            
offenses  such as an escape  from prison were  the escapee  to claim                                                            
that such action  was "to protect  yourself from being brutalized".                                                             
However,  that person "must  immediately turn"  themselves  into the                                                            
Co-Chair  Green asked  regarding the  reference  to "an incompetent                                                             
person" as reflected  in Sec. 2(c), page two, line  20; specifically                                                            
whether  that language  meant that  that person  must be "under  the                                                            
custody of another, even if they weren't a minor".                                                                              
     (c)  The affirmative  defense of necessity  under AS  11.81.320                                                            
     does  not apply  to a prosecution  for  custodial interference                                                             
     under  (a) of this section if  the protracted period  for which                                                            
     the  person held  the child  or incompetent  person exceed  the                                                            
     shorter of the following:                                                                                                  
3:28:58 PM                                                                                                                    
Mr. Guaneli  affirmed that  to be correct.  The underlying  crime of                                                            
custodial  interference would  involve "someone  who takes  either a                                                            
child  or an  incompetent  person,  someone  who  is in  custody  of                                                            
somebody else".                                                                                                                 
Co-Chair Wilken asked the  significance of specifying that Section 1                                                            
must apply to harming a child ten years of age or younger.                                                                      
Mr. Guaneli  responded that that age  reference is in existing  law.                                                            
The Statute  was originally  developed  in response  to assaults  to                                                            
children  under the age of  ten. "They were  the least likely  to be                                                            
able to either defend themselves or run and get help."                                                                          
Co-Chair Green noted that  the language being referenced, Sec. 1(C),                                                            
page one, beginning on  line 11, would also indicate that the person                                                            
conducting the assault  be age 18 or older. To that point, she asked                                                            
whether State  Statute exists that would address assaults  conducted                                                            
by those younger than 18 years old.                                                                                             
Mr. Guaneli expressed  that this language "was designed  to apply to                                                            
adults  and not take  into account  children who  may interact  with                                                            
other  children".  The goal  was to  draw a  line  "to avoid  having                                                            
juvenile  delinquency proceedings  if  someone under  18 is  causing                                                            
injury to a child".                                                                                                             
Co-Chair Green asked whether  other State Statutes might address the                                                            
issue of a person under the age of 18 assaulting children.                                                                      
Mr. Guaneli clarified  that standard misdemeanor assault  provisions                                                            
would apply  to a person under 18  years of age who commits  such an                                                            
assault. The language  in this bill would specify  that a person age                                                            
18 or older would be subject  to a felony. A person under the age of                                                            
18 would "be subject  to the jurisdiction of the Children's  Court".                                                            
Co-Chair  Wilken  moved  to  report the  bill  from  Committee  with                                                            
individual recommendations and accompanying fiscal notes.                                                                       
There  being  no  objection,  CS  SB  135(JUD)   was  REPORTED  from                                                            
Committee  with zero fiscal  note #1, dated  April 4, 2005  from the                                                            
Department  of Administration; zero  fiscal note #2, dated  April 1,                                                            
2005 from the  Alaska Court System,  and zero fiscal note  #2, dated                                                            
April 5, 2005 from the Department of Law.                                                                                       
     SENATE CS FOR CS FOR HOUSE BILL NO. 75(RES)                                                                                
     "An Act relating  to the powers and duties of  the commissioner                                                            
     of  fish and game,  Board of  Fisheries, and  Board of  Game in                                                            
     promoting and preserving  fishing, hunting, and trapping in the                                                            
     state; and repealing  the power and duty of the commissioner of                                                            
     fish  and game to assist  the United  States Fish and  Wildlife                                                            
     Service in  the enforcement of federal laws regarding  fish and                                                            
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
KEATH  HILLIARD,  Staff to  Representative  Mike Kelly,  the  bill's                                                            
sponsor, stated  that SCS CS HB 75(RES)  was an improved  version of                                                            
the original bill.  The bill was introduced to preserve  and promote                                                            
"the cultural  heritage of  hunting, fishing,  and trapping"  in the                                                            
State.  Such   a  bill   would  be  consistent   with  the   State's                                                            
Constitution  dealing  with  "the  common use  and  sustained  yield                                                            
