Legislature(2001 - 2002)
05/01/2002 09:49 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
May 01, 2002
9:49 AM
TAPES
SFC-02 # 83, Side A
SFC 02 # 83, Side B
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:49 AM.
PRESENT
Senator Pete Kelly, Co-Chair
Senator Dave Donley, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Senator Loren Leman
Also Attending: LADDIE SHAW, Special Assistant, Office of Veteran
Affairs, Department of Military and Veterans Affairs; PAT
CAROTHERS, Chair, Alaska Veterans Advisory Council; NEIL SLOTNICK,
Deputy Commissioner, Department of Revenue; JOHN JENKS, Chief
Investment Officer, Treasury Division, Department of Revenue; LINDA
SYLVESTER, Staff to Representative Pete Kott; MARY MARSHBURN,
Director, Division of Motor Vehicles, Department of Administration;
Attending via Teleconference: Off-net: KEN SHERWOOD, Alaska Mill
and Feed Company; DENNIS GREEN, Owner, Green and Son; ROBERT THOM,
Budget Feed and Farm Store; HERB SIMON; ROBERT WELLS, Director,
Division of Agriculture, Department of Natural Resources; From
Delta Junction: PETER FELLMAN, Staff to Representative John Harris;
PHIL KASPARI Cooperative Extension Service, University of Alaska-
Fairbanks
SUMMARY INFORMATION
SB 353-AGRICULT. PROG.COORDINATOR/ANIMAL FEED
The Committee heard testimony from industry representatives, the
Department of Natural Resources and the University of Alaska. An
amendment was adopted and the bill was held in Committee.
SB 54-ALASKA VETERANS ADVISORY COUNCIL
The Committee heard testimony from the Department of Military and
Veterans Affairs and the Alaska Veterans Advisory Council. Two
amendments were adopted and the bill moved from Committee.
SB 267-ALASKA VETERANS' MEM.ENDOWMENT FUND
The Committee heard from the Department of Military and Veterans
Affairs and the Department of Revenue. The bill was held in
Committee.
HB 344-INCREASE DRIVER'S LICENSE/PERMIT FEES
The Committee heard from the sponsor and the Department of
Administration. The bill moved from Committee.
SB 311-STATE TRUST FUND MONIES
This bill was scheduled but not heard.
CS FOR SENATE BILL NO. 353(RES)
"An Act relating to the labeling of animal and poultry feeds
and to the agriculture program coordinator; and providing for
an effective date."
This was the second hearing for this bill in the Senate Finance
Committee.
Senator Ward noted Senator Olson's intent to change the funding
source for this legislation from general funds to receipt supported
services funds.
Senator Olson informed he has spoken to industry representatives to
get their input on this bill, as the legislation would impact them.
KEN SHERWOOD, Alaska Mill and Feed Company, testified via
teleconference from off-net site that he does not oppose this
legislation because the company complies with the labeling laws of
the State of Washington. He expressed he would like the
requirements to be identical to federal regulations. He was
concerned that the language in the bill is "vague".
DENNIS GREEN, Owner, Green and Son, testified via teleconference
from an off-net site in Delta Junction about the activities of the
company. He stated he would prefer the legislation not be enacted
at this time, as it would place a "strain" on those affected. He
understood a statute would be necessary at some point, but
requested a delay.
ROBERT THOM, Budget Feed and Farm Store, testified via
teleconference from an off-net site in Palmer that the company has
been producing feed in Alaska for 25 years. He stressed the need to
regulate feed imported into the State. He spoke of chemical
additives used to "boost" the protein content of feed, which Alaska
manufacturers are currently unable to produce but this legislation
would allow.
Senator Olson asked for clarification of whether the previous
witness favored or opposed the legislation.
Mr. Thom indicated he supports the legislation.
HERB SIMON testified via teleconference from an off-net site in
Nelchina that he has been manufacturing and selling feed for 25
years. He opposed the bill because it requires "manpower increases
in the overall State structure", which he asserted is
"diametrically opposed" to an appropriate legislative mandate. He
was unfamiliar with the organic farming and weed control portions
of the bill. He asserted the feed manufacturing industries would be
unable to comply with the new statutes because of a lack of
infrastructure and the time involved to obtain laboratory results
on the exact protein content. He continued that Alaska has been
known as a "dumping ground" for outdated feed products and he
surmised the protein content listed on product labels would be
considerably less because the protein level reduces quickly,
especially if the product is not properly stored. He opposed the
imposition of mandated standards that are impossible to achieve.
