Legislature(1995 - 1996)
04/04/1996 09:25 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 4, 1996
9:25 a.m.
TAPES
SFC-96, #68, Side 1 (000-575)
SFC-96, #68, Side 2 (575-046)
CALL TO ORDER
Senator Rick Halford, Co-chairman, convened the meeting at
approximately 9:25 a.m.
PRESENT
In addition to Co-chairmen Halford and Frank, Senators
Donley, Phillips, Rieger, and Zharoff were present. Senator
Sharp did not attend.
ALSO ATTENDING: Senator Torgerson; Jeff Bush, Deputy
Commissioner, Dept. of Commerce and Economic Development;
Jay Livey, Deputy Commissioner, Dept. of Health and Social
Services; Tom Boutin, State Forester, Division of Forestry,
Dept. of Natural Resources; Jim Nordlund, Director, Division
of Public Assistance, Dept. of Health and Social Services;
Glenda Straube, Director, Child Support Enforcement
Division, Dept. of Revenue; Robert V. Berryhill, American
Association of Retired Persons; Kip Knudson, aide to
Representative Hanley; Mark Mickelson, Coordinator,
JPTA/Service Delivery Area Program, Division of Rural and
Community Development, Dept. of Community and Regional
Affairs; Barbara Cotting, aide to Representative James;
Daniella Loper, aide to Representative Porter; and aides to
committee members and other members of the legislature.
ALSO PARTICIPATING VIA TELECONFERENCE: Lamar Cotten, Deputy
Commissioner, Dept. of Community and Regional Affairs,
Anchorage; Dan Bockhorst, Local Boundary Commission, Dept.
of Community and Regional Affairs, Anchorage; Pat Poland,
Director, Division of Municipal and Regional Assistance,
Dept. of Community and Regional Affairs, Anchorage; Jay
Dulany, Director, Division of Motor Vehicles, Dept. of
Public Safety, Anchorage; John Suddock, Trial Lawyer,
Anchorage; Angela Salerno, Hosanna Lee, Debbi Brown (Beyond
Shelter) and Tim Rogers (MOA), Anchorage; Paul Weir,
Glennallen; Louise Charles and Luic Beach, Fairbanks; and
Jennie Johnston, MatSu.
SUMMARY INFORMATION
SB 98 - PERSONAL RESPONSIBILITY ACT
Co-chairman Halford announced that discussion of
SB 98 would be rescheduled to next week.
SB 280 - MANDATORY INCORPORATION OF CERTAIN BOROUGHS
Continued discussion was had with Senator
Torgerson, and via teleconference with Lamar
Cotten, Dan Bockhorst, Pat Poland, and Paul Weir.
Amendment No. 2, by Senator Rieger, was withdrawn
and Revised Amendment No. 2 was offered and
adopted. CSSB 280 (Fin) was then REPORTED OUT of
committee with accompanying fiscal notes 1 through
10.
HB 158 - CIVIL LIABILITY
Teleconference testimony was given by John Suddock
from Anchorage. Discussion was had with Jeff Bush
and Daniella Loper. Amendments 1, 3, 4, 5, and 6
were adopted. Amendment No. 7 was discussed but
not offered. The bill was held in committee for
further review and consideration of remaining
amendments.
HB 212 - TIMBER MANAGEMENT & STATE LAND CLASSIFICATION.
Testimony was presented by Barbara Cotting on
behalf of Representative James. SCS CSHB 212
(Res) was then REPORTED OUT of committee with a
($3.0) fiscal note from the Dept. of Natural
Resources, $19.6 note from the Dept. of Fish and
Game, and zero note from the Dept. of
Environmental Conservation.
HB 468 - APPROP: SUPPLEMENTAL & OTHERS
Co-chairman Frank announced that the supplemental
would be rescheduled for hearing next week.
CS FOR HOUSE BILL NO. 212(FIN)
An Act relating to the management and sale of
state timber and relating to the administration of
forest land and classification of state land.
