Legislature(2001 - 2002)
03/20/2002 01:44 PM Senate JUD
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ALASKA STATE LEGISLATURE
SENATE JUDICIARY COMMITTEE
March 20, 2002
1:44 p.m.
MEMBERS PRESENT
Senator Dave Donley, Vice Chair
Senator John Cowdery
Senator Gene Therriault
Senator Johnny Ellis
MEMBERS ABSENT
Senator Robin Taylor, Chair
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 25
Proposing an amendment to the Constitution of the State of Alaska
relating to education.
MOVED CS SJR 25(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 362
"An Act extending the termination date of the Board of Governors
of the Alaska Bar Association."
MOVED SCS HB 362(JUD) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 324(L&C)
"An Act providing that a utility or electric operating entity
owned and operated by a political subdivision of the state
competing directly with a telecommunications utility is not
subject to the Alaska Public Utilities Regulatory Act."
HEARD AND HELD
PREVIOUS SENATE COMMITTEE ACTION
SJR 25 - See HESS minutes dated 4/18/01 and 4/20/01.
HB 362 - No previous action to record.
SB 324 - See Labor and Commerce minutes dated 3/5/02.
WITNESS REGISTER
Mr. Darroll Hargraves, Executive Director
Alaska Council of School Administrators
326 4th St., Ste 404
Juneau AK 99801
POSITION STATEMENT: Supports SJR 25
Ms. Amy Erickson
Staff to Representative Murkowski
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Testified for the sponsor of HB 362
Ms. Deborah O'Regan
Alaska Bar Association
Anchorage, AK
POSITION STATEMENT: Supports HB 362
Mr. Steve Van Goor
Alaska Bar Association
Anchorage, AK
POSITION STATEMENT: Supports HB 362
Mr. Van Abbott
Ketchikan Public Utilities
Ketchikan, AK 99901
POSITION STATEMENT: Supports SB 324
Mr. Jim Voteberg
City of Ketchikan
Ketchikan, AK 99901
POSITION STATEMENT: Supports SB 324
Mr. Jimmy Jackson
GCI
Anchorage, AK
POSITION STATEMENT: No position on SB 324
Mr. Mike Treuer
Regulatory Commission of Alaska
701 W Eighth Ave Ste 300
Anchorage, AK 99501
POSITION STATEMENT: No position on SB 324
Mr. Mike Garrett
AP&T
4300 B Street
Anchorage, AK
POSITION STATEMENT: Opposed to SB 324
ACTION NARRATIVE
TAPE 02-10, SIDE A
Number 001
VICE-CHAIRMAN DAVE DONLEY called the Senate Judiciary Committee
meeting to order at 1:44 p.m. Senators Cowdery, Therriault and
Donley were present. The first order of business to come before
the committee was SJR 25.
SJR 25-CONST. AM: EDUCATION FUND
SENATOR JERRY WARD, prime sponsor of SJR 25, encouraged members
to adopt a proposed committee substitute (Version J) before the
committee. He pointed out that members' packets also contain a
proposed committee substitute to SB 188, companion legislation to
SJR 25. He explained that the proposed committee substitute to
SJR 25 is an attempt to address some of the long term needs of K-
12 education in the state of Alaska. The University of Alaska was
removed from the proposed committee substitute at his request
because he wanted the bill to emphasize K-12. Much of the bill is
modeled after similar legislation introduced by Steve Cowper,
former Governor. Governor Cowper's education endowment required a
mandatory draw from the Permanent Fund; SJR 25 allows the
legislature to make such a draw but does not mandate it to do so.
Version J allows the legislature to put 5 million acres of state
land into an education endowment, allows residents to contribute
100 percent of their permanent fund dividends, and leave the door
open to allow other funds to be deposited into the endowment in
the future.
[SENATOR ELLIS arrived.]
