Legislature(2003 - 2004)
04/09/2003 09:05 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
April 09, 2003
9:05 AM
TAPES
SFC-03 # 43, Side A
SFC 03 # 43, Side B
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:05 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Ben Stevens
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: LANDA BAILY, Special Assistant to the Commissioner,
Department of Revenue; JOHN MACKINNON, Deputy Commissioner of
Highways & Public Facilities, Department of Transportation and
Public Facilities; JOEL GILBERTSON, Commissioner, Department of
Health and Social Services; EDGAR BLATCHFORD, Commissioner,
Department of Community and Economic Development; TOM LAWSON,
Director, Division of Administrative Services, Department of
Community and Economic Development; RICHARD SCHMITZ, Staff to
Senator John Cowdery
Attending via Teleconference: From Anchorage: MARC MARLOW, Alaska
Enfranchise Facilities, Inc.; SUSANNE DIPEITRO, Co-President,
Government Hill Community Council
SUMMARY INFORMATION
SB 106-FEE FOR STUDDED TIRES
The Committee adopted a committee substitute and heard testimony
from the Department of Revenue and the Department of Transportation
and Public Facilities. The bill reported from Committee.
SB 105-MEDICAID: CHILDREN/PREGNANT WOMEN/FACILITY
The Committee heard from the Department of Health and Social
Services and reported the bill from Committee.
SB 173-SCIENCE & TECH FOUNDATION/BIDCO/INT.TRADE
The Committee heard from the Department of Community and Economic
Development and held the bill in Committee.
SB 153-LONG-TERM LEASES OF ALASKA RR LAND
The Committee heard from the sponsor, took public testimony, and
held the bill in Committee.
CS FOR SENATE BILL NO. 106(TRA)
"An Act relating to studded tires; and providing for an
effective date."
This was the third hearing for this bill in the Senate Finance
Committee.
Co-Chair Green moved to adopt CS HB 106, Version 23-GS1127\V, as
the working draft.
There being no objection, the committee substitute was adopted as
the working draft.
Co-Chair Wilken explained that the Version "V" committee substitute
incorporates the word "new" into the language on page 1, line 8, of
Section 2, as follows.
Sec. 43.98/025. Tire fees. (a) A fee of $2.50 a tire is
imposed on the retail sale of new tires for motor vehicles
designated for use on a highway.
Co-chair Wilken noted that additional language is incorporated on
page 2, lines 14 through 19, as follows.
(g) The fees imposed in this section do not apply to the
following tires and [or] services if the purchaser provides
the seller with a certificate of use on a form prescribed by
the Department:
(1) tires or services sold to federal, state, or local
government agencies for official use; or
(2) tires for resale.
Senator Bunde asked for further clarification regarding the tire
for resale process, as he understands this language to apply to the
sale of used tires rather than to a store purchasing tires from a
distributor for resale.
Co-Chair Wilken detailed a situation wherein an individual would
purchase tires for their vehicle from a service station that the
service station had purchased from, for example, a Sears store. He
stated that the intent of this language is to clarify that the tire
tax would be charged exclusively to the customer at the service
station rather than to the service station purchasing the tires
from the Sears store.
LANDA BAILY, Special Assistant to the Commissioner, Department of
Revenue, concurred.
Co-Chair Wilken and Ms. Baily established for Senator Bunde's
benefit that the tax would be implemented at the point of retail
sale rather than at the wholesale level to avoid an inflation of
the original purchase price.
Senator Hoffman commented that the original intent of this bill, as
introduced by Governor Frank Murkowski, was to levy a tax on
studded tires to offset "the extensive damage" they inflict to
"paved highways." He asked for verification that studded tires do
create damage.
JOHN MACKINNON, Deputy Commissioner of Highways & Public
Facilities, Department of Transportation and Public Facilities
responded that the Department "conservatively" estimates that
studded tires are responsible for approximately $5 million of
damage to roadways annually due to "excessive wear that the studs
cause."
