Legislature(2013 - 2014)SENATE FINANCE 532

04/19/2014 09:00 AM FINANCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+= HB 385 PERS/TRS STATE CONTRIBUTIONS TELECONFERENCED
Moved SCS CSHB 385(FIN) Out of Committee
+= HB 278 EDUCATION TELECONFERENCED
Scheduled But Not Heard
+= HB 19 PERM. MOT. VEH. REGISTRATION/TRAILERS TELECONFERENCED
Moved CSHB 19(RLS) (efd am) Out of Committee
+= HB 160 LICENSING OF ATHLETIC TRAINERS TELECONFERENCED
Moved SCS CSHB 160(FIN) Out of Committee
+= HB 282 LANDLORD AND TENANT ACT TELECONFERENCED
Moved CSHB 282(JUD) Out of Committee
+= HB 287 OIL ROYALTIES; TAX CREDIT TELECONFERENCED
Scheduled But Not Heard
+= HB 306 EVAL. INDIRECT EXPENDITURES; TAX CREDITS TELECONFERENCED
Scheduled But Not Heard
+= HB 140 REGULATIONS: NOTICE, REVIEW, COMMENT TELECONFERENCED
Heard & Held
+ HB 316 WORKERS' COMPENSATION MEDICAL FEES TELECONFERENCED
Moved CSHB 316(FIN) Out of Committee
+ HB 384 ALASKA MINIMUM WAGE TELECONFERENCED
Scheduled But Not Heard
+= HJR 10 CONST. AM: TRANSPORTATION FUND TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                 SENATE FINANCE COMMITTEE                                                                                       
                      April 19, 2014                                                                                            
                         9:40 a.m.                                                                                              
                                                                                                                                
9:40:46 AM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Meyer  called the Senate Finance  Committee meeting                                                                    
to order at 9:40 a.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Kevin Meyer, Co-Chair                                                                                                   
Senator Pete Kelly, Co-Chair                                                                                                    
Senator Anna Fairclough, Vice-Chair                                                                                             
Senator Click Bishop                                                                                                            
Senator Mike Dunleavy                                                                                                           
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
None                                                                                                                            
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Darrell   Breese,   Staff,  Representative   Bill   Stoltze;                                                                    
Christine  Marasigan,  Staff,  Senator Kevin  Meyer;  Brodie                                                                    
Anderson,   Staff,  Representative   Steve  Thompson;   Sara                                                                    
Chambers, Director,  Division of Corporations,  Business and                                                                    
Professional  Licensing, Department  of Commerce,  Community                                                                    
and  Economic  Development;  Representative  Doug  Isaacson;                                                                    
Representative   Lora  Reinbold;   Arnold  Liebelt,   Policy                                                                    
Analyst,  Office  of  Management and  Budget;  Anna  Latham,                                                                    
Staff,  Representative Kurt  Olson;  Barbara Huff  Tuckness,                                                                    
Director,  Government  and  Legislative  Affairs,  Teamsters                                                                    
Local  959; James  Armstrong,  Staff,  Senator Kevin  Meyer;                                                                    
David Teal,  Director, Legislative Finance  Division; Angela                                                                    
Rodell, Commissioner, Department of Revenue.                                                                                    
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
Rachael   Petro,   President   and  CEO,   Alaska   Chamber,                                                                    
Anchorage; Ward  Hurburt, Chief Medical  Officer, Department                                                                    
of Health and Social Services, Anchorage.                                                                                       
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
CSHJR 10(FIN)                                                                                                                   
          CONST. AM: TRANSPORTATION FUND                                                                                        
                                                                                                                                
          CSHJR 10(FIN) was SCHEDULED but not HEARD.                                                                            
                                                                                                                                
CSHB 19(RLS)(efd am)                                                                                                            
          PERM. MOT. VEH. REGISTRATION/TRAILERS                                                                                 
                                                                                                                                
          CSHB   19(RLS)(efd  am)   was   REPORTED  out   of                                                                    
          committee  with  a  "do pass"  recommendation  and                                                                    
          with  previously  published  indeterminate  fiscal                                                                    
          note: FN3(ADM).                                                                                                       
                                                                                                                                
CSHB 140(FIN) am                                                                                                                
          REGULATIONS: NOTICE, REVIEW, COMMENT                                                                                  
                                                                                                                                
          CSHB 140(FIN) am was HEARD and HELD in committee                                                                      
          for further consideration.                                                                                            
                                                                                                                                
CSHB 160(FIN)                                                                                                                   
          LICENSING OF ATHLETIC TRAINERS                                                                                        
                                                                                                                                
          CSHB 160(FIN)  was REPORTED out of  committee with                                                                    
          a  "do pass"  recommendation  and with  previously                                                                    
         published fiscal impact note: FN1 (CED).                                                                               
                                                                                                                                
CSHB 278(FIN)am                                                                                                                 
          EDUCATION                                                                                                             
                                                                                                                                
          CSHB 278(FIN)am was SCHEDULED but not HEARD.                                                                          
                                                                                                                                
CSHB 282(JUD)                                                                                                                   
          LANDLORD AND TENANT ACT                                                                                               
                                                                                                                                
          CSHB 282(JUD)  was REPORTED out of  committee with                                                                    
          individual  recommendations  and  with  previously                                                                    
          published zero fiscal note: FN1 (REV).                                                                                
                                                                                                                                
CSHB 287(RLS)am                                                                                                                 
          OIL ROYALTIES; TAX CREDIT                                                                                             
                                                                                                                                
          CSHB 287(RLS)am was SCHEDULED but not HEARD.                                                                          
                                                                                                                                
CSHB 306(FIN)                                                                                                                   
         EVAL. INDIRECT EXPENDITURES; TAX CREDITS                                                                               
                                                                                                                                
          CSHB 306(FIN) was SCHEDULED but not HEARD.                                                                            
                                                                                                                                
CSHB 316(FIN)                                                                                                                   
          WORKERS' COMPENSATION MEDICAL FEES                                                                                    
                                                                                                                                
          CSHB 316(FIN)  was REPORTED out of  committee with                                                                    
          individual  recommendations  and  with  previously                                                                    
          published  fiscal  impact  note:  FN2  (LWF);  and                                                                    
          previously  published  indeterminate fiscal  note:                                                                    
          FN3 (ADM).                                                                                                            
                                                                                                                                
HB 384am ALASKA MINIMUM WAGE                                                                                                    
                                                                                                                                
          HB 382 am was SCHEDULED but not HEARD.                                                                                
                                                                                                                                
HB 385    PERS/TRS STATE CONTRIBUTIONS                                                                                          
                                                                                                                                
          SCSHB 385(FIN) was REPORTED  out of committee with                                                                    
          a  "do  pass"  recommendation  and  with  two  new                                                                    
          fiscal  impact  notes   from  the  Senate  Finance                                                                    
          Committee and the Governor.                                                                                           
                                                                                                                                
CS FOR HOUSE BILL NO. 19(RLS)(efd am)                                                                                         
                                                                                                                                
     "An   Act   relating   to   permanent   motor   vehicle                                                                    
     registration  in  the  unorganized  borough  and  in  a                                                                    
     municipality  that  has   elected  to  allow  permanent                                                                    
     registration;  relating  to  the registration  fee  for                                                                    
     noncommercial  trailers and  to the  motor vehicle  tax                                                                    
    for trailers; and providing for an effective date."                                                                         
                                                                                                                                
9:42:23 AM                                                                                                                    
                                                                                                                                
DARRELL BREESE,  STAFF, REPRESENTATIVE BILL  STOLTZE, stated                                                                    
that  the  bill provided  an  option  for permanent  vehicle                                                                    
registration  for   vehicles  eight   years  or   older  and                                                                    
noncommercial trailers.                                                                                                         
                                                                                                                                
9:42:45 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:43:42 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Senator Bishop MOVED to REPORT  CSHB 19(RLS)(efd am)  out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB  19(RLS)(efd am)was  REPORTED out  of committee  with a                                                                    
"do  pass"  recommendation  and  with  previously  published                                                                    
indeterminate fiscal note: FN3(ADM).                                                                                            
                                                                                                                                
9:44:24 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:45:12 AM                                                                                                                    
RECONEVENED                                                                                                                     
                                                                                                                                
CS FOR HOUSE BILL NO. 160(FIN)                                                                                                
                                                                                                                                
     "An Act relating to the licensing and regulation of                                                                        
     athletic trainers."                                                                                                        
                                                                                                                                