SENATOR WARD informed members that he and Senator Cowdery
introduced similar legislation in 1983. They were told at that
time it would take 20 years to produce income from a land
endowment. He believes the legislature should have committed 8
million acres of land to the endowment at that time. Senator Ward
said he is bringing this concept forward again because he has
seen the education community do a good job, but believes the
"boat is sinking." This year the legislature will have to spend
more on education than any other component of government. He
wants to align the educational community with the development
community so that Alaska can move forward and begin to develop
some of its more than 106 million acres of state land. He noted
that a land trust relationship was set up in the Alaska
Constitution for the University of Alaska and the mental health
community and the legislature set up a land trust for the Alaska
Railroad Corporation when it was purchased in 1983. He repeated
that he wants to bring advocates for public education and the
development community together so that, "we might be able to
overrule some of the non-growth environmental extremists from
outside that have been locking our country up for the last
several decades and not to say in the least for the last seven
years." He noted that he spoke with Governor Cowper when he first
proposed this concept and urged him to use a land endowment
instead of permanent fund monies but his constituency opposed
that plan. He stated the purpose of this legislation is to create
another revenue source for education.
SENATOR COWDERY moved to adopt the proposed committee substitute
to SJR 25 (Version J) for the purpose of discussion.
VICE-CHAIR DONLEY noted that he would leave that motion on the
table until Senator Therriault returned and the committee would
take public testimony.
MR. DARROLL HARGRAVES, Executive Director of the Alaska Council
of School Administrators (ACSA), informed members that this
legislation has not been on his "radar screen" so he has no
official position from the ACSA. He said he was happy to see this
issue surface again because he recalled, in 1982, the ACSA pushed
to highlight the possibilities of such a fund. ACSA invited Dr.
Norman Hall from Texas to visit: he proposed that Alaska do what
Texas did with its oil revenue - restrict that revenue to
construct and maintain school facilities. ACSA made such a
proposal but Alaska had so much money at that time, he believes
no one could foresee future problems. He favors limiting an
endowment to K-12 education and he encouraged members to consider
restricting its use to construction and major maintenance, as
that is what worked best in Texas. He added that he believes the
thth
statehood charter puts the 16 and 36 section of every township
into a public school land trust. He was not sure of the status
but offered to check for members. He applauded Senator Ward for
introducing the legislation and said he would like to see a land
endowment for education come to fruition.
SENATOR WARD acknowledged that Senator Taylor has worked with him
on this bill and estimated that the sections of land in the
statehood charter would add about 1.5 million acres to the
endowment. He noted that the Texas university system is making
enough from its land grants that it spends excess funds on K-12
programs. He has spoken to members of Alaska's congressional
delegation about this issue and they believe the University of
Alaska's land grant should stand on its own. The delegation
suggested that if a land grant comes to pass, they would consider
trying to donate an equal amount of federal land to it. If 5
million acres of both federal and state land were put into an
endowment, it would be the largest land grant in the United
States.
SENATOR COWDERY asked how much land would be needed at the start
and noted that land sales could encompass one lot or one million
acres.
SENATOR WARD replied that he "took it down to nothing less than
40 acres." He suggested staying with 640 acres but pointed out
40-acre parcels would not require surveys so there would be no
transfer cost.
SENATOR COWDERY noted that he sees no reference to that in the
committee substitute.
SENATOR WARD clarified the details are specified in SB 188. He
referred to language on page 4 that reads:
Each list must contain not more than 25 percent of the
total acres of land to which the fund is entitled after
subtracting previous conveyances under this section,
but not less than 25,000 acres or the remaining
entitlement under this section, whichever is less,
and said that is a formula the department came up with. He
maintained that the bill should not contain a minimum because
size should not be a factor; the legislature should have the
option to transfer lots if necessary. He said it is not helpful
to the education of Alaska's children to leave over 100 million
acres in state ownership.
SENATOR WARD said he purposely did not restrict contributions to
permanent fund dividends so that future legislators can identify
other revenue streams, such as gas line revenue. He said he
believes there is a serious misunderstanding about education
funding. The legislature has been trying to put quite a bit of
money into public education for the last few years but it never
seems to be enough. He believes the legislature should fund
transportation, public safety and education well, and it is not
doing so. He does not believe the legislature can "tax its way
out of this," and that if a land endowment is logical for the
University, the railroad and the mental health community, it
certainly is logical for K-12 education. He then asked Mr.
Hargraves about the status of the land grant he referred to.
MR. HARGRAVES replied, "I think that thing is a real ball of
worms for you. This state someday may pay the price for that. I
don't know what you know - I don't know what's happening, but
aren't there some lawsuits out there that are either taking shape
or...?"
SENATOR WARD stated the lawsuits have dropped to the wayside
because agreements were negotiated.
