Legislature(1993 - 1994)

04/21/1993 01:45 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                   SENATE JUDICIARY COMMITTEE                                  
                         April 21, 1993                                        
                           1:45 p.m.                                           
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
 Senator Robin Taylor, Chairman                                                
 Senator Rick Halford, Vice-Chairman                                           
 Senator George Jacko                                                          
 Senator Suzanne Little                                                        
 Senator Dave Donley                                                           
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
 All members present                                                           
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
 SENATE BILL NO. 185                                                           
 "An Act relating to the limitations period for assessments for                
 certain state taxes, and for collection, after assessment, of                 
 taxes due the state; and providing for an effective date."                    
                                                                               
 HOUSE BILL NO. 181 am                                                         
 "An Act relating to the state's right to appeal in criminal                   
 cases; relating to sentence appeals; amending Rule 202 of the                 
 Alaska Rules of Appellate Procedure; and providing for an                     
 effective date."                                                              
                                                                               
 CS FOR HOUSE BILL NO. 254(JUD) am(ct rule fld)                                
 "An Act relating to open meetings of governmental bodies."                    
                                                                               
  PREVIOUS SENATE COMMITTEE ACTION                                             
                                                                               
 SB 185 - See Judiciary minutes dated 4/20/93.                                 
                                                                               
 HB 181 - No previous action to record.                                        
                                                                               
 HB 254 - No previous action to record.                                        
                                                                               
  WITNESS REGISTER                                                             
                                                                               
 Larry Meyers, Director                                                        
 Income & Excise Audit Division                                                
 Department of Revenue                                                         
 P.O. Box 110420                                                               
 Juneau, AK 99811-0420                                                         
  POSITION STATEMENT:   Testified in support of SB 185                         
                                                                               
 Paul Sullivan                                                                 
 Exxon Co. USA                                                                 
 240 Main St., #202                                                            
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Opposes SB 185                                         
                                                                               
 Attorney General Charles Cole                                                 
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, AK 99811-0300                                                         
  POSITION STATEMENT:   Supports SB 185                                        
                                                                               
 Eric Musser, Staff to Representative Brian Porter                             
 State Capitol                                                                 
 Juneau, AK 99801-1182                                                         
  POSITION STATEMENT:     Offered information on HB 181                        
                                                                               
 Richard Monkman                                                               
 Alaska State Hospital & Nursing Home Association                              
 One Sealaska Bldg.                                                            
 Juneau, AK 998-1                                                              
  POSITION STATEMENT:   Addressed concerns with Section 3                      
                      of HB 254                                                
                                                                               
 Wendy Redman, Vice President for University                                   
   Relations                                                                   
 University of Alaska                                                          
 910 Yukon Drive                                                               
 Fairbanks, AK 99775-2388                                                      
  POSITION STATEMENT:   Supports HB 254                                        
                                                                               
 Ken Swisher                                                                   
 Alaska Municipal League                                                       
 217 2nd St.                                                                   
 Juneau, AK 99801                                                              
  POSITION STATEMENT:   Supports HB 254                                        
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
 TAPE 93-47, SIDE A                                                            
 Number 001                                                                    
                                                                               
  Chairman Robin Taylor  called the Judiciary Committee meeting                
 to order at 1:45 p.m.                                                         
                                                                               
 SENATOR TAYLOR introduced  SB 185  (LIMITATIONS PERIOD FOR TAX                
 ASSESSMENTS) as the first order of business.                                  
                                                                               
 LARRY MEYERS, Director, Income & Excise Audit Division,                       
 Department of Revenue, stated the department's support for SB
 185.                                                                          
                                                                               
 Number 040                                                                    
 SENATOR TAYLOR asked Mr. Meyers what currently is the oldest                  
 unresolved tax case.  LARRY MEYERS responded that the oldest                  
 unresolved tax case in the Income & Excise Audit Division was                 
 approximately ten years old.                                                  
                                                                               
 Number 075                                                                    
                                                                               
 PAUL SULLIVAN, General Tax Counsel, Exxon Company, U.S.A.,                    
 stated the company's strong opposition to SB 185.                             
                                                                               
