Legislature(1997 - 1998)
05/06/1998 09:40 AM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
6 May, 1998
9:40 a.m.
TAPES
SFC 98 # 159, Side A (000-593)
Side B (593-173)
CALL TO ORDER
Senator Bert Sharp, Co-Chair, convened the meeting at
approximately 9:40 a.m.
PRESENT
In addition to Co-Chair Sharp, Senators Donley, Torgerson,
Adams, Parnell and Phillips were present when the meeting
was convened. Senator Pearce arrived later.
Also Attending: Senator LOREN LEMAN; Representative CON
BUNDE; Representative JOHN DAVIES; CAROL CARROLL, Director,
Division of Support Services, Department of Natural
Resources; BOB BARTHOLOMEW, Deputy Director, Division of
Income and Excise Audit, Department of Revenue; ROBERT
BUTTCANE, Administrative Probation Officer for Youth
Corrections, Division of Family and Youth Services,
Department of Health and Social Services; JON SHERWOOD,
Medical Assistance Program Officer, Division of Medical
Assistance, DHSS; MARILYN HOLMES, Direct Entry Certified
Midwife; MIKE GREANY, Director, Division of Legislative
Finance and aides to committee members and other members of
the Legislature.
via Teleconference: From Anchorage: KEVIN BANKS, Director,
Division of Oil and Gas, Department of Natural Resources;
BARBARA BRINKS, Director, Public Defender Agency, Department
of Administration; From Fairbanks: JEFF COOK, Vice
President, External Affairs and Administration, MAPCO Alaska
Petroleum.
SUMMARY INFORMATION
HOUSE BILL NO. 469
"An Act approving the sale of Prudhoe Bay Unit royalty
oil by the State of Alaska to Mapco Alaska Petroleum,
Inc.; and providing for an effective date."
Co-Chair Sharp asked if there was anyone present from the
Department of Natural Resources to speak to the bill and
open the dialog. CAROL CARROLL, Director of the Division of
Support Services, came to the table and introduced KEVIN
BANKS, Director of the Division of Oil and Gas, who was
linked to the meeting via teleconference from Anchorage.
Co-Chair Sharp requested an overview on what the bill would
do and the essentials of the contract. Mr. Banks answered
as follows:
"The contract that I helped to negotiate with MAPCO is a
five-year contract, which will begin in December 1, 1998 and
expire December 31, 2003. We propose to sell to MAPCO
approximately 28,000 barrels a day of Prudoe Bay oil. Or
that calculates in the contract specifically to about 20
percent of Prudoe Bay production, royalty production that
is, in the first year. But that percentage will increase
each year as production declines to about 33.5 percent,
which will make for a relatively constant delivery of 28,000
barrels per day over the life of the contract."
"The price is calculated based on what we receive in for our
royalty in value paid by the lessees. Actually, the volume
weighted average price that we receive from the lessees,
plus 15 cents."
"The contract also includes the provision in the event that
MAPCO defaults. We have a - the contract is secured by a
letter of credit equal to a value - equal to the value of 75
days of delivery of royalty oil."
"We have a provision that also requires that MAPCO process
up to at least 80 percent of the oil that we sell to them in
their North Pole refinery."
"And there is a local-hire provision as well in the contract
were we define Alaskan residents in the same way as they are
defined in the North Star lease amendments that were
approved by the Legislature in 1996. Also the local hire
clause includes a provision that to the extent practicable,
MAPCO hire local contractors for the work that they do."
"I believe that sort of touches on most of the high points
on the contract. I'd be happy to take any questions at this
time."
Senator Adams noted this proposed contract was for five
years and approximately 28,000 barrels per day. He wanted
to know what were the provisions in the old contract with
MAPCO. Mr. Banks responded that the other contract was for
25 years with 35,000 barrels of oil delivered per day. That
contract would also expire on December 31, 2003. He added
that there was also a one year contract that would expire
When this one began. That contract was for 13,000 barrels a
day.
Co-Chair Sharp called upon JEFF COOK, Vice President of
External Affairs and Administration for MAPCO Alaska
Petroleum, to testify next. Mr. Cook spoke via
teleconference from Fairbanks as follows:
"We appreciate the committee hearing this bill today. We
feel that this bill both enables as well as expands a great
partnership between MAPCO and the State Of Alaska. We are
well into our $70 million expansion."
"This contract will feed what we call our 'crude unit number
three'."
"We're - we probably have about 125 Alaska workers out there
right now and our primary contractor is TCI, Vern Boyles out
of Fairbanks."
"This stand alone crude unit will process an additional
14,000 barrels of jet fuel a day and 3,000 barrels of
diesel. We will not be able to refine any additional
gasoline with our new crude unit."
"Last year we did tell you that if we were able to get jet
fuel tax equalization that we would expand. We would put
people to work and we would make up the deficit of 14,000
barrels a day of jet fuel that now has to be imported from
outside the state. And we're happy to report we're doing
that and I wish you could all be here to see the tremendous
progress on this project and to drive through the parking
lot and count up all the Alaska plates that I see out there
as I drive through every day."
"And with that - and I will say that we will refine all of
that crude oil. We will exceed the 80 percent. We will
refine all of that at our North Pole refinery."
"And with that I just appreciate your passing this bill out
today and getting it on its way so we can start refining
that crude in December. And if there's any questions, I'd
be pleased to answer them."