Co-chairman Halford directed that CSHB 212 (Fin) be brought
on for discussion and referenced SCS CSHB 212 (Res).
BARBARA COTTING, aide to Representative James, came before
committee. She directed attention to a sponsor statement
and bill analysis (copies on file in the original Senate
Finance Committee file for HB 212). She explained that the
bill was introduced at the request of constituents in the
timber industry in Fairbanks. It has subsequently received
wide state support. Interested constituents are operators
of small timber businesses in local communities. Operations
have been impacted by overly complicated procedures that
must be endured to secure timber from the state. It is not
a lack of timber but inability of the Dept. of Natural
Resources to allow harvesting that has caused the problem.
Current Title 38 statutes, requiring five-year planning and
three-year updates, make continuation of an ongoing industry
very difficult. Well-managed timber harvesting not only
creates and supports jobs and a healthy economy, it creates
and supports healthy forests. Communities are prohibited
from developing basic timber industries necessary for
maintaining strong forest ecology and a strong economic
environment.
HB 212 provides flexibility to the division of forestry to
meet the needs of small timber operators in a timely manner.
It also makes small adjustments to Title 28 and 41 intended
to secure a sustainable forest products industry. A truly
cooperative effect stemming from introduction last year and
work during the interim resulted in the bill in its current
form.
In response to a question from Senator Randy Phillips
regarding the planning process, Ms. Cotting advised that
sales of ten acres or less would be exempt from all
requirements of the forest land use plan. An additional key
provision is that small sales are defined as 160 acres or
less. The division of forestry will closely monitor sales.
TOM BOUTIN, State Forester, Division of Forestry, Dept. of
Natural Resources, came before committee. In response to an
inquiry from Senator Zharoff regarding operation of the ten-
acre exemption, Mr. Boutin explained that sales now "have to
go through two, separate, unrelated processes." They have
to be in the five-year schedule for at least the two prior
years. Each sale also has to have a forest land-use plan.
The latter is used to substantiate the best-interest finding
needed for disposal of any state land-use resource. Section
1 of the bill remove the requirement for sales of ten acres
or less. It would also mean that the department would not
have to prepare a plan when it sells timber and is not
involved in the harvest. He cited, as an example, a raft of
timber stolen from state land which was ultimately made
available for fire wood because sale by the state would have
required the expensive public process involved in developing
a land use plan. Section 1 would have alleviated that
situation. Mr. Boutin cited the situation at the Ft. Knox
project as a further example.
Co-chairman Halford asked if the department supports the
bill. Mr. Boutin replied that all concerns raised when the
bill was introduced have now been answered. He acknowledged
concern by the environmental community regarding exemption
of sales of 160 acres or less. Aside from emergency
situations, the division is committed to "having every sale
in the five-year schedule." The division will work on a
department order that will define that. Information from
operators indicates that the market window can open and
close in a two-year period.
Co-chairman Frank MOVED for passage of SCS CSHB 212 (Res)
with individual recommendations and accompanying fiscal
notes. No objection having been raised, SCS CSHB 212 (Res)
was REPORTED OUT of committee with a ($3.0) fiscal note from
the Dept. of Natural Resources, $19.6 note from the Dept. of
Fish and Game, and a zero note from the Dept. of
Environmental Conservation. Co-chairmen Halford and Frank
and Senator Rieger signed the committee report with a "do
pass" recommendation. Senators Donley, Phillips, and
Zharoff signed "no recommendation."
SENATE BILL NO. 280
An Act relating to the mandatory incorporation of
certain boroughs in the unorganized borough.
Senator Torgerson, sponsor of the legislation, came before
committee. He noted that at a previous hearing, the
committee held Amendment No. 2 for discussion at this time.
Senator Rieger, sponsor of the amendment, voiced his
understanding that the Local Boundary Commission is strongly
opposed to the amendment. He said he did not wish to impede
progress of the bill because of that objection.
