Legislature(2017 - 2018)SENATE FINANCE 532
04/25/2018 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB306 | |
| HB47 | |
| HB217 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 306 | TELECONFERENCED | |
| + | HB 47 | TELECONFERENCED | |
| + | HB 217 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
April 25, 2018
9:29 a.m.
9:29:22 AM
CALL TO ORDER
Co-Chair MacKinnon called the Senate Finance Committee
meeting to order at 9:29 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Anna MacKinnon, Co-Chair
Senator Click Bishop, Vice-Chair
Senator Peter Micciche
Senator Donny Olson
Senator Gary Stevens
Senator Natasha von Imhof
MEMBERS ABSENT
None
ALSO PRESENT
Leslie Ridle, Commissioner, Department of Administration;
Kathy Lea, Chief Pension Officer, Department of
Administration; Representative Neal Foster, Sponsor; Paul
LaBolle, Staff, Representative Neal Foster; Kathie
Wasserman, Executive Director, Alaska Municipal League;
Representative Geran Tarr, Sponsor; Diana Rhodes, Staff,
Representative Geran Tarr.
PRESENT VIA TELECONFERENCE
Rob Johnson, Chair, Alaska Retirement Management Board,
Anchorage; John Korta, Mayor, City of Galena, Galena; Amy
Seitz, Alaska Farm Bureau, Soldotna.
SUMMARY
HB 47 MUNICIPAL PERS CONTRIBUTIONS/INTEREST
HB 47 was HEARD and HELD in committee for further
consideration.
HB 217 LOCAL FOOD GOV PROCUREMENT; FARM TOURS
CSHB 217(FIN) was HEARD and HELD in committee for
further consideration.
CSHB 306(FIN)
PERS/TERS DISTRIBUTIONS
CSHB 306(FIN) was HEARD and HELD in committee for
further consideration.
CS FOR HOUSE BILL NO. 306(FIN)
"An Act relating to disbursement options under the
Public Employees' Retirement System of Alaska and the
Teachers' Retirement System of Alaska for participants
in the defined contribution plan; and providing for an
effective date."
9:30:22 AM
LESLIE RIDLE, COMMISSIONER, DEPARTMENT OF ADMINISTRATION,
conveyed that the Alaska Retirement Management (ARM) Board
asked the administration to introduce the bill. She
explained that the Defined Contribution Committee of the
ARM board worked to assure that anyone under the defined
contribution plan could retire with a good pension. She
stated that currently, all the products that a retiree
could receive through the defined contribution plan were
not listed in statute. She lamented that this limited
flexibility of what could be offered to retirees that would
allow for a lasting pension and secure financial future in
retirement. She said that those with supplemental benefits
system benefits as well as deferred compensation benefits
had retirement options that were written into regualtion
and were flexible in their product offerings. The ARM board
had asked for a bill that would allow for products to be
offered through regulation for those under the defined
contribution plan. She shared that the change would not be
of cost to the state and there would be no actuarial change
in the plan.
9:33:28 AM
Co-Chair MacKinnon asked whether it had been written into
the bill that there would be no cost to the state for the
plan.
KATHY LEA, CHIEF PENSION OFFICER, DEPARTMENT OF
ADMINISTRATION, replied that it was not in the bill
specifically, but within the plan itself, all the
disbursement options were up to the participant. She
related that any cost associated with the participant's
choices would be borne by the participant.
Co-Chair MacKinnon asked whether the administration would
oppose language that stipulated that the change in statute
would not be of cost to the state.
Ms. Lea responded that the administration would not oppose
such language.
9:34:47 AM
Senator Micciche asked for examples of payment choices that
would be different from what currently existed.
Ms. Lea detailed that current options included a lump sum
payment, a bi-annual lump sum payment, or an annuity
payment that was designed in the 1980s. She relayed that
new products under review by the ARM board included a
qualified lifetime annuity contract, which would allow for
a deferred portion of up to $125 thousand to be paid when
the retiree was 80 years old. This was a method to hedge
against longevity risk. She related that a guaranteed
lifetime withdrawal option would allow a participant to
ensure their balance; at the time the participant retired,
the highest balance they had in the plan during the time
they had been in that option, would be what their monthly
payment was based on. She added that if after retirement
the account balance grew, they would get the benefit of the
higher amount and would be protected against market cycling
risk.