PETER FELLMAN, Staff to Representative John Harris, testified via
teleconference from Delta Junction that although Alaska has a
"truth in labeling" law, there is insufficient manpower in the
Division of Agriculture to enforce it. This legislation, he
stressed, would provide staff to implement the existing law. He
informed of the laboratories available to perform nutrition
testing. He remarked if feed is properly stored as instructed on
the package, the nutrition level should be maintained. He spoke to
the lack of labeling requirements in Alaska that are present in
every other state. He surmised that if a manufacturer is producing
nutritional feed, there should be no problem with complying with
these provisions. He asserted that those feeding pets and farm
animals have a right to know that the feed purchased is nutritious.
Senator Leman asked if the witness agreed with the fiscal note that
a full time position is necessary to implement this statute or
whether the duties could be shared with existing staff or a part
time staff.
Mr. Fellman told of the three duties this legislation would create
and agreed that one full-time position is unnecessary for each
duty. However, he noted the combination of the duties would amount
to the necessity of a full-time position.
Senator Leman asked if one person could be found who is qualified
to perform all three duties.
Mr. Fellman replied this is possible and emphasized that successful
performance of the duties would require good organization and
attention to detail. He qualified some training would be required
to educate the employee about testing feed samples and to become a
organic certifier. He informed this training is not difficult.
Co-Chair Kelly referred to Section 5 of the bill relating to civil
liability that increases the amount of the fines levied. He asked
the purpose of changing this provision from regulatory to
statutory.
Mr. Fellman was unprepared to respond to this issue and offered to
research the matter.
PHIL KASPARI Cooperative Extension Service, University of Alaska-
Fairbanks, testified via teleconference from Delta Junction that he
is available to address questions relating to noxious weeds.
Co-Chair Kelly suggested Senator Leman and Senator Olson work with
Senator Green on revising the fiscal note.
Senator Leman expressed his intent to review the workload of the
proposed position, as it did not appear to require full time
attention.
Co-Chair Kelly indicated hesitation to change the fiscal note
without input from the bill's sponsor, Senator Green, who was
absent from this meeting due to illness.
Senator Leman addressed the amendment he had offered at the prior
hearing for this bill, which was adopted and which changed the
effective date of the new position. He pointed out the adoption of
regulations does not conform to this change and that a correction
is necessary.
AT EASE 10:12 AM / 10:14 AM
Amendment #1: This amendment provides that Section 7 of this
committee substitute, which stipulates that this legislation does
not apply to meat, fish or poultry, take effect July 1, 2002. This
amendment also inserts a new Section 14 to provide that Section 8,
AS 03.60.006. Agriculture program coordinator, of the committee
substitute take effect January 1, 2003.
Senator Leman moved to rescind action taken at the previous hearing
to adopt this amendment.
There was no objection and the action adopting this amendment was
RESCINDED.
Senator Leman offered a motion to withdraw this amendment.
The amendment was WITHDRAWN without objection.
Amendment #2: This amendment inserts a new Section 14 to provide
that Section 1 and Section 8 of the committee substitute take
effect January 1, 2003. Section 1 relates to AS 03.05.010(a)(7)
establishing requirements for the labeling of animal an poultry
feeds, and Section 8 adds a new section to AS 03.60: AS 03.60.006.
Agriculture program coordinator.
Senator Leman announced he would NOT OFFER this amendment.
Amendment #3: This amendment provides that Sections 1 and 8 take
effect January 1, 2003.
Senator Leman moved for adoption.
The amendment was ADOPTED without objection.
Senator Wilken referenced page 1, line 12 of the bill and asked if
farmed shellfish would qualify as a raw or processed aquiculture
product under the organic certification provision of this
legislation.
Mr. Kaspari understood that aquatic products are not included in
the provisions of this legislation and deferred to Mr. Wells for
confirmation.