Senator Adams wanted to know if with the acquisition of
MAPCO Company by Williams Energy Groups, would the local
hire provision be in place. Would Alaskans stay on board
versus bringing in Oklahoma residents to take those jobs, he
asked. Mr. Cook responded that the company had been under
the ownership of WEG since the end of March and had not seen
any changes. He did not expect any changes in the local
hire provisions in the Alaskan operation. They would all
carry on as before and WEG would assume the contracts with
the local hire obligations, he stated.
Senator Phillips had a question for the representative of
the Division of Oil and Gas. He had looked at the
background of the contract and saw that there had been no
public comment. He asked if that was correct. Mr. Banks
replied that the division had only received minimal comment
consisting of one letter faxed to the Royalty Board.
Senator Phillips wanted to know what were the comments, and
what consideration did they receive. Mr. Banks turned to the
letter, which was written by Hal Whitley, owner of Wet
Willy's Car Wash. The letter expressed concerns about the
prices charged by MAPCO gas stations and that his gas
stations were having a difficult time trying to compete.
Senator Phillips clarified that the complaint was unfair
competition. Mr. Banks agreed saying that Mr. Whitley
claimed that he was unable to buy gasoline wholesale for
less than the retail prices charged by MAPCO.
Co-Chair Sharp noted there was no one else signed up to
testify and there were no further questions of the previous
speakers.
Senator Adams offered a motion to move HB 469 from the
committee with accompanying fiscal notes. Without
objection, Co-Chair Sharp so ordered.
SENATE CS FOR CS FOR HOUSE BILL NO. 16(JUD)
"An Act relating to delinquent minors, to the taking of
action based on the alleged criminal misconduct of
certain minors, to the services to be provided to the
victims of criminal misconduct of minors, and to agency
records involving minors alleged to be delinquent based
on their criminal misconduct; providing for the dual
sentencing of minors who commit certain felony
offenses; relating to violations of municipal
ordinances by minors and to civil penalties for
violation of municipal ordinances by minors; relating
to semi-secure residential child care facilities and
secure residential psychiatric treatment centers;
relating to programs and shelters for runaways;
relating to placement of children in need of aid and
delinquent minors in secure residential psychiatric
treatment centers; amending the Interstate Compact on
Juveniles to which the state is a party; allowing use
of hearsay evidence at temporary detention hearings in
juvenile delinquency proceedings; and amending Rules 3,
10(c), 21, and 27 and repealing Rules 6 and 7, Alaska
Delinquency Rules; and providing for an effective
date."
Senator Tim Kelly was the sponsor of this bill and Co-Chair
Sharp called upon his aid, BRUCE CAMPBELL, to testify on its
behalf. Mr. Campbell spoke as follows:
"I'm pleased to bring you our priority legislation for this
session. HB 16 is a long hard worked product of the last
several years. It is a bill that deals with the juvenile
justice system and provides them a number of tools"
"Perhaps the most visible tool is going to be the dual
sentencing of serious offenders within the juvenile justice
system so that for Class C and B felonies, judges will have
an opportunity to give 17-year olds both a juvenile sentence
and an adult sentence. If a kid re-offends then he would -
the judge would then have the opportunity to sentence him
right directly to adult jail. And it's driven by the kid's
behavior. And if he had repetitive or repeat offender or
some other problem like that then the judge will get to send
him right straight to adult jail."
"But, equally important, perhaps more so, are some of the
tools we're trying to give communities to allow communities
to optionally get involved at lower and earlier levels of
juvenile misbehaviors. We've learned from our work and from
work of many others nationwide, that it is that the
earliest, lowest offenses that a juveniles become amendable
to treatment. And so we'll allow communities to get
involved in the process. Anchorage as you know now has a
system where they take kids to civil court. This makes it
clear that any community can do that. And it makes it clear
that when they do that we ask them to send the records to
Health and Social Services so that they have a complete
pattern of records on those kids."
"We're also allowing police officers to testify in
disciplinary hearings. These correlate to the probable
cause hearing for an adult. And the police officer can
provide the testimony on the events, much as happens in the
adult treatment system and reducing the burden on victims.
We found that victims have a very difficult time getting
their part in the juvenile justice process and they often
feel like they're being burdened extensively by a system
that requires them to show up again and again and again for
hearings but they'll suddenly miss one and it drops through
the cracks."
"We increase the amount of community service that - options
are available to judges. We increase communications with
federal and state officials. We did for - within state
agencies last year, but the agencies came back and said,
'Well that's nice but gee they passed this new federal law.
Can we include the Gang Crimes Commissions of the federal
agencies and some of the DEA groups that work with kids a
lot?' And we said yes, and those are part of this bill."
"I'll certainly answer any questions."
Senator Torgerson asked if currently municipalities were
required to give notice to the commission of the Department
of Health and Social Services on any juvenile violations.
Mr. Campbell was unsure what the City of Anchorage was
doing. He believed they were working with the department.
It was not actually required. But, he warned, if DHSS did
not have those records, they would not have the evidence to
make a more serious case. Having the records helped
establish a pattern of behavior.
Senator Torgerson wanted to know if that information wasn't
already available to the DHSS through the Alaska State
Troopers, the local police or the court. He wondered if
because there already was a record, this would just be
duplication. Mr. Campbell said the bill would create a link
so that when the record was created in the court system that
it would be linked to DHSS.