9:36:27 AM
Vice-Chair Bishop considered that the bill offered options
for guaranteed lifetime income.
Ms. Lea answered in the affirmative.
Vice-Chair Bishop stated he supported the defined benefit
option. He thought if the bill became law, it would give an
individual an option to have guaranteed benefit.
Ms. Lea stated that some of the choices could mimic a
defined benefit option.
9:37:37 AM
Senator von Imhof referenced her experience in finance and
understood the products. She referenced Vice-Chair Bishop's
comments and agreed that a product could mimic the defined
benefit option but cautioned that investment cycles could
vary to a degree that it could risk a person outliving
funds. She referenced page 2, line 11 of the bill, which
provided options for people that fit their specific life
needs but felt discomfort with the suggestion that a plan
could be designed that would provide a person benefits for
the rest of their lifetime.
9:39:25 AM
Senator Micciche wanted to clarify the intent of the bill.
He stated that the bill allowed for products to be offered
in regulation. He stressed that the bill provided the
ability to list products available to retirees in
regualtion.
Commissioner Ridle agreed. She added that the bill mimicked
what was currently done with the supplemental benefit
system and deferred compensation; when a person retired,
they had different options in regualtion for those plans.
9:40:29 AM
Vice-Chair Bishop surmised that the bill would provide an
additional tool for an employee participating in the state
retirement plan.
Ms. Ridle answered in the affirmative.
Senator Stevens stated that many individuals had retired
under the defined contribution plan and could not go back
and renegotiate their retirement benefits under any new
extended benefit plan.
Ms. Lea stated that if an individual had removed their
contributions from the plan, it would not be possible to
renegotiate; however, if an individual's contributions were
still in the plan, depending on the type of option the ARM
board chose, they could be able to take advantage of the
new options.
9:41:51 AM
Ms. Lea addressed the Sectional Analysis (copy on file):
Section 1: Amends AS 14.25.420(a) to allow for
distribution options for participants in the Teachers'
Retirement System (TRS) defined contribution plan to
be authorized by regulation.
Section 2: Amends AS 39.35.820(a) to allow for
distribution options for participants in the Public
Employees' Retirement System (PERS) defined
contribution plan to be authorized by regulation.
Section 3: Adds section to the uncodified law to allow
the Department of Administration to adopt regulations
as necessary to implement this legislation.
Section 4: Establishes an immediate effective date.
9:43:00 AM
Co-Chair MacKinnon asked whether the choosing of an
immediate effective date would change the actuarial
assumptions for any of the plans.
Ms. Lea answered in the negative and reiterated that all
the costs were borne by the participants; there would be no
impact to the plan.
Co-Chair MacKinnon asked whether there was a reason that a
fiscal year was not chosen for implementation.
Ms. Lea stated that the immediate effective date was chosen
based on the deliberation schedule of the ARM board on what
type of options could be chosen and whether the current
options could be expanded. She added that regulations to
add new options would not occur until the ARM board had
gone through deliberations, had public hearings, and made
decisions on which new options to provide.
9:44:11 AM
Vice-Chair Bishop commented that even without knowing about
the potential products, he considered that the change could
help with employee retention.
Co-Chair MacKinnon directed attention to the fiscal note.
Vice-Chair Bishop addressed FN 2 from the Department of
Administration, OMB Component 64. The fiscal note carried
zero fiscal impact. He read from the analysis:
This change will allow more flexibility to the Plan
Administrator, with adoption by the Alaska Retirement
Management Board, to add new options as they become
available and are of benefit to participants. Future
disbursement options will go through the regulatory
process with public notice to all stakeholders and
interested parties.
This legislation will have no actuarial impact to the
TRS or PERS since any costs incurred when electing a
distribution option is borne by the participant.
Therefore, the agency submits a zero-fiscal note.
9:45:49 AM
Co-Chair MacKinnon OPENED public testimony.
9:46:21 AM
ROB JOHNSON, CHAIR, ALASKA RETIREMENT MANAGEMENT BOARD,
ANCHORAGE (via teleconference), thought that Vice-Chair
Bishop had summarized the intent of the bill. He thought
the bill would provide more tools and options for retirees.