elements  in regards  to our natural  resources".  The major  change                                                            
that occurred in the Senate  Resources committee substitute, Version                                                            
24-LS0359\L  was the removal  of "the current  Statutory  obligation                                                            
that the commissioner  of Fish and  Game work with the federal  Fish                                                            
and Wildlife Department to enforce all federal regulations".                                                                    
Co-Chair Green understood  that Version "L" included a title change.                                                            
M. Hilliard affirmed and  noted that the title change resolution has                                                            
not yet been developed.                                                                                                         
Co-Chair Green  ordered the bill HELD  in order to allow  the Senate                                                            
Concurrent Resolution for the title change to be developed.                                                                     
3:35:14 PM                                                                                                                    
     SENATE CS FOR HOUSE BILL NO. 35(L&C)                                                                                       
     "An Act  extending the termination  date of the State  Board of                                                            
     Registration  for Architects,  Engineers,  and Land  Surveyors;                                                            
     extending the term of a temporary member of the State Board of                                                             
     Registration for Architects, Engineers, and Land Surveyors;                                                                
     and providing for an effective date."                                                                                      
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
REPRESENTATIVE  VIC KOHRING,  the bill's sponsor,  stated that  this                                                            
"simple  bill" would  extend  the State  Board of  Registration  for                                                            
Architects, Engineers,  and Land Surveyors for four  years. The ten-                                                            
member  Board,  whose members  are  appointed  by the  Governor,  is                                                            
charged with  adopting regulations  and providing oversight  for the                                                            
issuance  of  licenses  to  the aforementioned   professionals.  The                                                            
Legislative  Audit Division  recently conducted  an audit [copy  not                                                            
provided]  and  recommended  that  the  Board  be  continued  as  it                                                            
"successfully  carries out its mission"  and operates in  the public                                                            
Representative Kohring  noted that the Senate Labor & Commerce (L&C)                                                            
committee substitute contains  a change that would best be explained                                                            
by the  organization that  lobbied for it.  In conclusion,  he asked                                                            
for the Committee's support of the bill.                                                                                        
Co-Chair Green identified  SCS CS HB 35(L&C), Version 24-LS0273\Y as                                                            
being before the Committee.                                                                                                     
SAM  KITO   JR.,  Chair,  Legislative   Liaison  Committee,   Alaska                                                            
Professional  Design  Council, spoke  in support  of  the bill.  The                                                            
Senate L&C committee substitute  "added the temporary extension of a                                                            
Landscape  Architect  position"  on  the Board.  However,  the  bill                                                            
drafter inadvertently  omitted a paragraph that provided  transition                                                            
language  in this regard.  The desire would  be that this  Committee                                                            
address that inadvertent language omission.                                                                                     
Co-Chair  Green   asked  whether  the  addition  of  the   Landscape                                                            
Architect position  to the Board would increase the  Board to eleven                                                            
Mr. Kito  explained  that action  in the House  of Representative's                                                             
Finance Committee  had changed the temporary Landscape  Architect to                                                            
a  permanent   position.   Concerns  that   that  action  might   be                                                            
"premature" were expressed  by other House members as well as by the                                                            
Alaska Professional  Design Council.  The bill adopted by  the House                                                            
Finance Committee,  CS HB35 (FIN) would have increased  the Board to                                                            
eleven members. The Senate  L&C committee substitute would specify a                                                            
ten  member  Board "plus  the  one  non-voting  Landscape  Architect                                                            
Co-Chair Green stated that  the Senate L&C bill, Version "Y", before                                                            
the Committee  did not specify the make-up of the  ten-member Board.                                                            
Co-Chair Wilken moved to  adopt the Version "Y" committee substitute                                                            
(L&C) as the working document.                                                                                                  
PAT  DAVIDSON,  Legislative  Auditor,  Legislative  Audit  Division,                                                            
Legislative Agencies &  Offices, affirmed that the Audit recommended                                                            
a four-year  extension of  the Board, as the  Board operated  in the                                                            
public's interest and the  license fees were "sufficient to maintain                                                            
the operations  of the  Board". In addition,  the audit recommended                                                             
that  the  Board  consider  "the  use  of  sub-specialties  or  sub-                                                            
disciplines in  the engineering field". Such action  is occurring in                                                            
other states,  and thought was that  a study should be conducted  in                                                            