Senator Rieger said that, in researching the issue further,
he came across statutes that appear to be contrary to the
intent of self-determination and which do not remove the
power of the Local Boundary Commission to review changes in
municipal governments. He said that text from the statutes
was attached to an amendment he wished to offer as Revised
Amendment No. 2. Senator Rieger next read wording from AS
29.05.011(a)(5) and 29.05.021. He suggested that petition
to the Local Boundary Commission reflects desire for a local
government. The proposed amendment repeals statutory
provisions cited above.
Senator Torgerson concurred in withdrawal of Amendment No.
2. He acknowledged that while he agreed with what the
amendment attempts to do, it raises many questions,
constitutional issues, and problems for the Local Boundary
Commission.
Speaking to Revised Amendment No. 2, Senator Torgerson
expressed agreement, saying that he was not previously aware
that language within AS 29.05.011 and 29.05.021 existed.
Co-chairman Halford raised questions regarding footnote
information attached to the above-cited statutes. LAMAR
COTTON, Deputy Commissioner, Dept. of Community and Regional
Affairs, spoke via teleconference from Anchorage and
introduced DAN BOCKHORST, Local Boundary Commission staff.
Mr. Bockhorst spoke to case law relating to municipal
extension and the issue of cohesiveness.
Senator Rieger MOVED for adoption of Revised Amendment No.
2. Senator Zharoff OBJECTED and inquired concerning the
number of unincorporated communities. Mr. Bockhorst
attested to 68 or 70 in the unorganized borough. He
explained that language to be removed by the second citation
in Revised Amendment No. 2 applies to any class of city.
Language in the first citation applies only to first-class
and home-rule cities.
In response to a further question from Senator Zharoff
regarding removal of language relating to a demonstrated
need for city government, Mr. Bockhorst explained that it is
currently one of the standards used by the Local Boundary
Commission in evaluating applications. It reflects an
attempt by the legislature to ensure that city governments
are formed only where there is a need for local government
services. Removal would make it easier to form city
governments.
Senator Randy Phillips asked if removal poses a
constitutional problem. Mr. Bockhorst said he saw none. He
cited Article X, Sec. 1, of the Alaska Constitution which
calls for a minimum of local government units. The state
supreme court has interpreted that to mean "a minimum number
of local government units." The commission is sensitive to
that issue. The proposed amendment does not pose a
substantial problem for either the Local Boundary Commission
or the Dept. of Community and Regional Affairs.
In response to an additional question regarding removal of
AS 29.05.021, Senator Rieger explained that it eliminates
some of the prohibitions and gives greater variety to the
form of local government the local population might prefer.
The existing statute is poor public policy in that it, in
effect, says that a community cannot do what it might wish
to do. It would have to annex to another community or allow
some other form of government to provide local services.
Co-chairman Halford concurred in need for removal. However,
he expressed concern over removal of 29.05.011(5), relating
to demonstrated need. He suggested it might send a signal
the legislature does not intend to send. Senator Rieger
voiced his belief that the Local Boundary Commission would
defer to the desires of the local population. AS
29.05.011(5) is extremely vague and injects uncertainty as
to how it will be used by the Local Boundary Commission.
The paramount concern should be the desire of local
citizens. Senator Torgerson noted that following the
petition and other activities necessary to establish a city,
there has to be a vote of those in the impacted area. If
there is no demonstrated need for establishment of the city,
it will be voted down.
Co-chairman Halford called for a show of hands on adoption
of Revised Amendment No. 2. Co-chairman Frank inquired
concerning the department and Local Boundary Commission
position on the amendment. PAT POLAND, Director, Division
of Municipal and Regional Assistance, Dept. of Community and
Regional Affairs, advised via teleconference from Anchorage
that the department was comfortable with the amendment. It
does not effect a substantial change, and it removes
confusion surrounding formation of cities and service areas.
PAUL WEIR next testified via teleconference from Glennallen.