Senator Torgerson's next questions related to page 5 line
15, where language referred to a certificate of a shelter
designated for runaways. He read, "...is designated a
shelter for runaways by a corporation that is licensed to
make the designation..." and wanted to know what that meant
and if it wasn't a duplication of the requirement that the
department also make the designation. Mr. Campbell said
that no, it was a collateral reference. The term "non-
profit" was being taken out of several statutes. Because of
that, reading only sections 10 and 11 would not make sense
unless the entire statute was taken into account. The
issue, Mr. Campbell explained, was that Charter North,
Brightway Hospital in Utah, a small foster care facility in
Fairbanks and other entities wanted to be able to offer some
of these treatment services and they are corporations not
non-profits. He spoke further about the requirements for
setting up a non-profit corporation. He shared with the
committee Charter North's desire to set up a facility within
Alaska, which would save the trouble and expense of shipping
the youths out of state.
Senator Torgerson wasn't satisfied with the explanation for
shelter designation. He didn't understand the language and
wanted to know what other corporation was going to make the
designation for the first corporation to have a license.
Mr. Campbell responded that the DHSS made that
determination. The only change made in the bill was the
word "non-profit" was deleted, he stressed.
Senator Torgerson had another question. On page eight,
language read, "...is charged by complaint or
indictment...information..." He wanted to know more about
the "information". Mr. Campbell explained that this was
language used in the criminal code. The word "arraigned"
was being deleted. To show the reason for this change, Mr.
Campbell referred to a recent incident in Anchorage where
two youth were killing taxi cab drivers. When the court
system interpreted the statute to waive juvenile court, it
determined that names could not be released until after the
defendant received a grand jury indictment. Mr. Campbell
felt the Legislature and the Attorney General's Office did
not intend that to be the case. The DOL then asked the
language to be changed to reflect comparable language in the
adult criminal code, which said, "complaint, information or
indictment." This referred to information supplied to the
court for indictment.
Senator Torgerson said he read the language differently and
had never heard the term, "charged by information." He had
heard, "charged by complaint and indictment." Senator
Parnell said that while he was not a criminal attorney, he
had some knowledge of the situation. The word "information"
was a term used in criminal law that could say the same
thing as "complaint, he said." Senator Torgerson was
satisfied, although he felt his task was to help write the
statutes in language that could be understood.
Senator Parnell addressed Senator Torgerson's question on
page 5 line 13-16. He had also been confused by the
language, but realized that in lines 13 and 14, it was the
corporation that was holding itself out as a shelter for
runaway miners. Therefore, the corporation was making the
determination that the facility was a shelter and it was
licensed to run it as such.
Senator Adams told the committee he had an amendment to
offer, which pertained to Section 4 and affected the
implementation of provisions by an entity selected by the
department. He detailed the proposed changes on page 25
starting on line eight. The language would read, "...the
entity that the department may select in order to exercise
authors is limited to a municipality, a corporation, or two
or more persons recognized by the community and operating
under contract or license from the department. He requested
that the sponsor's representative comment on the amendment.
Mr. Campbell responded that they supported the amendment
because it would allow DHSS to expand community involvement
throughout the state in bringing in communities with two or
more persons who could react more quickly to juvenile
matters. He felt that was a very important option for
communities.
Co-Chair Sharp indicated he wished the committee to hear all
testimony before beginning action on amendments.
There were no further questions of Mr. Campbell. Co-Chair
Sharp noted ROBERT BUTTCANE, Administrative Juvenile
Probation Officer with Youth Corrections for the Division of
Family and Youth Services, DHSS, had signed up to comment
and answer questions. He offered Mr. Buttcane an
opportunity to speak. Mr. Buttcane identified himself and
testified as follows:
"The HB 16 before you is the outcome of the Governor's
Conference on Juvenile Justice that was held throughout the
state in 1996. And a number of provisions in this bill have
come out of the recommendations of that statewide bipartisan
group."
"We do support this bill. We have worked closely with the
sponsor on crafting language that took care of a number of
some specific issues that we had in our delinquency
procedures and our philosophies."
"I can go over section by section of the bill if you wish.
I know that you've got a busy schedule. But basically I
think I will just be available for questions if you have
anything specific. But that the department and the
Administration do support HB 16."
Co-Chair Sharp chose the latter approach of posing specific
questions to Mr. Buttcane rather than having him detail each
section of the bill.
Senator Phillips wanted to know if by Mr. Buttcane's
comments that meant the Governor would sign the bill into
law. Mr. Buttcane didn't pretend to speak for the Governor,
but he believed the department would make that
recommendation that he do so. Senator Phillips felt it
would be nice to have some sort of commitment one way or
another, but he understood Mr. Buttcane's position.
Senator Parnell asked if the department had any concerns or
questions with Amendment #1, drafted by Senator Adams. Mr.
Buttcane replied they would support it, since it would
enable them to work more closely with communities in an
effective way to hold young offenders accountable. He felt
it was an appropriate amendment.
Senator Parnell wanted clarification of, "...two or more
persons recognized by the community..." Mr. Campbell
explained that the department needed some vehicle to make
sure the individuals were at least known amongst the
community and recognized by the people in the community.
Senator Parnell asked, "recognized as what?" Mr. Campbell
replied the individuals should be recognized as people able
to handle matters in a way the community was comfortable
with. It was not intended to be any particular focus for
the department.
Senator Parnell wanted to know it the department was asking
that the people were competent and operating under contract,
or just be that others would recognize them on the street.
Mr. Campbell related an incident in a village where one
group claimed to be responsible for the community but the
mayor didn't actually recognize that group. He felt it
would be of value to make sure the department had some sense
from the community that the group would be effective.