9:45:29 AM                                                                                                                    
                                                                                                                                
Vice-Chair   Fairclough  MOVED   to   ADOPT  the   committee                                                                    
substitute for  SCS CS HB  160(FIN), Work  Draft 28-LS0423\H                                                                    
(Martin,  4/19/14).  There being  NO  OBJECTION,  it was  so                                                                    
ordered.                                                                                                                        
                                                                                                                                
CHRISTINE MARASIGAN,  STAFF, SENATOR KEVIN  MEYER, explained                                                                    
the  changes in  the committee  substitute. She  stated that                                                                    
the  version  addressed  some  of  the  concerns  that  were                                                                    
considered  during the  committee.  She  announced that  she                                                                    
worked closely with  the sponsor and took  into account some                                                                    
comments   from  various   physical   therapists  that   had                                                                    
expressed concern.  She announced  that many  problems could                                                                    
not  be resolved  in  regards to  the  definitions, but  Mr.                                                                    
Anderson could provide further detail.                                                                                          
                                                                                                                                
BRODIE  ANDERSON,   STAFF,  REPRESENATIVE   STEVE  THOMPSON,                                                                    
stated  that   page  2,  line  12   resolved  some  problems                                                                    
regarding emails from fitness  trainers and coaches. He read                                                                    
from the bill:                                                                                                                  
                                                                                                                                
     Nothing  in this  chapter requires  the licensing  of a                                                                    
     coach or  fitness trainer who  1) does not use  a title                                                                    
     listed in  (d) of  this section,  and is  acting within                                                                    
     the scope of the person's duties as a coach or a                                                                           
     fitness trainer.                                                                                                           
                                                                                                                                
Mr.  Anderson shared  that he  had worked  with the  fitness                                                                    
trainers  and coaches  to resolve  the  conflict. He  shared                                                                    
that  there were  various  definitions  regarding a  defined                                                                    
scope  of   practice  that  included  "athletic   injury  or                                                                    
illness" found on page 4.                                                                                                       
                                                                                                                                
Vice-Chair  Fairclough  wondered  if  the  CS  affected  the                                                                    
fiscal note.  Mr. Anderson replied  that he did  not believe                                                                    
that the CS affected the fiscal note.                                                                                           
                                                                                                                                
Vice-Chair Fairclough  stressed that she would  like to know                                                                    
for sure that the fiscal note does not change.                                                                                  
                                                                                                                                
SARA CHAMBERS, DIRECTOR,  DIVISION OF CORPORATIONS, BUSINESS                                                                    
AND   PROFESSIONAL   LICENSING,  DEPARTMENT   OF   COMMERCE,                                                                    
COMMUNITY AND  ECONOMIC DEVELOPMENT, stated that  the fiscal                                                                    
note remained the same.                                                                                                         
                                                                                                                                
Vice-Chair Fairclough  MOVED to REPORT SCS  CSHB 160(FIN out                                                                    
of  committee   with  individual  recommendations   and  the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
SCS CSHB 160(FIN)  was REPORTED out of committee  with a "do                                                                    
pass"  recommendation and  with previously  published fiscal                                                                    
impact note: FN1 (CED).                                                                                                         
                                                                                                                                
CS FOR HOUSE BILL NO. 282(JUD)                                                                                                
                                                                                                                                
     "An  Act  relating to  the  rights  and obligations  of                                                                    
     residential landlords and tenants;  and relating to the                                                                    
     taking  of  a  permanent  fund dividend  for  rent  and                                                                    
     damages owed to a residential landlord."                                                                                   
                                                                                                                                
9:52:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DOUG  ISAACSON, stated that he  was available                                                                    
to answer questions.                                                                                                            
                                                                                                                                
Vice-Chair Fairclough  MOVED to REPORT CSHB  282(JUD) out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal  note. There being NO  OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB 282(JUD) was REPORTED out  of committee with individual                                                                    
recommendations  and with  previously published  zero fiscal                                                                    
note: FN1 (REV).                                                                                                                
                                                                                                                                
9:55:31 AM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
9:58:52 AM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR HOUSE BILL NO. 140(FIN) am                                                                                             
                                                                                                                                
     "An Act relating to the proposed adoption, amendment,                                                                      
     or repeal of a regulation; and relating to contact                                                                         
     with agencies about regulations."                                                                                          
                                                                                                                                
9:59:19 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LORA REINBOLD, stated  that the intent of the                                                                    
legislation   was  to   provide  better   information  about                                                                    
regulations   that   may    significantly   affect   private                                                                    
individuals and  businesses, other state agencies  and local                                                                    
governments.   She  shared   that  HB   140  required   that                                                                    
regulation  notices  include   information  about  estimated                                                                    
costs beyond those to the  agency. In view of the increasing                                                                    
reach  of the  Washington  D.C. into  Alaska's affairs,  the                                                                    
bill also requires  that when the federal  government is the                                                                    
reason for the regulation,  the exact federal law, executive                                                                    
order or  decision be  identified in  order for  Alaskans to                                                                    
better  understand  government  actions  that  affect  their                                                                    
businesses and lives.                                                                                                           
                                                                                                                                
Senator Dunleavy wondered who might  be in opposition to the                                                                    
bill. Representative  Reinbold replied  that there  was some                                                                    
initial  opposition   to  the   bill  from   the  Regulatory                                                                    
Commission  of Alaska  (RCA),  and the  Alaska  Oil and  Gas                                                                    
Conservation  Commission  (AOGCC).   She  pointed  out  that                                                                    
neither  organization  offered  vocal opposition  until  she                                                                    
asked  for  their  input.  She  stressed  that  the  current                                                                    
version exempted those organizations.                                                                                           
                                                                                                                                
Senator Hoffman  queried the reason  that they wanted  to be                                                                    
exempted.  Representative Reinbold  responded  that she  did                                                                    
not  want to  speak for  those organizations.  She furthered                                                                    
that, in  general, those organizations  felt that  they were                                                                    
independent  and  "quasi-judicial."   She  stated  that  the                                                                    
Alaska's legal department felt that,  just because they were                                                                    
independent did not merit their exemption.                                                                                      
                                                                                                                                
Senator  Olson wondered  if Representative  Reinbold was  in                                                                    
favor of  the exemptions. Representative  Reinbold responded                                                                    
that she felt  fine about the exemptions,  and remarked that                                                                    
many bills required some compromise.                                                                                            
                                                                                                                                
10:04:57 AM                                                                                                                   
                                                                                                                                
Senator  Olson  felt  that some  of  the  exempted  agencies                                                                    
should be examined further.                                                                                                     
                                                                                                                                
Co-Chair Meyer  felt that the legislation  could be expanded                                                                    
at  a  later date,  in  order  to  incorporate some  of  the                                                                    
exempted  organizations.  Representative Reinbold  announced                                                                    
that  all  of the  agencies,  boards,  and commissions  were                                                                    
included with the four exclusions.  She felt that there were                                                                    
good reasons for  the Board of Game and Board  of Fish to be                                                                    
excluded, because of the number  of regulations. She did not                                                                    
want to be  inundated as a regulatory  review committee with                                                                    
600 emails  based on regulations.  She felt  that increasing                                                                    
accountability  and  transparency  was  essential,  and  was                                                                    
provided in a packet.                                                                                                           
                                                                                                                                
Senator  Hoffman felt  that  the  organizations were  exempt                                                                    
because  the fiscal  note for  the  executive branch  stated                                                                    
that the  exemption would reduce the  overall fiscal impact.                                                                    
He relayed that  the last paragraph of  the executive branch                                                                    
fiscal note stated that the  agencies must add indeterminate                                                                    
positions and resources  would be needed to  comply with the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Co-Chair Meyer  wondered if  the fiscal  note total  for the                                                                    
bill was  $600,000. Vice-Chair  Fairclough replied  that the                                                                    
total for the fiscal notes was $677,000.                                                                                        
                                                                                                                                
Co-Chair Meyer stated  that the bill had  been modified from                                                                    
its original version in order to reduce the fiscal impact.                                                                      
                                                                                                                                
Vice-Chair Fairclough  looked at FY  16, and noted  that the                                                                    
annual  operating cost  increase that  was quantified  under                                                                    
the   three  fiscal   notes   was   $677,200,  without   the                                                                    
indeterminate note.                                                                                                             
                                                                                                                                
Senator Olson felt  that there were many people  that may be                                                                    
negatively  impacted  by  the   exclusion  of  some  of  the                                                                    
organizations. He  felt that the people  should be protected                                                                    
by having many of the regulations publicly reviewed.                                                                            
                                                                                                                                