Senator Hoffman voiced that were this the logic for implementing a
tax on studded tires then it should be noted that of the seventy
communities in District S that he represents, less than ten have
paved highways. He voiced the understanding that the intent of the
tax would be to recoup "the tremendous" expense incurred annually
to repair studded tire damage to the State's paved roadways.
Therefore, he contended, while the bill is well intended, it should
not be a broad tax unless the intent is for "general maintenance."
Mr. Mackinnon agreed that the original intent of the bill was to
specifically offset road damage caused by studded tires; however,
he continued, "it has evolved" to include general maintenance for
the State's paved roads.
Senator Hoffman declared that while it may have evolved, the
original intent of the bill was valid. He supported "the concept of
the people who benefit from a service" should pay the costs of
providing that service and, in addition, "the people who cause the
damage should pay", and he noted that the Legislature has been
addressing these situations through cost-saving measure discussions
and legislation. He contended that State road maintenance in rural
areas of the State is oftentimes "non-existent," and he furthered
that some rural areas do not even require their residents to
acquire a driver's license. He stated that "this tax is very, very
broad and that residents in rural Alaska end up paying for"
services they might not receive from the Department, or "where the
State has little presence and if they do have presence, it is for
aviation."
Mr. Mackinnon acknowledged Senator Hoffman's comments; however, he
pointed out that although road maintenance might not be provided in
some rural areas, Department personnel or Department contracted
personnel maintain rural airfields.
Senator Hoffman concurred but stressed that studded tires do not
incur any damage to State roads or to the airports in those areas.
Mr. MacKinnon agreed.
Co-Chair Wilken asked the amount of money the State spends for
rural airport maintenance.
Mr. MacKinnon replied that he did not have that information, but
could provide it.
Senator Bunde asserted that this version of the bill applies a tax
on all tires, and "is an opportunity for all Alaskans to contribute
money to the general fund to assist in paying for all the benefits
they receive."
Co-Chair Green moved to report CS SB 106 (FIN) from Committee with
individual recommendations and accompanying fiscal note.
There being no objection, CS SB 106 (FIN) REPORTED from Committee
with a new $72,200 fiscal note, dated April 8, 2003, from the
Department of Revenue.
CS FOR SENATE BILL NO. 105(HES)
"An Act relating to eligibility requirements for medical
assistance for certain children, pregnant women, and persons
in a medical or intermediate care facility; and providing for
an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-chair Wilken informed that this bill would amend "the
eligibility income levels for Denali KidCare and Medicaid under the
special income limits for nursing homes and home and community
based waiver services."
JOEL GILBERTSON, Commissioner, Department of Health and Social
Services, explained that this bill was introduced by Governor Frank
Murkowski and was subsequently amended by the Senate Health,
Education & Social Services (HES) Committee. He stated that the
Governor's bill specified that the eligibility income levels for
the Denali KidCare program and pregnant women "would be frozen" at
the federal maximum allowable poverty level of 200 percent, and at
300 percent of the special income standards for individuals in
long-term care under the Medicaid program and for individuals
receiving home and community based waiver services.
Commissioner Gilbertson continued that the HES version of the bill
amends these levels to 175 percent of poverty levels for the Denali
KidCare program and pregnant women program, and he noted that a new
negative $7,151,300 fiscal note, dated April 8, 2003 from the
Department of Health and Social Services accompanies the HES
version of the bill. He stated that the poverty level specified in
the HES version of the bill would eliminate an additional 1,200
individuals from the Title 21 Denali KidCare and pregnant women
programs above the number specified in the Governor's bill. He
stated that some of the impact "is buffered" by provisions
specifying that pregnant women and children in the Denali KidCare
program who establish eligibility by June 30, 2003 would continue
to be provided coverage for nine months and six months,
respectively, under existing eligibility rules.
