Legislature(2011 - 2012)SENATE FINANCE 532

03/30/2011 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= SB 19 PASSENGER VEHICLE RENTAL TAX TELECONFERENCED
Moved CSSB 19(FIN) Out of Committee
+ SB 92 DENTISTS/DENTAL HYGIENISTS/ASSISTANTS TELECONFERENCED
Heard & Held
+ SB 66 AIDEA: NEW MARKETS TAX CREDIT PROGRAM TELECONFERENCED
Heard & Held
+ SB 90 BOARD OF PUBLIC ACCOUNTANCY SECRETARY TELECONFERENCED
Heard & Held
+ SB 94 SECOND VERSE OF ALASKA'S STATE SONG TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
+= SB 97 COMMUNITY REVENUE SHARING/EDUC FUNDING TELECONFERENCED
Moved CSSB 97(FIN) Out of Committee
                 SENATE FINANCE COMMITTEE                                                                                       
                      March 30, 2011                                                                                            
                         9:03 a.m.                                                                                              
                                                                                                                                
                                                                                                                                
9:03:51 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair  Stedman   called  the  Senate   Finance  Committee                                                                    
meeting to order at 9:03 a.m.                                                                                                   
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Lyman Hoffman, Co-Chair                                                                                                 
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Lesil McGuire, Vice-Chair                                                                                               
Senator Johnny Ellis                                                                                                            
Senator Dennis Egan                                                                                                             
Senator Donny Olson                                                                                                             
Senator Joe Thomas                                                                                                              
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Darwin  Peterson,  Staff,  Senate  Finance  Committee;  Dana                                                                    
Owen,  Staff,  Senator  Egan;  David  Logan,  Alaska  Dental                                                                    
Society;  Don  Habeger,  Director,  Division  of  Corporate,                                                                    
Business,  and Professional  Licensing;  Mark Davis,  Alaska                                                                    
Industrial  Development and  Export  Authority (AIDEA);  Tim                                                                    
Grussendorf, staff, Co-Chair  Hoffman; David Teal, Director,                                                                    
Legislative   Finance   Division;  Senator   Bettye   Davis,                                                                    
District K, Anchorage; Pamela  Marsch, Staff, Senator Bettye                                                                    
Davis; Connie Davis, Juneau.                                                                                                    
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Deborah Stauffer,  Alaska State  Board of  Dental Examiners;                                                                    
Gail   Walden,   Matsu,   Alaska  State   Dental   Hygienist                                                                    
Association; Ted  Leonard, Executive Director,  AIDEA; Chris                                                                    
Kolerok,  Consultant  Alaska  Gross  Capital;  Lisa  Rogers,                                                                    
Anchorage.                                                                                                                      
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
SB 19     PASSENGER VEHICLE RENTAL TAX                                                                                          
                                                                                                                                
          SB 19  was REPORTED  out of  committee with  a "do                                                                    
          pass" recommendation and with  one new fiscal note                                                                    
          from the Department of Revenue.                                                                                       
                                                                                                                                
SB 66     AIDEA: NEW MARKETS TAX CREDIT PROGRAM                                                                                 
                                                                                                                                
          SB 66 was HEARD and  HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
SB 90     BOARD OF PUBLIC ACCOUNTANCY SECRETARY                                                                                 
                                                                                                                                
          SB 90 was HEARD and  HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
SB 92     DENTISTS/DENTAL HYGIENISTS/ASSISTANTS                                                                                 
                                                                                                                                
          SB 92 was HEARD and  HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
SB 94     SECOND VERSE OF ALASKA'S STATE SONG                                                                                   
                                                                                                                                
          SB 94 was HEARD and  HELD in Committee for further                                                                    
          consideration.                                                                                                        
                                                                                                                                
SB 97     COMMUNITY REVENUE SHARING/EDUC FUNDING                                                                                
                                                                                                                                
          SB 97  was REPORTED  out of  committee with  a "do                                                                    
          pass" recommendation and  with a new indeterminate                                                                    
          fiscal note from the  Senate Finance Committee for                                                                    
          the   Department   of  Commerce,   Community   and                                                                    
          Economic  Development  and one  new  indeterminate                                                                    
          fiscal note from the  Senate Finance Committee for                                                                    
          the    Department   of    Education   and    Early                                                                    
          Development.                                                                                                          
                                                                                                                                
SENATE BILL NO. 19                                                                                                            
                                                                                                                                
     "An Act excluding motorcycles and motor-driven cycles                                                                      
     from the passenger vehicle rental tax."                                                                                    
                                                                                                                                
9:03:57 AM                                                                                                                    
                                                                                                                                
Co-Chair Hoffman  proposed committee substitute,  work draft                                                                    
27-LSO157/M.  Co-Chair  Stedman   OBJECTED  for  purpose  of                                                                    
discussion.                                                                                                                     
                                                                                                                                
9:06:07 AM                                                                                                                    
                                                                                                                                
DARWIN PETERSON, STAFF,  SENATE FINANCE COMMITTEE, described                                                                    
the changes  made in  the CS. He  stated that  the committee                                                                    
decided that  the established 10  percent tax was  too high.                                                                    
The CS taxes motorcycle rentals at 3 percent.                                                                                   
                                                                                                                                
Co-Chair Stedman noted several  requested responses that the                                                                    
committee received from the Department of Revenue (DOR).                                                                        
                                                                                                                                
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair  Hoffman MOVED  to report  SB 19  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note. There being NO OBJECTION, it was so ordered.                                                                              
                                                                                                                                
SENATE BILL NO. 92                                                                                                            
                                                                                                                                
     "An Act relating to dental hygienists, dentists,                                                                           
    dental assistants, dental hygiene, and dentistry."                                                                          
                                                                                                                                
9:08:41 AM                                                                                                                    
                                                                                                                                
Senator  Egan   explained  that  CSSB  92   (L&C)  clarified                                                                    
statutes for  dental hygienists,  dentists and the  board of                                                                    
dental examiners.                                                                                                               
                                                                                                                                