Senator Parnell asked if they were looking for some sort of
validation from a governing body. Mr. Campbell listed some
of the options for recognition as access through a public
hearing process or a governing body. Senator Parnell stated
that he had wanted some more information on the record as to
the meaning and intent of the language.
Co-Chair Sharp noted there was no further questions of the
department or the sponsor, nor were there any others signed
up to testify.
Senator Adams moved for adoption of Amendment #1. There was
no objection and it was adopted.
Senator Parnell offered a motion to move SCS CS HB 16 (FIN)
from committee with accompanying fiscal note. Co-Chair
Sharp voiced concern with the price of this program of a
quarter million dollars to start with and escalating in
future years. However, he was in favor of the legislation
and realized that the costs were necessary so he would not
object to the motion. The bill was moved from committee
without objection.
Co-Chair Sharp announced there was someone signed up to
testify via teleconference from Anchorage he had overlooked.
Because the committee still had the bill in its possession,
it had the option of changing actions taken. He apologized
and called upon BARBARA BRINK from the Public Defender
Agency in the Department of Administration to offer her
comments. She testified as follows:
"I appreciate this opportunity to speak even though it
sounds like understandably this is a done deal. I wanted to
point out a couple of my concerns because I want to thank
the sponsor who has worked with me carefully in narrowing
the scope of this bill and also addressing some of my
concerns. But I still have a couple more and I wanted to
let the committee know about those concerns."
"My number one concern Mr. Chairman, has to do with Section
52 on page 28, which amends Rule 10-C of the delinquency
rules. And I heard the sponsor's aid comment that this
would simply bring how hearings are conducted in the
juvenile arena in line with how things are conducted in the
adult arena. And I think this bill goes broader than that
and I wanted to explain how."
"A temporary detention hearing - a probable cause hearing is
sort of like a grand jury process in the adult world. In
the adult world, hearsay evidence is not admissible in a
grand jury. The point of a grand jury is to determine
whether or not there's probable cause to believe this
individual committed a crime. And hearsay isn't admissible
at grand jury because it's not reliable it's not
trustworthy. It's sort of like playing that game of
telephone when you were a child. By the time it goes
through two or three people, it's not exactly what was said
initially. You can introduce hearsay at a grand jury if you
prove manifest necessity and there are certain exceptions
for child sex abuse crimes. But as a general rule you
cannot introduce hearsay testimony. A police officer can
testify about what other police officers told them. But not
about what the alleged victim is claiming happened."
"And so I really think that this section erodes the fairness
of the process in the juvenile world and it changes it much
more greatly than as expressed by the sponsor. So if I had
anything to offer this committee, I would suggest that you
take a good hard look at Section 52 and question the wisdom
of allowing hearsay unreliable and untrustworthy testimony
at a probable cause hearing."
"Mr. Chairman, my other concern has to do with the dual
sentencing provision. And part of it is simply a basic
philosophy question. I understand that many states around
the country are moving toward treating more children as
adults. I would just like to point out for the committee's
perusal the Department of Justice has indicated that there
is no evidence that treating kids like adults is a more
effective crime solution than keeping them in the juvenile
system. There's no proof that it increases crime prevention
[undecipherable] rehabilitation or lowers crime in any way."
"Secondly, while we all think juvenile crime is going up and
up and up, that simply is not the case. The Alaska justice
forum just printed a ten-year study from 1987 to 1996
showing that the rate of juvenile crime has actually
declined in the last ten years. Now that's a myth that
permeates how we are creating criminal justice legislation,
not only in Alaska, but throughout the country. And the
statistics hold true nationwide as well. Juvenile crime is
not increasing."
"And finally, I just want to point out to this committee
that we already treat juveniles in the juvenile system very
harshly. Alaska is fortunate in that we're 37th in the
country in the amount of juvenile crime that we have. That
means only 13 states are doing better than we are. But we
are second in the country in the numbers of kids that we
lock up and second in the country in how long we lock them
up for in the juvenile system. So I think to pass this bill
because we think we're not treating kids harshly enough
would not be a correct reflection of how we are actually
dealing with juvenile crime."
"Finally, two other details I'd like to point out to the
committee. We're actually creating a system where juveniles
get treated more harshly than adults. In Section 25 at page
15 lines 29 through 30, we are passing a bill here that
requires juveniles to go to jail if they mess up on their
juvenile probation and get the adult sentence imposed. That
section provides that they must have some portion of their
jail time imposed. Even adults in the adult system don't
have that requirement for certain crimes."
"And finally, we are treating children who violate their
probation much more harshly than adults because we let an
individual probation officer determine what conditions they
must obey. And also we make the child, once it's proven
that there's been a violation, we make the child prove that
he is amenable to further treatment. In the adult system if
you have [undecipherable] probation proven against you, the
judge takes everything into account from the day you were
released on probation 'til the end to decide whether or not
to impose further jail on you. So we're actually creating a
system that's not parallel for adults and children. We're
creating a system where the juvenile who fails in the
juvenile system is treated much worse than the adults in the
same system are."
"And finally, Mr. Chairman, I do support the idea of having
secure psychiatric facility within the state to send our
children to. It is a problem when we end up sending
children outside. The separation from their family actually
hurts in the rehabilitative process. But I have concerns
that the system we've set up in this bill does not provide
the kind of due process that we provide for adults again.
For example, if you want to lock up an adult in API against
their will, they're entitled to a lawyer. They're entitled
to probable cause hearing within 72 hours. They're entitled
to another hearing for a 30-day commitment. They're entitled
to a jury trial if they are to be locked up over 90 days.
