Legislature(2001 - 2002)
05/07/2002 09:51 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 07, 2002
9:51 AM
TAPES
SFC-02 # 89, Side A
SFC 02 # 89, Side B
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:51 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Loren Leman
Senator Lyda Green
Senator Gary Wilken
Senator Alan Austerman
Senator Lyman Hoffman
Senator Donald Olson
Also Attending: SENATOR GENE THERRIAULT; JOE BALASH, Staff to
Senator Gene Therriault; TAMMY KEMPTON, Regulation of Lobbying,
Alaska Public Offices Commission, Department of Administration;
CHIP WAGONER, private citizen; JASON HOOLEY, Staff to
Representative Fred Dyson; ALISON ELGEE, Deputy Commissioner,
Department of Administration; JOANNE GIBBENS, Program
Administrator, Division of Family and Youth Services, Department of
Health and Social Services; JOHN BITNEY, Legislative Liaison,
Alaska Housing Finance Corporation
Attending via Teleconference: From Anchorage: ANTHONY LOMBARDO,
Representative, Covenant House
SUMMARY INFORMATION
SB 363-CAMPAIGN COMMUNICATIONS & DISCLOSURES
The Committee heard from the sponsor, the Alaska Public Offices
Commission, and took public testimony. The bill reported from
Committee.
HB 162-ABSENCES UNDER LONGEVITY BONUS PROGRAM
The Committee heard from the sponsor and the Department of
Administration. The bill reported from Committee.
HB 209-PROGRAM FOR FORMER FOSTER CHILDREN
The Committee heard testimony from the Division of Family and Youth
Services, took public testimony, and reported the bill from
Committee.
SB 268-GUARANTEED REVENUE BONDS FOR VETERANS
The Committee heard from the Alaska Housing Finance Corporation,
considered but took no action on one amendment, and held the bill
in Committee.
CS FOR SENATE BILL NO. 363(STA)
"An Act relating to communications and elections, to reporting
of contributions and expenditures, and to campaign misconduct
in the second degree; relating to disclosure by individuals of
contributions to candidates; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
SENATOR GENE THERRIAULT stated that this bill was generated by the
Senate State Affairs Committee and clarifies regulations involving
campaign contributions to candidates and issue-advertising
guidelines for State elections. He noted these issues are also
being addressed at the federal level. He voiced that citizen
concerns about how contributions to candidates and issues could
"influence the outcomes of campaigns" has resulted in a "compelling
interest" to prohibit certain types of issue advertising while
working within the parameters of the United States' constitution
regarding freedom of speech. He mentioned that State regulations
recognize "express advocacy" as advertising that, instead of
educating people about a general issue or public policy, attempts
to influence the outcome of the campaign. He communicated that
State regulations align with the US Senate 1977 McCain-Feingold
Bill, which expanded the definition of express advocacy to include
issue advocacy commercials broadcast within "30 days of a primary
or 60 days before a general election, as those broadcasts could be
recognized as "trying to impact the outcome of the election."
Senator Therriault furthered that this bill would "place some
restrictions on the source of funding that is coming into and
backing that expression." He noted that Section 8, subsection 14 on
page 4, line 18 of this legislation further defines components
within a commercial or communication that would be recognized as
express advocacy by the State.
Senator Therriault explained that Sections 7 and 8 primarily
address issue advertising while Sections 1, 2, 3, 4, 5, 6, and 10
address modifications to the Alaska Public Offices Commission
(APOC) report requirements for campaign donations and expenditures,
specifically the requirements of the "15/5 filing report," which
requires anyone who contributes $500 or more to a candidate to
notify APOC of the contribution within 30 days of its being
contributed. He stated that APOC has determined that the 15/5
ruling is "meaningless" as more recent law limits the maximum
amount a person could contribute to a candidate at $500.
Co-Chair Kelly asked the penalty for failing to file or for filing
late, under the 15/5 regulation.