DANA OWEN,  STAFF, SENATOR  EGAN, stated  that the  bill was                                                                    
introduced to the  office by a group of  dentists and dental                                                                    
hygienists. He stated that the  dentistry and dental hygiene                                                                    
statutes had  not been comprehensively  reviewed in  over 20                                                                    
years. The bill makes many  changes to the statutes, most of                                                                    
which are  reflections of changes in  dental practices. Some                                                                    
changes are  due to differences in  regulatory framework and                                                                    
others  accommodate  modern communications  technology.  The                                                                    
committee  proposing  the  changes  was  composed  of  three                                                                    
dentists and  three dental hygienists.  One of  the dentists                                                                    
and one  of the  dental hygienists on  the committee  sit on                                                                    
the board of dentistry.  The committee originally proposed a                                                                    
sunset provision,  but the provision is  currently separated                                                                    
from the larger bill to facilitate reauthorization of the                                                                       
board.                                                                                                                          
                                                                                                                                
9:11:47 AM                                                                                                                    
                                                                                                                                
Mr. Owen provided a sectional analysis.                                                                                         
                                                                                                                              
     Section  1.    Removes  a  requirement  that  a  person                                                                  
     practicing  dental  hygiene,  or  who  is  offering  to                                                                    
     practice   dental   hygiene,   must  have   a   current                                                                    
     certificate of registration.                                                                                               
                                                                                                                                
     Section  2.   Establishes the  qualifications necessary                                                                  
     for licensure as a dental hygienist.                                                                                       
                                                                                                                                
     Section 3.   Amends the qualifications  necessary for a                                                                  
     dental hygienist to be licensed by credentials.                                                                            
                                                                                                                                
     Section  4.     Edits  the  dental   hygiene  licensing                                                                  
     provision  to provide  that  successful applicants  for                                                                    
     licensure will no longer be  registered by the Board of                                                                    
     Dental Examiners  (board) (see  sec. 25 for  a parallel                                                                    
     provision applicable to dentists).                                                                                         
                                                                                                                                
     Sections 5 -  6.  Conform the "renewal  of license" and                                                                  
     "lapse and reinstatement of  license" provisions to the                                                                    
     bill's  removal  of  the registration  requirement  for                                                                    
     dental hygienists.                                                                                                         
                                                                                                                                
     Section  7.     Allows  a  dental   hygienist  who  has                                                                  
     completed a course offered by  or under the auspices of                                                                    
     a  program  accredited  by  the  Commission  on  Dental                                                                    
     Accreditation  of the  American  Dental Association  or                                                                    
     other  equivalent  course  or   program  to  receive  a                                                                    
     restorative function endorsement from the board.                                                                           
                                                                                                                                
     Section 8.  Changes  the levels of supervision required                                                                  
     for a dental hygiene  student performing dental hygiene                                                                    
     procedures.    Makes  the  section  applicable  to  all                                                                    
     students enrolled in dental hygiene programs.                                                                              
                                                                                                                                
     Sections  9  -  11.   Change  the  permitted  scope  of                                                                  
     practice  for  a  dental  hygienist  and  clarify  what                                                                    
     practices  and procedures  may not  be  delegated to  a                                                                    
     dental hygienist by a dentist.                                                                                             
                                                                                                                                
     Section 12.  Clarifies  what practices and procedures a                                                                  
     dental hygienist, who has  entered into a collaborative                                                                    
     agreement  with a  dentist, may  be  authorized by  the                                                                    
     dentist to perform.                                                                                                        
                                                                                                                                
     Section 13.  Makes stylistic changes.                                                                                    
                                                                                                                                
     Section 14.   Permits  the board  to sanction  a dental                                                                  
     hygienist who  used or knowingly cooperated  in deceit,                                                                    
     fraud,  or intentional  misrepresentation  to obtain  a                                                                    
     certificate  or   endorsement  and  amends   the  other                                                                    
     grounds for discipline, suspension,  or revocation of a                                                                    
     dental hygienist's license.                                                                                                
                                                                                                                                
     Section 15.  Gives the  board the authority to impose a                                                                  
     civil  fine  of  up  to  $25,000  for  a  violation  of                                                                    
    AS 08.32 or a regulation adopted under the chapter.                                                                         
                                                                                                                                
     Section 16.   Amends the  list of dental  hygienists to                                                                  
     whom the provisions of AS 08.32 do not apply.                                                                              
                                                                                                                                
     Section  17.   Provides new  definitions applicable  to                                                                  
     AS 08.32 for "licensed  dental hygienist" and "licensed                                                                    
     dentist."                                                                                                                  
                                                                                                                                
     Section  18.    Adds  a qualification  for  the  public                                                                  
     member of the board.                                                                                                       
                                                                                                                                
     Section 19.  Requires the  members of the board to take                                                                  
     an oath.  Requires the board to adopt a seal.                                                                              
                                                                                                                                
     Section 20.  Requires the  president of the board to be                                                                  
     a dentist or dental hygienist.                                                                                             
                                                                                                                                
     Section 21.  Amends the powers of the board.                                                                             
                                                                                                                                
     Section  22.    Requires the  Department  of  Commerce,                                                                  
     Community,  and  Economic   Development  to  employ  an                                                                    
     investigator for the board.                                                                                                
                                                                                                                                
     Section 23.  Requires  the board to establish standards                                                                  
     for  dental  radiological  equipment that  comply  with                                                                    
     applicable federal law.  Permits  the board to charge a                                                                    
     fee  for   equipment  registered  under   the  section.                                                                    
     Removes  a requirement  that inspections  of radiologic                                                                    
     equipment  be  performed  by   a  person  with  certain                                                                    
     qualifications.                                                                                                            
                                                                                                                                
     Section 24.  Requires the  board to maintain a registry                                                                  
     of persons  licensed as  dentists or  dental hygienists                                                                    
     and  persons  certified  as dental  assistants,  and  a                                                                    
     registry  of licenses,  certificates, and  endorsements                                                                    
     revoked by the board.                                                                                                      
                                                                                                                                