Commissioner Gilbertson stated that the Governor continues to
support the bill at the 200 percent of poverty level for children
in the Denali KidCare program and pregnant women and 300 percent
for individuals needing long-term care.
Co-Chair Green asked whether Alaska's poverty calculation receives
additional adjustments at the federal level.
Commissioner Gilbertson explained that the State currently
specifies the eligibility level for the Denali KidCare and pregnant
women program at 200 percent of the federal poverty level, which he
noted, is adjusted and inflation-proofed annually. Furthermore, he
declared, the federal government awards the State of Alaska an
additional inflation factor of 25 percent. Therefore, he clarified;
the State's established poverty level for these programs is 200
percent above the national poverty level calculated for Alaska.
Additionally, he pointed out that individuals in the programs are
held harmless for their permanent fund dividends (PFDs). He
qualified that "the income standards are uniquely adjusted for the
Alaska situation" in terms of the federal calculated poverty level
and "the hold harmless clause" for the PFDs.
Commissioner Gilbertson reiterated that the Governor continues to
support the levels specified in the original bill as opposed to the
HES version's amended levels.
Co-Chair Green calculated that the State's poverty level for these
programs "is 250 percent above" the normed federal poverty level.
Commissioner Gilbertson stated that when comparing Alaska's poverty
level standards to the national standard poverty level for the
"Lower 48," that is correct.
Co-Chair Green asked whether additional adjustments result from a
State-conducted asset test regarding the Denali KidCare program.
Commissioner Gilbertson clarified that the State does not conduct
an asset test for the Denali KidCare program.
Co-Chair Green noted therefore "it is a fairly short window of an
income level at a certain level that qualifies a person for this
program."
Commissioner Gilbertson responded yes.
Co-Chair Green specified that the program recipients "could either
be uninsured or underinsured."
Commissioner Gilbertson concurred.
Senator Hoffman declared that this bill reduces health care to
pregnant women, children, and the disabled to save less than
$300,000 in general funds. He noted that other cost saving options
must be available "that have less impact" on those in need. He
asked for confirmation that the Administration supports these cuts
that would affect approximately 800 individuals to save this level
of funding.
Commissioner Gilbertson responded that, were the Governor's bill
adopted, approximately 800 people would be affected. However, he
clarified that the HES version, which is before the Committee,
would narrow the program further. He clarified that the savings
resulting from the Senate HES version would be $7.2 million.
Commissioner Gilbertson informed the Committee that this bill is an
effort by the Administration to contain "the rapid escalation of
growth of our program, 40 percent growth in the last five years" of
these three Medicaid programs. He advised that to strengthen the
program and ensure continuing Medicaid benefits "for low income
beneficiaries, …. this is the size of a Medicaid program that the
we can support in terms of the number of eligible individuals." He
stated that the State currently has the highest income standards
allowed under federal law, and that the Governor's bill "would lock
in" those standards.
Commissioner Gilbertson continued that rather than being a
statement that this reduction would have "no impact," the State
"has undergone exponential growth in our Medicaid program," and in
order to continue the program, "some of the optional categories"
must be addressed. He continued that the State must acknowledge
that it "has reached a capacity where further growth in those
programs will threaten the viability of the program itself and
threaten the ability of the State itself to fund the core services
that are covered for individuals currently enrolled in the
program." He stated that the poverty levels in the Governor's bill
would not jeopardize those individuals currently in the program
provided they not experience an increase in their income level, but
would allow for a downsizing of the program over time. He stated
that the Senate HES committee version "would roll back the
standards," and consequently incur a larger reduction. He stated
that the bill recognizes that there are benefits to the
continuation of these types of programs such as reducing the amount
of low birth rate babies and providing insurance coverage for
pregnant women, children and the disabled; however the costs of
these programs "coupled together" is leading to a situation wherein
the ability of the State "to pay for good services and have good
reimbursement rates for those individuals who are currently
covered" is being threatened.
Senator Hoffman expressed that while this bill might produce short-
term savings, the long-term costs might increase.
