Legislature(1995 - 1996)

04/05/1995 01:58 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                   SENATE JUDICIARY COMMITTEE                                  
                         April 5, 1995                                         
                           1:58 p.m.                                           
  MEMBERS PRESENT                                                              
 Senator Robin Taylor, Chairman                                                
 Senator Lyda Green, Vice-Chairman                                             
 Senator Mike Miller                                                           
 Senator Al Adams                                                              
 Senator Johnny Ellis                                                          
  MEMBERS ABSENT                                                               
  COMMITTEE CALENDAR                                                           
 CS FOR HOUSE BILL NO. 4(STA)(title am)                                        
 "An Act allowing, for the purposes of permanent fund dividend                 
 eligibility, an individual to accompany, as the spouse or minor or            
 disabled dependent, another eligible resident who is absent for               
 vocational, professional, or other specific education for which a             
 comparable program is not reasonably available in the state, for              
 secondary or postsecondary education, for military service, for               
 medical treatment, for service in the Congress or in the Peace                
 Corps, or for other reasons that the commissioner of revenue may              
 establish by regulation; requiring, for the purposes of permanent             
 fund dividend eligibility, an individual who is not physically                
 present in the state to maintain and demonstrate at all times an              
 intent to return to the state to remain permanently;  relating to             
 the eligibility for 1992, 1993, and 1994 permanent fund dividends             
 of certain spouses and dependents of eligible applicants; relating            
 to appeal periods for certain 1994 permanent fund dividends; and              
 providing for an effective date."                                             
 CS FOR SENATE BILL NO. 53(L&C)                                                
 "An Act relating to consumer credit insurance; to regulation of               
 risk retention or purchasing groups; to preemption of the                     
 regulation of insurance agents and insurance producers; to the                
 general powers of the director of the division of insurance; to               
 insurance examination hearings; to insurer certificates of                    
 authority; to annual and quarterly statements, taxes, and                     
 prohibited acts of insurers; to reinsurance credit allowed a                  
 domestic insurer; to risk based capital for insurers; to insurer              
 assets and liabilities; to insurer investments; to insurance                  
 holding companies; to regulation, licensing, and examination of               
 insurance producers, managing general agents, third-party                     
 administrators, brokers, independent adjusters, and reinsurance               
 intermediary managers; to surplus lines insurance; to insurance               
 trade practices and criminal insurance acts; to premium increases             
 in automobile insurance; to insurance rating; to assigned risk                
 pools; to filing and approval of certain insurance policy forms; to           
 required insurance coverage for acupuncture, nurse midwives'                  
 services, mammography, and phenylketonuria; to health insurance               
 provided by small employers; to transfer of an insurer's status as            
 a domestic insurer; to quarterly statements of benevolent                     
 associations, fraternal benefit societies, and health maintenance             
 organizations; to reciprocal insurers; to the definition of `member           
 insurer' for purposes of the Alaska Life and Disability Insurance             
 Guaranty Association; to electronic insurance data transfer and               
 insurance funds transfer; to the definitions of `managing general             
 agent' and `person' applicable to insurance law; to automobile                
 assigned risk plans; placing a person employed by the division of             
 insurance as an actuary or assistant actuary into the exempt                  
 service; amending Alaska Rule of Civil Procedure 45; and providing            
 for an effective date."                                                       
 SENATE JOINT RESOLUTION NO. 14 -  WORKSESSION                                 
 Proposing an amendment to the Constitution of the State of Alaska             
 relating to certain public corporations.                                      
  PREVIOUS SENATE COMMITTEE ACTION                                             
 HB 4 - See State Affairs minutes dated 3/21/95 and 3/28/95.                   
 SB 53 - See Labor and Commerce minutes dated 2/28/95 and 3/2/95.              
     See Judiciary minutes dated 3/27/95.                                      
 SJR 14 - See State Affairs minutes dated 2/21/95.                             
      See Judiciary minutes dated 3/22/95.                                     