10:09:31 AM                                                                                                                   
                                                                                                                                
Vice-Chair Fairclough wondered if  there was a consideration                                                                    
for  a tiered  approach  for gradual  implementation of  the                                                                    
program  in order  to understand  the fiscal  impact of  the                                                                    
broader  approach.  She  stressed  that  she  supported  the                                                                    
concept,  but was  concerned about  the indeterminate  note.                                                                    
Representative   Reinbold   replied   that  she   felt   the                                                                    
legislation outlined a phased  approach. She shared that the                                                                    
bill  was "gentle"  as  related to  her  feelings about  the                                                                    
regulatory process.  She explained  that the bill  looked in                                                                    
aggregate of  the costs to  the agency, other  agencies, and                                                                    
municipalities.  It provided  an aggregate  based on  a good                                                                    
faith  effort  with no  ability  to  sue for  inaccuracy  or                                                                    
inefficient   information,   and   provide   online   public                                                                    
transparency.                                                                                                                   
                                                                                                                                
Vice-Chair Fairclough  stressed that she was  not commenting                                                                    
on  the  pressure that  the  bill  may provide,  but  rather                                                                    
whether a  phased approach focusing  on each  department may                                                                    
be  simpler. She  felt  that  the bill  may  be outlining  a                                                                    
broader approach to the issue.                                                                                                  
                                                                                                                                
Ms.  Chambers  testified  regarding  the  fiscal  note.  She                                                                    
announced that one  of the fiscal notes  totaled $333,000 in                                                                    
the first year.  She noted that there were  many elements in                                                                    
the bill  which triggered that  number. She stated  that the                                                                    
division supported transparency  in government, and remarked                                                                    
that there were many activities  in the bill that the agency                                                                    
currently conducts. She remarked  that the division's boards                                                                    
and  commissions operated  slightly  differently that  other                                                                    
boards  and  commissions.  The bill  had  the  potential  to                                                                    
impact  the licensees,  because any  costs that  result from                                                                    
the bill  would be  picked up by  the licensees.  The fiscal                                                                    
impact  was not  a general  fund obligation.  She looked  at                                                                    
Section 2 of  the bill, and expressed  concern regarding the                                                                    
issue of  aligning the boards  and commissions  with regular                                                                    
response  to specific  issues raised  by the  administrative                                                                    
regulation  review  committee  and  some  governor's  office                                                                    
concerns.  She felt  that  the issue  was  important to  her                                                                    
division,  because  they  tried  to  be  as  transparent  as                                                                    
possible. She  stressed that the  travel cost in  the fiscal                                                                    
note should  be considered a "worst  case scenario", because                                                                    
it related to the possibility  of board meetings in response                                                                    
to any  changes or recommendations by  the Governor's Office                                                                    
or the  Administrative Regulation and Review  Committee. She                                                                    
stated   that  the   division  conducted   approximately  25                                                                    
regulation  projects   per  year,   which  were   board  and                                                                    
commissions.  She stated  that  she did  not anticipate  the                                                                    
division's travel costs, she stressed  that there could be a                                                                    
possibility for an in person meeting.                                                                                           
                                                                                                                                
10:16:29 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
10:26:13 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Meyer CLOSED public testimony.                                                                                         
                                                                                                                                
Ms. Chambers stated  that she had some  more fiscal concerns                                                                    
that she would like to  express to the committee. She looked                                                                    
at Section 3, and remarked  that there was a requirement for                                                                    
the agency to make a good  faith effort to estimate the cost                                                                    
to the  state agency,  private persons, other  agencies, and                                                                    
municipalities.  She   stated  that   the  division   had  a                                                                    
logistical  concern with  its  twenty  volunteer boards  and                                                                    
commissions  and the  type of  regulations  that were  often                                                                    
passed. She  felt that it  may be difficult to  estimate the                                                                    
cost in a  good faith effort that would  amount to education                                                                    
to  the  public  to  some  of  the  board  regulations.  She                                                                    
remarked that  there could be continuing  education changes,                                                                    
and the  cost to  the private person  could be  difficult to                                                                    
quantify   if  the   variety   of   courses  were   examined                                                                    
nationwide. She  understood that it was  an extreme example,                                                                    
but was a potential way to  not satisfy the education of the                                                                    
public.  She also  pointed out  Section  7 regarding  agency                                                                    
contact with the  public. She remarked that the  she was not                                                                    
intending to  call out the  division's inability  to comply,                                                                    
but rather  the difficulty  with the boards  and commissions                                                                    
to potentially  comply with  the requirements.  She remarked                                                                    
that  the  good  faith  effort to  answer  public  questions                                                                    
received  in writing,  or asked  at a  public meeting,  were                                                                    
received,  weighed,  and  deliberated   at  the  boards  and                                                                    
commissions meetings.  She felt that the  bill would require                                                                    
the  boards  to speak  to  questions  that  may come  up  in                                                                    
writing through  the agency prior  to public input  would be                                                                    
collected. She stressed  that the agency did  not have staff                                                                    
that was empowered  by the boards to speak  on their behalf.                                                                    
She remarked that many of  the boards were ably administered                                                                    
by the staff, but were  mostly managed by licensee examiners                                                                    
that oversaw up to three boards.  She felt that the bill may                                                                    
require  additional meetings  or  procedures  for boards  to                                                                    
answer.                                                                                                                         
                                                                                                                                
10:31:28 AM                                                                                                                   
                                                                                                                                
Ms. Chambers  she pointed  out that  Section 8  only allowed                                                                    
oral commentary  as public comment, which  could be received                                                                    
through the  division office. She explained  that interested                                                                    
parties, licensees, and the public  could contact the office                                                                    
to  ask questions  that  the division  would  be obliged  to                                                                    
respond.  She  noted that  many  of  her concerns  from  the                                                                    
previous  section  would be  amplified  with  the Section  8                                                                    
issue.  She  remarked  that  there   would  need  to  be  an                                                                    
additional staff person to corral  the comments and maintain                                                                    
the concerns for the public record.                                                                                             
                                                                                                                                
Vice-Chair Fairclough wondered why  the governor's order did                                                                    
not accomplish the proposed tasks  in the bill. Ms. Chambers                                                                    
responded that  the governor's order  was received  the fall                                                                    
prior,  and the  division  worked to  analyze  the scope  of                                                                    
regulations.  She  felt  that  the  compliance  level  would                                                                    
result in a similar outcome.                                                                                                    
                                                                                                                                
Vice-Chair  Fairclough felt  that  the indeterminate  fiscal                                                                    
note should be changed to  zero. She suggested that a highly                                                                    
justified  supplemental budget  item  could  be included  in                                                                    
following year.  She stressed that the  governor's order was                                                                    
the catalyst for implementation.                                                                                                
                                                                                                                                
Senator Hoffman  felt that there  should be an  inclusion of                                                                    
the RCA,  Boards of Fish  and Game,  and the AOGCC,  so they                                                                    
can comply with the  governor's executive order. He remarked                                                                    
that  there  were  concerns regarding  the  actions  of  the                                                                    
Boards of Fish  and Game, and stressed  that they especially                                                                    
should be included in the legislation.                                                                                          
                                                                                                                                
10:36:10 AM                                                                                                                   
                                                                                                                                
Senator  Olson  queried  the  most   recent  review  of  the                                                                    
regulations. He  recalled that he  never had to meet  with a                                                                    
regulatory board while  he was a member of  a medical board.                                                                    
If there  was a regulatory  review of the medical  board, he                                                                    
assumed  it was  conducted via  teleconference. He  wondered                                                                    
what  had changed  recently to  require physical  attendance                                                                    
for the  review board meetings. Ms.  Chambers responded that                                                                    
the fiscal  note reflected the "worst  case scenario", where                                                                    
board members may  make the executive decision  to meet. She                                                                    
shared that there were  tools provided for teleconferencing.                                                                    
Many   boards   and   commissions  strived   to   meet   via                                                                    
teleconference for focused purposes.                                                                                            
                                                                                                                                
Senator Olson felt that continued  education did not require                                                                    
a  face   to  face   meeting.  He  agreed   with  Vice-Chair                                                                    
Fairclough, that the  fiscal note could be  almost zero. Ms.                                                                    
Chambers  responded  that  the  division  would  advise  the                                                                    
boards  to  meet  via  teleconference,  because  there  were                                                                    
minimal costs  for meeting via teleconference.  She stressed                                                                    
that,  if a  board intended  to  meet in  person, she  would                                                                    
allow that meeting to occur.                                                                                                    
                                                                                                                                