In this system, there's no right to jury trail. A kid gets
a hearing only after 90 days and the state is allowed to
keep them against their will under a much lower standard.
So I just want to let the committee know I have some
concerns about the due process in the secure psychiatric
commitment portion of the bill."
"Thank you very much Mr. Chairman. I really appreciate the
time."
There were no questions of Ms. Brink.
SENATE CS FOR CS FOR HOUSE BILL NO. 239(TRA)
"An Act relating to the liability of motor fuel dealers
for payment of tax imposed on certain credit
transactions involving motor fuel sales or transfers
that become worthless debts or on sales or transfers to
persons who declare bankruptcy; and providing for an
effective date."
Representative GARY DAVIS, the bill's sponsor was invited to
join the committee. He testified as follows:
"HB 239 deals with an issue that was brought to my
attention. Currently the motor fuels tax - the system that
we have in the state, we require the distributors that
deliver the fuel to customers to pay the tax to the state.
And then as it's - even prior to them receiving the payment
from the client. And in a case, what this - and then the
distributor waits to get paid from the client for his fuel
and the taxes that he has paid on the fuel."
"What this legislation does, there's been a couple
instances. I don't know how many instances but it addresses
a case where there's been a major fuel delivery to a
customer and the distributor has paid the motor fuel taxes
to the state and then the customer has gone bankrupt so the
distributor doesn't get reimbursed. Of course he doesn't
get reimbursed for his - get paid for his fuel plus his
taxes. So what this does, in a situation like that when
it's - when he's paid over $500 in motor fuel taxes to the
state, and then doesn't receive those taxes back from the
client, then the state issues a credit to that distributor
until the amount of taxes that he's paid is retrieved by the
distributor."
"That's in essence what the legislation does. And I - you
know the rationale for it is of course, as a state we tell
him that he must pay the tax before he gets paid for the
tax. So I feel the state has a responsibility in that
regard to assist them when they've actually made a payment
to the state and then have gotten shorted themself. So
that's the rationale. And as I indicated, it's not for
small amounts. It's for when a distributor has a large tax
debt $500 or more that this comes into play."
"The department is here. It's hard to get a handle on the
possible fiscal impacts of this. I believe they've, to try
and keep numbers nice and orderly they tried, I guess
they've used the estimate of one-tenth of one percent of
motor fuel taxes. So I guess I think it's a possibility of
$40,000 as might be impact the state but that's easy to
understand that there'd be a real hard number to get a hold
of the actual fiscal impact to the state. So, Mr. Chairman,
that's the essence of the bill and I'll be answer any
comments, like I indicated the department is here and I have
staff here who's worked on it that if I get stumped, I rely
on her."
There were no questions of the sponsor at that time and Co-
Chair Sharp called upon BOB BARTHOLOMEW, Deputy Director of
the Division of Income and Excise Audit for the Department
of Revenue. Mr. Bartholomew spoke as follows:
"I guess I can just briefly give you the information we
gathered in taking a look at proposed legislation. We were
working last year with the motor fuel industry to revise the
forms and to enhance our compliance effort. And it was
during the time that we were working with the industry that
the issue of whether there should be some relief for bad
debt was brought up."
"What we did was contact some other states to find out one
if it's something that they do, and two, some experience on
the volumes of bad debt that they saw. And we also - that's
what led to the requirements that you either had to be -
your customer either had to have claimed bankruptcy in the
courts or have met the IRS rules for writing off a bad debt.
So it's not like you can just not get paid and then claim it
from the state. We tried to put some kind of guideline in
there that says basically you know usually don't get to the
bankruptcy stage or to the Internal Revenue Service
guidelines for writing something off until you've gone
through some sort of collection measure."
"So that's the protections that we thought were important
for the state to have. And the fiscal note basically, again
we don't have experience in Alaska. They don't report to us
the history of bad debts. In talking to other states, they
said it's a program that they do allow and that it has a
very small fiscal impact for them. And that's what - were
we came up with our estimates of $44,000."
Co-Chair Sharp wanted to know the procedure. He outlined
what he understood the process to be. If a distributor
filed with their monthly tax remittance, a credit for $300
worth of taxes previously submitted on a company that since
went bankrupt, the department would verify information and
give the distributor a credit to be used against future
taxes. Mr. Bartholomew said his assessment of the process
was correct but that the tax payment would have to exceed
$500. Anything below that amount would not qualify.
Senator Parnell asked if the legislation was retroactive or
would it only apply to bankruptcy filings done after the
effective date of the bill. Mr. Bartholmew replied that the
sales transactions would have to take place after the date
of the bill becoming law in order to participate.
Co-Chair Sharp reiterated the qualifications for the bad
debt as bankruptcy filing or situations meeting the
guidelines for IRS bad debt deduction. A bounced check or a
longtime outstanding account would not qualify alone, he
asked. Mr. Bartholomew affirmed.
Senator Parnell noted that the bill had a five-year life.
He asked what the life was of similar laws in other states.
Representative Davis replied that his staff was not aware of
any sunset provisions in the laws of the other states that
they contacted.
Senator Torgerson asked if the sponsor would object if the
sunset provision were removed from the bill. Representative
Davis did not have any objection and told the committee that
the original bill did not have the clause. The House Finance
Committee inserted it during a meeting that he was not
present. He felt the sunset provision was not altogether
bad, just that a five-year sunset would not be enough time
to gauge the program's performance. He would prefer either
a greater sunset period or none at all.