this regard to  determine what costs and benefits  such action might                                                            
Co-Chair Green asked for further information about the study.                                                                   
Ms.  Davidson  stated  that  the study  would  examine  the  use  of                                                            
specialties  in engineering  fields  or sub-disciplines.   Currently                                                            
licenses  are provided  to  the core  areas of  Civil, Engineering,                                                             
Chemical, Electrical,  and Mechanical Engineering  as well as Mining                                                            
and  Petroleum  Engineering.  Continuing,  however, she  noted  that                                                            
there is  a list  of approximately  13 actual  specialties and  sub-                                                            
disciplines.  It is unknown whether  the activities associated  with                                                            
those areas would  warrant their being licensed. That  determination                                                            
would be the purpose of the study.                                                                                              
[NOTE: No  formal action  regarding the motion  to adopt the  Senate                                                            
L&C Committee Version "Y" committee substitute occurred.]                                                                       
Co-Chair Green ordered the bill HELD in Committee.                                                                              
3:40:56 PM                                                                                                                    
     SENATE CS FOR CS FOR HOUSE BILL NO. 132(JUD)                                                                               
     "An Act relating to certain crimes committed against the                                                                   
     elderly; and providing for an effective date."                                                                             
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
BEN MULLIGAN, Staff to  Representative Bill Stoltze, noted that this                                                            
bill would increase  the penalty for crimes against  the elderly for                                                            
as the population  of older citizens in the nation  and in Alaska is                                                            
increasing  so are the  crimes that target  that demographic  group.                                                            
The  purpose of  the legislation  would  be  to act  as a  deterrent                                                            
against such crimes.                                                                                                            
Amendment #1:  This amendment inserts a new subsection  into Section                                                            
1 of the bill as follows.                                                                                                       
     (c) In addition  to any other penalty imposed  by law, a person                                                            
     sentenced  to an increased sentence  under (a) of this  section                                                            
     for  a  crime   specified  in  (b)(9)  of  this   section  must                                                            
     immediately surrender  any business license issued by the State                                                            
     of  Alaska and  may not  obtain, possess,  or  hold a  business                                                            
     license   in  the  state  for  two  years  from   the  date  of                                                            
Senator  Dyson moved  to  adopt Amendment  #1.  He noted  that  this                                                            
amendment  is being  sponsored on  behalf of Senator  Bunde who  had                                                            
introduced a companion  bill to this legislation. He also noted that                                                            
Representative  Stoltze was agreeable  to the amendment's  language.                                                            
Mr.  Mulligan  stated  that  this amendment  would  provide  a  tool                                                            
through which  a person, such as a  handyman, who defrauds  a senior                                                            
citizen,  would loose  the right  to hold  a State  issued  business                                                            
license. Currently no such tool exists.                                                                                         
Co-Chair  Green asked how  the age  of 65 was  determined to  be the                                                            
appropriate  age  for the  persons  to  whom  such crimes  might  be                                                            
RANDY RUARO, Assistant  Attorney General, Legislation  & Regulations                                                            
Sections,  Department  of  Law,  noted  that  a  review  of  similar                                                            
legislation  in other states  indicated that  the age of 65  was the                                                            
most  commonly  age  specified.  The  age of  65  was  an  arbitrary                                                            
3:44:51 PM                                                                                                                    
Co-Chair Green  viewed the age of  65 as being very "arbitrary",  as                                                            
people in their forties could be devastated by such an "attack".                                                                
Mr. Ruaro stressed  that as the number of seniors  has increased, it                                                            
has become  apparent that they are  being "specifically targeted  by                                                            
con artists".                                                                                                                   
Mr. Mulligan  noted that 65-years  of age is the approximate  age at                                                            
which the majority  of people retire  and enter into a fixed  income                                                            
lifestyle.  Crimes committed against  people on fixed incomes  could                                                            
be "more significant"  than a crime  committed against someone  in a                                                            
different phase of life.                                                                                                        
In  response  to a  question  from  Senator  Olson,  Co-Chair  Green                                                            
clarified  that the discussion  has morphed  from an explanation  of                                                            
the  amendment  to   the  age  specification.  She  emphasized   her                                                            