ROBERT WELLS, Director, Division of Agriculture, Department of
Natural Resources, testified via teleconference from off-net site
in Palmer that the Department of Environmental Conservation has
responsibility over the inspection of meat and seafood products. He
stressed this legislation only addresses land-based, terrestrial
products, i.e. vegetables, etc.
Co-Chair Kelly ordered the bill HELD in Committee.
AT EASE 10:18 AM / 10:18 AM
SENATE BILL NO. 54
"An Act establishing the Alaska Veterans Advisory Council; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
LADDIE SHAW, Special Assistant, Office of Veteran Affairs,
Department of Military and Veterans Affairs, testified this bill
establishes in statute, the Alaska Veterans' Advisory Council. He
noted this organization was created under Administrative Order #164
in 1996.
Mr. Shaw explained this organization assists the Department in
identifying the needs and concerns of veterans in the State of
Alaska, their dependants and survivors, as well as identifying
methods to better address those needs. He detailed the Council's
duties including making recommendations concerning veterans'
priority service, needs, developing public and private partnerships
to meet those needs and providing coordination and information
regarding veterans' benefits and services in the State.
Mr. Shaw stated that the Council consists of 20 members appointed
by the governor. He listed that one or more members are affiliated
with a veterans' organization; one or more members represent a
State agency that manages programs affecting veterans; and one or
more members of the general public "familiar with veterans'
issues". He emphasized that members serve without compensation
beyond per diem and travel expenses.
PAT CAROTHERS, Chair, Alaska Veterans Advisory Council, and
Lieutenant Colonel, US Marine Corps, Retired, testified in support
of establishing the Council in statue. He cautioned that a future
governor could "abolish" this Council and that the efforts of the
past seven years undertaken on behalf of Alaska's veterans would be
"just about down the tube" with the exception of legislation
already adopted.
Lt. Col. Carothers remarked the Council operates on a statewide
basis and he described the process whereby "problems within the
veterans' community" are brought before service officers of the
veterans' organizations and handled on an individual basis. He
noted the Council has representation in each veteran organization
and that each veteran organization has representation on the
Council. Therefore, he informed that many issues are presented to
the Council, and if it is determined that a problem affects more
than the individual, the Council addresses the matter. He explained
the Council makes recommendations and pointed out that most of
these recommendations have been implemented by the appropriate
State agencies. He characterized this process as the Council
serving as "the eyes and ears of the Administration" as well as the
Legislature.
Lt. Col. Carothers asserted the $3,500 cost of this legislation is
minimal. He informed that the Council holds three meetings
annually: one each in Anchorage and Juneau, plus one teleconference
meeting.
Lt. Col. Carothers stressed the importance of an entity to
coordinate veteran service organizations to receive suggestions for
improvement. He remarked, "A healthy veteran community is a good
asset for any legislator to have in his constituency."
Lt. Col. Carothers stressed that the members of the Council would
be "very very disappointed" if this bill did not pass and the
Council were eliminated. He stated the Council is bi-partisan,
assuring that he is "not in the Administration's club" and that he
serves the veterans of Alaska, as do the other Council members.
Senator Wilken was concerned with the assertion that the new
governor would choose to eliminate the Council as it has been in
place since 1996. He asked why the witness surmised this would
occur.
Lt. Col. Carothers informed that Governor Wally Hickel had
abolished the Council when he took office.
Senator Wilken commented that a 20-member Council appears large,
although he did not object if the Council is able to operate with a
budget of $3,500. He commented that the Council could reduce its
membership to ten seats and hold more efficient meetings more
frequently.
Co-Chair Kelly suggested that the governor should appoint ten
members with the remaining ten appointed by the legislature.
Senator Olson commended Lt. Col. Carothers and other members of the
Council for their involvement. He wanted to know the number of
veterans in Alaska.
Lt. Col. Carothers replied that 68,000 veterans reside in Alaska,
which is more per capita than in any other state.
Senator Olson asked the geographical distribution of veterans in
the State.
Mr. Shaw answered that approximately 43 percent of the veterans in
Alaska reside in Anchorage and the Mat-Su Valley; the second
largest concentration is in Fairbanks, with the remaining 25 to 27
percent living elsewhere in the State.