ARNOLD  LIEBELT, POLICY  ANALYST, OFFICE  OF MANAGEMENT  AND                                                                    
BUDGET, (OMB) spoke to the  fiscal impact of the legislation                                                                    
across all  departments as related  to Section 3.  He stated                                                                    
that Section  2 should be  considered the policy  portion of                                                                    
the bill. He remarked that  Section 2 outlined the repeal of                                                                    
the  boards  and  commissions from  the  existing  language.                                                                    
There   were  approximately   more  than   100  boards   and                                                                    
commissions. He  restated that the  bill exempted  the Board                                                                    
of Game,  Board of  Fish, RCA, and  the AOGCC.  He explained                                                                    
that the regulations would pass  before the governor, and he                                                                    
would participate in the process.  He stated that boards and                                                                    
commissions  generally  operated   independently,  and  were                                                                    
staffed with members  of the public to  represent the public                                                                    
within  the  industries.  He  pointed  out  that  Section  3                                                                    
addressed the cost impact for  the department and the boards                                                                    
and  commissions,  because it  asks  the  state agencies  to                                                                    
prepare an  annual cost impact for  private person including                                                                    
businesses  and  municipalities.  Through  the  fiscal  note                                                                    
process,  the division  already ascertained  with that  cost                                                                    
would  be for  legislation  and  anticipated regulations  to                                                                    
state agencies. He stated that  providing a cost estimate in                                                                    
the  aggregate  was  helpful, but  that  was  primarily  the                                                                    
source  of  the  cost.  The   indeterminate  note  from  OMB                                                                    
represented all  the other  agencies that  did not  submit a                                                                    
fiscal  note, but  remarked that  the note  would have  some                                                                    
impact. He stressed  that OMB could not  estimate the number                                                                    
of regulations or the cost therein.                                                                                             
                                                                                                                                
10:43:05 AM                                                                                                                   
                                                                                                                                
Co-Chair  Meyer looked  at AO.266,  and felt  that the  work                                                                    
outlined in  the proposed legislation should  already occur.                                                                    
Mr. Liebelt  responded that  the work  was similar,  but the                                                                    
cost came in when departments  need to add to their workload                                                                    
by estimating  what the cost  would be for  private persons.                                                                    
He stated  that the  departments were not  currently staffed                                                                    
for the requirements  in the legislation. He  noted that the                                                                    
Boards of Game  and Fish could see as much  as 500 proposals                                                                    
per year for regulations.                                                                                                       
                                                                                                                                
Senator  Hoffman  looked  at  the  third  paragraph  of  the                                                                    
executive  branch   fiscal  note,  which  referred   to  162                                                                    
municipalities   in   Alaska.    He   assumed   that   those                                                                    
municipalities would  also be impacted, but  the fiscal note                                                                    
did not reflect  what costs would be attributed  to them. He                                                                    
wondered if there  was an estimate for fiscal  impact to the                                                                    
municipalities  in  Alaska.  Mr.  Liebelt  agreed  that  the                                                                    
fiscal note  excluded the municipalities, and  the paragraph                                                                    
was  included to  comment on  the  number of  municipalities                                                                    
that  could or  could  not be  impacted  by regulations.  He                                                                    
looked  at Section  3, which  stated  that the  department's                                                                    
boards  and commissions  would be  required  to provide  the                                                                    
cost impact to the municipality as a result of regulations.                                                                     
                                                                                                                                
Senator  Hoffman stated  that he  did not  understand why  a                                                                    
fiscal  note would  be  zeroed out,  with  the knowledge  of                                                                    
probable costs.  He felt  that the  agencies should  be held                                                                    
accountable  for  cost   outlines,  because  those  agencies                                                                    
drafted the  indeterminate fiscal note.  He did not  want to                                                                    
impose   an   unfunded   mandate    to   the   agencies   or                                                                    
municipalities.                                                                                                                 
                                                                                                                                
10:47:38 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:01:14 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
CSHB 140(FIN)am was HEARD and  HELD in committee for further                                                                    
consideration.                                                                                                                  
                                                                                                                                
11:02:02 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:02:42 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR HOUSE BILL NO. 316(FIN)                                                                                                
                                                                                                                                
     "An  Act relating  to  workers'  compensation fees  for                                                                    
     medical  treatment and  services; relating  to workers'                                                                    
     compensation   regulations;   and  providing   for   an                                                                    
     effective date."                                                                                                           
                                                                                                                                
11:03:16 AM                                                                                                                   
                                                                                                                                
ANNA LATHAM, STAFF, REPRESENTATIVE KURT OLSON, introduced                                                                       
the legislation and read from the sponsor statement:                                                                            
                                                                                                                                
     For  the  past decade,  Alaska  has  faced the  highest                                                                    
     workers compensation rates in the nation.                                                                                  
                                                                                                                                
     The   Alaska    Workers'   Compensation    Board,   the                                                                    
     Legislature, the Alaska Health  Care Commission and the                                                                    
     Administration agree  that effective reform  is needed,                                                                    
     and is crucial to Alaska's economic future.                                                                                
                                                                                                                                
     In  2005, the  Alaska Legislature  passed HB  13, which                                                                    
     established a workers'  compensation fee schedule based                                                                    
     on usual,  customary and reasonable  rates, set  at the                                                                    
     90th percentile,  with a geographic  differential. This                                                                    
     made incremental changes for  the better, but it wasn't                                                                    
     the sweeping reform that Alaska truly needs.                                                                               
                                                                                                                                
     HB  316  proposes  a  solution  to  this  challenge  by                                                                    
     introducing  a new  fee schedule.  HB  316 changes  the                                                                    
     basis for the fee  schedule from what physicians charge                                                                    
     in a  geographic area, to  what it costs  physicians to                                                                    
     perform    medical   procedures.    Thirty-two   states                                                                    
     currently  use this  relative values  unit methodology,                                                                    
     which incorporates the relative  value of a physician's                                                                    
     work,  practice  expense,  and  professional  liability                                                                    
     insurance.   A   conversion   factor   and   geographic                                                                    
     differential is  applied to the formula.  This relative                                                                    
     value unit  methodology is  a system  that is  owned by                                                                    
     the American Medical Association,  and is the basis for                                                                    
     Medicare and Medicaid's payment schedules.                                                                                 
                                                                                                                                
     The  Medical Services  Review  Committee  will set  the                                                                    
     conversion  factors   for  the  fee   schedules,  which                                                                    
     require the  approval of the Commissioner  of Labor and                                                                    
     Workforce  Development  before  they are  adopted  into                                                                    
     regulation  by  the  Workers' Compensation  Board.  The                                                                    
     Board  will  also  set   reimbursement  rates  for  air                                                                    
     ambulance   services,   and   the  markup   rates   for                                                                    
     prescription drugs and durable medical equipment.                                                                          
                                                                                                                                
     HB  316  introduces  comprehensive reform  of  Alaska's                                                                    
     workers'  compensation fee  schedule, in  an effort  to                                                                    
     reduce exorbitant costs in both  the public and private                                                                    
     sectors.                                                                                                                   
                                                                                                                                
     I urge your support of this legislation.                                                                                   
                                                                                                                                
Co-Chair  Meyer  understood  that   the  bill  had  received                                                                    
support from  the majority of  affected parties.  Ms. Latham                                                                    
agreed that  there were  38 letters of  support in  the bill                                                                    
packet  from  various  medical,   union  and  other  related                                                                    
groups. She furthered  that the sponsor had  worked with all                                                                    
stakeholders  involved  during  the legislative  process;  5                                                                    
hearings were  heard in  House Labor and  Commerce and  2 in                                                                    
the House  Finance Committee,  prior to  the bill  moving to                                                                    
the senate.                                                                                                                     
                                                                                                                                
Vice-Chair  Fairclough read  from an  April 17,  2014 letter                                                                    
from the Alaska Chamber of Commerce:                                                                                            
                                                                                                                                
     While Committee  Substitute House Bill 316  (HB 316) is                                                                    
     singularly focused  on the medical fee  schedule, it is                                                                    
     an   important   piece    of   the   overall   workers'                                                                    
     compensation system. Until now,  the Alaska Chamber has                                                                    
     withheld support  from HB 316. Not  because the changes                                                                    
     made  by  HB  316  move  workers'  comp  in  the  wrong                                                                    
     direction,  but because  additional reforms  introduced                                                                    
     during  the   legislative  process   have  yet   to  be                                                                    
     included. Our primary concern is  that HB 316 will only                                                                    
     have  a  short-term  effect  on  workers'  compensation                                                                    
     medical costs over the next several years.                                                                                 
                                                                                                                                