He voiced opposition to forcing communities into boroughs
and asked how residents of Anchorage, Fairbanks, and Juneau
would gain by that action. Senator Torgerson explained that
the proposed legislation represents a move to equalize
taxation and education. Mr. Weir again protested against
need to undergo the rigors of planning, zoning, and other
necessities of incorporation. Senator Torgerson explained
that an amendment made at the previous hearing took care of
that problem. If the bill is adopted as now written, there
will be a vote in each unorganized area. Residents will
have a choice of either forming or not forming a borough.
If residents choose not to form, the state assessor will
construct a mill rate or mill rate equivalency for the local
contribution to education, per the other fifteen boroughs in
Alaska. The word "mandatory" was removed from the bill.
The compromise recognizes that in some areas of Alaska it
may not make sense to form a borough government.
Co-chairman Halford again called for objections to Revised
Amendment No. 2. Senator Zharoff maintained his OBJECTION.
The Co-chairman again called for a show of hands. Revised
Amendment No. 2 was ADOPTED on a vote of 4 to 2 (Co-chairman
Frank and Senator Zharoff were opposed, and Senator Sharp
was absent from the meeting.)
Senator Zharoff advised members that he might subsequently
offer an amendment to impose a six percent state sales tax
on communities that do not currently have one. In response
to suggestions that the amendment would be unpopular,
Senator Zharoff stressed that it would create equity to
offset educational assessments against unincorporated
communities.
END: SFC-96, #68, Side 1
BEGIN: SFC-96, #68, Side 2
Discussion of sales versus property tax options followed
among committee members.
Senator Rieger MOVED for passage of CSSB 280 (Fin) with
individual recommendations and accompanying fiscal notes.
Senator Zharoff OBJECTED. Co-chairman Halford called for a
show of hands. CSSB 280 (Fin) was REPORTED OUT of committee
on a vote of 5 to 1. The following fiscal notes accompanied
the bill:
Dept. of Administration 0
Dept. of Commerce and Economic Development 0
Dept. of Community and Regional Affairs
(State Assessor) 63.5
(Local Boundary Commission) 15.6
Dept. of Education 0
Dept. of Law 0
Dept. of Natural Resources 0
Dept. of Public Safety 0
Dept. of Transportation and Public Facilities 0
Office of the Governor/Elections 25.4
Co-chairmen Frank and Halford and Senators Donley, Phillips,
and Rieger signed the committee report with a "do pass"
recommendation. Senator Zharoff signed "do not pass."
CS FOR HOUSE BILL NO. 158(FIN) am(ct rls pfld)(efd fld)
An Act relating to civil actions; amending Alaska
Rule of Civil Procedure 95.
Co-chairman Halford directed that CSHB 158 (Fin)am (ct rls
pfld)(efd fld) be brought on for discussion and referenced
SCS CSHB 158 (Jud). JOHN SUDDOCK, Trial Lawyers'
Association, testified via teleconference from Anchorage.
He suggested that the "overall drift" of the legislation is
to benefit people charged with wrongdoings and to
disadvantage victims of crime. In that sense, the bill is
at odds with the current philosophy of individual
responsibility. Legislative tightening of criminal and
welfare provisions are intended to make wrongdoers and
welfare recipients more responsible. The proposed bill
appears to swim against that stream in that it makes
corporate and insurance interests less responsible.
Mr. Suddock voiced his understanding that there would be an
attempt to "try to amend out one of the few saving graces of
the bill"--the insurance rate rollback. The proposed bill
represents poor legislation against the broad interest of
public policy. Inclusion of the rollback at least ensures
that the public gets something in return for giving up its
rights.
Mr. Suddock next addressed a technical provision relating to
an offer of judgment which he termed "widely misunderstood."