JOE BALASH, Staff to Gene Therriault, responded that the penalty
for late filing is $50 a day once APOC notification has been
issued.
Co-Chair Kelly asked whether the notification is sent to the
candidate receiving the contribution or to the contributor.
Mr. Balash surmised that both the candidate and the contributor
receive notice.
TAMMY KEMPTON, Regulation of Lobbying, Alaska Public Offices
Commission, Department of Administration, concurred that both the
candidate and the contributor receive notification.
Co-Chair Kelly stated that the 15/5 filing "was somewhat
problematic and a lot of citizens did not understand" their
obligation to report contributions. He asked whether the
elimination of the 15/5 penalty should be retroactive since the
15/5 regulation is recognized as not being a "a good idea in the
first place," and some citizens could be prosecuted or fined "under
the old law".
Ms. Kempton stated she is "fairly confident" that no one is
currently being fined or prosecuted because of a violation of the
15/5 regulation.
Senator Green asked how the funding sources of political
advertising "published" within 60 days of an election are reported.
Senator Therriault responded that current regulations require
"source" reports to be filed with APOC for advertising expenditure
contributions coordinated with a candidate's campaign, and that
independent expenditure reports include "where the money comes
from" and whether the funding is from "out-of-State" sources or a
wealthy individual expending thousands of dollars.
Senator Green commented that APOC reporting restrictions focus on
the funding sources, not necessarily what the funds are used for.
She shared that candidates are often "surprised by something that
happens out there that you know nothing about either pro or con,
where you think… do I have to take the hit for this contribution."
Co-Chair Kelly asked for clarification as to whether a person who
neglects to file the 15/5 report would be fined $500 a day
beginning on the thirty-first day after the contribution is made or
beginning the day the APOC notification is received.
Ms. Kempton clarified that current law specifies that anyone
contributing $500 to a campaign must report that contribution to
APOC within 30 days. She continued that if APOC finds that a $500
contribution has not been reported, APOC would notify the
contributor, and from that date on, the contributor would be fined
$50 a day until the filing is completed.
Co-Chair Kelly stated that Section 6 in this bill specifies the
non-filing penalty amount to be $500 a day.
Senator Therriault interjected that the $500 fine referred to in
line 14, Section 6 applies to a candidate or group.
Co-Chair Kelly asked if State statute specifies when a penalty
would begin to accrue.
Ms. Kempton stated that APOC has the authorization to levy lower
fines than those specified in regulation, with $500 being the
maximum per day fine. She reiterated that a fine would begin to
accrue after APOC notification is given.
Co-Chair Kelly stressed that statute should clearly define at which
point the levying of fines would begin to accrue. He asked the
sponsor if the addition of this language would be problematic.
Senator Therriault asserted the need to continue allowing APOC to
have the flexibility to adjust the level of fines according to the
circumstances.
Co-Chair Kelly assured that APOC's flexibility in determining the
amount of fines would not be affected by the addition of language
such as "delinquency continues after notification by APOC."
Ms. Kempton spoke to the need to clarify current regulations.
Senator Therriault suggested that the Senate Rules Committee might
need to address the addition of this language; however, there is
sufficient time to do that before the Legislative session adjourns.
Co-Chair Kelly recommended that penalty clarification be included
in this legislation.
Senator Leman asked whether anyone has ever been convicted of
campaign misconduct in the second degree, which is specified by
State statute as a class B misdemeanor.
Ms. Kempton stated she is not aware of any such conviction.
Senator Leman asked the penalty amount levied to someone convicted
of this offense.
Ms. Kempton responded that a $1,000 fine could be levied along with
jail sentencing of up to one year.
Senator Leman clarified this might be the penalty for neglecting to
include the language "paid for by" in an advertising message.
Ms. Kempton concurred.
Senator Leman asked if APOC has ever pursued this course of action
for this violation.
Ms. Kempton replied that APOC has not.