Vice-Chair Fairclough  noted that Alaska ranked  last in the                                                                    
nation  when it  came to  worker's compensation  reform. She                                                                    
wondered  if  the  legislation  would  improve  the  state's                                                                    
standing, and  what the  effects would  be on  employers and                                                                    
employees. Ms.  Latham replied that there  were many reforms                                                                    
that  needed  to  be   addressed  when  discussing  worker's                                                                    
compensation.  She  believed  that  the  chamber  wanted  to                                                                    
implement evidence  based best practices and  utilization as                                                                    
part  of the  reform.  The sponsor  holds  that the  process                                                                    
should consist  of 2 parts,  lowering fees  and implementing                                                                    
utilization and evidence based best practices.                                                                                  
                                                                                                                                
11:08:45 AM                                                                                                                   
                                                                                                                                
Vice-Chair Fairclough understood  that the legislation would                                                                    
also benefit employers. Ms.  Latham responded yes; employers                                                                    
would pay lower premium rates.                                                                                                  
                                                                                                                                
Senator  Bishop   expressed  support   for  the   intent  of                                                                    
legislation.  He  noted in  member  packets  the letters  of                                                                    
support  from labor  and contract  associations, as  well as                                                                    
certain municipalities and boroughs (copy on file).                                                                             
                                                                                                                                
Senator  Olson remarked  that the  letters  of support  were                                                                    
from  industry. He  queried  whether  employees had  offered                                                                    
support  for   the  legislation.  Ms.  Latham   replied  one                                                                    
individual testified in House  Labor and Commerce concerning                                                                    
their experience  in the  worker's compensation  system. She                                                                    
relayed that  the previous hearings  of the  legislation had                                                                    
been publicly  noticed and  that the  process had  been very                                                                    
open to the public. She  added that the Alaska State Medical                                                                    
Association   offered  full   support  of   the  legislation                                                                    
following the  amendment of  the bill  in the  House Finance                                                                    
Committee;  the amendment  would allow  the Commissioner  of                                                                    
Labor to  approve the conversion  factor set by  the Medical                                                                    
Services Review  Committee (MSRC).  She maintained  that the                                                                    
process had been open and transparent.                                                                                          
                                                                                                                                
Senator Olson expressed  concern that the bill  could be too                                                                    
ambitious.  He worried  about a  hasty  transition from  the                                                                    
usual,  customary, and  reasonable (UCR)  fee schedule  to a                                                                    
resource  based scenario.  He wondered  if  the sponsor  had                                                                    
been  in  discussions  with   pain  management  clinics,  or                                                                    
patients  that  dealt  with pain  management.    Ms.  Latham                                                                    
stated that  a HB370 was  up in Senate Judiciary,  and spoke                                                                    
to the fee schedule as  it pertained to pain management. She                                                                    
asserted  that  the   Resource-Based  Relative  Value  Scale                                                                    
(RBRVS)  methodology in  the  bill was  sound  and had  been                                                                    
developed by  Harvard researchers. She relayed  that the UCR                                                                    
was inherently  inflationary. She shared that  32 states had                                                                    
adopted the RBRVS methodology with  a conversion factor, not                                                                    
in phases but in a swift switch from one to the next.                                                                           
                                                                                                                                
11:13:13 AM                                                                                                                   
                                                                                                                                
Senator  Dunleavy asked  whether  practitioners from  remote                                                                    
areas of  the state  had testified  on the  legislation. Ms.                                                                    
Latham said  that the only practitioners  that had testified                                                                    
on  the  bill were  physical  therapists  in Fairbanks.  She                                                                    
added that  the sponsor had  worked closely with  the Alaska                                                                    
State  Hospital   and  Nursing  Home   Association  (ASHNA),                                                                    
adopting a critical access  hospital exemption because ASHNA                                                                    
used  a different  federal  Medicaid  billing schedule.  She                                                                    
furthered that  a geographic  differential had  been applied                                                                    
for smaller, rural hospitals and clinics.                                                                                       
                                                                                                                                
Senator Olson understood that there  was a letter of support                                                                    
from the  Alaska State Medical Association  (ASMA) in member                                                                    
packets. Ms. Latham replied in the affirmative.                                                                                 
                                                                                                                                
Co-Chair Meyer  wondered if  chiropractors had  expressed an                                                                    
opinion  on   the  bill.  Ms.  Latham   responded  that  the                                                                    
chiropractic community  had not expressed an  opinion on the                                                                    
legislation.                                                                                                                    
                                                                                                                                
Senator Dunleavy  asked whether cost issues  due to Alaska's                                                                    
unique terrain  had been considered during  the process. Ms.                                                                    
Latham replied  yes. She reiterated that  the bill contained                                                                    
a critical access hospital exemption  and the ability of the                                                                    
board to  apply a  geographic differential,  as well  as the                                                                    
initial conversion factor.                                                                                                      
                                                                                                                                
RACHAEL PETRO, PRESIDENT AND  CEO, ALASKA CHAMBER, ANCHORAGE                                                                    
(via   teleconference),   testified   in  support   of   the                                                                    
legislation.  She  referred  to  the letter  of  support  in                                                                    
member  packets  (copy  on  file).  She  believed  that  the                                                                    
legislation was a step in  the right direction for systemic,                                                                    
comprehensive change.                                                                                                           
                                                                                                                                
11:17:17 AM                                                                                                                   
                                                                                                                                
WARD HURBURT,  CHIEF MEDICAL  OFFICER, DEPARTMENT  OF HEALTH                                                                    
AND SOCIAL  SERVICES, ANCHORAGE (via  teleconference), spoke                                                                    
in  support   of  the  legislation.   He  shared   that  the                                                                    
legislation was  consistent with the recommendations  of the                                                                    
Alaska Healthcare  Commission and  that the  new methodology                                                                    
would  encourage a  free market.  He opined  that healthcare                                                                    
and  medical costs  in the  state  were the  highest in  the                                                                    
nation and  the bill would  open up better  negotiations. He                                                                    
said  that  there  would  be a  conversion  factor  for  the                                                                    
resource  based scale  to reflect  the costs  in Alaska.  He                                                                    
noted that  organized labor groups had  testified in support                                                                    
of the legislation.                                                                                                             
                                                                                                                                
BARBARA HUFF TUCKNESS,  DIRECTOR, GOVERNMENT AND LEGISLATIVE                                                                    
AFFAIRS, TEAMSTERS  LOCAL 959,  testified in support  of the                                                                    
legislation.  She believed  that the  medical review  board,                                                                    
with the  make-up of doctors and  lay representatives, would                                                                    
be effective.                                                                                                                   
                                                                                                                                
Co-Chair Meyer CLOSED public testimony.                                                                                         
                                                                                                                                
Senator Olson  expressed concern that the  legislation could                                                                    
prove to alienate those already on the margins of society.                                                                      
                                                                                                                                
Vice-Chair  Fairclough  spoke  to   the  fiscal  notes.  She                                                                    
remarked that the FY15 column  reflected $62 thousand, while                                                                    
FY16 through  FY18 reflected $54 thousand  with an estimated                                                                    
supplemental  appropriation of  $13,700. She  felt that  the                                                                    
numbers were  appropriate. She pointed out  that fiscal note                                                                    
3  reflected  several   indeterminate  costs;  however,  the                                                                    
analysis on  page two  of the  note provided  an appropriate                                                                    
explanation for the indeterminate amount.                                                                                       
                                                                                                                                
Vice-Chair Fairclough  MOVED to REPORT CSHB  316(FIN) out of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes. There  being NO OBJECTION, it was                                                                    
so ordered.                                                                                                                     
                                                                                                                                
CSHB 316(FIN) was REPORTED out  of committee with individual                                                                    
and with previously published  fiscal impact note: FN2(LWF);                                                                    
and   previously   published  indeterminate   fiscal   note:                                                                    
FN3(ADM).                                                                                                                       
                                                                                                                                
11:23:18 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:44:29 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Meyer handed the gavel to Co-Chair Kelly.                                                                              
                                                                                                                                
HOUSE BILL NO. 385                                                                                                            
                                                                                                                                
     "An Act  relating to additional state  contributions to                                                                    
     the teachers'  defined benefit retirement plan  and the                                                                    
     public employees' defined  benefit retirement plan; and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
11:45:23 AM                                                                                                                   
                                                                                                                                
Co-Chair Meyer MOVED to ADOPT SCSHB 385(FIN), Work Draft,                                                                       
28-LSGH2241\U (Wayne, 4/17/14). There being NO OBJECTION,                                                                       
it was so ordered.                                                                                                              
                                                                                                                                
11:46:05 AM                                                                                                                   
                                                                                                                                
JAMES ARMSTRONG, STAFF, SENATOR KEVIN MEYER, discussed the                                                                      
committee substitute sectional analysis (copy on file):                                                                         
                                                                                                                                