Senator Olson commented, "It sounds like a very good bill Mr.
Chairman."
Co-Chair Kelly asked if the witnesses would object to amending the
legislation to provide that five Council members are appointed by
the President of the Senate, five by the Speaker of the House and
ten by the governor.
Amendment #1: This conceptual amendment provides that appointment
of the 20 Council members shall be determined by the following
entities: governor, ten seats; Senate leadership, five seats; House
of Representatives leadership, five seats. This amendment also
provides this change takes effect as the Council members' current
terms expire.
Senator Leman moved for adoption.
Senator Ward clarified this would not impact current Council
memberships.
The amendment was ADOPTED without objection.
Senator Hoffman asked the percentage of rural members serving on
the Council.
Mr. Carothers responded that approximately one-third of the
membership reside in Bethel, and other small communities.
Co-Chair Kelly thanked the witnesses and those members of the
public for their service in combat.
Senator Hoffman asked how the appointment of the Council positions
would be rotated.
Co-Chair Kelly suggested the next vacancy could be filled by an
appointee of the governor, the second vacancy by the Senate and the
third vacancy by the House of Representatives, with the process
repeating in this manner for subsequent vacancies.
Senator Leman agreed to this process.
Mr. Shaw stated this method is possible. He pointed out that
currently appointments are made based on the recommendations of
local veterans organizations. He assumed this process could
continue regardless of the appointing authority.
Co-Chair Kelly surmised that the rotation of appointing authority
would assure fair consideration of the veteran organizations'
recommendations.
Co-Chair Kelly suggested the amendment should be conceptual to
allow the drafter to conform the language to the intent of the
Committee.
Amendment #2: This conceptual amendment provides that the first
vacant seat would be filled by appointment of the governor, the
second vacant seat would be filled by appointment of the Senate
leadership, the third vacant seat would be filled by appointment of
the House of Representatives leadership, and subsequent vacancies
would be filled in this rotating order.
Senator Leman moved for adoption of this conceptual amendment to
accommodate the Committee's intent to provide fair distribution of
Council membership.
There was no objection and the amendment was ADOPTED.
Senator Ward offered a motion to "move Senate Bill number 54
amended out of Committee with individual recommendations and the
accompanying note."
Without objection, CS SB 54 (FIN) with accompanying $3,500 fiscal
note #2 from the Department of Military and Veterans Affairs dated
2/9/02, MOVED from Committee.
SENATE BILL NO. 267
"An Act establishing the Alaska veterans' memorial endowment
fund and providing for credits against certain taxes for
contributions to that fund; relating to other tax credits for
certain contributions; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
LADDIE SHAW, Special Assistant, Office of Veteran Affairs,
Department of Military and Veterans Affairs read a statement into
the record as follows.
SB 267 sets up an endowment fund to support the maintenance of
existing and construction of new memorials, to Alaska veterans
and the military. Today Alaska has over 70 memorials to our
veterans. These tributes range from small plaques to memorials
like Byers Lake. Funds to maintain these existing memorials
are few.
The bill before the Committee would allow the Department of
Revenue to accept donations from the private sector of
legislative appropriations, to invest the funds to earn a real
rate of return of at least 5%, and identify amounts available
for appropriation each year.
The Department of Military and Veterans Affairs, with the
assistance of appropriate veterans' organizations would grant
the appropriated funds to organizations that would maintain
the monuments or memorials. If funds were available, new
memorials or monuments could be constructed. Regulations would
be promulgated to describe this process.
In addition, the bill allows a tax credit to taxpayers that
choose to donate money to the endowment fund. Credits would be
limited to 50% of the first $100,000 and 100% of the second
$100,000. The tax credit mirrors the structure of the existing
education tax credit. A taxpayer's total credit under both of
these credits would be limited to $150,000.
By providing a mechanism to take care of the existing
veterans' memorials in Alaska and to building additional in
the future, this bill recognizes the contribution that
veterans and the military have made to our state.
Co-Chair Kelly referenced language in Sec. 4 on page 3, lines 21
through 25, which reads as follows.
Article 8. Alaska Veterans' Memorial Endowment Fund.