     Section 25.   Edits the dentist  licensing provision to                                                                  
     provide that  successful applicants for a  license will                                                                    
     no longer be registered by the  board (see sec. 4 for a                                                                    
     parallel provision applicable to dental hygienists).                                                                       
                                                                                                                                
     Section 26.   Amends  the qualifications for  a license                                                                  
     to practice dentistry in the state.                                                                                        
                                                                                                                                
     Section 27.   Requires that an  applicant for licensure                                                                  
     as  a dentist  must  be interviewed  in  person by  the                                                                    
     board.                                                                                                                     
                                                                                                                                
     Sections  28 -  29.    Amend what  is  necessary for  a                                                                  
     dental hygienist to be licensed by credentials.                                                                            
                                                                                                                                
     Section 30.   Permits all persons  enrolled as students                                                                  
     in an accredited school of  dentistry to perform dental                                                                    
     procedures without a license  if certain conditions are                                                                    
     met.                                                                                                                       
                                                                                                                                
     Section  31.   Conforms the  "renewal of  registration"                                                                  
     provision  to the  bill's removal  of the  registration                                                                    
     requirement for dentists.                                                                                                  
                                                                                                                                
     Section 32.   Provides that a dentist who  does not pay                                                                  
     the   license  renewal   fee  forfeits   the  dentist's                                                                    
     license.   Permits  the board  to  reinstate a  license                                                                    
     upon certain conditions.                                                                                                   
                                                                                                                                
     Section  33.    Amends   the  grounds  for  discipline,                                                                  
     suspension,  or revocation  of  a  license to  practice                                                                    
     dentistry.                                                                                                                 
                                                                                                                                
     Section  34.    Permits  a  dental  assistant  who  has                                                                  
     completed a course offered by  or under the auspices of                                                                    
     a  program  accredited  by  the  Commission  on  Dental                                                                    
     Accreditation  of the  American  Dental Association  or                                                                    
     other  equivalent  course  or   program  to  receive  a                                                                    
     restorative function endorsement from the board.                                                                           
                                                                                                                                
     Section  35.   Adds  a new  provision allowing  persons                                                                  
     enrolled in  a program  or course  of study  to perform                                                                    
     dental assisting  procedures as part of  that course of                                                                    
     study  or  program  without a  certificate  if  certain                                                                    
     conditions are met.                                                                                                        
                                                                                                                                
     Section 36.   Adds a new section that  provides who may                                                                  
     own, operate,  or maintain  a dental  practice, office,                                                                    
     or clinic.                                                                                                                 
                                                                                                                                
     Section 37.  Provides  new definitions applicable to AS                                                                  
     08.36  for  "certified   dental  assistant,"  "licensed                                                                    
     dental hygienist," and "licensed dentist."                                                                                 
                                                                                                                                
     Section   38.      Repeals   AS 08.32.020,   08.32.035,                                                                  
     08.32.040, 08.32.060,  08.32.097, 08.32.100, 08.32.120,                                                                    
     08.32.130,  08.32.140,  08.32.190(2);  AS 08.36.075(b),                                                                    
     08.36.075(c),  08.36.075(d),  08.36.075(e),  08.36.114,                                                                    
     08.36.230, 08.36.244,  08.36.246, 08.36.247, 08.36.248,                                                                    
     08.36.260,  08.36.271, 08.36.290,  08.36.350(a)(3), and                                                                    
     08.36.350(a)(4).                                                                                                           
                                                                                                                                
     Section  39.   Instructs  the  revisor  of statutes  to                                                                  
     change the catch line for AS 08.36.250.                                                                                    
                                                                                                                                
9:19:13 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  addressed Page  18, Line 28  regarding the                                                                    
ownership of  the dental office  and facility. He  asked the                                                                    
reason for the new section.                                                                                                     
                                                                                                                                
DAVID  LOGAN,  ALASKA  DENTAL   SOCIETY  answered  that  the                                                                    
statute currently  lacks a provision permitting  a surviving                                                                    
spouse to have  ownership of a practice  during a transition                                                                    
period.  The section  allows  a  transitional period  during                                                                    
which a spouse  has ownership of a practice  with a licensed                                                                    
dentist  in  control.  During  the  transition  period,  the                                                                    
spouse  may sell  the practice  to  another individual.  The                                                                    
section also  clarifies additional mechanisms  for ownership                                                                    
of a dental practice.                                                                                                           
                                                                                                                                
Co-Chair  Stedman   mentioned  the  fiscal  note   from  the                                                                    
Department of  Commerce, Community and  Economic Development                                                                    
(DCCED) for  $114,200 in receipt support  services to employ                                                                    
one full time investigator.                                                                                                     
                                                                                                                                
9:21:28 AM                                                                                                                    
                                                                                                                                
Senator Thomas asked about the  first item in Section 1, the                                                                    
removal  of   the  need  for  a   current  certification  of                                                                    
registration. He  asked if the  language was  redundant. Mr.                                                                    
Logan responded yes.                                                                                                            
                                                                                                                                
Senator Thomas  asked about the certification  or inspection                                                                    
of equipment. He expressed interest  in the hazards of x-ray                                                                    
and was curious  about the condition of  the equipment used.                                                                    
Mr.  Logan  answered  yes.  He expected  that  much  of  the                                                                    
content   of  the   statutes   will   be  transferred   into                                                                    
regulations with some minor  modifications. He mentioned the                                                                    
overarching federal  law that ensures the  minimum standard.                                                                    
He noted  requirements for  qualifications of  the equipment                                                                    
inspectors along with a time allotment for inspection.                                                                          
                                                                                                                                
Co-Chair  Hoffman asked  why the  Labor  and Commerce  (L&C)                                                                    
committee  felt  the  need for  an  investigator.  Mr.  Owen                                                                    
responded  that   an  investigator  would  provide   a  more                                                                    
effective way of policing dental practices.                                                                                     
                                                                                                                                
Co-Chair  Stedman  asked  about   the  committee.  Mr.  Owen                                                                    
responded that the committee was  composed of three dentists                                                                    
and three dental hygienists.                                                                                                    
                                                                                                                                