     Section 1.                                                                                                                 
     This  section amends  the  Teachers' Retirement  System                                                                    
     (TRS)  state assistance  statute  (AS 14.25.085).  This                                                                    
     statute was  enacted in 2008  by SB 125,  and currently                                                                    
     provides that  the state  shall appropriate  the amount                                                                    
     sufficient  to   fully  pay  the  total   past  service                                                                    
     liability  for the  year at  the employer  contribution                                                                    
     rate adopted by the  Alaska Retirement Management Board                                                                    
     (ARMB).  In   practice,  this  means  that   the  State                                                                    
     appropriates  the amount  that reflects  the difference                                                                    
     between  the TRS  employer contribute  ion rate  cap of                                                                    
     12.56 percent  and the  actuarial contribution  rate to                                                                    
     the  TRS   trust  funds.  In  FY14,   this  amount  was                                                                    
     approximately $317mm.                                                                                                      
                                                                                                                                
     Section  1   amends  AS  14.25.085  to   implement  the                                                                    
     Governor's  proposal.  Under the  Governor's  proposal,                                                                    
     $1.1   billion   would   be   appropriated   from   the                                                                    
     constitutional budget  reserve to  the TRS  trust fund,                                                                    
     and then  from FY16 -  FY36, an annual flat  payment of                                                                    
     $343mm would be appropriated as state assistance.                                                                          
                                                                                                                                
     According  to  Buck  Consultants, the  Governor's  plan                                                                    
     would convert  the actuarial approach  for TRS  from an                                                                    
     actuarial ratemaking  paradigm to a  fixed contribution                                                                    
     paradigm.  In  a  ratemaking paradigm,  each  year  the                                                                    
     actuary calculates what  contribution rate is necessary                                                                    
    to pay down the accumulated past service liability.                                                                         
                                                                                                                                
     In  Alaska,  this  has   resulted  in  highly  volatile                                                                    
     employer contribution  rates that over the  past decade                                                                    
     have ranged from 12 percent to over 70 percent.                                                                            
                                                                                                                                
     In a  fixed contribution paradigm, the  rate volatility                                                                    
     is  eliminated.  Instead  the  annual  contribution  is                                                                    
     fixed. In the  case of TRS, the  annual contribution is                                                                    
     fixed at  $343mm. What can  change each  year, however,                                                                    
     is the term of the amortization.                                                                                           
     Under  the Governor's  plan,  the initial  amortization                                                                    
     term  is 21  years  -fixed payments  of $343mm  through                                                                    
     FY36.                                                                                                                      
                                                                                                                                
     In  the  event of  actuarial  losses,  the actuary  may                                                                    
     advise  that   the  amortization   term  needs   to  be                                                                    
     extended.  So  if  there  is  a  market  downturn  that                                                                    
     results in  investment losses in FY18,  the actuary may                                                                    
     advise that  the amortization term must  be extended to                                                                    
     FY43  in  order  to  fully amortize  the  TRS  unfunded                                                                    
     liability. Conversely, actuarial  gains could result in                                                                    
     a shortening of  the amortization term of  less than 21                                                                    
     years.                                                                                                                     
                                                                                                                                
     Under   the  Governor's   plan,  the   length  of   the                                                                    
     amortization term  necessary to  pay down  the unfunded                                                                    
     liability will  be evaluated each year.  There could be                                                                    
     cases  where  the  actuarial  loss  over  a  particular                                                                    
     period is sufficiently profound  that payment of $343mm                                                                    
     over any  length of  amortization term  is insufficient                                                                    
     to fully pay off the  unfunded liability. In such case,                                                                    
     the actuary will  assign a date on which  the TRS trust                                                                    
     fund will  exhaust its funds  unless the  $343mm annual                                                                    
     payment amount  is increased.  The actuaries  call this                                                                    
     date the "cross-over" point.                                                                                               
                                                                                                                                
     The last new sentence of  the amendment to AS 14.25.085                                                                    
     is intended  to address  situations where  a cross-over                                                                    
     point  is  reached. It  provides  that  the state  will                                                                    
     appropriate  an additional  fixed amount  sufficient to                                                                    
     amortize   the  unfunded   liability   over  a   period                                                                    
     consistent with actuarial standards.                                                                                       
                                                                                                                                
     Section 2.                                                                                                                 
     This  section implements  the  same  amendment as  does                                                                    
     section 1, for the  Public Employees' Retirement System                                                                    
     (PERS)  state  assistance   statute,  AS  39.35.280.  A                                                                    
     benefit to  making this amendment in  the PERS context,                                                                    
     is  that  a  fixed  contribution  paradigm  aligns  the                                                                    
     respective  interests  of   all  PERS  employers.  PERS                                                                    
     employers  all share  in the  actuarial gains,  through                                                                    
     having a  shorter amortization  schedule, and  share in                                                                    
     actuarial losses, through  having a longer amortization                                                                    
     schedule.                                                                                                                  
                                                                                                                                
     Under  the  current  version   of  AS  39.35.280,  PERS                                                                    
     municipal  employers  are  largely indifferent  to  the                                                                    
     impact  of market  downturns that  create new  unfunded                                                                    
     liability because  their rate does not  change, and the                                                                    
     State  absorbs 100  percent of  the impact  of any  new                                                                    
     unfunded  liability.   The  Governor's   proposal  cost                                                                    
     shares such  new unfunded  liability in  a fair  way by                                                                    
     extending   the  amortization   term,   so  that   PERS                                                                    
     employers  pay at  the 22  percent capped  contribution                                                                    
     rate for a longer period of time.                                                                                          
                                                                                                                                
     Section 3.                                                                                                                 
     This  section   makes  the   bill  contingent   on  the                                                                    
     enactment   of  constitutional   budget  reserve   fund                                                                    
     appropriations to  TRS in the  amount of  $1.1 billion,                                                                    
     and to PERS in the amount of $1.9 billion.                                                                                 
                                                                                                                                
     Section 4.                                                                                                                 
     Establishes the effective  date of this act  as July 1,                                                                    
     2014.                                                                                                                      
                                                                                                                                
Co-Chair Kelly queried the details of the legislation.                                                                          
                                                                                                                                
DAVID TEAL,  DIRECTOR, LEGISLATIVE FINANCE  DIVISION, looked                                                                    
at  a  collection  of graphs  titled  "Cumulative  Costs  of                                                                    
Options to Eliminate PERS and  TRS Unfunded Liability" dated                                                                    
4/19/2014 (copy on file). He  explained that the first graph                                                                    
represented the total PERS and  TRS. He stated that the fine                                                                    
dashed   line  represented   the   fiscal   impact  of   the                                                                    
legislation, which  was $1 billion  for PERS and  $2 billion                                                                    
for TRS  at a level  percent. He  stated that in  2015 there                                                                    
would be  a $3 billion  cash infusion. He remarked  that the                                                                    
line  started  at  $3  billion   and  showed  its  increased                                                                    
cumulative  costs with  added  state  assistance each  year,                                                                    
with  a total  cost of  approximately $10  billion in  state                                                                    
assistance through  2040. The  second graph  represented the                                                                    
PERS system  only, with  a $1 billion  starting point  and a                                                                    
total  cost of  approximately $4  billion. He  stressed that                                                                    
there was  a discount  of 3 percent,  which was  roughly the                                                                    
anticipated rate of  inflation. The third graph  was for TRS                                                                    
starting  at $2  billion cash  infusion and  increases to  a                                                                    
total  cost of  just over  $6 billion  by 2040.  The numbers                                                                    
represent what was used to generate the graph.                                                                                  
                                                                                                                                
11:51:07 AM                                                                                                                   
                                                                                                                                
Co-Chair Kelly  asked for explanation  of the  fiscal notes.                                                                    
Mr.  Teal replied  that  the  TRS was  $1  billion, and  the                                                                    
source of  the money  was the Constitutional  Budget Reserve                                                                    
(CBR).  Because the  CBR required  a three-quarter  vote, it                                                                    
would not be  attached to Section 2 of  the operating budget                                                                    
bill, rather it  would be added to the  Language Section. He                                                                    
stated  that  2016-2020  showed reductions  from  the  base,                                                                    
where the base had a level  percent of pay under the current                                                                    
scenario. There would be a  reduction of roughly 200 million                                                                    
per year  from the  current scenario under  the legislation.                                                                    
The TRS  fiscal note had  $2 billion cash infusion  from the                                                                    
CBR, and had savings of  approximately $200 million per year                                                                    
in the out years.                                                                                                               
                                                                                                                                
11:52:34 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
11:53:38 AM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
11:53:43 AM                                                                                                                   
                                                                                                                                