Commissioner Gilbertson acknowledged that there are savings
resulting from providing State funded insurance coverage although
other health care options, such as community health centers, "3-30
grants and clinics," uncompensated care awards, volunteer services
by providers, and other insurance coverage might be available. He
acknowledged that the State does "have a problem with individuals
being uninsured or underinsured." However, he continued, as the
programs continue to experience growth and "the State's income
standards rise to the point where we see individuals that are
moving into higher income brackets being eligible for State
programs," the State might not have the resources "to provide its
match so we can have a good reimbursement rate for low income
individuals and provide needed services."
Senator Hoffman acknowledged this, but asked whether the fiscal
note's projected program savings or other State programs would be
negatively affected by not providing these services to the three
identified groups.
Commissioner Gilbertson clarified that the HES committee
substitute, rather than the Governor's version of the bill, would
affect program eligibility standards. He stated that the HES
committee substitute is projected to produce $7.1 million in
savings, and he continued, research does not indicate additional
demand would be placed on other services the Department provides.
He stated that pregnant women currently in the program would
continue to receive care. He acknowledged that prenatal care has
positive results in terms of health care dollars spent and that it
is unknown what health care options future pregnant women could
receive, but "it is expected that they would still receive care."
Senator Hoffman voiced that the long-term costs of the HES version
of the bill would outweigh the short-term savings.
Commissioner Gilbertson stated that the Administration agrees that
savings do occur from providing health care to children and
pregnant women, and that is the reason the Governor's bill proposes
to "lock in" the current standards.
Senator Hoffman asked whether the Department supports the HES
amended standards.
Commissioner Gilbertson expressed that the Governor's
administration does not support the HES committee substitute.
Senator Hoffman voiced support of the Governor's version of the
bill.
Co-Chair Wilken asked for clarification that 150 percent of the
federal poverty level is the minimum level the State could
authorize, as referenced in the "2003 Federal Poverty Guidelines
for Alaska" [copy on file] chart provided by the Department.
Commissioner Gilbertson responded, that in order "to access the
federal enhanced match rate," the State must establish a minimum
150 percent of federal poverty level standard. He shared that the
enhanced match rate increases the federal match contribution for
the Denali KidCare program from 60 percent to 71 percent.
Co-Chair Wilken asked for confirmation that the income figures in
the chart do not include the permanent fund dividend.
Commissioner Gilbertson replied that is correct.
Senator B. Stevens asked whether the information in the chart
includes the 25 percent Cost of Living Allowance (COLA).
Commissioner Gilbertson responded that it does.
Co-Chair Wilken noted that 1,200 individuals "would lose services."
He asked the Department to provide detailed information as to who
would be affected.
Commissioner Gilbertson responded that this information is included
on page two of the HES fiscal note. He noted that both the HES and
Governor's version of the bill maintain the 300 percent of the
special income standard for individuals requiring long-term care or
home or community based waiver services. He stated that the
Governor's 200 percent of federal poverty standard would reflect a
net decease of 61 cases in the Denali KidCare program in 2004,
whereas the HES version would incur a net decrease of 1,213 cases.
Co-Chair Wilken asked the deadline for individuals to qualify under
the existing standards.
Commissioner Gilbertson responded that it is June 30, 2003.
Co-Chair Wilken asked the total number of individuals in the
affected programs.
Commissioner Gilbertson responded that the total number of
individuals in the program would be supplied. He estimated that
approximately 26,000 children are in the Denali KidCare program;
therefore, he calculated that approximately four percent of the
children in the program would be affected.
Co-Chair Wilken asked the Department to provide the total number of
individuals in the programs as well as information regarding other
health care options.
Senator Hoffman questioned the percentage calculation of those
being affected by changes in the Denali KidCare program.
Co-Chair Wilken asked the Department to confirm the percentage of
program participants who would be affected.
Co-Chair Green moved to report CS SB 105 (HES) from Committee with
individual recommendations and accompanying fiscal note.