Co-Chair Kelly stated that although APOC has recommended against
this course of action, there have been instances in which the
Department of Law pursued people according to these statutes. He
opined that the penalty for not including "paid for by" in an
advertising message is "silly." He complimented APOC for its
discretion in invoking penalties on various APOC violations as some
of the laws "are absurd."
CHIP WAGONER informed the Committee that APOC had charged a pro-
life organization he represented of express advocacy violations for
distributing a postcard mailing during a local election. He stated
that the postcard had "merely presented information" stating that a
certain candidate "had as his campaign manager, the head of the
Juneau Pro-Choice Coalition." He stated the message did not
recommend nor encourage people "to vote for, vote against or
support or oppose" the candidate. He stated that even though the
organization was not fined; APOC held them to be in violation. He
stated that he "is not sure this bill is a vast improvement" as "a
bright line test" to further define express advocacy.
Mr. Wagoner suggested that Section 8, subsection 16 be expanded to
include language regarding "imparting of information, so that what
happened to his client does not happen to anyone else."
Senator Therriault stated APOC has acknowledged that the proposed
language in this legislation would assist in establishing some
definite "bright lines" in determining whether express advocacy or
the influencing of an election is occurring. He stated that both
APOC and the Alaska Court System support the establishment of "a
definite line."
Senator Wilken moved "to report Senate Bill 363 from Committee with
individual recommendations and attached fiscal notes."
There being no objections, CS SB 363 (STA) reported from Committee
with a new fiscal note dated May 6, 2002 in the amount of $5,000
from the Department of Administration, and a previous zero fiscal
note dated April 22, 2002 from the Division of Elections, Office of
the Lieutenant Governor.
SENATE CS FOR HOUSE BILL NO. 162(STA)
"An Act relating to absences from the state under the
longevity bonus program."
This was the first hearing for this bill in the Senate Finance
Committee.
JASON HOOLEY, Staff of Representative Fred Dyson, informed the
Committee that this legislation would extend a longevity program
participant's allowable absence from the State from the current 30-
consecutive days to 60 consecutive days, in addition to extending
the allowable unpaid sabbatical term from 90 days to three years.
He stated that the extension of these two program components would
lower the overall cost of the longevity program to the State.
ALISON ELGEE, Deputy Commissioner, Department of Administration,
stated that the Department's fiscal note addresses the two
extensions separately. She explained that extending allowable
absences from 30 days to 60 days would cost the program additional
money; however, extending the allowable unpaid sabbatical term to
three years would save money. She stated that the three-year
sabbatical would be applicable to such eligible longevity
participants as those who move to Arizona and realize it was a
"mistake" and move back, or those participants who wish to spend
extended time with family out of State. She stated this provision
would allow those individuals to return to the State and resume
their residency without jeopardizing their longevity bonus
eligibility. She stated that the three-year deadline provides the
Department with a "necessary end-point."
Ms. Elgee stated the Department projects that if ten percent of
current longevity bonus participants were out of the State an
additional month, as would be allowed under the extended unpaid
sabbatical plan, the State would save up to $435,000. She noted
significant interest has been expressed favoring this legislation
and she predicted that participants would take advantage of the
extensions.
Co-Chair Donley asked for clarification that, "people do not get
paid if they are out of State for any given month."
Ms. Elgee responded that currently, individuals would not receive a
monthly longevity check if they were out of the State for more than
30 days. She stated that this bill would increase the allowable
absence time from 30 days to 60 days.
Co-Chair Donley summarized that if this legislation becomes
effective, a participant who is out of the State for two months
would receive benefits for those two months, but would not receive
benefits during any time spent out of the State beyond two months.
Ms. Elgee agreed and clarified that their eligibility status would
be suspended after the initial 60 days.
Senator Austerman asked how long a person could be absent from the
State without losing their eligibility status.