Senator Torgerson posed the same question to Mr.
Bartholomew. Mr. Bartholomew said that when the proposed
legislation was brought to the attention of the
commissioner, Mr. Condon had the sense that it was an equity
or fairness issue. He didn't think it was inappropriate for
the State to share in the risk of tax collection. Mr.
Bartholomew qualified that while he had not spoken to Mr.
Condon specifically about the sunset issue, the commissioner
was in support of the bill and therefore, Mr. Bartholomew
felt the department would support the absence of a sunset
clause.
Senator Donley had a question about the definition of a
dealer and asked for clarification of who it would apply to.
Did it include large multi-national companies, he asked.
His impression was to think of smaller "mom and pop"
establishments. Mr. Bartholomew gave the definition as a
"qualified dealer". The big fuel providers would generally
not qualify because they sell their product down through a
distribution chain. Most of the refiners sold their fuel to
a distributor, and don't pay tax at the manufacturing level.
If a big manufacturer had its own distribution system, they
could qualify, he stated. He gave further details of
possible examples of qualified dealers and potential
situations.
Tape #159 Side B 10:25 a.m.
Senator Torgerson spoke of court action attempts to recoup
the lost revenue and commented on the option of dealers
checking credit history of its customers before selling fuel
on credit.
Mr. Bartholomew said the tax would only be five to eight
percent of the total debt owed to the distributor. The
distributor would therefore give greater effort to
collecting the larger portion of the debt rather than the
taxes owed, he speculated.
Senator Torgerson moved for adoption of Amendment #1, which
would extend the sunset clause. He then moved to Amend
Amendment #1 to delete line 17 and essentially eliminate the
sunset clause. He commented that no other states had the
sunset. He felt that the dealer should not be saddled with
the uncollected tax because its customer went bankrupt. He
offered that the Legislature could require a report each
year detailing the success of the program. However, he did
not wish for any more reports.
Senator Phillips objected to the amendment to amendment.
Senator Parnell said he agreed with the policy being made.
He supported the original amendment Senator Torgerson
offered and felt that the Legislature should have the
opportunity to revisit the matter again. He thought ten
years was a reasonable period of time. He therefore opposed
the amendment to the amendment.
With that, Senator Torgerson removed his amendment to
Amendment #1 without objection.
There was no objection to Amendment #1 and Co-Chair Sharp
ordered it adopted.
Senator Torgerson offered a motion to move from committee
SCS CS HB 239 (FIN). Without objection, Co-Chair Sharp so
ordered.
SENATE CS FOR CS FOR HOUSE BILL NO. 459(HES)
"An Act establishing new eligibility for medical
assistance for certain disabled persons and giving
their eligibility for services the highest priority
among optional services and groups under the medical
assistance program; amending the definition of
'personal care services in a recipient's home' as used
in the medical assistance program; moving midwife
services from being the first to being the 14th service
eliminated under the medical assistance program when
there is insufficient funding; and adjusting the
priority of optional services and optional eligible
groups under the medical assistance program in order to
reflect the new priorities given to the newly-eligible
disabled persons and to midwife services but without
otherwise changing the relative order of the other
optional services and optional groups."
After some discussion as to which version of the bill was
before the committee, it was noted that there were several
versions the committee could reference if desired.
Co-Chair Sharp spoke to his concerns to the bill as amended
saying that it re-prioritized the list for the eligibility
of midwives or any other services. He noted the committee
already had other bills in its possession, which would put
other services higher on the list. He did not want to get
into a battle of which services should be prioritized at
what level. Different people had different ideas of where
the services should be listed. He gave an example of
medical assistance for certain disabled persons.
He then invited Representative CON BUNDE, the bill's sponsor
to join the committee and speak to the bill. Representative
Bunde commented as follows:
"Mr. Chairman, obviously I think the original idea was a
good and sound idea and do not find any fault with your
reasoning."
Senator Parnell requested an explanation of the original
idea. Representative Bunde continued:
"Mr. Chairman, Senator Parnell, the original idea was to
allow people who have suffered serious disabilities, an
opportunity to get back to work."
"Often after disabled people have gone through a recovery
period, they find it very difficult to get back to work
because their medical expenses are greater than what they
could earn and support themselves."
"This bill basically allows them a period of time where they
can buy into Medicaid, go back to work, have this federal
medical insurance helping them out in a transition period.
And simply what it does, is it frees them of being prisoners
of their own disability because they can't work because the
SSI covers their medical but for their own self-worth, for
the betterment of the State. For just the - I think to
improve their prospects of recovery. Many of them would
love to go back to work but it's that catch-22. If they do
they can't afford their medicine and this allows them a buy-
in on a sliding scale that gives them an opportunity to go
back to work. And as I say, transition from full hundred
percent support on SSI and their medical expenses to the
point where they can be self-sufficient."
"It certainly - the bill I think that is a benefit to people
who suffer from disabilities. And I guess we're all one
bicycle wreck away from that happening to us. And it's
certainly a benefit to the State. We'd have more working
and productive people in this era of welfare reform and
trying to get people an opportunity to work. It seems as if
it is a very positive step."
Senator Parnell wanted an explanation of the changes that
were made to the bill, with regard to midwife services, as
it progressed through the Legislative process. He also
wanted an overview of the testimony heard on the matter.