He pointed out that the bill would have no additional costs
to the state. He noted that the ARM board had unanimously
supported the expansion of options as outlined in the bill.
Co-Chair MacKinnon reiterated her question concerning the
immediate effective date.
Mr. Johnson understood that the immediate effective date
would not have an immediate effect. He explained that the
effective date would allow for the process to begin
immediately.
CSHB 306(FIN) was HEARD and HELD in committee for further
consideration.
Co-Chair MacKinnon advised that proposed amendments were
due the following day at noon.
9:49:16 AM
HOUSE BILL NO. 47
"An Act requiring certain municipalities with a
population that decreased by more than 25 percent
between 2000 and 2010 that participate in the defined
benefit retirement plan of the Public Employees'
Retirement System of Alaska to contribute to the
system an amount calculated by applying a rate of 22
percent of the total of all base salaries paid by the
municipality to employees of the municipality who are
active members of the system during a payroll period;
authorizing the administrator of the defined benefit
retirement plan of the Public Employees' Retirement
System of Alaska to reduce the rate of interest
payable by certain municipalities that are delinquent
in transmitting employee and employer contributions to
the retirement plan; and providing for an effective
date."
9:49:16 AM
Co-Chair MacKinnon offered a brief history of the bill in
committee.
REPRESENTATIVE NEAL FOSTER, SPONSOR, stated that the bill
would provide relief for communities that paid into the
PERS system and had lost more than 25 percent of its
population since the last census. He said that the relief
would be provided by resetting the minimum payments for the
2008 salary levels to the 2012 salary levels. He used the
example of Galena, which had lost 30 percent of its
population, reflected in the last census, due to the
closure of the Air Force base. He shared that
municipalities had to pay into the PERS system based on one
of two alternatives: an amount based on their current
salary level or an amount based on what their salary level
was in 2008, referred to as the 2008 salary floor. The
floor was established when the legislature polled municipal
PERS systems in 2008 and existed under the rationale that
local governments usually grew rather than shrinking. He
explained that the problem in Galena had been that the
salary level had shrunk from $1.5 million in 2008 to
$770,000 in 2012. According to the PERS system, Galena
still had to make contributions into the PES system as if
it had a $1.5 million workforce. He lamented that Galena
did not have the resources to pay into the retirement
system for workers that they did not have and could
continue to let their PERS bill grow or close their city
office. He hoped that the bill could foster a compromise
that would provide Galena with some relief.
9:53:00 AM
PAUL LABOLLE, STAFF, REPRESENTATIVE NEAL FOSTER, stated
that the reason for Galena's shrinking workforce was the
removal of the Air Force Base. He informed that state law
did not allow for bankruptcy for municipalities, nor could
cities dissolve unless debts were paid, which would leave
the state responsible for the unfunded liability the city
had amassed.
Senator Stevens asked whether any other communities in the
state faced similar problems and whether there was any
assistance from the military when communities faced the
closure of a base.
Mr. LaBolle stated that there were five communities that
fit the definition of population loss as defined by the
bill. He listed Pelican, St. George, and Galena as three
that were affected. He said that when the Air Force base
moved out of Galena assets had been left with the city.
9:55:19 AM
Senator von Imhof found the legislation compelling.
9:56:35 AM
Co-Chair MacKinnon pondered the economic impact on a
community losing a military installation. She wondered
whether there could be any help on the federal level. She
asked whether termination studies had been done for Galena
to determine the total liability.
Representative Foster addressed how the federal government
had been involved in Galena. He noted that the Air Force
had left over 1 million gallons of heating fuel, which was
now largely gone. He said that no other financial resources
had been bestowed on the community.
Co-Chair MacKinnon wondered about the fairness issue of the
state picking up the cost for this small community verses
others.
Mr. LaBolle stated that Galena had not done termination
studies. He said that SB 25 had two components: the
termination studies and the 2008 floor. Galena was
currently only affected by the floor. He shared that the
total debt, to date, was $1.5 million; changing the floor
would bring their minimum payment to $775 thousand. He
added that the payroll had grown to just over $1 million,
with the 2008 floor of $1.5 million.
Co-Chair MacKinnon observed that the state would pick up
the difference of approximately $133 thousand in
perpetuity.
Mr. LaBolle deferred to the Legislative Finance Division.
