Legislature(1997 - 1998)
02/11/1998 08:40 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 11 February, 1998 8:40 am TAPES SFC 98 # 28, Side A (000-452) CALL TO ORDER Senator Drue Pearce, Co-Chair, convened the meeting at approximately 8:40 am. PRESENT In addition to Co-Chair Pearce, Senators Torgerson, Adams and Phillips were present when the meeting was convened. Senator Donley arrived shortly thereafter. Also Attending: DEBORAH VOGT, Deputy Commissioner, Department of Revenue; BOB BARTHOLOMEW, Deputy Director, Division of Income and Excise Audit, DOR; CHRIS CHRISTENSEN, Staff Council, Alaska Court System; GORDON EVANS, Alaska Bar Association; MIKE GREANY, Director, Division of Legislative Finance; GRETCHEN MANNIX, Fiscal Analyst, DLS; and aides to committee members and other members of the Legislature. via Teleconference: From Anchorage: DAVID BUNDY, Member, Alaska Bar Association. SUMMARY INFORMATION SENATE BILL NO. 179 "An Act authorizing the Department of Corrections, for the benefit of the state, to enter into an agreement to use space within a correctional facility in the Matanuska-Susitna Borough that is built, owned, and operated by a private contractor, and setting conditions on the operation of the correctional facility affected by the use agreement; and authorizing the Department of Corrections, for the benefit of the state, to enter into an agreement with the City of Seward to use space within a correctional facility that is built, owned, and operated by a private contractor, and setting conditions on the operation of the correctional facility affected by the use agreement." Senator Torgerson, chair of a subcommittee formed to address this legislation, gave a brief report of the subcommittee's findings. He presented a Committee Substitute drafted by the group and encouraged the full Committee to use it as a working draft. At this point, he moved for adoption of CSSB 179(FIN). Senator Adams objected, then withdrew his objection citing his intention to offer an amendment at a later time. Without objection, Co-Chair Pearce announced the CS adopted. Senator Adams moved to adopt Amendment #1. Senator Torgerson objected, giving as his reason the fact that this amendment was just brought to the Committee and members hadn't had a chance to study its implications. He noted the plan to hold the bill in Committee, therefore, giving time to consider changes to the CS. Senator Adams agreed to WITHDRAW his amendment on the condition that the bill is held in committee pending further discussion. At this point, Co-Chair Pearce ordered CSSB 179 (FIN) held in Committee. HOUSE BILL NO. 86 "An Act relating to the payments in lieu of taxes program for cities in the unorganized borough; and providing for an effective date." A Senate Finance subcommittee had been formed to study this proposal and make recommendations to the full Committee. Senator Torgerson gave a brief overview of those recommendations contained in a committee substitute draft and subsequently move to adopt the CS. Senator Adams objected saying he felt the CS was unfair to rural communities with over one thousand residents. Senator Torgerson retorted observing that communities in his district were the ones paying for these services. Senator Donley voiced concerns about the Village Public Safety Officers (VPSO) program in general and specifically the 32 percent of the budget being spent for administrative overhead. He stated he would like to examine the source of funding for the program and how the monies are being spent. He admitted he would like to see communities other than Anchorage shoulder some of the program costs. He concluded by saying he does not support the CS because Anchorage pays at a much higher rate. Senator Adams cited examples on the Kenai Peninsula where the state funds extensive Alaska State Trooper services. He said he would rather eliminate some State Trooper coverage in favor of more VPSO activities. He stated his main concern is for public safety in all communities. Senator Donley expanded on his observations of the imbalance of state-funded services provided for rural communities versus Anchorage. His examples included police training, water and sewer, transportation and school construction. He perceives Anchorage as being discriminated against. Senator Adams disagreed. Co-Chair Pearce then called for a vote on adoption of SCSHB 86(FIN). The CS passed by a vote of four to one (Pearce, Donley, Phillips and Torgerson for adoption and Adams opposed.) Co-Chair Pearce announced the CS be adopted and held the bill in committee for further consideration. SENATE BILL NO. 240 "An Act repealing the tax on punchboards and coin- operated amusement and gaming devices; and providing for an effective date." Bob Bartholomew, Deputy Director of the Division of Income and Excise Audit, Department