Ms. Elgee responded that a person is currently allowed "to be
consecutively absent for up to 90 days at which point you would
need to return to the State for a least ten days" to retain your
eligibility. She continued that another 90 consecutive day
absenteeism period could occur; however, there is an absenteeism
limit of 180 days in a 12-month period. She explained that other
allowable absences could occur as a result of an approved medical
leave or sabbatical leave which would allow a person to be absent
from the State for up to a year within a given five-year period.
Senator Austerman asked whether there are any other exemptions.
Ms. Elgee voiced there are not; however, she would verify this as
the exemptions are identified in State regulations. She stated,
"that medical absences are the most common."
Senator Green affirmed that the sabbatical component of this
legislation provides significant savings for the longevity bonus
program; however, she mentioned that as the longevity "program
begins to wane," the overall expenses of the program lessen. She
referred the Committee to the saving projections detailed in the
Department's fiscal note.
Co-Chair Kelly asked the testifier the amount of the current total
program "payout."
Ms. Elgee responded that this year's program expenses amount to $50
million; however, expenses are being reduced $3 to $4 million a
year as the number of eligible participants decrease.
Senator Austerman asked whether the Department would be tracking
the two components of this bill, if enacted, to ensure that
projected savings are occurring.
Ms. Elgee responded that the Department tracks absences, therefore,
this information would be available.
Co-Chair Donley asked if the Department of Administration supports
this legislation.
Ms. Elgee replied that the Department has not taken a formal
position on the legislation; however, she noted that the Department
"does not oppose it." She mentioned that all current longevity
bonus recipients are over 70 years old, so "we think that as a
policy call, if the Legislature chooses to pass this legislation,
we think it's fine."
Senator Green offered a motion to move "House Bill 162, Version L,
from Committee with individual recommendations and accompanying
fiscal notes."
There being no objections, SCS for HB 162(STA) was REPORTED from
Committee with a new Department of Administration fiscal note dated
April 24, 2002 with a net savings of $146,700.
SENATE CS FOR CS FOR HOUSE BILL NO. 209(HES)
"An Act directing the Department of Health and Social Services
to establish a foster care transition program; relating to
that program; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Mr. Hooley informed the Committee that this legislation would allow
the Division of Family and Youth Services (DFYS) to access
available federal funds to provide a variety of services to youth
ages 16 to 21 "who are aging out" of the State's Foster Care
Program.
JOANNE GIBBENS, Program Administrator, Division of Family and Youth
Services, Department of Health and Social Services, informed the
Committee that the federal Foster Care Independence Act of 1999
includes a foster care program to assist in developing independent
living services for children "who are in State custody who would
probably not be finding a permanent home in terms of adoption or
guardianship," and who would likely be emancipated from care. She
stated that statutory authority would allow the State of Alaska to
expend a portion of $500,000 federal funds to provide additional
support for individuals over the age of 18 who had previously been
in the foster care system.
Senator Austerman asked the testifier whether matching funds are
required to receive these federal funds.
Ms. Gibbens responded that the 20 percent match requirement is
currently funded by the "grantees who are providing some of the in-
kind services" to the program.
Co-Chair Kelly clarified there is therefore no need to "find new
money" to meet the match requirement.
Ms. Gibbens concurred.
Senator Austerman asked how much of the current $500,000 federal
funding would be allocated to this program.
Ms. Gibbens replied that the amount would be determined by how many
eligible individuals would request this transitional assistance.
Senator Austerman stated that language in the Department of Health
and Social Services fiscal note specifies that the State shall
receive "no less than $500,000" from the federal government;
therefore, he asked how much federal funding is currently allocated
to the Foster Care program.
Ms. Gibbens clarified that the State is receiving $500,000 in
federal funds.
Senator Austerman clarified that the Foster Care program is not
currently able to use these federal money to provide services to
individuals who have transitioned out of the program.
Ms. Gibbens confirmed that is correct.
Senator Austerman offered a motion to report "HB 209 out of
Committee with individual recommendations and accompanying fiscal
note."