10:00:31 AM
Senator Olson wondered whether there was an alternative way
to keep the city functioning if the bill did not pass.
Representative Foster replied that he knew of no
alternative. He noted that the Galena Interior Learning
Academy was an asset and a hub in the community and
coordinated work on renewable energy and water and sewer
issues. He reiterated that there were no immediate
alternatives to the city office.
Senator Olson thought the importance of the city office in
Galena was sizable.
10:02:25 AM
Vice-Chair Bishop commented it was still unknown where the
employees from Galena had gone and whether they were
working in another PERS system. He noted that the school in
Galena had a 100 percent graduation rate.
10:03:11 AM
Senator Stevens asked about what happened if the population
returned to prior levels.
Mr. LaBolle stated that if the population grew and there
was a corresponding growth in municipal government, the
actuals would be paid versus the floor.
Senator von Imhof asked about the total population for the
three towns.
10:03:55 AM
AT EASE
10:05:30 AM
RECONVENED
Mr. LaBolle relayed the populations for the following
areas:
Anderson: 246
Atka: 61
Galena: 470
Pelican: 88
St. George 102
Senator von Imhof pointed out that Pelican had an employer
number of 200.
Mr. LaBolle stated that the number was a code for
identifying the positions.
Senator von Imhof referenced communities with percentages
under 25. She asked whether the sponsor had considered a
rubric with which to evaluate communities that would
benefit from the state's relief. She considered how to
afford the implementation over the long-term, and whether
there were multiple funding sources. She urged the sponsor
to develop a rubric.
10:08:09 AM
Co-Chair MacKinnon asked about the population size of
Anderson.
Senator Stevens replied that that population of Anderson
was 246.
Co-Chair MacKinnon corrected her precious statement about
the fiscal note and what the state would owe in perpetuity.
She corrected that the fiscal note reflected a timespan of
20 years to pay down the interest and the current
obligation. She noted that there was a defined end to the
contributions. She added that the contributions that the
cities had to make were effected by the size of the payroll
and not necessarily the number of employees. She felt that
it was important to understand the employee change in each
community versus the population drop. She reiterated
previous testimony that the population in Galena had
dropped 30 percent and that there was a $1.5 million
payroll in 2008.
Mr. LaBolle affirmed the numbers were correct.
Co-Chair MacKinnon continued that the $1.5 million payroll
of Galena had been reduced by half to $750,000 in 2012.
Mr. LaBolle answered in the affirmative.
Co-Chair MacKinnon thought that in considering the bill it
was important to recognize the payroll numbers and whether
the state government grew or declined. She reiterated the
need for a termination liability study of the system at the
current payroll. She referenced the fiscal note which
reflected expected small increases to the payroll in
Galena. She spoke to the effective date written into the
bill, which would alleviate the cities contributions for
2017, and make that a state responsibility with the new
floor. This required a supplemental request of $148,000 in
addition to the $141,000 of reoccurring operating costs.
10:13:01 AM
Senator Micciche wondered what the effect would be if the
$148,000 was amortized in future years rather than placed
in the supplemental budget.
Co-Chair MacKinnon said that if the supplemental was not
provided there could be a shortfall in the calculation that
could hit the state differently on the retirement system
and the state's obligation. She thought that if the
supplemental was not going to pass then the effective date
would need to be changed, which would affect the fiscal not
on the reoccurring operating cost line, or the liability
would go up and local communities would experience a higher
interest rate over the amortization period.
Ms. Lea agreed with that assessment.
Co-Chair MacKinnon concluded that the bill would positively
impact affected cities because they would not owe the
additional contribution or the interest payments to the
state - even though the fiscal year was nearly at an end.
10:14:29 AM
Mr. LaBolle added that the existing liability of $1.5
million would remain on the books after passage of the
legislation.
Co-Chair MacKinnon countered that the fiscal note showed an
outstanding liability of $1,099,633.35 from Galena. She
believed that the issue merited further discussion.
10:15:14 AM
Mr. LaBolle said that Section 1 of the bill contained
enabling language that corresponded to Section 4. He
addressed the Section 2, where the 2008 floor was adjusted
to establish a new floor for the effected communities of
FY12. He spoke to Section 2, subsection (B):
(B) June 30, 2012, if that total is less than the
total under
(A) of this paragraph, and the employer is a
municipality in which the population decreased by more
than 25 percent between 2000 and 2010, according to
the decennial census conducted by the United States
Bureau of the Census.