Senator Hoffman  remarked that  there were  conversations in                                                                    
previous committees that  looked at the funding  level of 70                                                                    
percent. He queried  the percentage impact of  PERS and TRS.                                                                    
Co-Chair Kelly  replied that the  legislation would  put TRS                                                                    
beyond  70   percent  immediately,   and  deferred   to  Mr.                                                                    
Armstrong.                                                                                                                      
                                                                                                                                
Mr.  Armstrong  pointed to  the  two  new fiscal  notes.  He                                                                    
looked at page  two, and referred to the  funding ratios. He                                                                    
stated that  the infusion would  bring PERS to  68.8 percent                                                                    
by  FY17,  and would  exceed  70  percent  in FY18.  The  $2                                                                    
billion infusion in TRS would bring  it up 20 percent in one                                                                    
year.  He noted  that the  following year  had a  cumulative                                                                    
increase of over 70 percent.                                                                                                    
                                                                                                                                
Vice-Chair Fairclough discussed  a conceptual amendment. She                                                                    
stated  that there  were some  previous numbers  that showed                                                                    
potential of the  fund in the out years  retaining a balance                                                                    
that  should belong  to  the state,  because  the state  was                                                                    
providing the  initial cash infusion. She  remarked that the                                                                    
current  TRS  funding ratio  was  52.1  percent. The  action                                                                    
before  the  committee  would  increase  the  number  by  17                                                                    
percent, and  would be brought  to 73 percent. She  felt the                                                                    
funding  could level,  if given  the  right statements  over                                                                    
time.                                                                                                                           
                                                                                                                                
Vice-Chair Fairclough MOVED to ADOPT Conceptual Amendment                                                                       
1, 28-GH224\A.1, Wayne, 4/13/14 (copy on file).                                                                                 
     Page 1, line 2, following the second occurrence of                                                                         
     "plan:                                                                                                                     
          Insert "and to excess assets of those plans on                                                                        
          termination of the plans"                                                                                             
                                                                                                                                
     Page 2, following line 6:                                                                                                  
          "Sec. 2. AS 14.25.181(b) is amended to read:                                                                          
                    (b) If, upon termination of the plan,                                                                       
               all  liabilities  are satisfied,  any  excess                                                                    
               assets  shall  be  deposited in  the  general                                                                    
               fund, [REVERT TO  THE EMPLOYERS AS DETERMINED                                                                    
               BY   THE   ADMINISTRATOR]  subject   to   the                                                                    
               approval of  the termination by  the Internal                                                                    
               Revenue Service.                                                                                                 
          Sec.3. AS 39.35.115(e) is amended to read:                                                                            
                    (e) If, upon termination of the plan,                                                                       
               all  liabilities  are satisfied,  any  excess                                                                    
               assets  shall  be  deposited in  the  general                                                                    
               funds [REVERT TO  THE EMPLOYERS AS DETERMINED                                                                    
               BY   THE  ADMINISTRATOR],   subject  to   the                                                                    
               approval of  the termination by  the Internal                                                                    
               Revenue Service."                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 2, line 25:                                                                                                           
          Delete "This Act is"                                                                                                  
          Insert "Sections 1 and 4 of the Act are"                                                                              
                                                                                                                                
     Page 2, line 29:                                                                                                           
          Delete all material and insert:                                                                                       
                    "Sec 6. If secs. 1 and 4 of the Act                                                                         
               take   effect,  they   take  effect   on  the                                                                    
               effective   date    of   the   appropriations                                                                    
               described in  sec. 5  of the  Act or  July 1,                                                                    
               1014, whichever is later.                                                                                        
                    Sec. 7. Except as provided in sex. 6 of                                                                     
               the  Act,  this  Act  takes  effect  July  1,                                                                    
               2014."                                                                                                           
                                                                                                                                
Co-Chair Meyer OBJECTED for discussion.                                                                                         
                                                                                                                                
Vice-Chair Fairclough explained the conceptual amendment.                                                                       
                                                                                                                                
11:58:00 AM                                                                                                                   
                                                                                                                                
Co-Chair  Kelly  announced  that  the  conceptual  amendment                                                                    
would ensure that  the excess money be cycled  back into the                                                                    
general fund.                                                                                                                   
                                                                                                                                
Vice-Chair  Fairclough  felt  that  the  Department  of  Law                                                                    
needed to review the language in the conceptual amendment.                                                                      
                                                                                                                                
Co-Chair  Meyer  REMOVED  his   objection.  There  being  NO                                                                    
further OBJECTION, Conceptual Amendment 1 was adopted.                                                                          
                                                                                                                                
11:59:33 AM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
12:01:19 PM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
12:01:46 PM                                                                                                                   
                                                                                                                                
ANGELA  RODELL, COMMISSIONER,  DEPARTMENT OF  REVENUE, (DOR)                                                                    
shared that  she had no  concerns with the  proposed changes                                                                    
or the amendment that was adopted.                                                                                              
                                                                                                                                
12:03:15 PM                                                                                                                   
                                                                                                                                
Vice-Chair  Fairclough   stressed  the  importance   of  the                                                                    
legislation. She  commended the efforts of  the governor and                                                                    
the committee's effort on the legislation.                                                                                      
                                                                                                                                
Co-Chair    Kelly   appreciated    Vice-Chair   Fairclough's                                                                    
gratefulness.                                                                                                                   
                                                                                                                                
Co-Chair  Kelly  remarked  that the  Buck  Consultants  memo                                                                    
should travel with the bill.                                                                                                    
                                                                                                                                
Co-Chair   Meyer  stressed   that  the   unfunded  liability                                                                    
included medical  liability, and hoped that  the bond raters                                                                    
would take note  of the enormous cash  infusion. He stressed                                                                    
that $3 billion was a substantial amount of money.                                                                              
                                                                                                                                
Co-Chair Kelly remarked that the  committee must be prudent,                                                                    
but felt that  the legislation did not address  the issue of                                                                    
the state's reserves.                                                                                                           
                                                                                                                                
Co-Chair  Meyer  MOVED  to  REPORT  SCSHB  385(FIN)  out  of                                                                    
committee with individual  recommendations, Letter from Buck                                                                    
Consultants and the accompanying fiscal note(s). There                                                                          
being NO OBJECTION, it was so ordered.                                                                                          
                                                                                                                                
SCSHB 385(FIN) was REPORTED out of committee with a "do                                                                         
pass" recommendation and with two new fiscal impact notes                                                                       
from the Senate Finance Committee and the Governor.                                                                             
                                                                                                                                
12:17:15 PM                                                                                                                   
AT EASE                                                                                                                         
                                                                                                                                
12:17:50 PM                                                                                                                   
RECONVENED                                                                                                                      
                                                                                                                                
CS FOR HOUSE BILL NO. 278(FIN) am                                                                                             
                                                                                                                                
     "An Act increasing the base  student allocation used in                                                                    
     the  formula for  state  funding  of public  education;                                                                    
     relating  to  the  exemption   from  jury  service  for                                                                    
     certain  teachers;  relating  to   the  powers  of  the                                                                    
     Department   of   Education  and   Early   Development;                                                                    
     relating to  high school  course credit  earned through                                                                    
     assessment;  relating  to school  performance  reports;                                                                    
     relating to  assessments; establishing a  public school                                                                    
     and  school   district  grading  system;   relating  to                                                                    
     charter  schools and  student transportation;  relating                                                                    
     to residential school  applications; relating to tenure                                                                    
     of  public school  teachers;  relating to  unemployment                                                                    
     contributions for  the Alaska technical  and vocational                                                                    
     education  program;  relating  to earning  high  school                                                                    
     credit for  completion of vocational  education courses                                                                    
     offered   by  institutions   receiving  technical   and                                                                    
     vocational  education  program   funding;  relating  to                                                                    
     schools  operated by  a federal  agency; relating  to a                                                                    
     grant for  school districts; relating to  education tax                                                                    
     credits;   establishing  an   optional  municipal   tax                                                                    
     exemption for  privately owned real property  rented or                                                                    
     leased  for  use as  a  charter  school; requiring  the                                                                    
     Department of Administration to  provide a proposal for                                                                    
     a salary  and benefits  schedule for  school districts;                                                                    
     making  conforming  amendments;  and providing  for  an                                                                    
     effective date."                                                                                                           
                                                                                                                                
CSHB 278(FIN)am was SCHEDULED but not HEARD.                                                                                    
                                                                                                                                