ANTHONY LOMBARDO, representative of Covenant House, testified via
teleconference from Anchorage, in support of this bill, as it is
"excellent for Alaska's youth."
There being no objections, SCS HB 209 (HES) was REPORTED from
Committee with zero fiscal note #2, dated February 8, 2002 from the
Department of Health and Social Services.
AT EASE 10:35 AM / 11:02 AM
SENATE BILL NO. 268
"An Act relating to the issuance of state-guaranteed revenue
bonds by the Alaska Housing Finance Corporation to finance
mortgages for qualifying veterans; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
JOHN BITNEY, Legislative Liaison, Alaska Housing Finance
Corporation (AHFC), Department of Revenue, stated that passage of
this bill would authorize an AHFC bond measure to be placed on the
next State general election ballot for a vote of the people to
authorize $500 million in veterans' mortgage revenue bonds. He
informed the Committee that Alaska is one of five states whose
veteran loan programs was granted a federal tax-exemption because
the program was established prior to a change in federal law
disallowing the exemption. He explained that the federal tax-
exemption status "requires that the bonds have a State guarantee
behind them;" and furthermore, Alaska's Constitution "requires a
vote of the people in order to have that State guarantee on that
debt."
Mr. Bitney assured the Committee that the bonds are structured in
such a manner "that revenues from the mortgages that they fund, go
to pay those bonds." He stressed that this program "has never cost
the State anything nor is it intended to;" however, getting voter
approval is "a formality required under the tax code to get that
tax-exemption on the bond."
Mr. Bitney informed the Committee that voters previously approved
AHFC veterans' bond propositions in 1982, 1983, 1984 and 1986 and
that the program provides funds for low-interest home loans to
qualified veterans. He stated that the federal veterans' loan
program defines qualified veterans as those "individuals who must
have entered active service prior to January 1, 1977 and not have
been discharged more than 30 years prior to the date of their loan
application," He stated that the number of individuals who qualify
for the veterans' loan program is diminishing as time progresses,
and that the program "should almost be non-existent" by the year
2006 or 2007, therefore, "this, in essence, would be the last time"
that AHFC would be requesting this kind of bond authorization,
pending any federal changes to the definition of a qualified
veteran.
SFC 02 # 89, Side B 11:07 AM
Senator Austerman asked for clarification that previous bond
packages amounts exceeded $2 billion, and this bond is seeking
authorization for an additional $500 million.
Mr. Bitney stated that is correct, and he detailed the amounts
distributed in the previous four voter authorizations. He stated
that the approximately $47 million currently remaining from the
1986 authorization is projected to be completely allocated by the
end of this year. He stated that the new bonds, if authorized,
would be allocated on an "as-needed basis."
Senator Austerman asked if the tax-exempt status of these bonds
reduces AHFC's bonding costs, and he asked how the bonds are
repaid.
Mr. Bitney explained that there is approximately a one-percent
difference in the taxable and tax-exempt rate; and he explained
that the rate for the veterans mortgage program is the same as that
of the tax-exempt rate for first-time homebuyer program as both are
tax-exempt interest rates. He stated that "the qualifier" for the
veterans program is the person's military service whereas other
tax-exempt programs instill qualifiers such things as income
limits.
Senator Austerman asked if the bonds "are actually paid back by the
veterans."
Mr. Bitney stated that is correct as the mortgages funded by the
bonds are structured in a manner where the loans are repaid to the
bonds.
Senator Austerman asked if these bonds have any effect on the
dividend that AHFC pays the State each year, which then funds other
State programs.
Mr. Bitney responded that this bond program would not affect that
dividend.
Senator Austerman stated that the annual dividend the State
receives from AHFC is the result of interest earnings generated
from various AHFC bond packages and loan programs. He asked if any
of the interest earned from the veterans loan program is
contributed to the State.
Mr. Bitney stated that the veterans loan program enhances AHFC's
"bottom line" by offering a program that attracts borrowers.