Senator Hoffman objected.
A roll call was taken on the motion.
IN FAVOR: Senator Bunde, Senator B. Stevens, Co-chair Green, and
Co-chair Wilken
OPPOSED: Senator Hoffman, Senator Olson
ABSENT: Senator Taylor
The motion PASSED (4-2-1)
CS SB 105(HES) was REPORTED from Committee with a new negative
$7,151,300 fiscal note, dated April 8, 2003 from the Department of
Health and Social Services.
SENATE BILL NO. 173
"An Act repealing statutes pertaining to the Alaska Science
and Technology Foundation and transferring money in the
foundation's endowment; repealing statutes relating to the
BIDCO assistance program; repealing statutes pertaining to the
international trade and business endowment and transferring
money in the international trade and business endowment;
transferring oversight administration of outstanding Alaska
Science and Technology Foundation loans and grants to the
Alaska Industrial Development and Export Authority;
establishing an Alaska BIDCO assistance program to be
administered by the Department of Community and Economic
Development; making conforming amendments; and providing for
an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-chair Wilken explained that this bill, which is requested by the
Governor, would repeal the statutes relating to the Alaska Science
and Technology Foundation (ASTF) and its programs. He specified
that the BIDCO (Business and Industrial Development Corporation)
assistance program would be replaced with a program within the
Department of Community and Economic Development, and that
oversight of the former ASTF program would be transferred to the
Alaska Industrial Development & Export Authority (AIDEA).
EDGAR BLATCHFORD, Commissioner, Department of Community and
Economic Development read the language included in the title of the
bill. He then read a portion of the Department overview titled "The
Alaska Science and Technology Foundation," [copy on file], dated
March 25, 2003 as follows.
ASFT was created in 1988 with an endowment of more than $100
million to support grants for technology projects, knowledge
projects, small business innovative research bridging grants,
and direct grants to teachers. Through its endowment, ASTF has
generated about $126 million in income for distribution. Between
1988 and 2002, one half of the endowment income - $63 million -
has been appropriated and spent for "non-ASTF purposes":
· $35 million for University of Alaska operations, Alaska
Aerospace Development (AADC) Corporation operations, and
International Trade and Development office operations;
· $11 million was used to match federal funding for
construction of the AADC's $39 million Kodiak Rocket Launch
Center; and
· $17 million was appropriated to the state general fund.
Distributions to support core programs totaled: $25 million in
technology grants, $10 million for other knowledge grants; $8
million for business partners, and $2 million in grants to math
and science teachers. Foundation operating expenses totaled $13
million, equal to 35% of the $45 million spent for core purpose
grants.
In mid-March the Legislature passed and the Governor signed into
law a supplemental appropriation reducing ASTF FY 2003
operations to amounts spent and obligated to date and included
th
instruction to ASTF to wind down operations by May 15. The
Governor's FY 2004 budget supports the Legislative directive -
no funding is provided for ASTF.
Commissioner Blatchford informed the Members that due to serving on
a Native tribal council, which has applied for ASTF grants, he
wished to declare a potential conflict of interest on this matter.
Senator Stevens asked the identity of the business partners who
received the $8 million.
TOM LAWSON, Director, Division of Administrative Services,
Department of Community and Economic Development, specified that
the partners include the BIDCO entities of: the Alaska Growth
Capital; Alaska Manufacturer's Association; Alaska InvestNet; and
the Alaska Hi-Tech Business Council. He stated that the money was
allotted to those entities to allow them to operate various
functions.
Co-Chair Wilken asked for information regarding language in Section
5 (1) on page 2, line 15 of the bill that reads as follows.
(1) administering the Alaska BIDCO assistance program related
to loans and other financial assistance made or provided under
AS 37.17.500 - 37.17.690;
Mr. Lawson responded that the intent of this language is "to
replicate the BIDCO program" in the Department of Community and
Economic Development rather than in ASTF. He asserted that while
the "shell of the program" is being transferred, there is no
accompanying request for funding. He stated that further
information regarding the language would be supplied.