discomfort  with age related  legislation, as  people the age  of 65                                                            
should not be labeled as being more vulnerable.                                                                                 
Senator Dyson  opined that the age of 65 could be  viewed as a point                                                            
at which people  "deserve much more  respect"; this bill  would just                                                            
affirm that people that age should not be "messed" with.                                                                        
Senator  Olson  spoke  to  the  amendment   in  that  the  immediate                                                            
surrender  of a business  license  would affect  more than just  the                                                            
business  owner,  it  would  affect employees  who  depend  on  that                                                            
Senator Dyson  responded that  it would be  unfortunate to  work for                                                            
such "jerks".  The intent  of the amendment  would be to remove  the                                                            
business license related to the crime.                                                                                          
Mr. Mulligan  affirmed that the intent  would be the elimination  of                                                            
the business license used to defraud the person.                                                                                
Co-Chair Green asked for  clarification as to whether this amendment                                                            
could affect  a business license that  was totally unrelated  to the                                                            
Mr. Ruaro suggested  that the amendment  language be revised  to tie                                                            
the business license removal  to that associated with the crime. The                                                            
language is "a bit broad".                                                                                                      
Co-Chair Green objected to the amendment.                                                                                       
Senator Dyson moved to withdraw Amendment #1.                                                                                   
Without objection, Amendment #1 was WITHDRAWN.                                                                                  
3:50:35 PM                                                                                                                    
MARIE DARLIN,  Representative, AARP,  spoke in support of  the bill.                                                            
She  noted  that  while  violent  crime   receives  the  most  media                                                            
attention,  fraud   and  identity  theft  crimes  are  increasingly                                                             
targeting the  elderly, particularly individuals 65  years of age or                                                            
older. The loss of any  amount of money could be more devastating to                                                            
a retired victim living  on a low or fixed income. AARP research has                                                            
found that people  over the age of 50 are increasingly  staying home                                                            
at night  due to fear  of becoming  a crime victim.  She noted  that                                                            
AARP would  not object were the age  specified in the bill  changed.                                                            
This bill  would assist in  deterring those  who prey on the  oldest                                                            
victims,  regardless  of  whether  it was  violent  crime,  property                                                            
crime,  fraud, or  identity  thief.  Reducing crimes  against  older                                                            
persons would  assist in  restoring their  freedom and help  prevent                                                            
them from essentially becoming "prisoners" in their own home.                                                                   
Co-Chair  Green  asked  whether Ms.  Darlin  would  anticipate  this                                                            
legislation to be a deterrent to such crime.                                                                                    
Ms.  Darlin declared,  "yes",  the increased  penalties  would be  a                                                            
deterrent. AARP  would be conducting seminars on identity  theft and                                                            
other  scams. It  could  take years  for a  person  to recover  from                                                            
identity thief.  The seminars would  be open to people of  all ages.                                                            
Co-Chair Green  stated that the bill  would be HELD in Committee  to                                                            
allow the amendment's language to be reworked.                                                                                  
     HOUSE BILL NO. 230                                                                                                         
     "An Act authorizing the making of loans for upgrade of                                                                     
     commercial fishing tender vessels and gear."                                                                               
This  was the first  hearing  for this  bill in  the Senate  Finance                                                            
IAN FISK, Staff  to Representative Bill Thomas, the  bill's sponsor,                                                            
informed  the Committee  that this  bill would  address "commercial                                                             
fishing tenders  and their ability to access the Commercial  Fishing                                                            
Revolving  Loan fund".  Tenders  could be  likened  to truckers,  as                                                            
their job  is to  receive fish from  the harvesters  on the  fishing                                                            
grounds and transport  them to the processing plants  on shore. "The                                                            
Revolving Loan  Fund is a mechanism  that the State used  to promote                                                            
the State  ownership of  fishing permits  and vessels." The  problem                                                            
with the  Revolving Loan  Fund is that tenders  "are not  considered                                                            
fisherman" and as such are not eligible for loans from the fund.                                                                
Co-Chair Green asked whether a tender was a person or a vessel.                                                                 
Mr. Fisk responded  that a tender is a vessel that  is operated by a                                                            
Mr. Fisk continued that  the bill would allow tenders to be eligible                                                            