Mr. Logan  added that board members  expressed concern about                                                                    
the length of time required  to adjudicate cases. He pointed                                                                    
out the limited number  of investigators. The department has                                                                    
many investigations with different  boards. The board opined                                                                    
that with its own  investigator, the investigations would be                                                                    
performed in  a timely  manner. The board  acknowledged that                                                                    
the change would result in additional licensing fees.                                                                           
                                                                                                                                
9:24:46 AM                                                                                                                    
                                                                                                                                
Senator Olson asked  about Page 18. He  understood that only                                                                    
a person  who holds a  valid license  can own and  operate a                                                                    
dental practice  clinic. He asked  if the owner of  a dental                                                                    
practice  must  have  a  valid  dental  license.  Mr.  Logan                                                                    
responded that  a laundry list  of exceptions exists  in the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Senator Olson asked  if a community owned  dental clinic was                                                                    
trying to attract a dentist  would they be exempted from the                                                                    
restriction.     Mr.  Logan  agreed.  He   stated  that  the                                                                    
community could own the dental  clinic but the management of                                                                    
the clinic must be done by a licensed dentist.                                                                                  
                                                                                                                                
Senator  Olson asked  about prescriptive  authority and  the                                                                    
midlevel  practitioners. Mr.  Logan answered  that the  bill                                                                    
has  no effect  on midlevel  practitioners. They  are exempt                                                                    
from the state licensure.                                                                                                       
                                                                                                                                
Senator Olson  asked about  the health  corporation's dental                                                                    
practitioners who have studied  abroad and then returned. He                                                                    
wondered   the  effect   the   legislation   has  on   those                                                                    
practitioners working for the  native corporations. Mr. Owen                                                                    
responded  that current  practice in  rural areas  of Alaska                                                                    
will  remain  unchanged.  He  explained  that  the  original                                                                    
drafted language was insufficient.  He worked with attorneys                                                                    
and a  drafter to incorporate the  appropriate language into                                                                    
the amendment.                                                                                                                  
                                                                                                                                
Senator  Olson  wondered  about   letters  of  support  from                                                                    
specific  health corporations.  Mr.  Owen did  not have  the                                                                    
requested letters.                                                                                                              
                                                                                                                                
9:28:02 AM                                                                                                                    
                                                                                                                                
Senator Olson  asked about Section  14 and  the disciplinary                                                                    
action by the dental board.  He recalled that medical boards                                                                    
are  always  seeking  investigators.  He  wondered  why  the                                                                    
dental  board  was  different.   Mr.  Logan  suspected  that                                                                    
additional boards would visit  the legislature with the same                                                                    
request.                                                                                                                        
                                                                                                                                
Senator Olson  asked about Section  23 and  the radiological                                                                    
procedures.  He  asked  how the  legislation  restricts  the                                                                    
practice of current radiology  technicians. Mr. Logan stated                                                                    
that a board member could answer the question.                                                                                  
                                                                                                                                
Senator Olson  asked how  many disciplinary  actions occured                                                                    
in the last  five years. Mr. Logan deferred  the question to                                                                    
the director.                                                                                                                   
                                                                                                                                
9:30:19 AM                                                                                                                    
                                                                                                                                
DEBORAH  STAUFFER, ALASKA  STATE BOARD  OF DENTAL  EXAMINERS                                                                    
(via   teleconference),   testified   in  support   of   the                                                                    
legislation. She  stated that the board  of dental examiners                                                                    
unanimously supported the passage of  SB 92. She pointed out                                                                    
that the  legislation updates  current statutes.  She stated                                                                    
that as  of February, there  were six open  complaints filed                                                                    
and awaiting review. She  mentioned nine open investigations                                                                    
with some  consent agreements pending  and noted  nine other                                                                    
cases awaiting  records or release documents  since the last                                                                    
meeting in December. The results  are similar to those noted                                                                    
in the  November meeting regarding the  number of complaints                                                                    
and investigations. She  stated that one case  closed in May                                                                    
after  eight  years of  investigation.  She  opined that  an                                                                    
additional investigator would help protect the public.                                                                          
                                                                                                                                
Co-Chair Stedman requested the data in letter format.                                                                           
                                                                                                                                
9:34:28 AM                                                                                                                    
                                                                                                                                
Senator  Olson  asked  how the  number  of  open  complaints                                                                    
compares with those  of the medical board.  Ms. Stauffer did                                                                    
not know.                                                                                                                       
                                                                                                                                
Senator Olson  requested a comparison. He  believed that the                                                                    
medical board  did not possess  their own  investigator. Co-                                                                    
Chair Stedman stated that the  data will be compiled for the                                                                    
committee.                                                                                                                      
                                                                                                                                
9:35:06 AM                                                                                                                    
                                                                                                                                
GAIL   WALDEN,   MATSU,   ALASKA  STATE   DENTAL   HYGIENIST                                                                    
ASSOCIATION  (via teleconference),  testified in  support of                                                                    
the  legislation. She  agreed that  the dental  practice act                                                                    
had   not   been   thoroughly  reviewed   and   updated   in                                                                    
approximately  20 years.  She noted  that SB  92 amends  and                                                                    
repeals dental  hygiene statute language  where appropriate,                                                                    
making the practice act more  concise. She opined that SB 92                                                                    
maintains high standards for dental hygienists.                                                                                 
                                                                                                                                
9:36:33 AM                                                                                                                    
                                                                                                                                
DON HABEGER, DIRECTOR, DIVISION  OF CORPORATE, BUSINESS, AND                                                                    
PROFESSIONAL  LICENSING, stated  that  he did  not have  the                                                                    
requested  information to  answer Senator  Olson's question.                                                                    
He offered to provide the information to the committee.                                                                         
                                                                                                                                
Senator Egan  offered to provide additional  information and                                                                    
announced  that an  amendment would  be  offered during  the                                                                    
bill's next hearing.                                                                                                            
                                                                                                                                