MR. HARGRAVES said it is his impression, "...that if you got a
decision similar to that mental health lands trust in connection
with this one, I think it would practically destroy the state."
SENATOR WARD commented that Senator Taylor believes giving the
full 5 million acres to the land endowment would solve the
problem.
MR. HARGRAVES said the statehood charter issue is very
complicated and would have tremendous and devastating
implications for the state.
SENATOR WARD clarified that he brought the proposed committee
substitute for SB 188 to members' attention because he wanted to
inform them of the board make-up. He said he would like to pit
the development community and the education community against the
extreme environmentalists.
VICE-CHAIR DONLEY announced the committee would take up HB 362.
He asked Ms. O'Regan to testify.
HB 362-EXTEND BOARD OF GOVERNORS OF AK BAR ASSN
MS. DEBORAH O'REGAN, Alaska Bar Association, informed members
that an audit of the Alaska Bar Association (ABA) by the
Legislative Budget and Audit (LBA) division last year found the
ABA meets the public need in an effective and economical manner.
The ABA deals with licensing of attorneys. HB 362 reflects the
recommendation of the LBA to extend the Board of Governors for
another four years.
MR. STEVE VAN GOOR, Alaska Bar Association, said he was available
to answer any questions about the audit.
MS. AMY ERICKSON, staff to Representative Murkowski, sponsor of
HB 362, agreed the legislation extends the sunset date of the
Board of Governors to June 30, 2006. The Board of Governors was
established in 1955 to ensure that only qualified members of the
legal profession of good moral character are allowed to practice
law in the state. She urged members to support the legislation.
VICE-CHAIR DONLEY noted a conflict of interest as he is a member
of the Alaska Bar Association. He then noted the ABA is running a
deficit this year and expressed concern about the cost of ABA
dues as that cost is one of the highest in the nation. He
questioned what plan the ABA has to bring down the cost of
membership.
MS. O'REGAN said, unfortunately, one of the things that affected
the ABA's budget last year was an Alaska Supreme Court mandate
that the ABA provide a voluntary CLE program. It encouraged
attorneys to report a minimum of 12 hours of CLE credits each
year. ABA's budget deficit was due to the increased cost of
temporary staff, data processing, computer programming, and
discounts taken by lawyers. Another large expenditure in 2001 was
for an ABA convention held in Ketchikan, the first in 22 years.
She noted the convention will be held in Anchorage this year so
it will not be quite as expensive. She said that membership in
only half of the bar associations across the country is
mandatory; membership in Alaska's is mandatory. She pointed out
the ABA last increased its dues in 1992; the prior increase
occurred in 1981.
VICE-CHAIR DONLEY remarked that there was a virtual revolution
within the California Bar Association over dues. He strongly
encouraged Ms. O'Regan to do everything possible to keep the
costs down. He then noted with no further testimony, he would set
HB 362 aside.
SB 324-MUNICIPAL PUB.UTIL.COMPETING W/TELECOM
MR. JIM VOTEBERG, assistant city manager of the City of Ketchikan
and the assistant general manager of Ketchikan Public Utilities
(KPU), stated support for SB 324. He provided the following
highlights of the written testimony he submitted to committee
members.
The City of Ketchikan, and the City of Ketchikan doing
business as Ketchikan Public Utilities, owns and
operates several utilities including
telecommunications, electric, water, wastewater
collection and treatment, and solid waste collection
and disposal. This legislation is a local issue and
important to the city because it allows the city to
operate its utilities in a cost-effective manner, as it
has for over 50 years and it provides local leaders
with an important tool for the economic development of
our community. Should the city become regulated under
the RCA, the cost to the ratepayers in Ketchikan is
estimated at around $700,000 annually, which does not
include the cost of a rate study that, for each
utility, could be in the range of $250,000. These costs
include annual fees, [indisc.], additional staff time
to perform the increased workload of a fully regulated
utility, and costs associated with changes in the
city's existing accounting system. These costs would be
directly passed on to our consumers resulting in a
higher utilities bill. Given the economic situation in
Ketchikan, this is not the time to increase costs to
its residents and businesses.
The city is aware that AP&T opposes this legislation
and has questioned its need by pointing out that the
RCA currently has regulations in place to grant a
waiver to Ketchikan. Although a procedure may exist,
the procedure can be time consuming and expensive,
particularly when a company opposes the waiver and
there's no guarantee that a request will be granted.