…
Sec. 37.14.730. Use of the fund. (a) As soon as
practicable after July 1 of each year, the commissioner of
revenue shall determine the average month-end market value of
the fund for the immediately preceding three fiscal years. The
commissioner shall identify five percent of that amount as
available for appropriation by the legislature for uses
described in (b) of this section…
Co-Chair Kelly asked if this would essentially create a "sinking
fund" in the event of a period of poor earnings on the investment,
noting the requirement that five-percent must be appropriated.
SFC 02 # 83, Side B 10:38 AM
NEIL SLOTNICK, Deputy Commissioner, Department of Revenue, deferred
to Mr. Jenks to explain how this would be avoided.
JOHN JENKS, Chief Investment Officer, Treasury Division, Department
of Revenue, assured that the "investment features" of this
endowment are designed to ensure a "stable payout" over time,
despite fund performance. He noted the amount available for
appropriation is limited even in those years in which the fund
earnings are high. He furthered that this legislation also directs
the Department of Revenue to manage the endowment in a manner that
provides a five-percent "real or inflation-adjusted return over
time."
Co-Chair Kelly posed a scenario whereby earnings in the first two
years of the fund's existence are less than five percent and
surmised that the corpus of the fund would immediately "erode"
under the provisions of this legislation.
Mr. Jenks agreed the value of the fund would decline.
Co-Chair Kelly suggested amending the bill to stipulate that an
appropriation would not be made using funds from this endowment
before a year in which the endowment has realized a five-percent
rate of return.
Mr. Jenks replied that such a provision is possible, but cautioned
it would defeat the purpose of establishing a link between the
long-term investment policy i.e., the long-term expected earnings,
and the payout of the fund. He acknowledged the corpus of the
endowment could be reduced in the first two years, but assured that
long-term performance is the higher priority.
Co-Chair Kelly qualified his expertise on the matter is limited,
but wanted to ensure that the principal of the endowment would not
be compromised. He informed this has occurred with other
endowments.
Mr. Jenks reiterated that such action would be inconsistent with
the intended management of the fund.
Mr. Slotnick clarified that the language in the bill stipulates
that the funds would be identified and made available for
appropriation. However, he stressed the language does not require
that an appropriation actually be made. He foresaw the Department
issuing an annual report on the condition of the fund, and the
legislature making the determination as to whether an appropriation
is appropriate in a given year.
Co-Chair Kelly indicated this is satisfactory.
Senator Ward agreed.
Senator Wilken referenced Sections 1, 2 and 3 of the bill and asked
if the tax credits proposed in this legislation are comparable to
donations made to the University of Alaska.
Mr. Slotnick affirmed this legislation is modeled after the
University of Alaska endowment program.
Co-Chair Kelly noted the presence of students from Floyd Dryden
Middle School in Juneau who were attending the meeting as part of
the Close Up Program. He directed them to introduce themselves.
Senator Wilken asked about other tax credit programs.
Mr. Slotnick responded two programs are in existence, both relating
to the University of Alaska and postsecondary education.
Senator Wilken noted this legislation would establish a third tax
credit program.
Co-Chair Kelly directed attention to multiple statutory references
in the bill relating to "credits taken during the taxpayer's tax
year". He asked for elaboration.
Mr. Slotnick noted the "seven different tax types" for which a
contribution credit would be eligible, pointing out that
"overlapping" credits is disallowed. He exampled an oil and gas
company providing a contribution and explained the credit could be
taken against the company's oil and gas property tax, oil and gas
severance tax, or oil and gas corporate income tax in an amount not
to exceed the maximum allowed $150,000. He listed fisheries
business tax, fisheries landing tax, license tax, insurance premium
tax, and the three aforementioned oil and gas taxes as the seven
tax types. He qualified that other tax types are ineligible for
this tax credit program including motor fuel tax and tobacco tax.
Co-Chair Donley questioned the 100 percent tax credit allowed for
the second $100,000 contribution and asked who made the decision to
include this provision.
Mr. Slotnick answered this legislation was drafted to model the
University of Alaska endowment tax credit program.
Co-Chair Donley wanted to know the "human being" who made the
public policy decision to provide the 100 percent tax credit.