SB  92  was   HEARD  and  HELD  in   Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 66                                                                                                            
                                                                                                                                
     "An Act  creating a new  markets tax  credit assistance                                                                    
     guarantee   and   loan   program  within   the   Alaska                                                                    
     Industrial  Development   and  Export   Authority;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
9:37:56 AM                                                                                                                    
                                                                                                                                
MARK  DAVIS,   ALASKA  INDUSTRIAL  DEVELOPMENT   AND  EXPORT                                                                    
AUTHORITY (AIDEA)  testified on  SB 66.  He stated  that the                                                                    
bill allows  AIDEA's participation and support  in a federal                                                                    
tax  credit program  known  as the  New  Markets Tax  Credit                                                                    
(NMTC). The  bill is part  of AIDEA's  plan to add  tools to                                                                    
further economic development in  the state. The NMTC program                                                                    
was  run  by the  Internal  Revenue  Service (IRS)  and  was                                                                    
started in  2000 as a  unique equity leveraging  program. He                                                                    
explained that  the program works  by encouraging  people to                                                                    
compete with  IRS tax credits  available through  the United                                                                    
States Department  of Treasury.  The credits are  awarded as                                                                    
Community  Development Entities  (CDE). Those  entities then                                                                    
seek investors.                                                                                                                 
                                                                                                                                
Mr. Davis  mentioned two sets  of investors in  the program:                                                                    
equity investors and leverage  lenders. The equity investors                                                                    
receive a 39 percent credit on  their federal taxes over a 7                                                                    
year period.  The tax  credits are  available to  low income                                                                    
areas, certain rural areas, or  to targeted populations such                                                                    
as Indian tribes. The program  is also available to targeted                                                                    
populations lacking access to loans.                                                                                            
                                                                                                                                
Mr. Davis  explained that  once a  CDE has  a tax  credit it                                                                    
finds investors  and a  bank to make  the leverage  loan. He                                                                    
noted that the Platinum Fish  Processing Plant and the elder                                                                    
care  facility  in Kotzebue  both  utilized  the credits  as                                                                    
well.  Unfortunately, the  program has  lacked vigor  due to                                                                    
the national credit crunch. The  leverage lenders must agree                                                                    
to  two  restrictions.  The first  restriction  is  to  take                                                                    
interest  only   on  the  leverage   loan  portion   of  the                                                                    
investment for seven years and  must agree not to foreclose.                                                                    
The project can use the  equity capital by the qualified tax                                                                    
driven investors and  pay interest only for  seven years. At                                                                    
the end  of the  seven years,  the equity  investors forgive                                                                    
the  investment  and the  loan  is  refinanced. The  program                                                                    
provides instant  equity to  the refinancing  at the  end of                                                                    
the  7 year  period  and lowers  the cost  of  a project  by                                                                    
approximately 20 to 25 percent.                                                                                                 
                                                                                                                                
Co-Chair Stedman asked about the  forgiveness of the equity.                                                                    
Mr.  Davis  responded  that the  tax  equity  investors  are                                                                    
driven by the 39 percent tax credit.                                                                                            
                                                                                                                                
Co-Chair Stedman asked how many  years the investors have to                                                                    
utilize the 39 percent tax  credit. Mr. Davis responded that                                                                    
they utilize the credit at  different percentages over seven                                                                    
years.                                                                                                                          
                                                                                                                                
Co-Chair Stedman  asked if the percentage  is taken directly                                                                    
from the tax bill. He asked  if the investors walk away from                                                                    
their  equity position.  Mr. Davis  responded yes.  He added                                                                    
that approximately 99 percent  of cases follow the described                                                                    
format.                                                                                                                         
                                                                                                                                
Co-Chair  Stedman   asked  about  the  issue   of  the  debt                                                                    
incurred.  Mr. Davis  explained  that  the leverage  lenders                                                                    
place 70  percent of funds into  the project. At the  end of                                                                    
seven years,  the residual  amount of the  loan is  used for                                                                    
refinancing. The  original equity can  be used as  a portion                                                                    
of  the   debt  equity   calculation  to  qualify   for  the                                                                    
refinancing.                                                                                                                    
                                                                                                                                
9:43:34 AM                                                                                                                    
                                                                                                                                
Senator  Thomas   asked  about  the  equity   provision.  He                                                                    
wondered if  the federal  tax credits  offset the  equity in                                                                    
the  seven year  period of  time. Mr.  Davis responded  that                                                                    
investors  with   tax  liabilities   seek  tax   credits  or                                                                    
consortiums of  investors hire employees  to seek  out those                                                                    
looking for  NMTC opportunities. Usually the  39 percent tax                                                                    
credit  provides the  motive. The  transaction is  leveraged                                                                    
and works  well for  low income  communities because  of the                                                                    
equity  position gained  after seven  years. The  difficulty                                                                    
with the program is due  to the bank's unwillingness to lend                                                                    
at interest only, or without  the ability to foreclose. Many                                                                    
states operate  as a community development  entity. He noted                                                                    
that  AIDEA made  a different  choice  as Alaska  has a  CDE                                                                    
known as Alaska  Growth Capital, which is  already active in                                                                    
the state. The  approach taken by AIDEA is  to guarantee the                                                                    
leveraged part  of the  loan for the  seven year  period. He                                                                    
stated  that  AIDEA canvassed  banks  and  talked to  Alaska                                                                    
Growth  Capital and  hired a  consultant with  the consensus                                                                    
that an  AIDEA guarantee would  be sufficient to  revive the                                                                    
program in Alaska.                                                                                                              
                                                                                                                                
9:45:59 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman supposed that the  loan sounded like a zero                                                                    
money down,  100 percent leveraged proposition.  He wondered                                                                    
about the  lender's recourse when  dealing with  the project                                                                    
assets.  Mr.  Davis responded  that  a  bank must  agree  to                                                                    
interest  only and  cannot foreclose  during the  seven year                                                                    
period  during which  the credit  exists.  The code  insists                                                                    
that if the project fails and  payments are not made, then a                                                                    
recapture  event occurs.  A recapture  event means  that the                                                                    
investor must  repay all credits  received with  interest at                                                                    
the  interest repayment  rate  from the  first  date of  the                                                                    
filing of the first return claiming the credit.                                                                                 
                                                                                                                                