Mr. LaBolle relayed that Section 3 contained conforming
language. He said that Section 4 would allow for the PERS
administrator to negotiate the delinquent interest rate. He
furthered that bill would allow the administration to
negotiate an interest rate for delinquent payments. He
concluded that Section 5 was the effective date.
10:17:10 AM
Co-Chair MacKinnon OPENED public testimony.
JOHN KORTA, MAYOR, CITY OF GALENA, GALENA (via
teleconference), testified in support of the bill. He
discussed the closure of the Air Force base, which had been
a significant source of employment for Galena residents. He
said that in 2000, Galena had 675 residents, 470 in 2010,
resulting in the 30 percent decline. He furthered that in
2013, ice dammed the Yukon River, which led to a federal
disaster declaration. He relayed that the 2008 floor had
been established to prevent a municipality from gaming the
PERS system by contracting out work previously done by
municipal employees, in order to avoid making ongoing
contributions to PERS. He related that the current minimum
PERS contribution was based on 2008 salaries, the law had
not accounted for Galena's unexpected situation and had not
contemplated municipalities with sharply declining
populations. He stated that HB 47 only affected communities
that faced a minimum 25 percent decline in population
between 2000 and 2010. He asserted that the bill would
simply replace the 2008 floor with the 2012 floor. He
stated that Galena was currently paying contributions based
on the 2008 floor, which represented a population
substantially larger than the actual population. He
lamented that the cities required PERS contribution
approached half od the cities entire current payroll. He
shared that the FY08 salary total had been $1,513.365.19
for 36 employees, making their annual PERS contribution
$332,940. In FY 12, Galena's payroll was $765,776 for 17
employees. He reiterated that under the current 2008 floor,
Galena's annual minimum contribution was over half of their
entire payroll costs. He warned that if action was not
taken, the differential would continue to create an ever-
increasing obligation. He stressed that the cities
financially situation was so severe that in FY 11, a low
interest loan from the Alaska Bond Bank had to be secured
for heat and electricity in the city.
10:21:19 AM
Mr. Korta continued that HB 47 did not undermine the
underlying policy goals of the existing PERS structure but
helped ensure that municipalities remained able to
contribute to PERS, while recognizing that the city could
not make a contribution based on a larger population. He
noted that Galena had continued to pay 100 percent of its
annual obligation of 22 percent to PERS for its actual
payroll.
10:24:06 AM
Co-Chair MacKinnon asked the testifier to submit any
written testimony.
Co-Chair Hoffman asked about the status of the municipal
bond bank loan taken out in 2011 to pay for fuel.
Mr. Korta estimated that the loan balance was over $1
million. He said that all payments had been made on time.
Co-Chair Hoffman asked how long the borrowed $1 million
from the bond bank had been expected to last to pay for
heating fuel and electricity.
Mr. Korta stated that the city had to do some restructuring
after the closure of the base, which he believed was closer
to $2 million. He said that the city had paid down that
obligation and had stabilized since the restructure.
Co-Chair Hoffman asked whether the community of Galena had
an annual audit.
Mr. Korta answered in the affirmative.
Co-Chair Hoffman asked that the last 3 years' audits be
made available to the committee.
10:26:03 AM
Senator von Imhof looked at the city manager's testimony
(copy on file). She indicated that the salary in 2008 was
approximately $1.5 million, and the salary in 2012 was
about $765,000; yet both years the city had paid the same
PERS contribution of $332,000 for both years despite the
salaries going down by half.
Mr. Korta agreed.
Co-Chair MacKinnon asked whether the contributions had been
paid or owed.
Mr. Korta replied that the city had been paying actual
contributions but not paying on the accruing interest.
Senator von Imhof asked whether the $332,000 included the
accruing interest.
Mr. Korta deferred to the city manager.
Senator von Imhof understood that under a hypothetical in
the letter, the actual payroll should have been $164,000,
with a difference of $150,000.
Co-Chair MacKinnon thought that without a termination study
to reduce and pay to the plan the amount owed to a person
who retired, Senator von Imhof was correct. She thought it
was accurate when Vice-Chair Bishop stated that if the
employees moved to another state system, the employees
would continue to contribute to costs in the state system.