Mr. Slotnick was unaware of who made the decision. He emphasized
the intent is to provide an incentive for a second $100,000
contribution.
Co-Chair Donley pointed out this would result in a "100 percent
loss to the treasury" of those funds.
Mr. Slotnick explained the rational that the fist $100,000
contribution is only available for 50 percent tax credit.
Co-Chair Donley recalled the extensive debate on this issue at the
time the University of Alaska endowment program was established. He
expressed he did not support this structure in the University of
Alaska endowment program and does not support it as proposed for
the veterans' memorial fund. He stated this method does not benefit
the State's treasury and predicted that rather than the government
determining the best use of funds, companies would make donations
in lieu of paying taxes.
Co-Chair Donley disagreed with using the University of Alaska
endowment program as a model for this legislation. He cautioned
against "just blindly be copying mistakes of the past" without
debating the issue.
Senator Wilken suggested the fiscal note must be corrected, as it
does not reflect the subsequent reduction of the credited donations
from the general fund.
Senator Ward requested the Department of Military and Veterans
Affairs speak to the 100 percent tax credit for the second $100,000
contribution.
Mr. Shaw qualified his limited understanding of the tax credit
system. He predicted that actual donation amounts would be less
than $100,000, citing information indicating actual donations
average less than $5,000. He stated this legislation includes a
$125,000 legislative appropriation to match the $125,000 the
Department has already collected.
Co-Chair Kelly ordered the bill HELD in Committee.
CS FOR HOUSE BILL NO. 344(STA)
"An Act increasing fees for driver's licenses, instruction
permits, and identification cards; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
LINDA SYLVESTER, Staff to Representative Pete Kott, Chair of the
House Rules Committee, testified this bill was introduced at the
request of the Division of Motor Vehicles. She informed this
legislation would increase fees for noncommercial driver licenses
from $15 to $20, and learner's permits by $10, as well as increase
the fees for identification cards. She stated the bill would also
enable the Division of Motor Vehicles to implement a conversion to
a digital license system, noting the Division requests $500,000 to
implement the IT component to support the digital system. She
assured this appropriation would be offset by fee increases, which
would generate between $750,000 and $900,000 per year.
Ms. Sylvester pointed out an inaccuracy in Section 1(a) on page 1,
lines 11 and 12, which reads as follows.
(3) Alaska is one of four remaining states that has
yet to convert from 1950s era technology to digital driver
licenses and personal identification cards.
Ms. Sylvester informed that since this bill was introduced, the
other three states have made the conversion and Alaska remains the
only state still operating with the outdated technology.
Ms. Sylvester stressed that the current Polaroid system, which has
remained virtually unchanged since 1954, operates manually and is
"uniquely susceptible" to fraud. She assured that by updating the
technology, the integrity of the nation's personal identification
system would be improved. She spoke of discussions occurring
following the terrorism incidents of September 11, 2001, regarding
the security of the identification system. She stated that these
discussions have resulted in an emphasis in strengthening the
states' systems. She emphasized that states have a responsibility
for the integrity of identification systems.
Ms. Sylvester stressed that obtaining a driver license signifies
more than passage of a driving examination, given the reliance on
these documents for identification for security and financial
reasons. She characterized Alaska's driver licenses and
identification chards as "breeder documents", explaining that once
in hand, airline tickets, passports, checking accounts, firearm
permits, credit cards, etc., could be parlayed. She remarked that
driver licenses are a key component of the theft identity
"phenomenon," which resulted in a loss of $7 billion the previous
year. She furthered that fraudulent manufacturing and use of Alaska
identification cards for certain purchases by underage users is
another problem.
Ms. Sylvester detailed the simple way to obtain a duplicate or
fraudulent driver license, and shared anecdotal stories. This
included a college student with an enlarged "picture" of a driver
license in which a person could pose for a photograph standing in
front of a yellow curtain covering the photo section of the driver
license; the photograph of the person and the picture of the
license would then be laminated, thus producing a realistic, but
fraudulent driver license.
Ms. Sylvester also spoke to difficulties of Alaska residents in
utilizing their Alaska identification while traveling outside the
State, explaining that the identification is sometimes not accepted
because it "looks too hokey." She furthered that the Division is
unable to issue replacement photo driver licenses to Alaskans in
the event their identification is lost or stolen during travel
because the Division does not maintain photographs. She qualified
that identification that does not include a photo is available,
however, airline security and other venues often require photo
identification.