Co-Chair Stedman understood that  the equity investor covers                                                                    
the debt if  the project implodes. Mr.  Davis corrected that                                                                    
the equity  investor repays the  credits with  interest. The                                                                    
interest in a tax bill can often exceed the principal.                                                                          
                                                                                                                                
9:48:08 AM                                                                                                                    
                                                                                                                                
Co-Chair   Hoffman   understood   that  the   bill   targets                                                                    
economically disadvantaged  and rural  areas. He  noted that                                                                    
program was  reauthorized by congress for  an additional two                                                                    
years beginning  in January. He asked  about the anticipated                                                                    
success  of the  program in  rural areas  of the  state. Mr.                                                                    
Davis  responded that  AIDEA could  provide one  or two  new                                                                    
market  tax credit  projects each  year. He  added that  the                                                                    
projects  are complex  and require  ample time  to assemble.                                                                    
The  projects  are  available  in  areas  that  conventional                                                                    
lending is unavailable  and can be used  to leverage lending                                                                    
to  provide a  project that  would not  cash flow  for seven                                                                    
years. He stated that the  project would work for a platinum                                                                    
fish plant  or a processing  plant in rural  Alaska. Another                                                                    
advantage of  the program  is its  few restrictions  for the                                                                    
types  of  projects  eligible   for  funding.  Most  federal                                                                    
programs are  restrictive. The  list of  restricted projects                                                                    
is limited  to golf courses,  massage parlors, hot  tubs and                                                                    
alcoholic dispensaries.                                                                                                         
                                                                                                                                
Co-Chair Stedman  asked about the  fish plant  in Ketchikan.                                                                    
Mr. Davis  clarified that  the mentioned  fish plant  was in                                                                    
Platinum Alaska.                                                                                                                
                                                                                                                                
Co-Chair Stedman asked  if the fish plant was  used for cold                                                                    
storage or  waste reduction plant.  Mr. Davis  answered that                                                                    
the  program has  been  used for  a  fish processing  plant,                                                                    
elder care  facilities, industrial plants,  office buildings                                                                    
and renovation of buildings in low income areas.                                                                                
                                                                                                                                
9:50:51 AM                                                                                                                    
                                                                                                                                
Co-Chair  Stedman asked  about the  population cap  of 2000.                                                                    
Mr.  Davis responded  that three  triggers  exist: a  census                                                                    
track for poverty,  a census track for  population less than                                                                    
2000 or a census track with a large targeted population.                                                                        
                                                                                                                                
9:51:27 AM                                                                                                                    
                                                                                                                                
Co-Chair Stedman  mentioned one  zero fiscal note.  He asked                                                                    
about the  cap of $40  million. Mr. Davis answered  that the                                                                    
original  cap was  $50 million.  In the  hearing before  the                                                                    
Senate Community and  Economic Development committee Senator                                                                    
Menard suggested reducing  the cap to $40  million and AIDEA                                                                    
agreed  to the  reduction.  He thought  that  the cap  would                                                                    
provide the ability to provide two projects per year.                                                                           
                                                                                                                                
9:52:17 AM                                                                                                                    
                                                                                                                                
TED    LEONARD,     EXECUTIVE    DIRECTOR,     AIDEA    (via                                                                    
teleconference),  echoed  the  testimony of  Mr.  Davis.  He                                                                    
added that AIDEA  is seeking another tool  for the promotion                                                                    
of  economic development  in  rural areas  or  areas of  the                                                                    
state suffering poverty.                                                                                                        
                                                                                                                                
CHRIS   KOLEROK,  CONSULTANT   ALASKA  GROSS   CAPITAL  (via                                                                    
teleconference),  testified in  support of  the legislation.                                                                    
He stated that Alaska Gross  Capital is the only entity with                                                                    
an allocation  from NMTC  and has  received $90  million. He                                                                    
stated that  "the NMTC program  is a powerful tool  to bring                                                                    
Wall  Street capital  to main  street Alaska."  He mentioned                                                                    
that  his company's  goal was  to bring  another elder  care                                                                    
facility, a domestic violence shelter,  and a village health                                                                    
clinic online.                                                                                                                  
                                                                                                                                
9:55:55 AM                                                                                                                    
                                                                                                                                
SB  66  was   HEARD  and  HELD  in   Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
9:56:32 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
10:03:01 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
SENATE BILL NO. 97                                                                                                            
                                                                                                                                
     "An  Act  authorizing   additional  appropriations  for                                                                    
     public  education  and  for community  revenue  sharing                                                                    
     based on  the price  of Alaska  North Slope  crude oil,                                                                    
     and   adjusting    the   formula   for    payments   to                                                                    
     communities."                                                                                                              
                                                                                                                                
Co-Chair Hoffman  proposed committee substitute,  work draft                                                                    
#27-LS0626/E.  Co-Chair  Stedman  OBJECTED  for  purpose  of                                                                    
discussion.                                                                                                                     
                                                                                                                                
10:04:24 AM                                                                                                                   
                                                                                                                                
TIM  GRUSSENDORF,  STAFF,  CO-CHAIR  HOFFMAN  discussed  the                                                                    
changes  made in  the CS.  The  first adjustment  was for  a                                                                    
timeframe in  which to calculate  the average price  of oil.                                                                    
The full  year will be  used to establish the  average price                                                                    
per barrel. He explained the  addition of a "safety cushion"                                                                    
of  $2 per  barrel  of oil  to ensure  that  the revenue  is                                                                    
available and to prevent overspending of the surplus.                                                                           
                                                                                                                                