Given that AP&T testified before the Senate Labor &
Commerce Committee that it would oppose any request by
KPU for a waiver from the RCA. The cost to file a
waiver will be high, it will take a long time and,
again, there's no guarantee of the outcome.
Through correspondence dated March 5, 2002, RCA
Chairperson Nan Thompson addresses SB 324 by stating,
'The RCA has not taken a position in support or in
opposition to this legislation. We believe it presents
policy issues that are within the legislators'
province.' The city agrees that this legislation is a
policy issue within the legislative jurisdiction and is
seeking resolution through the legislative process.
Given the advancement of telecommunication technology
and varying levels of regulations placed on
telecommunications companies, the proposed legislation
creates a level playing field. Without this
legislation, for example, should a cable company such
as GCI use its cable plants to provide telephone
service in Ketchikan, GCI would be non-regulated while
Ketchikan would be fully regulated. If a wireless
company, such as AP&T, were to compete in Ketchikan,
AP&T would be lightly regulated while Ketchikan would
be fully regulated. In any case, an uneven playing
field is created by Ketchikan becoming fully rate-
regulated and trying to compete against a non-regulated
or a lightly regulated entity. Maintaining its non-
regulated status allows Ketchikan to compete on a level
surface.
In closing, I'd like to stress the importance of this
relatively small change to AS 42.05.711(b)(2) in the
community of Ketchikan. This is a local issue. SB 324
has been narrowly crafted to simply address the uneven
playing field facing the City of Ketchikan and point
out that it does not affect other municipalities
throughout the state. The city looks to the state to
preserve local control over its utility as it has had
for over 50 years and ensure that local government
retains the tool it needs to better serve our community
and assist in turning Ketchikan's economy around. Thank
you and that's all I have.
VICE-CHAIR DONLEY asked Mr. Voteberg to explain why SB 324 will
not apply to other communities with a municipally owned utility
in competition with a privately owned utility.
MR. VOTEBERG said that Ketchikan has the only municipally-owned
telephone company in the state therefore it is the only
municipally-owned company that would be in competition with
another telephone company.
VICE-CHAIR DONLEY noted SB 324 applies to both electric operating
entities and telephone companies.
MR. VOTEBERG deferred to Heather Graham, counsel for the City of
Ketchikan.
MR. VAN ABBOTT, Ketchikan Public Utilities, said one answer he
would pose to Senator Donley's question is that, hypothetically,
if an electric company wanted to get into the telephone business
and compete with a telephone company, it would have to get a
certificate of public convenience, which involves a lengthy
process. Whether it would be regulated or not would be in the
bounds of the due diligence the RCA would take before issuing the
certificate.
VICE-CHAIR DONLEY asked Ms. Graham if the answer to his question
is that although language on page 2 covers a utility or an
electric operating entity, it only applies if that entity is
competing with a telecommunications utility and not with another
electric operating entity.
MS. HEATHER GRAHAM, counsel to the City of Ketchikan, said that
is exactly right. She noted she would be available to answer any
future questions should they arise.
MR. JIMMY JACKSON, attorney for GCI, clarified the earlier
statement by a representative from Ketchikan that GCI would be
unregulated if it was to compete with KPU in the local phone
business is incorrect, and that GCI takes no position on the
bill.
MR. PHILLIP TREUER, RCA staff, stated the RCA neither opposes nor
supports SB 324.
MR. MIKE GARRETT, President of AP&T Wireless, a subsidiary of
Alaska Power and Telephone, said that AP&T Wireless opposes SB
324 and is uncertain why it is before the committee. He believes
it is special interest legislation for KPU that provides relief
for that one entity and addresses an issue for which an
administrative solution exists. KPU could file a waiver with the
RCA and, in doing so, have to prove that the facts behind its
estimates are true and correct and in the public's interest. If
so, the waiver would be approved. He said it is strange to AP&T
that KPU would take legislative action rather than administrative
action.