of Revenue, was invited to the table to testify in support of this bill. He gave a brief history of events that lead to this request. The original tax was imposed by the Territorial Legislature in 1947. Mr. Bartholomew said he has been unable to find documentation to show the reasoning behind this original action. While the tax rate was in increased in 1987, since that time, the department costs of administering the program have risen and can no longer be justified by the small amount of earnings brought in. The department is trying to maintain a high level of service on a continually decreasing amount of operating funds. This program requires approximately 500 man-hours a year to administer and brings in less than $30,000 annually. Mr. Bartholomew said his office feels their efforts could be better spent on enforcement of other programs that generate higher revenues. He explained that although revenue from this tax is distributed between municipalities and the state, the municipalities have given their support for repealing this tax. Their reasons are the same as the departments: focusing resources on collection of other tax programs, with higher revenue, is more fiscally advantageous. Mr. Bartholomew answered a question from Senator Torgerson saying that repealing this tax will have no affect on a municipality's authority to regulate businesses. Senator Donley noted this bill did not address vending machines and asked if they were taxed. Mr. Bartholomew told him that other than cigarette machines, he was unaware of any other vending machine taxes. Senator Adams pointed out that the changes proposed in SB 240 would affect 14 statutes. He wondered if the legislature would be required to address video machines and pulltabs. Mr. Bartholomew anticipated the need for completely new regulations to govern gaming machines. Co- Chair Pearce shared that it is normal for states to collect a percentage of the income generated by these machines rather than impose a straight tax on their presence. There was more discussion on the division's intent to focus the savings into the Compliance Group if this measure passed. This group was formed within the Department to work to bring taxable parties into compliance with the law. Senator Adams moved SB 240 out of committee and without objection, and with an updated zero fiscal note from Department of Revenue, Division of Income and Excise Audit, it was reported out. SENATE BILL NO. 234 "An Act extending the termination date of the Board of Governors of the Alaska Bar Association." Co-Chair Pearce pointed out to the committee materials before them relating to this bill. They included a statement from the Board of Governors of the Alaska Bar Association, a Legislative Budget and Audit report and a written response to that report from the Alaska Bar Association. David Bundy, and attorney and member of the ABA, testified in favor of the bill that would extend the sunset deadline. He stated that the current program has been running well for many years and, because of membership dues, no state funding is required to administer. When Co-Chair Pearce opened the floor to questioning, Senator Phillips asked if the state was considering changes recommended by the Supreme Court. Mr. Bundy answered that this bill would approve those changes. Senator Torgerson announced his membership on a committee of the ABA and asked advice of the chair whether he should be allowed to participate in discussion and voting on this measure. Co-Chair Pearce ruled that by giving this disclosure, it would be appropriate for him to fully participate. Senator Donley requested an outline of the current budget of the ABA. He voiced concerns with the amount of spending incurred by the ABA. He said he would like to see back up material showing justifications for these expenditures. Co- Chair Pearce offered the option of holding the bill in committee until this information is produced and committee members have a chance to analyze. She had a question on how excess revenue is administered. Mr. Bundy explained a long-range budget plan in place that raises dues in anticipation of higher budget years. Extra monies are invested during the first few years after a membership dues hike. Over the following years, as budget needs increase, funds are taken from those investments thus delaying the next dues increase. Co-chair Pearce commented that while this is not necessarily a bad system, it does differ from other boards and commissions in the state. Co-Chair Pearce then ordered SB 234 held in committee with a time specific date of February 24. She asked that Mr. Bundy get the requested information to Senator Donley before this time. ADJOURNMENT Co-Chair Pearce adjourned the meeting at approximately 9:25 am. SFC-98 (5) 2/11/98 am
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