Co-Chair  Stedman  asked  about   the  $2.  Mr.  Grussendorf                                                                    
responded  that  the  cushion  describes  the  $2  over  the                                                                    
average price per barrel. Co-Chair  Stedman added $2 dollars                                                                    
of  the  break even  rate  of  our operating  and  potential                                                                    
capital budget.  The intent was  that the original  bill was                                                                    
spinning out  the percentage  of the  surplus between  2 and                                                                    
2.7 percent of  the surplus for these  programs. The factors                                                                    
chosen  will  produce  a  similar  number  as  seen  in  the                                                                    
original bill.                                                                                                                  
                                                                                                                                
10:06:21 AM                                                                                                                   
                                                                                                                                
DAVID   TEAL,   DIRECTOR,  LEGISLATIVE   FINANCE   DIVISION,                                                                    
mentioned  that the  prior  version of  the  bill was  based                                                                    
strictly on  the price of  oil, which allowed  the potential                                                                    
to  share wealth  that failed  to materialize.  This version                                                                    
shares wealth only  during times of surplus.  The surplus is                                                                    
taken for one  year, which will determine  the amount handed                                                                    
out in the following year.                                                                                                      
                                                                                                                                
10:07:28 AM                                                                                                                   
                                                                                                                                
Mr.  Teal  provided  a sectional  analysis.  He  began  with                                                                    
Section  1 which  relates to  supplemental funding  for K-12                                                                    
education. The  amount allocated equals $5  million for each                                                                    
dollar difference  between the actual price  and the trigger                                                                    
price of oil. Section (b)  computes the trigger price of oil                                                                    
and  states that  expenditures will  be taken  excluding the                                                                    
community  revenue   sharing  payments  and   the  education                                                                    
payments made  under this bill.  Any deposits to  the budget                                                                    
reserve fund are  also excluded. The breakeven  price of oil                                                                    
is rounded  to the nearest  dollar with the addition  of the                                                                    
mentioned  $2. The  $2 provides  a safety  valve that  gives                                                                    
sufficient funding  to make  the appropriation  to community                                                                    
revenue  sharing and  to K-12  and to  offset any  errors in                                                                    
revenue forecasts. The goal was  to avoid sharing money that                                                                    
was not present.                                                                                                                
                                                                                                                                
10:10:19 AM                                                                                                                   
                                                                                                                                
Mr. Teal  continued with Section  2 and the  revenue sharing                                                                    
portion  of the  CS. He  noted that  2(b) corrects  an error                                                                    
that  is unrelated  to  the  supplemental community  revenue                                                                    
sharing  and refers  to the  existing basic  revenue sharing                                                                    
program.                                                                                                                        
                                                                                                                                
10:11:06 AM                                                                                                                   
                                                                                                                                
Mr. Teal described  Section 3 and the change  of the revenue                                                                    
sharing program  enabling the amount distributed  to include                                                                    
the basic  revenue sharing portion. This  section allows the                                                                    
amount  calculated under  (d) to  be distributed.  Section 4                                                                    
mirrors the calculations of the education portion.                                                                              
                                                                                                                                
10:12:36 AM                                                                                                                   
                                                                                                                                
Co-Chair  Hoffman applauded  the  legislation. He  supported                                                                    
sharing the wealth with  school districts and municipalities                                                                    
during times of high oil prices.                                                                                                
                                                                                                                                
Co-Chair  Stedman WITHDREW  his  OBJECTION.  There being  NO                                                                    
OBJECTION, it was so ordered.                                                                                                   
                                                                                                                                
Co-Chair Hoffman  MOVED to report  CSSB 97 out  of Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
note.                                                                                                                           
                                                                                                                                
SB  97  was REPORTED  out  of  committee  with a  "do  pass"                                                                    
recommendation  and with  a  new  indeterminate fiscal  note                                                                    
from  the Senate  Finance Committee  for  the Department  of                                                                    
Commerce,  Community and  Economic Development  and one  new                                                                    
indeterminate fiscal note from  the Senate Finance Committee                                                                    
for the Department of Education and Early Development.                                                                          
                                                                                                                                
SENATE BILL NO. 90                                                                                                            
                                                                                                                                
     "An Act classifying and setting a monthly salary for                                                                       
     the executive secretary of the Board of Public                                                                             
     Accountancy."                                                                                                              
                                                                                                                                
10:14:47 AM                                                                                                                   
                                                                                                                                
Senator  Egan explained  that  the  legislation corrects  an                                                                    
error created by the passage of previous legislation.                                                                           
                                                                                                                                
Mr.  Owen stated  that the  position of  executive secretary                                                                    
for the Board  of Public Accountancy was  established in law                                                                    
and the  funding to pay for  the position at a  range 23 was                                                                    
incorporated  into the  budget.  He added  that because  the                                                                    
range  was not  established  in statute,  the Department  of                                                                    
Revenue felt it necessary  to perform a classification study                                                                    
for  the position.  The study  determines that  the position                                                                    
deserves a range 19. The  certified public accountants asked                                                                    
that the position  be established in statute as  a range 23,                                                                    
which  they  deemed  sufficient   to  hire  the  caliber  of                                                                    
applicant required for the position.                                                                                            
                                                                                                                                
Co-Chair  Stedman mentioned  one zero  fiscal note  from the                                                                    
Department of Commerce, Community and Economic Development.                                                                     
                                                                                                                                
10:16:37 AM                                                                                                                   
                                                                                                                                
LISA  ROGERS,  ANCHORAGE (via  teleconference),  represented                                                                    
the  Alaska Society  of  Certified  Public Accountants.  She                                                                    
stated that  her profession  requires a  competent executive                                                                    
secretary.  She  emphasized  that  the  person  holding  the                                                                    
position would help to  facilitate investigations. The board                                                                    
opined  that  a range  19  might  attract a  person  without                                                                    
thorough understanding of the profession's complexities.                                                                        
                                                                                                                                
SB  90  was   HEARD  and  HELD  in   Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
SENATE BILL NO. 94                                                                                                            
                                                                                                                                
     "An Act adding a second verse to the official Alaska                                                                       
     state song."                                                                                                               
                                                                                                                                