 Mr. Sullivan said the committee is being asked to consider a                  
 bill containing statements of "legislative findings and                       
 purpose" that are clearly incorrect and not factually                         
 supported.  He said the facts are:                                            
                                                                               
  (1)  This bill is merely an after the fact administrative                    
 interpretation of the current assessment deadline statute.                    
 The interpretation is an issue the department has flip-flopped                
 on since 1978.                                                                
                                                                               
  (2)  The department's prior interpretation of the                            
 assessment deadline statute is not correct and the Alaska                     
 Court has told the department so.                                             
                                                                               
  (3)  The department's ability to audit tax returns is not                    
 constrained by its audit resources.                                           
                                                                               
  (4)  Taxpayers did not contribute to any delay in the                        
 period required to issue tax assessments.                                     
                                                                               
  (5)  Arguments that substantial public revenues are at                       
 risk in pending litigation cannot be substantiated.                           
                                                                               
  (6)  The statement that the decisions reached by the                         
 Superior Court in the Exxon and Tesoro Petroleum Corporation                  
 cases are inconsistent is not supportable; in fact they're not                
 even related.                                                                 
                                                                               
  (7)  Three years is enough time to analyze a taxpayer's                      
 return and determine the taxes due the state.  In addition,                   
 the statute allows for further written extensions if                          
 necessary.  Exxon has always granted division requests for                    
 extensions.                                                                   
                                                                               
 Mr. Sullivan said that there should be no doubt that this                     
 legislative proposal attempts to completely change the statute                
 under which taxpayers have conducted their business for the                   
 last 17 years.  He said Exxon has had a long-standing                         
 interpretation and practice with respect to the existing                      
 statute.  The difference between Exxon's interpretation and                   
 that state's is that Exxon's has been reviewed by the Alaska                  
 Court and accepted, while the state's interpretation, first                   
 revealed in May of 1989, was reviewed and has been rejected.                  
                                                                               
                                                                               
 Mr. Sullivan outlined the following reasons why SB 185 is bad                 
 legislation:                                                                  
                                                                               
  (1)  It removes any incentive for the division to bring                      
 cases to final resolution while they try to create new ways                   
 to extract more money from the taxpayers that will ultimately                 
 not be supportable.                                                           
                                                                               
  (2)  It leaves taxpayers at the whim of the division and                     
 never able to finally resolve their tax years in Alaska.                      
                                                                               
  (3)  It will increase an already over burdensome                             
 litigation situation on tax issues in Alaska since taxpayers                  
 will be required to defend against some entirely new and                      
 perhaps misdirected interpretation embodied in an assessment                  
 that could be issued 15, 20 or more years after the fact.                     
                                                                               
 Referring to testimony at a previous hearing on SB 185, Mr.                   
 Sullivan said it was suggested that the Texas statute on                      
 assessments was similar to SB 185.  He said that is not true.                 
 Texas has a four-year period for assessments, except in the                   
 case of taxpayer refund claims.  No new assessments may be                    
 made after the four-year period, the only exception being                     
 taxpayer refund claims.                                                       
                                                                               
 Concluding his testimony, Mr. Sullivan urged rejection of SB
 185.                                                                          
                                                                               
 Number 415                                                                    
                                                                               
 ATTORNEY GENERAL CHARLES COLE, Department of Law, stated he                   
 disagreed with Mr. Sullivan's testimony.                                      
                                                                               
 Attorney General Cole said Exxon was incorrect in stating that                
 the assessment may not be amended if there is an                              
 administrative appeal.  He noted an assistant attorney general                
 had spoken to the Texas comptroller earlier in the day and she                
 was assured that the theory of the Alaska proposed statute,                   
 which was before the committee, was applicable in Texas.                      
                                                                               
 Attorney General Cole said one of reasons that the state wants                
 to have SB 185 enacted is so that there won't be any                          
 misunderstanding or confusion in the Alaska Supreme Court                     
 about what the law of this state should be as declared by the                 
 legislature.  He said they ask by virtue of this legislation                  
 to make clear to the Alaska Supreme Court as to what the                      
 legislative policy is in Alaska.                                              
                                                                               