Provisions currently penalize a person who receives an
offer, does not take the offer, and then does less well at
trial. As a penalty, the party pays partial attorney fees
to the other side and receives a severely reduced rate of
interest on the judgment. That causes attorneys for
plaintiffs considerable fear. The proposed bill contains a
"far more Draconian, severe form of offer of judgment that
in many cases will make the court system unavailable to
injured people . . . ." It raises the ante for failure of
prediction. Unless the plaintiff guesses "what's going to
happen with 95 percent accuracy," the plaintiff will have to
pay the actual attorney fees of the other side even if the
plaintiff wins the case. The other side is often large
institutions. These are well-funded corporate interests
(insurance companies etc.) that can afford to sit down with
those stakes on the table and afford to win and lose. The
average individual will be disadvantaged by inability to
predict what the award might be. Entry into the criminal
justice system will place one's home and retirement at peril
(even if the individual is injured, is right, and his
attorney is a 93 percent "good guesser").
Mr. Suddock noted the Senate Judiciary Committee attempt to
ameliorate the foregoing provision by requiring evaluation
of only one joint-offer in cases of multiple defendants. He
encouraged retention of that provision if the current plea
to eliminate offer of judgment provisions is not heeded.
Speaking to punitive damages, Mr. Suddock said that the bill
places an arbitrary limit on ability of juries to punish the
type of corporate interest that makes money by "stealing
small amounts from lots of people." It also allocates 50
percent of the punitive damage recovery to the state. He
referenced an amendment by Senator Rieger to increase the
amount of punitive damages flowing to the state to 90
percent. If that increase is adopted, the legislature might
as well eliminate punitive damages since the additional
expense and risk of pursuing them would not be justified.
Following Mr. Suddock's testimony, Co-chairman Halford
directed that the meeting be briefly recessed pending
arrival of the sponsor of the legislation.
RECESS - 10:10 A.M.
RECONVENE - 10:30 A.M.
Senator Rieger directed attention to Amendment No. 1 which
he explained was prepared by Mike Ford, a Legislative Legal
Services Attorney, to correct a drafting error within SCS
CSHB 158 (Jud). The error would have inadvertently repealed
the collateral benefit section under medical malpractice.
He then MOVED for adoption. No objection having been
raised, Amendment No. 1 was ADOPTED.
Senator Rieger advised that he would not offer Amendment No.
2 since it would effect the same change made by Amendment
No. 1.
Senator Rieger advised that Amendment No. 3 relates to
punitive damages. He voiced concern over ability of the
civil liability system (intended to make whole, individuals
who have been damaged by the action of others) to apply
punitive damages which are "almost the same as criminal
fines." The proposed bill would thus deposit 90 percent of
punitive damages to the general fund. Senator Rieger then
MOVED for adoption. No objection having been raised,
Amendment No. 3 was ADOPTED.
Senator Rieger directed attention to Page 2, line 29, and
noted references to construction, design plans, etc. It
appears that the body of statutes relates to construction of
a facility. The statute of limitations at the bottom of
Page 2 appears to apply more broadly than that. It says
that one cannot bring any action based on construction-
related activity. Amendment No. 4 attempts to clarify that
the statute of repose refers to design, planning,
construction--improvements to real property. That parallels
language used elsewhere.
DANIELLA LOPER, aide to Representative Porter, came before
committee. She raised concern regarding placement of
wording within the amendment, suggesting that there may be
other kinds of property damage unrelated to construction.
Senator Rieger explained that his amendment attempts to
clarify that the actions being brought via the introductory
clause are the same as the causes and circumstances referred
to in the remainder of Sec. 2. Ms. Loper said she had no
problem with Amendment No. 4.
Senator Rieger MOVED for adoption of Amendment No. 4.
Senator Donley OBJECTED. Co-chairman Halford called for a
show of hands. Amendment No. 4 was ADOPTED on a vote of 4
to 2.