10:18:58 AM                                                                                                                   
                                                                                                                                
SENATOR    BETTYE   DAVIS,    ANCHORAGE,   introduced    the                                                                    
legislation. The bill  adds the second stanza  to the Alaska                                                                    
state song.                                                                                                                     
                                                                                                                                
PAMELA MARSCH,  STAFF, SENATOR BETTYE DAVIS,  testified that                                                                    
SB 94  would add a  second verse  to the Alaska  state song.                                                                    
She  stated that  the second  verse provided  recognition to                                                                    
the  Alaska natives  and to  Benny Benson  who designed  the                                                                    
Alaska  flag.  Similar bills  have  been  introduced in  the                                                                    
past.  She believed  that this  is the  year to  support the                                                                    
long  overdue addition  of the  second verse  to the  Alaska                                                                    
state song.                                                                                                                     
                                                                                                                                
Co-Chair Stedman  mentioned one indeterminate note  from the                                                                    
Office of the Governor.                                                                                                         
                                                                                                                                
10:21:46 AM                                                                                                                   
                                                                                                                                
Senator Davis hoped that the  bill would proceed with a zero                                                                    
fiscal  note  as  recommended  by  the  prior  committee  of                                                                    
referral, State Affairs.                                                                                                        
                                                                                                                                
10:22:39 AM                                                                                                                   
                                                                                                                                
CONNIE  DAVIS, JUNEAU,  testified  in regard  to the  second                                                                    
verse  of  the  state  song   written  by  her  mother.  She                                                                    
mentioned that the University of  Alaska Foundation which is                                                                    
legally separate from the  university itself. The foundation                                                                    
manages  gifts   and  donations  for  the   benefit  of  the                                                                    
university.  The copyrights  of  the Alaska  state song  are                                                                    
held in  trust by  the university foundation,  therefore the                                                                    
state is  not responsible for  any problem that  might arise                                                                    
in regard to the second verse.                                                                                                  
                                                                                                                                
10:24:06 AM                                                                                                                   
                                                                                                                                
SB  90  was   HEARD  and  HELD  in   Committee  for  further                                                                    
consideration.                                                                                                                  
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 10:24 AM.                                                                                          

Document Name Date/Time Subjects
SB 19 DOR Response 03 10 11.pdf SFIN 3/30/2011 9:00:00 AM
SB 19
SB 19 - Letter Support MotoQuest.pdf SFIN 3/30/2011 9:00:00 AM
SB 19
SB 19 - Letter Support AMA.pdf SFIN 3/30/2011 9:00:00 AM
SB 19
SB 19 - Letter Support Harley.pdf SFIN 3/30/2011 9:00:00 AM
SB 19
SB 19 - Relevant Statutes.pdf SFIN 3/30/2011 9:00:00 AM
SB 19
SB 19 - Sample Itinerary.pdf SFIN 3/30/2011 9:00:00 AM
SB 19
SB 19 - Sponsor Statement.pdf SFIN 3/30/2011 9:00:00 AM
SB 19
CSSB 42(RES) FERC RCA Oversight 3-22-11.pdf SFIN 3/30/2011 9:00:00 AM
SB 42
CSSB 42(RES) RCA regulation 3-22-11.pdf SFIN 3/30/2011 9:00:00 AM
SB 42
CSSB 42(RES) Sectional Analysis - By Subject March 22, 2011.pdf SFIN 3/30/2011 9:00:00 AM
SB 42
CSSB 42(RES) Sectional Analysis - Sequential March 22, 2011.pdf SFIN 3/30/2011 9:00:00 AM
SB 42
New SB092-CCED-CBPL-03-01-11.pdf SFIN 3/30/2011 9:00:00 AM
SB 92
SB 42 Governor Transmittal Letter 1-14-11.pdf SFIN 3/30/2011 9:00:00 AM
SB 42
SB 92 Amendment D.1, 3-17-11.PDF SFIN 3/30/2011 9:00:00 AM
SB 92
SB 92 Changes from original to L&C CS.pdf SFIN 3/30/2011 9:00:00 AM
SB 92
SB 92 Sectional Analysis CSSB92- L&C.pdf SFIN 3/30/2011 9:00:00 AM
SB 92
SB 92 Sectional Analysis.pdf SFIN 3/30/2011 9:00:00 AM
SB 92
SB 92 Sponsor Statement CS L&C.pdf SFIN 3/30/2011 9:00:00 AM
SB 92
SB 92 Summary of Fiscal Notes.pdf SFIN 3/30/2011 9:00:00 AM
SB 92
SB 92-SCF proposed amendment support letter.pdf SFIN 3/30/2011 9:00:00 AM
SB 92
SB 66 - CSSB66_Sectional_AIDEA NMTC.pdf SFIN 3/30/2011 9:00:00 AM
SB 66
SB 66_Hearing Information Sheet.pdf SFIN 3/30/2011 9:00:00 AM
SB 66
SB 66_White Paper-NMTC(1-26).pdf SFIN 3/30/2011 9:00:00 AM
SB 66
SB 90 Alaska Society of CPA Support Letter.pdf SFIN 3/30/2011 9:00:00 AM
SB 90
SB 90 Board of Accountancy Background Letter.pdf SFIN 3/30/2011 9:00:00 AM
SB 90
SB 90 DOA Determination on Range and Step.pdf SFIN 3/30/2011 9:00:00 AM
SB 90
SB 90 Sponsor Statement.pdf SFIN 3/30/2011 9:00:00 AM
SB 90
SB 94 Background Material Newpaper letter from Fran Ulmer.pdf SFIN 3/30/2011 9:00:00 AM
SB 94
SB 94 Senators' Vote form for SB 94.pdf SFIN 3/30/2011 9:00:00 AM
SB 94
SB 94 Background Material Resolution.pdf SFIN 3/30/2011 9:00:00 AM
SB 94
SB 97 Version E.pdf SFIN 3/30/2011 9:00:00 AM
SB 97
SB 97 LFD Chart.pdf SFIN 3/30/2011 9:00:00 AM
SB 97
SB 92 CBPL memo.doc SFIN 3/30/2011 9:00:00 AM
SB 92