for the  Commercial Fishing  Revolving Loan  fund, specifically  the                                                            
Product Quality Improvement  Loan component of the Fund. The purpose                                                            
of that component is to  provide funds to fisherman to add equipment                                                            
to their vessels  that would assist  in maintaining "the  quality of                                                            
the fish  after it is harvested".  Provided  tenders the ability  to                                                            
acquire loans  in this regard would further the State's  endeavor to                                                            
maintain  the  quality  and value  of  its fish  and  further  State                                                            
residents ownership abilities.                                                                                                  
Co-Chair Green asked the history of the bill.                                                                                   
Mr.  Fisk  communicated  that  the Alaska  Independent  Tenderman's                                                             
Association brought this  issue to Representative Thomas' attention.                                                            
He noted  that this  is companion  legislation to  SB 145-LOANS  FOR                                                            
COMMERCIAL FISHING TENDERS,  which was sponsored by Senator Stedman.                                                            
3:57:28 PM                                                                                                                    
Co-Chair  Wilken  asked  the reason  for  furthering  this  endeavor                                                            
through  the State's  Commercial Fishing  Revolving  Loan Fund  when                                                            
options are available through  the privately owned Alaska Commercial                                                            
Fishing and Agriculture Bank (CFAB).                                                                                            
Mr. Fisk  expressed that  the issue  of whether  "CFAB was truly  an                                                            
independent  private entity"  would  be debatable.  The Division  of                                                            
Investments,   which  is  the  State   division  that  manages   the                                                            
Commercial Fishing  Revolving Loan Fund, could provide  better terms                                                            
to the industry. "They  are an excellent organization to work with."                                                            
Due to  the inherent  risk  involved, it  is "often  difficult"  for                                                            
people in the  fishing industry to find private financing.  "That is                                                            
the reason that the Revolving  loan fund was created to begin with."                                                            
This bill would "correct an inconsistency in that program".                                                                     
Co-Chair Wilken  asked whether "the credit worthiness  requirements"                                                            
were the same for both the State and CFAB.                                                                                      
Mr.  Fisk responded  that  the Division  of investments  would  best                                                            
answer  that question.  Continuing,  however,  he shared  that  "the                                                            
Revolving Loan  Fund has been very successful" and  has not utilized                                                            
general  funds  since  its  inception  in 1985.  It  has  more  than                                                            
compensated the initial  capitalization and it essentially "operates                                                            
independently".  The Fund  provides the entirety  of the  Division's                                                            
operating expenses,  and "is an excellent example  of a program that                                                            
promotes Alaskan  ownership … in an  independent manner,  in that it                                                            
does not require  Legislative assistance  to operate each  year. The                                                            
Fund has also supported other programs.                                                                                         
3:59:40 PM                                                                                                                    
Co-Chair Wilken understood  the answer to be that the State provides                                                            
better  terms.  The  question  remains  as  to  whether  its  credit                                                            
worthiness terms differ from those offered elsewhere.                                                                           
Mr.  Fisk responded  that  the Division  of Investments  conducts  a                                                            
thorough  scrutiny   of  the  applicants.   "Credit  worthiness   is                                                            
definitely"  a factor. "The fact that  the program is as  successful                                                            
as it  is would  testify  to the  Division's ability  to  scrutinize                                                            
applications and to determine credit worthiness."                                                                               
Co-Chair Wilken  voiced being okay with that; however,  he continued                                                            
to voice concern  about the State competing with CFAB  for business.                                                            
4:01:18 PM                                                                                                                    
Mr. Fisk responded  that the Commercial Fishing Revolving  Loan Fund                                                            
was established  after  the Limited  Entry  Act with  the intent  of                                                            
ensuring  that  Alaskans  had  access to  the  fisheries.  CFAB  was                                                            
created following that.  He had no knowledge regarding the inception                                                            
of  CFAB.  Nonetheless,  both  entities  "are  quasi  private".  The                                                            
Division of Investments  is the more "popular" of  the two programs,                                                            
within the industry.                                                                                                            
Co-Chair  Green  ordered the  bill  HELD in  Committee  in order  to                                                            
further address Co-Chair Wilken's questions.                                                                                    
Co-Chair Green adjourned the meeting at 04:02 PM.                                                                               

Document Name Date/Time Subjects