Ms. Sylvester noted that the State's current identification system
relies on Polaroid for equipment and supplies and informed that the
company filed for Chapter 11 bankruptcy protection in October 2001
and that Chapter 7 bankruptcy protection is likely to follow. She
stated that the company's identification system has since been sold
to a company that serves 37 other states with identification
systems. She stated that replacement cameras for the current system
are no longer available and that film would be unavailable at the
end of the calendar year as well.
Senator Ward asked if any states currently utilize private
contractors to fully operate their driver license and
identification programs using privately owned equipment.
MARY MARSHBURN, Director, Division of Motor Vehicles, Department of
Administration was unaware of any states that contract for these
services. She told of "turnkey" systems available, but emphasized
these are primarily used for private security systems.
Senator Ward understood the state of Vermont might utilize a
private contractor.
Ms. Marshburn was unsure.
Senator Ward wanted to research the matter of operations in Vermont
before making a decision to support this legislation.
Senator Hoffman asked if the Division could acquire and install the
new equipment to be operational by the July 1, 2002 effective date
of this bill.
Ms. Marshburn answered no, and explained the effective date applies
to the date the fees would be increased fees to garner the
necessary funding to begin process to begin the conversion process
to a digital system. She informed 18 months would be required
before the new system is operational.
Senator Hoffman asked if licenses would continue to be valid until
the printed expiration date.
Ms. Marshburn affirmed. She anticipated that many people would
choose to renew before the expiration date given the greater
protection against fraud.
Senator Hoffman asked if an additional fee would be imposed for
early renewal.
Ms. Marshburn replied that the current fee for obtaining a
duplicate of an unexpired license would be levied.
Senator Olson asked that amount.
Ms. Marshburn answered $10.
Ms. Marshburn then explained the current Polaroid system, which is
somewhat difficult to alter or replicate, although significantly
easier than a digital system. She pointed out for Senator Leman's
benefit that engineering students tend to be the most inspired to
attempt to alter or create fraudulent identification.
Ms. Marshburn described the digital license technology that would
be used for production of licenses and identification as well as
for data storage. She informed the new licenses and identifications
would not require subtraction of birth dates from the current year
to determine the age of the holder. She furthered that licenses for
holders under the age of 21 would be oriented horizontally rather
than vertically to allow for ready recognition.
Senator Olson asked about the process to obtain a duplicate driver
license if the original is lost while traveling out of State.
Ms. Marshburn responded it is not possible to produce a duplicate
license if the holder is not present. She detailed the current
system of two photographs taken, with one placed on the face of the
license or identification and the other forwarded to the Department
of Public Safety. She stated that in the event of a lost or stolen
license, the Division could research the driving history of the
holder and verify that a valid driver license does exist for that
holder then fax that information to the holder. However, she noted
this does not verify that the holder of this document is the person
claimed, as no photograph is included.
Senator Hoffman asked if it is possible to hold two licenses. He
was told that possessing more than one is punishable with a $25,000
fine.
Ms. Marshburn was unaware of the fine system. She shared that she
obtained a State of Alaska identification card to utilize while
traveling. She therefore is less likely to lose her driver license.
Senator Hoffman commented that $25,000 was a large amount for such
an offense.
Senator Leman supported the conversion to digital licenses. He was
concerned about the ease of altering current licenses. He was also
concerned about the cost involved with such a conversion. However,
he agreed the funding mechanism proposed in this legislation is
acceptable.
Senator Leman noted the Division had indicated to him a request to
amend language contained in the intent section of the bill.
Ms. Marshburn remarked that the change should not be made.
Senator Leman "moved to report committee substitution House Bill
344 from Committee with individual recommendations and the
accompanying fiscal notes."
Co-Chair Donley requested a "definitive written answer" to Senator
Hoffman's question about the possession of more than one driver
license.
Without objection CS HB 344 (STA) MOVED from Committee with
accompanying $500,000 fiscal note #1 from the Department of
Administration, dated 2/20/02.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 11:14 AM
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