10:29:14 AM
KATHIE WASSERMAN, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL
LEAGUE, testified in support of the legislation. She
informed that that league had been working on retirement
termination studies and below the floor costs since SB 25
went into effect in 2008. She asserted that many smaller
committees in the legislature did not have a full
understating of PERS issues, which made passing legislation
difficult. She said that when she was mayor of Pelican, and
the population had dropped, the community had lost many
people from all areas of the workforce. She lamented that
the state could only expect so much from communities with
no money and no tax base.
10:32:53 AM
Co-Chair MacKinnon CLOSED public testimony.
Senator Micciche requested the audit information and
information on the city's tax base.
Mr. Korta replied that he would need a physical address to
send the information to.
Co-Chair MacKinnon provided the address.
Co-Chair MacKinnon stated that proposed amendments due the
following day at noon.
HB 47 was HEARD and HELD in committee for further
consideration.
CS FOR HOUSE BILL NO. 217(FIN)
"An Act relating to civil liability for risks inherent
in farm touring; relating to the state and municipal
procurement preferences for agricultural products
harvested in the state and fisheries products
harvested or processed in the state; relating to
merchandise sold and certain fees charged or collected
by the Department of Natural Resources; and providing
for an effective date."
10:34:29 AM
REPRESENTATIVE GERAN TARR, SPONSOR, believed that issues
related to agriculture were important in discussions about
diversifying the state's economy. She offered background
information from the Sponsor Statement:
More than 95% of Alaska's food is imported, yet
farmers in Alaska are ready and motivated to increase
production. From 2007 to 2012, direct sales in Alaska
grew by 32% - 13 times the national average.
In 2017, the Farm Bureau and Division of Agriculture
launched a statewide campaign to encourage every
Alaskan to spend just $5/week on Alaska Grown
products, year-round, to generate $188 million for
Alaska's economy.
Retailers include Carrs-Safeway, Walmart, Fred Meyer,
and Save-U-More. With expectations of further market
growth in 2018, Bell's Nursery plans to increase
production of tomatoes and cucumbers by 20 percent and
the Alaska Flour Company added products to 23
additional retailers throughout the state.
Alaska's farmers markets are also growing. In 2005 the
Division of Agriculture listed 13 markets in Alaska.
In 2014 that number grew to 37, and in 2017, there
were 41, with more in planning stages. Market sales
include:
? Tanana Valley Farmers Market (Fairbanks) -
$1.25 million
? Homer Farmers Market (Homer)- $500,000
? Kodiak Farmers Market (Kodiak) - $100,000
? Mountain View Farmers Market (neighborhood
market in Anchorage) - $19,000
Representative Tarr discussed the genesis of the bill. She
said that the effort was to increase direct producer to
consumer sales, eliminating the need for a middle man. She
shared that the Department of Environmental Conservation
was working with farmers on a pilot program for expanded
sales of cottage food products online.
Representative Tarr stated that as the bill transitioned,
short term policy changes that would benefit farmers came
to light. She discussed the receipt authority for the
Department of Natural Resources to collect the fee for the
promotional use of the "Alaska Grown" logo. She explained
that the department would buy more promotional Alaska Grown
materials wholesale and then distribute them to farmers.
She added that the department would reinvest proceeds from
the materials into the Alaska Grown program.
Representative Tarr discussed procurement, which she had
worked on for four years. She spoke of the Alaska Product
Procurement Preference statue, which said that a state
procurement officer buying food product would be directed
to buy the lowest priced product but could spend up to 7
percent more on Alaskan products. She said that she had
requested an audit of the statute in order to fully
evaluate the effectiveness of the statute. She relayed that
the audit revealed several challenges: the price problem,
getting farmers on the preferred vendors list, and not
having enough seasonal availability. She shared that the
bill added "may spend" up to 15 percent. She stressed that
the bill did not require additional spending but would make
purchasing Alaskan grown products easier.