 Attorney General Cole declared that SB 185 is not changing the                
 substantive law of taxation in the State of Alaska, as was                    
 indicated by Exxon.  He said it is only a situation where it                  
 affects tax law dealing with the statute of limitations.                      
                                                                               
 Attorney General Cole said it is a uncontroverted fact that                   
 the resources of the Department of Revenue to audit the                       
 returns in this area have been constrained.  In addition,                     
 resolving these cases takes so long because Exxon and other                   
 taxpayers and producers string them out themselves.  They can                 
 quickly ask for a formal hearing, a formal hearing can be held                
 and the issue can be resolved expeditiously.                                  
                                                                               
 In his closing comments, Attorney General Cole reiterated that                
 the State of Texas has the very same statute that is being                    
 sought in SB 185.                                                             
                                                                               
 TAPE 93-47, SIDE B                                                            
                                                                               
 Number 005                                                                    
                                                                               
 SENATOR LITTLE asked Attorney General Cole why is was a good                  
 idea to have the bill retroactive.  ATTORNEY GENERAL COLE                     
 answered that first it all it is constitutional, and in the                   
 state's view the issue should be clarified that the                           
 Legislature intended that if the taxpayer appeals from an                     
 assessment during the administrative appeal process and the                   
 judicial appeal process, that the department may raise as well                
 as lower the assessment so that the assessments need not be                   
 litigated through the courts for the next ten or fifteen years                
 to resolve this issue.                                                        
                                                                               
 SENATOR LITTLE asked if the state would be in the position of                 
 gaining additional revenues if the bill passes and changes                    
 were made by the Department of Revenue in the amount owed in                  
 the assessment.  ATTORNEY GENERAL COLE answered that it is                    
 conceivable that if the legislation is not enacted, the Alaska                
 Supreme Court could get confused and it would be very costly                  
 to the state.                                                                 
                                                                               
 Number 145                                                                    
                                                                               
 PAUL SULLIVAN said Exxon has kept their books and records and                 
 they continue to keep them with respect to known assessments.                 
 His concern is 20 years down the road when the people who were                
 involved in the transactions are no longer there or can't                     
 remember, particularly when you have legislation which is                     
 retroactive 17 years.                                                         
                                                                               
 Number 175                                                                    
                                                                               
 There being no further testimony on SB 185, SENATOR TAYLOR                    
 closed the public hearing.                                                    
 Number 180                                                                    
 SENATOR TAYLOR brought  HB 181 am  (APPEALS BY STATE IN CRIMINAL              
 CASES) before the committee as the next order of business.                    
                                                                               
 Number 185                                                                    
                                                                               
 ERIC MUSSER, staff to Representative Brian Porter, said the                   
 thrust of HB 181 is to allow the state a right of appeal in                   
 adjudicated criminal cases without infringing on a defendant's                
 constitutional right to double jeopardy.  He noted Margo Knuth                
 of the Department of Law was present to address any technical                 
 questions on the legislation.                                                 
                                                                               
 There being no further testimony on HB 181 am, SENATOR TAYLOR                 
 asked for the pleasure of the committee.                                      
                                                                               
 SENATOR DONLEY moved that HB 181 am be passed out of committee                
 with individual recommendations.  Hearing no objection, it was                
 so ordered.                                                                   
 Number 210                                                                    
 SENATOR TAYLOR introduced  CSHB 254(JUD) am(ct rule fld)  (OPEN               
 MEETING ACT) as the next order of business.                                   
                                                                               
 RICHARD MONKMAN, testifying on behalf of the Alaska State                     
 Hospital and Nursing Home Association, said his comments would                
 be on Section 3 of the legislation.  The Association's only                   
 concern with the bill is the proposal to delete language which                
 speaks to the governing body or any committee of the hospital                 
 from the exemptions to the Act.  Under present law, meetings                  
 of governing bodies of a hospital on subjects relating to                     
 hospital privileges are exempt from the Open Meetings Act.                    
 He said this is important for two reasons:  patient privacy                   
 and the physicians reputation being at issue.                                 
                                                                               