In response to Mr. Voteberg's statement that AP&T would oppose a
waiver application by KPU, MR. GARRETT said AP&T would not oppose
an application that is in the public interest. AP&T would reserve
the right to comment if KPU filed a waiver. He noted that the
law, as written now, adheres to the Telecom Act of 1996,
particularly Section 254(k). AP&T's interpretation of that
section is that unregulated services cannot be subsidized with
regulated services. AP&T has regulated utility operations. As a
wireless carrier providing services in Ketchikan, it would not
necessarily be rate regulated, but it would have to provide
[indisc.] to the Commission just like any other competitive local
telephone company. Its regulated services, power, telephone and
hydroelectric, are regulated: AP&T provides the information
requested by the RCA and does not find it to be burdensome.
MR. GARRETT said the existing law has worked well in the past.
The law was put in place when Anchorage and Fairbanks had city-
owned utilities. They were able to get waivers from this rule as
they were able to prove that waivers were appropriate. He noted
that AP&T is uncertain how SB 324 will affect other city-owned
electric utilities that may want to compete in telecommunication
services.
2:30 p.m.
There being no further testimony, VICE-CHAIR DONLEY noted the
committee did not have a quorum at this time. He then announced a
short recess.
TAPE 02-10, SIDE B
VICE-CHAIR DONLEY called the meeting back to order and announced
the committee would take up HB 362. Senator Therriault had
arrived.
HB 362-EXTEND BOARD OF GOVERNORS OF AK BAR ASSN
SENATOR THERRIAULT expressed concern about the fact that the
Board of Governors of the Alaska Bar Association (ABA) has
amassed a sizeable fund, about $1 million, from attorney fees. He
said he questions its operations as it is completely off budget.
He noted there are dueling legal opinions as to whether "that is
being done right or wrong." He noted that other licensing boards
have state oversight to make sure that members are not being
over-assessed. He questioned whether the Board of Governors
cannot cover its annual costs and is living off of that fund, and
whether that fund prevents the state and members from knowing
what the legitimate annual expenses are.
MR. STEVE VAN GOOR, ABA counsel, said he has been employed by the
ABA since 1983 and, while his responsibilities are primarily on
the disciplinary side, he is aware that since 1983 the Board of
Governors has been very concerned about the expenses it has
incurred and that it fulfill its statutory requirements for the
addition and character examination of attorneys, discipline of
attorneys, and continuing legal education. During the 1970s and
early 1980s, the ABA's dues were $165. The early 1980s were a
time of high inflation and economic instability so the Board,
with the input of the membership, decided that in order to
continue to provide services mandated by the court and
statutorily, it must raise fees to $310. The Board expected the
dues increase to last three or four years during the high
inflationary period. He said Board members are very concerned
about the cost and expenses; the annual budget is the topic of
the October board meeting. Regarding accountability, the board's
budget is available for member review and the Legislative Budget
and Audit division has the opportunity to look over the ABA's
shoulder every four years. LBA has determined the ABA's fiscal
management is appropriate.
VICE-CHAIR DONLEY commented that, typically, LBA does not go into
the nuts and bolts of how the ABA spends its money. It does an
overview of the ABA' public policies. The fact that LBA
recommended extending the board does not necessarily mean it
agreed with how the board operates.
SENATOR THERRIAULT stated, having dealt with the budgets of other
licensed professions, there is a connection between the level of
expenditures by the boards that is felt immediately in membership
fee increases because other boards are not allowed to amass funds
over a couple of years. He maintained the ABA says its large fund
balance will enable the board to cover increased operational
costs. He questioned whether those increased costs are
inflationary or whether they are for activities the members might
not approve of or know of until fees increase again. He commented
that there is no immediate connection between the fees members
pay and what the board spends the money on that year and that
concerns him.
VICE-CHAIR DONLEY said that if some of the fee increases resulted
from mandates by the judicial branch, the ABA could develop a
bifurcated rate with a higher rate for judges' licensing fees.
SENATOR COWDERY moved to amend HB 362 to change the board's
extension to June 30, 2004 rather than 2006.
VICE-CHAIR DONLEY noted that, without objection, the amendment
was adopted.
SENATOR COWDERY moved SCS HB 362(JUD) from committee with
individual recommendations.
VICE-CHAIR DONLEY announced that without objection, the motion
carried. He then announced the committee would take a short
recess.
Upon reconvening the meeting, SENATOR COWDERY moved CS SJR
25(JUD) from committee with individual recommendations.
VICE-CHAIR DONLEY noted that without objection, the motion
carried.
There being no further business to come before the committee, he
adjourned the meeting at 2:44 p.m.
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