Representative Bunde requested his aide, Patty Swenson, be
allowed to speak on the topic. He could not be present at
the committee meeting where the changes were made and sent
Ms. Swenson to sit in during his absence. Ms. Swenson
testified as follows:
"The changes in the midwife - the change that occurred with
the midwifes occurred because an amendment was offered in
House Finance that would opened up or given a way around the
Medicaid list where people drop off. So instead of giving
that way around, they chose to move midwives from the top of
the list to 15th. And it accomplished the same goal. That's
why the bill changed that way."
"And then in Senate HESS, I believe there was a formula -
the formula was tightened up as to how they figure out the
amount they get. But Bob Briggs is here from the Disability
Law Center and he's done a lot of work on that bill. If he
can come up and address that..."
Representative Bunde felt that Mr. Briggs could also answer
Senator Parnell's question on the relationship with the
midwife and how the formula changed. Senator Parnell
interjected that he understood how the formula worked, but
wanted to know why the change was made.
Ms. Swenson responded that the change was made because if
they had given a way around the list for the midwives it
would have opened it up for other services to be paid. For
that reason, the amendment was made.
Co-Chair Sharp invited BOB BRIGGS, a staff attorney from the
Disability Law Center, to come to the table to answer
questions.
Senator Parnell commented that the co-chair had made his
position clear about not making changes to the list of
priorities. He wanted to hear the sponsor's wish.
Representative Bunde said he thought the version proposed by
the House HSS Committee accomplished the purpose of the
bill, which was to allow the disabled to return to work.
Senator Parnell clarified that the representative would like
the Senate Finance Committee to adopt the House HSS version.
Representative Bunde affirmed.
Co-Chair Sharp wanted to know how much was 250 percent of
the federal poverty level in Alaska for a family of four.
Mr. Briggs said he had previously submitted a breakdown of
figures to the committee showing the threshold of
eligibility. For 1998, the federal Department of Health and
Human Services set the poverty guideline at $20,570 for a
family of four. He calculated 250% of that amount to be
$51,425. He said the eligibility standard was defined in
the Medicaid option that Congress provided. The amount was
the maximum net earnings allowed for a family of four with
one disabled member to be eligible for this benefit. But
only the disabled family member would be eligible for the
Medicaid benefit under this provision.
Co-Chair Sharp asked what was the definition of a disabled
person that would qualify for under this. Mr. Briggs
responded that the definition was established under federal
law and was based on eligibility and said that the person
must have impairment severe enough to meet a listing or
combination of impairments under Social Security law. The
qualified individual must also continue to have those
medical limitations.
What was the length of the window of opportunity for a
qualified person to participate in the program and buy into
Medicare coverage, Co-Chair Sharp asked. Mr. Briggs replied
that as long as the individual continued to qualify under
the federal disability guidelines and as long as they paid
their premium, they could participate.
Co-Chair Sharp wanted to know if this would allow employers
to deny coverage to a new employee because that employee
already qualified under this plan. Mr. Briggs thought there
were other laws that governed the extent to which an
employer could discriminate against a disabled person in
offering health insurance. Typically, individuals who would
qualify for participation in this program already found it
difficult to get coverage he shared. He gave examples of
some of his employed clients who had applied for health
insurance after satisfying their probationary period only to
be refused because of their medical conditions. This was
due to the pre-existing clause in the insurance coverage.
However there were some protections under the federal Health
Insurance Portability Act that governed some situations but
was not an absolute solution for every person with a
disability. To be covered by the act, the individual must
have coverage before becoming disabled, he explained. He
felt that the program in this legislation would not allow
for a carte blanc denial of coverage by a new employer
simply because the employee could qualify for this coverage.
He suggested that this program would be a bridge to
employment and was not intended as a permanent reliance.
Co-Chair Sharp commented that the reason he brought the
question up was because he did not want this program to
become an excuse for employers to deny coverage to disabled
workers.
Senator Donley was reluctant to dramatically change a system
overseen by the Health and Social Services committees
because that was not this committee's area of expertise.
But he also wanted to ask the sponsor what he wanted the
committee to do with this legislation. Representative Bunde
stated he would like the bill to pass the Legislature and
become law. If the midwives portion of the bill complicated
the process and hampered the success of the disabled workers
portion, he would rather eliminate the midwife portion. His
ultimate goal was to help the disabled get back to work.
Senator Phillips wanted to make the record clear that the
sponsor supported the House HSS, version "B" of the bill.
There was some discussion to clarify the intended version.
Senator Donley noted a problem with returning to Version "B"
because the midwives section was added in the House Finance
Committee and would therefore need a title change. Co-Chair
Sharp pointed out that the committee could adopt or draft
any version of the bill and if it involved a title change,
could write a resolution to do so. There was more
discussion between Senator Donley and Ms. Swenson and it was
determined that the bill would not require a title change if
the "B" version were adopted.
Representative Bunde restated his ultimate goal of getting
the bill to the floor and deferred to the chair to determine
which version of the bill would go forward. He excused
himself from the meeting to attend the House floor session.
Co-Chair Sharp assured him the committee would attempt to
pass a bill out that met the sponsor's goal.
Co-Chair Sharp, Senator Phillips and Ms. Swenson discussed
the severity of the disability standards and income
requirements.
MARILYN HOLMES was signed up to testify and Co-Chair Sharp
called upon her at this time. She spoke as follows:
"I have some information here about the midwifery portion if
I could pass this out. I don't know if you've received this
or not. [Undecipherable]"
Co-Chair Sharp allowed the material to be handed out to
committee members and staff. Ms. Holmes continued:
"I appreciate your concerned about changing the laundry list
on Medicaid funding. And I'm here to speak to that issue."