 Mr. Monkman said his understanding of the intent of the                       
 amendment to the statute was to roll in the phrase  "public                   
 body."  However, there are private hospitals, public                          
 hospitals, as well as quasi public hospitals, which are                       
 private hospitals that receive some sort of public funds.  The                
 Hospital Association's preference would be not to change this                 
 section at all, but, if it is changed, they request that it                   
 be made clear that the meetings of the governing body or                      
 committee of the hospital be kept exempt from the Open                        
 Meetings Act.                                                                 
                                                                               
 Mr. Monkman added that the present statute works in terms of                  
 protecting the physician's reputation and protecting the                      
 patient interest.                                                             
 Number 330                                                                    
                                                                               
 SENATOR DONLEY moved the following amendment to Section 2:                    
                                                                               
 Page 2, line 15:  After the words "attorney-client" insert "or                
 doctor-patient privilege."                                                    
                                                                               
 SENATOR LITTLE objected to adoption of the amendment, stating                 
 she didn't think the proposed amendment resolves the issue.                   
                                                                               
                                                                               
 SENATOR DONLEY commented that he strongly believes in open                    
 meetings, and, if there are some hospitals that may be a                      
 public body, then they should be subject to the Open Meetings                 
 Act.                                                                          
                                                                               
 Number 400                                                                    
                                                                               
 There was extensive discussion on the definition and clarity                  
 of "public body."  Senator Donley withdrew his amendment until                
 the committee could obtain more information on the issue.                     
                                                                               
 Number 515                                                                    
                                                                               
 KENT SWISHER, representing the Alaska Municipal League,                       
 testified in support of HB 254, stating it deals with a                       
 problem they have been concerned with for some time and  does                 
 many of the things the League has hoped to achieve.                           
                                                                               
 Mr. Swisher said the League has prepared an amendment which                   
 would: clarify the definition of "public body" so that the                    
 Open Meetings Act does not apply to administrative staff                      
 meetings and other similar gatherings; provide that any number                
 of officials from a public body may attend meetings and                       
 conferences without violating the Open Meetings Act; provide                  
 that the court may decide whether an action taken in violation                
 of the Act should be declared voidable; and an individual                     
 member of the council or assembly would not be named as the                   
 subject of a suit.                                                            
                                                                               
 TAPE 93-48, SIDE A                                                            
                                                                               
 Number 020                                                                    
                                                                               
 SENATOR DONLEY acknowledged that there are some problems with                 
 the application of the law, but he said he also thinks that                   
 the law hasn't been enforced by the courts the way it was                     
 intended by the people.  He said he is concerned with new                     
 language that says an action is voidable, because the courts                  
 don't even do it when it says it is void.                                     
                                                                               
 Number 050                                                                    
 WENDY REDMAN, Vice President, University of Alaska, stated the                
 Board of Regent's support for HB 254, and said their interest                 
 is at the heart of the bill, which is the definition of a                     
 "meeting."  Also, they have some concern with Section 3, and                  
 Ms. Redman said she would submit those concerns in writing.                   
                                                                               
 Ms. Redman said the University is not covered under the                       
 state's Personnel Act, so committees like faculty tenure                      
 committees for their non-organized faculty really work,                       
 according to the court, as a subordinate group of the Board                   
 of Regents and, therefore, are subject to the Open Meetings                   
 Act.  She said it does not work well to have those committees                 
 open to the general public.                                                   
                                                                               
 Number 095                                                                    
                                                                               
 SENATOR TAYLOR commented that the definition of "meeting" in                  
 Section 6 was poorly drafted and he has requested that staff                  
 provide the members with a copy of the AML proposed                           
 legislation that can be laid along side of HB 254 and possibly                
 be used as a working document.  He invited any suggestions and                
 input into the legislation and said it would be back before                   
 the committee after it has been worked on.                                    
 There being no further business to come before the committee,                 
 the meeting was adjourned at 3:37 p.m.                                        
                                                                               

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