Co-chair Wilken asked that information regarding Alaska statute AS
37.17.500 be supplied to the Committee, as it is frequently
referenced in the bill.
Co-Chair Wilken ordered the bill HELD in Committee.
SENATE BILL NO. 153
"An Act authorizing a long-term lease of certain Alaska
Railroad Corporation land at Anchorage; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this legislation "would allow the
Alaska Railroad to lease certain corporation land in Anchorage for
a period in excess of 55 years without reserving the right to
terminate the lease."
RICHARD SCHMITZ, Staff to Senator John Cowdery, explained that the
purpose of this legislation is to allow Alaska Enfranchise
Facilities, Inc to build a multi-family, senior housing project on
leased Alaska Railroad land on Government Hill in Anchorage,
utilizing a federal Housing and Urban Development (HUD), Section 2,
grant. He continued that "the way the law now reads, the Alaska
Railroad can approve leases in excess of 55 years; however, the
railroad must reserve the right to terminate the leases in the
event the land is needed for railroad purposes." However, he
continued, recently enacted federal regulations require a minimum
75-year lease, and in order to accommodate this grant's timeline
requirement, this bill seeks to remove the termination clause from
the lease agreement. He noted that State statute allows the Alaska
Railroad to request this language exemption as exampled by previous
legislation, CS HB 344(FIN) [copy on file].
Mr. Schmitz noted that Alaska Enfranchise Facilities, Inc. has
received a 55-year lease, but requires this legislation to
accommodate the federal grant provisions.
SFC 03 # 43, Side B 09:52 AM
MARC MARLOW, Alaska Enfranchise Facilities, Inc., testified via
teleconference from Anchorage to explain that Alaska Enfranchise
Facilities, Inc (AEF) is a 501-C3 non-profit entity, which proposes
to construct senior housing on the property it is leasing from the
Alaska Railroad. However, he continued, in order to qualify for two
federal grants to fund the project, a 75-year lease must be in
place.
SUSANNE DIPEITRO, Co-President, Government Hill Community Council
(GHCC), testified via teleconference from Anchorage to voice
concerns regarding this lease. She informed the Committee that two
entities were interested in leasing the land and applying for the
HUD grants; and, she opined, Mr. Marlow signed the lease paperwork
with the knowledge that the 55-year lease did not qualify for the
HUD grant. Now, she continued, after eliminating "the competitive
process," he is "asking for you to essentially change the terms of
the lease," so that he can qualify for money that the other
applicant does not have the benefit of."
Ms. DiPeitro continued that the GHSS would like to participate in
the discussion regarding what is constructed on the site. She
continued that she has furthered this request with Mr. Marlow, and
she voiced that "an understanding" about this communication could
be possible; however, she stated, the Community Council is on
record in opposition to this legislation.
Co-chair Wilken noted that the Committee has a letter [copy on
file] from the GHSS, dated March 21, 2003, stating its position. He
specified that the information supplied by Alaska Enfranchise
Facilities, Inc. titled "Providing safe, Clean and affordable
Housing for Alaskan Seniors" [copy on file] has also been received.
Co-Chair Green asked Mr. Marlow for information regarding other
legislation that he has previously submitted to the Legislature.
Mr. Marlow responded that he was involved in legislation "to amend
Alaska Statute 45 that would have allowed municipalities to extend
property tax relief to projects that would provide for facilitating
urban redevelopment."
Co-Chair Green asked the name of the building that legislation
involved.
Mr. Marlow identified the building as the McKay Building in
downtown Anchorage.
Co-Chair Green asked whether the previous request involved more
than one piece of legislation.
Mr. Marlow stated that the bill was introduced in one Legislative
session, but was not acted upon. Therefore, he continued, it was
re-introduced the following session.
Co-Chair Wilken ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 09:58 AM
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