"One of the reasons that it's possible to change this right
now is that the federal Social Security Act provides for -
that Medicaid funds can be allotted directly to pregnant
women as a specific and special group. This is a 1987
Social Security Act. I believe its called Title 19. And
the Department of Health and Social Services use this law as
the basis for legislation written for the Governor's Smart
Start Program earlier this session, which provided for the
allocation of Medicaid funds to Direct Entry Midwives."
"Now, one of the other reasons why this can be changed this
year is because of the S-Map funds, which I'm sure you're
all familiar with. But those funds [Undecipherable]
allegedly are allocated to help children and pregnant women
in part. I mean they're Medicaid funds but [U.S. Senator]
Murkowski and [President] Clinton have both made agreements
with our Governor that those funds should be used to help
children, families and improve health services through
Medicaid funding."
"Now, one of the things I'd like to point out about changing
this is we have been on the list for five years. To start
funding Medicaid to Direct Entry Midwives would save the
state money. Because right now 4500 pregnant women a year
only have access to the medical model, which costs 57 cents
more on the dollar than the midwifery model and has poorer
outcome. It's been proven over and over and over again that
the European model of midwifery care has much healthier
outcomes for women and children. As a matter of fact, the
five nations with the lowest infant mortality rate use
midwives for 70 percent of their births. We use midwives
for five percent of our births in this country and we are
22nd on the list of developed countries for infant mortality
and Alaska is lower than the national average."
"So we've got a problem here and just legislation could
improve those outcomes and it could save money further down
the line because when you have midwifery birth you have less
technical intervention, you have healthier babies, you have
more independence and more self-responsibility on the part
of the mother and the families. So all the way down the
line, you're getting a good deal financially on these
births. I have no idea how much money would be saved
eventually."
"This also has to do with restraint of trade in a way
because right now, midwives can not get third party
reimbursement for their services through Medicaid. And all
other birth attendants can. And somehow that's not quite
fair because they're not only a viable group but they
provide excellent health care all the way down the line."
"Now in countries that have the best birth outcomes, three
things happen. One, there's universal health coverage. In
Alaska that could be Medicaid funding for low-income
families. There is reprossity between the medical and the
midwifery communities, which is our state our Board of
Direct Entry Midwives has two medical professionals out of
the five board members. And the third thing that creates
healthy birth outcomes in those countries that have the low
infant mortality rates is they have continuous and early
health coverage for pregnant women. And this would provide
that for low-income women."
"So I strongly urge you to not delete that section from this
bill and to consider the cost savings. Plus there has not
been an uproar, Mr. Chairman, over changing this list and I
don't think you're going to get one. Because there's just
too many things in its favor."
Senator Parnell was starting to understand what was
happening. With the available Medicaid funds, the
department had cut the list off below midwife services so
they've never been funded even though it was in statute.
Other reproductive services were funded through Medicaid
except for midwife services, he pointed out. He suggested
that part of the question was where on the list that should
they go at that point. He felt that if the other birthing
services were covered, than midwives should be covered as
well. He was unsure how to best accomplish that without
starting a feeding frenzy.
Senator Phillips noted that other conflicts could arise.
Ms. Holmes interjected that he was concerned about problems
that may or may not happen and that she didn't feel that
would happen. Co-Chair Sharp pointed out that there were
already two other bills in the committee asking to change
the priority on other items. Ms. Holmes argued that there
was federal legislation that allowed the change to
midwifery.
There was further debate between members about the inclusion
of coverage for midwifery services and it's location on the
priority list. Senator Donley felt the handout offered some
compelling arguments saying the change could actually save
the state money and possibly allow funding for services
further down the list.
There was discussion about incorporating HB 234 into the
same package. Members debated that matter.
Ms. Holmes interjected final comments saying that federal
legislation was moving toward helping families and this was
something that the Legislature could do to move toward that
goal.
Co-Chair Sharp offered JON SHERWOOD of the Division of
Medical Assistance and opportunity to speak. He testified
as follows:
"I'd just like to say the department supports this bill. We
support it as it is now or without the change in the
priority list. We had similar language in a Governor's bill
that would have allowed us to cover midwife services. But
it was never part of this legislation. Never our intention
to attach these two pieces of legislation. So either way we
would support this legislation."
Senator LOREN LEMAN was invited to speak to the bill. His
comments were as follows:
"Thank you Mr. Chairman, committee members. I just
encourage you to adopt and report the Senate HSS Committee
version. This is one that was worked out in arrangement
with the House and the Governor's office. And for me the
reasons that Ms. Holmes just talked about, I believe this
will end up saving money. The midwifery reorganization has
not been a controversial issue. I don't believe it will be.
That was the one change we made the other was in the
transition provisions that we worked on and came up with
that in Senate HSS. I believe both of those are important
provisions for you to consider. So I'd recommend that you
take the Senate HSS Committee version."
Co-Chair Sharp remembered when the Legislature added
midwifes certification and then added it to the priority
list.
Senator Leman pointed out that under the current list, they
were not being funded so it was not possible to see the
benefit of the savings. These women were going to deliver
their children. The question was that some of them would
opt for the lower cost midwife alternative, he stated.
Senator Phillips requested an At Ease. Co-Chair Sharp noted
committee members were due on the Senate Floor. HB 459 was
set aside.
ADJOURNMENT
Co-Chair Sharp recessed the meeting subject to the call of
the chair, at approximately 11:05 a.m.
SFC-98 (23) 5/06/98 am
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