CS FOR HOUSE BILL NO. 287(RLS) am                                                                                             
                                                                                                                                
     "An Act  relating to the  determination of  the royalty                                                                    
     received  by the  state on  oil  production refined  or                                                                    
     processed  in  the  state; providing  tax  credits  for                                                                    
     qualified  infrastructure   expenditures  for  in-state                                                                    
     refineries   and  hydrocarbon   processing  facilities;                                                                    
     approving and ratifying the sale  of royalty oil by the                                                                    
     State  of  Alaska  to  Tesoro  Corporation  and  Tesoro                                                                    
     Refining and  Marketing Company LLC; and  providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
CSHB 287(RLS)am was SCHEDULED but not HEARD.                                                                                    
                                                                                                                                
CS FOR HOUSE BILL NO. 306(FIN)                                                                                                
                                                                                                                                
     "An Act  relating to the  review and  administration of                                                                    
     tax  credit  programs;   requiring  the  Department  of                                                                    
     Revenue  to report  indirect expenditures;  relating to                                                                    
     the   duties   of   state   agencies;   requiring   the                                                                    
     legislative   finance  division   to  analyze   certain                                                                    
     indirect  expenditures;  relating  to lapse  dates  for                                                                    
     appropriations  for  capital  projects;  repealing  the                                                                    
     insurance   tax  education   credit,  the   income  tax                                                                    
     education  credit, the  veteran employment  tax credit,                                                                    
     the oil or gas producer  education credit, the property                                                                    
     tax  education credit,  the  mining business  education                                                                    
     credit,  the fisheries  business education  credit, the                                                                    
     fisheries   business   tax   credit   for   scholarship                                                                    
     contributions,  the fisheries  business salmon  product                                                                    
     development tax  credit, the fisheries  business salmon                                                                    
     utilization tax credit,  the fisheries business landing                                                                    
     tax   credit   for   scholarship   contributions,   the                                                                    
     fisheries   resource  landing   tax   credit  for   the                                                                    
     fisheries  resource   harvested  under   the  community                                                                    
     development quota,  the fisheries resource  landing tax                                                                    
     education credit,  and the film production  tax credit;                                                                    
     and providing for an effective date."                                                                                      
                                                                                                                                
CSHB 306(FIN) was SCHEDULED but not HEARD.                                                                                      
                                                                                                                                
HOUSE BILL NO. 384 am                                                                                                         
                                                                                                                                
     "An Act increasing the minimum  wage; and providing for                                                                    
     an effective date."                                                                                                        
                                                                                                                                
HB 384 am was SCHEDULED but not HEARD.                                                                                          
                                                                                                                                
CS FOR HOUSE JOINT RESOLUTION NO. 10(FIN)                                                                                     
                                                                                                                                
     Proposing amendments to the Constitution of the State                                                                      
     of Alaska creating a transportation infrastructure                                                                         
     fund.                                                                                                                      
                                                                                                                                
CSHJR 10(FIN) was SCHEDULED but not HEARD.                                                                                      
                                                                                                                                
ADJOURNMENT                                                                                                                   
12:18:19 PM                                                                                                                   
                                                                                                                                
The meeting was adjourned at 12:18 p.m.                                                                                         
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
FW HB385 and SB220 - Leighton.msg SFIN 4/19/2014 9:00:00 AM
HB 385
SB 220
HB385 and SB220 Public Testimony - Walkin.msg SFIN 4/19/2014 9:00:00 AM
HB 385
SB 220
HB278 Are you joking No $ for the BSA - Faralan-Mingo.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 New education plan - Habicht.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 school grading - Roberts.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 2014-04-18 Sealaska Support for BSA - Sealaska.doc SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 Pre-k thru 12 funding - Hayden.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 Functional schools in Alaska - Hall Jones.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB 278 Section 55 Removal - Brown.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 Thank you for sending our money for our schools - Kuckertz.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 I am very disappointed by the newly released senate education plan - Pausbeck.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB 278 Opposition - Delaney.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 BSA school funding needs to increase - Fagnani.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 Please support base student allocation by $650 over next 3 years - Goto.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 Good luck Education funding 7th grade Anchorage son - Stoddard.msg SFIN 4/19/2014 9:00:00 AM
HB 278
Hb278 For Our Children (HB 278) - Predeger.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 Increase the BSA - Goudreau.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 Increase BSA - Fischer.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 BSA increase ($400 then $125 and $125) - Olsen.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 School funding - Slyker.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 URGENT - Fox.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 increase BSA funding for our schools - Nolan.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 BaseStudentAllocation_041814 - Reitmeier.pdf SFIN 4/19/2014 9:00:00 AM
HB 278
HB278 Please fund our schools Increase the BSA $400 $125 $135.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB 19 Public Testimony - Crowell.msg SFIN 4/19/2014 9:00:00 AM
HB 19
HB282 Support - Welsh.docx SFIN 4/19/2014 9:00:00 AM
HB 282
HB 282 - Public Testimony - Somers.msg SFIN 4/19/2014 9:00:00 AM
HB 282
HB282 Landlord tenant bill - McConnochie.msg SFIN 4/19/2014 9:00:00 AM
HB 282
HB282 Landlord tenant - Hewitt.msg SFIN 4/19/2014 9:00:00 AM
HB 282
HB287 Tesoro Letter of Support Senate FIN.pdf SFIN 4/19/2014 9:00:00 AM
HB 287
HB306 Photos from my Alaska Film Acting (SAG-AFTRA) - Holmstrom.msg SFIN 4/19/2014 9:00:00 AM
HB 306
Hb 306 Film Industry - McElroy.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 SENATE FINANCE COMMITTEE - take FILM out of HB306. - Teela.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB 306 Public Testimony - Halsey.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB 306 Public Testimony - Kern.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Oppose Committee Substitute for HB306 - Weaver.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306-Film Tax Credit - Crockett.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Public Testimony - Skabar.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 - PLEASE TAKE FILM OUT - Robinson.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB278 Protect the classroom for our children - Story.msg SFIN 4/19/2014 9:00:00 AM
HB 278
HB306 AK Resident Concern of HB306 Film Tax Incentive - Duffin.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB 306 Public Testimony - Gamez.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Please vote No or remove the film incentive program from HB 306 - Owens.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Take film out of HB306 - Robinson.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Letter 4 18 14.pdf SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Public Testimony - Boles.docx SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Public Testimony - Wegener.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 NO on 306 - Katzke.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Please consider the big picture and take the film out of HB306 - Scheler.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Public Testimony - Wheel Good Food.msg SFIN 4/19/2014 9:00:00 AM
HB 306
Hb306 AK Senate Letter 306 - Cypherius.pdf SFIN 4/19/2014 9:00:00 AM
HB 306
HB 306 Public Testimony - Robinson.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 - The Alaska Film Tax Credit Program - AK Film Group.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Please do not vote for HB306 - Frame.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Film Incentive Program HB306 - Sears.msg SFIN 4/19/2014 9:00:00 AM
HB 306
HB306 Public Testimony - Saarloos.msg SFIN 4/19/2014 9:00:00 AM
HB 306
AlaskaChamber-Kelly_HB316_WorkersCompMedicalFees.pdf SFIN 4/19/2014 9:00:00 AM
HB 316
HB 384 - Summary of Changes - Ver A to A A.pdf SFIN 4/19/2014 9:00:00 AM
HB 384
HB 384 Letter of Intent.pdf SFIN 4/19/2014 9:00:00 AM
HB 384
HB385 NO to HB 384! - Girard.msg SFIN 4/19/2014 9:00:00 AM
HB 384
HB 385
HB284 Public Testimony - Woodman.pdf SFIN 4/19/2014 9:00:00 AM
HB 284
HB384 Minimum Wage Bill - Mayhew.msg SFIN 4/19/2014 9:00:00 AM
HB 384
HB384 Public Testimony - Goldsmith.msg SFIN 4/19/2014 9:00:00 AM
HB 384
HB384 Oppose HB 384 - Pomeroy.msg SFIN 4/19/2014 9:00:00 AM
HB 384
HB385 LFD 041814 Buck Comparing Payment Options.pdf SFIN 4/19/2014 9:00:00 AM
HB 385
HB385 SCR Titile Change.pdf SFIN 4/19/2014 9:00:00 AM
HB 385
HB385 Buck Consultants 041814.pdf SFIN 4/19/2014 9:00:00 AM
HB 385
HB385 work draft version U.pdf SFIN 4/19/2014 9:00:00 AM
HB 385
HB385-SFC-TRS-04-19-14.pdf SFIN 4/19/2014 9:00:00 AM
HB 385
HB385-SFC PERS-04-19-14.pdf SFIN 4/19/2014 9:00:00 AM
HB 385
HB278 DEED Mil Rate Chart.pdf SFIN 4/19/2014 9:00:00 AM
HB 278