10:40:49 AM
Representative Tarr used the example of an anchor tenant
and smaller shops in a mall environment. She said that if
farmers had a solid wholesale opportunity, they would be
more likely to sell at a less than retail price because of
the size of the contract. She asserted that farmers would
grow more if they had assurance that their goods would
sell. She believed that the bill would open greater
opportunities for Alaskan farmers and would keep state
dollars in-state. She relayed that there was a new trend in
farm touring and believed that Alaskan could cash in on the
activity. She stated that farm tour language had been added
to statute, with protections form civil liability.
10:44:19 AM
Representative Tarr thought that the activities listed in
the bill were low risk for farmers.
10:45:05 AM
DIANA RHODES, STAFF, REPRESENTATIVE GERAN TARR, addressed
the Sectional Analysis (copy on file):
Section 1 Amends powers of Commissioner of Department
of Natural Resources to sell promotional merchandise
related to the Alaska Grown logo
Allows the Division of Agriculture within the
Department of Natural Resources to issue a
license and charge a license fee for the sale of
promotional merchandise related to the
Alaska Grown logo. The commissioner shall price
the merchandise in a manner that ensures a
reasonable monetary return to the state. It is
encouraged that the merchandise be manufactured
in the US and is procured from either an Alaska
bidder or a person that employs Alaska prison
inmates.
Section 2 Amends Alaska Code of Civic Procedures,
under the section of civil liability for sports and
recreation activities
Provides more freedom from civil liability to
farmers who operate "farm tours"
Section 3 Defines farm touring
Farm touring means briefly visiting a farm to
observe or experience aspects of raising,
growing, producing, cultivating, harvesting, or
processing an agricultural product as a tourist,
without receiving pay.
Sections 4 to 7 Amends multiple sections of existing
statutes providing for the solicitation and purchasing
of Alaska Grown agricultural and seafood products
There currently exists a seven percent state and
municipal preference procurement preference for
Alaska Grown agricultural products harvested in
the state and Alaska
Grown fisheries products harvested or processed
in the state; this would give flexibility to
purchase fisheries and agriculture products if
priced not more than 15 percent above a similar
product harvested outside the state (This
includes entities that receive state money,
including school districts and the university).
Section 8 Amends Public Finance Fiscal Procedures
Act to collect fees
Allows the Commissioner of the Department of
Natural Resources to collect fees for
Alaska Grown promotional merchandise.
Section 9 Effective date for the "farm touring" is
after January 1, 2019.
Section 10 Effective date of the bill is July 1,
2019.
10:46:50 AM
Vice-Chair Bishop commented on the importance of supporting
in-state agriculture. In 1950, Alaska grew 55 percent of
its food. He discussed food security and the importance of
being prepared for emergencies. He noted that Alaskan
products had a greater shelf-life than out-of-state
products.
Senator Stevens commented on seafood products. He thought
that similar interest should be taken in the marketing of
seafood products.
10:49:09 AM
Co-Chair MacKinnon OPENED public testimony.
AMY SEITZ, ALASKA FARM BUREAU, SOLDOTNA (via
teleconference), testified in support of the bill. She
echoed the comments of Vice-Chair Bishop on food security.
She believed that the agriculture industry in the state was
young and needed to build infrastructure and supporting
policy. She lamented that 95 percent of the food in the
state was imported form other states and countries and
there was only a 3 to 5-day supply of most food items on
grocery store shelves. She remarked on language removed
from the bill related to cottage foods industry. She hoped
to work with Department of Environmental Conservation on
the items that had been removed to the bill. She hoped that
the bill would give farmers more opportunity in the product
preference program. She discussed receipt authority. She
thought that the if fees could be collected for the Alaska
Grown marketing items it would help farmers to indicate
that products were Alaskan grown, while supporting the
Division of Agriculture. She highlighted the importance of
public outreach for Alaskan grown products. She hoped to
increase the incentives for the State Procurement Office to
buy Alaska grown and to develop enticement language to get
wholesalers to buy Alaskan grown products.
10:54:36 AM
Ms. Seitz concluded that protecting farmers, who offer farm
tours, from liability should be a priority.
10:55:15 AM
Co-Chair MacKinnon CLOSED public testimony.
CSHB 217(FIN) was HEARD and HELD in committee for further
consideration.
Co-Chair MacKinnon announced that amendments were due the
following day at noon.
Co-Chair MacKinnon discussed the agenda for the afternoon.
ADJOURNMENT
10:56:20 AM
The meeting was adjourned at 10:56 a.m.