Senator Rieger noted that Sec. 7 of the bill would reverse
existing law which says that the court may not require
security to be posted and would instead require that
security be posted. He said that while he had no problem
with the general policy, the provision as presently worded
leaves no ability for all parties, including the court, to
agree that posting of security is not advisable because of
associated expenses or for other reasons. Amendment No. 5
provides some flexibility for this new policy. Mr. Loper
advised of no objection to the change. Co-chairman Halford
called for a show of hands on adoption. Amendment No 5 was
ADOPTED on a vote of 4 to 2.
Senator Rieger directed attention to Amendment No. 6 and
explained that it clarifies language at Page 5, line 16,
referring to specification of increases in future payments
for anticipated inflation. A reading of existing language
raises questions concerning whether "someone might be put in
a position of having to estimate what future inflation is
and then actually specify the dollar amount of the payment."
The amendment clarifies that an order could specify the way
that inflation is calculated rather than the actual result
of that calculation. The amendment also provides more
latitude in choosing the index.
Brief discussion followed between Senator Donley and Ms.
Loper regarding the source of the original language.
In response to a question from Co-chairman Frank, Senator
Rieger advised that the court could decide on the index on a
case-by-case basis or adopt a court rule most practical for
implementation.
Discussion followed among members concerning whether
adoption of Amendment No. 6 should be divided into two
questions. Additional discussion ensued regarding selection
of a particular formula versus the formula specified in
language to be deleted by the amendment. Ms. Loper voiced
support for the amendment. Co-chairman Halford called for a
show of hands. Amendment No. 6 was ADOPTED on a vote of 4
to 2.
Senator Rieger directed attention to Amendment No. 7 and
explained that it addresses the question of what happens
when a party is partially at fault for damages, but suit
cannot be brought against that person. Can a jury or judge,
in allocating fault, determine how much fault applies to
that person (even though they cannot be sued) and allocate
the remainder of the fault to defendants? Or, do defendants
have their share of fault proportionately increased to bear
100 percent of the fault? As presently written, the bill
incorporates the latter approach. The proposed amendment
applies the former approach and deletes Sec. 9, which
allocates 100 percent fault to remaining defendants.
Co-chairman Halford cited an example of a 20-year old hanger
roof which fails and damages a helicopter and asked how
fault would be apportioned between those responsible for
design, construction, ownership, and maintenance should
those responsible for design be liable but protected from
suit by the statute of limitations. JEFF BUSH, Deputy
Commissioner, Dept. of Commerce and Economic Development,
came before committee. He explained that the bill as
presently written would assign 100 percent of liability to
"whatever defendants are in the court." That would
presumably be the owner who provided maintenance.
Mr. Bush said that if the foregoing provision is removed and
allocation against the designer is allowed but no liability
is attached, an "empty chair" situation is created. That
guarantees that defendants will point to that empty chair
and claim that the design defect was responsible for the
injury. If the designer was 60 percent responsible and the
owner 40 percent responsible, the likelihood is that the
jury will eventually find it was 80 or 90 percent the
responsibility of the designer because no one was there to
say that it was not. Co-chairman Halford suggested that the
same thing happens under current law in cases where the
designer is judgment proof because of death, bankruptcy,
etc.
Senator Rieger acknowledged that the alternative proposed by
Amendment No. 7 might not be better than existing language
within the bill. Both have flaws. He advised that he would
not offer the amendment, but he reiterated that there is a
problem in the bill as presently drafted.
Senator Donley noted need to attend the Senate Floor
Session. SCS CSHB 159 (Jud) was HELD in committee for
further review.
SENATE BILL NO. 98
An Act making changes related to the aid to families
with dependent children program, the Medicaid program,
the general relief assistance program, and the adult
public assistance program; directing the Department of
Health and Social Services to apply to the federal
government for waivers to implement the changes where
necessary; relating to eligibility for permanent fund
dividends of certain individuals who receive state
assistance, to notice requirements applicable to the
dividend program; and providing for an effective date.
Co-chairman Halford announced that SB 98 would be
rescheduled for hearing during the coming week.
ADJOURNMENT
The meeting was adjourned at approximately 11:00 a.m.
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