Senator Austerman asked if the veterans loan program "is a break-
even program on the pay-back of the bonds" or is there excess
interest earnings generated which could be contributed to the State
in the annual dividend.
Mr. Bitney stated that the veterans loan program is structured in
such a manner that the veterans' mortgages are paid directly to the
bond fund, and there are no "excess earnings, as the program is
prohibited from doing that." He stated, "all cost savings have to
be passed through to the borrower."
Co-Chair Kelly asked if the federal government contributes funding
assistance toward program administration expenses.
Mr. Bitney stated that AHFC does not receive federal administrative
assistance and that the program is administered along with other
AHFC programs "as a benefit to those who have served."
Senator Wilken commented that the State has "floated $2.2 billion"
in the past and is now being asked, "to float another $500 million
in what amounts to collateral against the federal loans." He stated
that the State's involvement is limited to providing "the full
faith and credit of Alaskans to back those bonds" if something
happens at the federal level.
Mr. Bitney concurred with Senator Wilken' remarks; however,
clarified that AHFC makes the loans and the State would need to
"back the bonds if AHFC falters."
Senator Wilken voiced concern that this bond package might be one
of several bonding issues listed on the general election ballot. He
asked what would occur if this bond-vote were delayed.
Mr. Bitney responded that there would be no funds available for the
veterans' home loan program and therefore, the program would need
to be suspended.
Senator Leman asked if the printing costs of including this bond
measure on the general election ballot would be absorbed by AHFC or
whether they would be an eligible to be covered as administration
expenses under federal guidelines.
Mr. Bitney clarified that the $22,000 printing expense specified in
the Division of Elections fiscal note would be the cost of
conducting the vote in conjunction with the general election.
Senator Leman stated that the fiscal note should specify who is
responsible for the printing costs of the ballot.
Mr. Bitney clarified that historically, if the bond measure is part
of the general election ballot, the costs are assumed by the
Division of Elections. He informed the Committee that one bond
authorization was voted on in a "stand-alone" special election, and
that AHFC assisted with the cost of conducting that election.
Amendment #1: This amendment deletes "the first general" and
inserts "a special election to be held on the date of the first
primary" in Section 4, page 2, on line 24, and on line 25 of that
same section, deletes "and" and inserts, "The special election
shall be held in substantial compliance with the election laws of
the state, including absentee voting and preparation, publication,
and mailing of an election pamphlet under AS 15.58. The election
pamphlet must comply with AS 15.58.020(7). The question placed
before the qualified voters of the state at the special election".
The ballot language would read as follows.
BALLOT QUESTION. The question of the state guarantee of bonds
referred to in this Act shall be submitted to the qualified
voters of the state at a special election to be held on the
date of the first primary after the effective date of this
Act. The special election shall be held in substantial
compliance with the election laws of the state, including
absentee voting and preparation, publication, and mailing of
an election pamphlet under AS 15.58. The election pamphlet
must comply with AS 15.58.020(7). The question placed before
the qualified voters of the state at the special election"
shall read substantially as follows:
Senator Leman moved for adoption of Amendment #1
Co-Chair Kelly objected for discussion.
Senator Leman explained that this amendment would remove the
veterans bond authorization ballot question from the November 5,
2002 general election, and instead, have it correspond with the
next primary election.
Co-Chair Kelly informed the Committee that this election date
change is suggested in a letter [copy on file] dated May 1, 2002 to
Dan Fauske, CEO/Executive Director of AHFC from Wohlforth, Vassar,
Johnson & Vrecht, Attorneys at Law.
Senator Wilken stated that the letter appears to suggest that if
the election date were changed, "extraordinary precautions" should
be taken because it would affect general voter interest as opposed
to the interest generated by a general election.
Co-Chair Kelly stated that the amendment would be TABLED and the
bill would be HELD in Committee.
RECESS TO CALL OF CHAIR 11:21 AM / 6:19 PM
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 06:19 PM.
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