  WITNESS REGISTER                                                             
 Rod Mourant                                                                   
 Legislative Aide to Rep. Kott                                                 
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:  Answered questions on CSHB 4(STA) Title Am              
 Mike McGee, Chief                                                             
 Permanent Fund Dividend Division                                              
 Department of Revenue                                                         
 P.O. Box 110460                                                               
 Juneau, Alaska  99811-0460                                                    
  POSITION STATEMENT:  Supports CSHB 4(STA) Title Am                           
 Marianne Burke, Director                                                      
 Division of Insurance                                                         
 P.O. Box 110805                                                               
 Juneau, Alaska  99811-0805                                                    
  POSITION STATEMENT:  Answered questions on CSSB 53(L&C)                      
 Senator Rick Halford                                                          
 Alaska State Capitol                                                          
 Juneau, Alaska  99801-1182                                                    
  POSITION STATEMENT:  Sponsor of SJR 14                                       
 Terri Lauterbach                                                              
 Legislative Legal Services                                                    
 Legislative Affairs Agency                                                    
 130 Seward St., Suite 409                                                     
 Juneau, AK  99801-2105                                                        
  POSITION STATEMENT:  Answered questions on SJR 14                            
 Jim Baldwin                                                                   
 Assistant Attorney General                                                    
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska  99811-0300                                                    
  POSITION STATEMENT:  Answered questions on SJR 14                            
 Judge Thomas Stewart                                                          
 Alaska Court System                                                           
 P.O. Box 114100                                                               
 Juneau, AK  99811-4100                                                        
  POSITION STATEMENT:  Commented on SJR 14                                     
  ACTION NARRATIVE                                                             
 TAPE 95-17, SIDE A                                                            
 Number 001                                                                    
          HB   4 PERMANENT FUND DIVIDEND ELIGIBILITY                          
  CHAIRMAN ROBIN TAYLOR  called the Judiciary Committee meeting to             
 order at 1:38 p.m.  The first order of business before the                    
 committee was CSHB 4 (STA) title am, sponsored by Representative              
 ROD MOURANT, legislative aide to the sponsor of HB 4, explained the           
 measure as follows.  CSHB 4(STA) title am reinstates a previous               
 policy allowing the spouses who accompany residents out of state              
 for allowable absences to be eligible to receive a permanent fund             
 dividend while out of state.  The spouse must also qualify as an              
 Alaska resident prior to leaving the state. This policy was changed           
 as the result of the Zyler vs. the State of Alaska case in 1993.              
 In 1992, 25 individuals were denied permanent fund dividends under            
 the changed policy, in 1993, 200 individuals were denied, and in              
 1994 approximately 1300 individuals were denied.  Allowable                   
 absences include college and vocational training, medical                     
 treatment, and military duty.  The bill allows for the retroactive            
 payment of the cases denied as a result of the Zyler case.  The               
 administrative cost estimated by the Department of Revenue is $600            
 to process the appeals files.                                                 
 Number 067                                                                    
 SENATOR ADAMS asked how an applicant would comply with the                    
 language, "maintains and demonstrates at all times an intent," on             
 page 3, lines 10-11.  He asked if proof of voter registration would           
 fulfill that requirement.  MR. MOURANT responded voter registration           
 by itself is not a sole indicator of residency of any state.  He              
 clarified that intent to return to Alaska is already in regulation;           
 the bill would place that requirement in statute.                             
 Number 097                                                                    
 SENATOR ADAMS asked what the cost of paying the permanent fund                
 dividends, denied since 1992 because of the Zyler case, would be.             
 He commented there are times when in-state residents have been                
 denied permanent fund dividends because they missed the filing                
 deadline by one or two days.  He suggested those people also be               
 allowed to re-apply.  MR. MOURANT was unable to provide the                   
 information but offered to calculate those costs.                             
 SENATOR TAYLOR noted the fiscal impact would be on the Permanent              
 Fund, not the General Fund.  MR. MOURANT stated the Permanent Fund            
 Division has adequate funds to cover the retroactive payments.                
 Number 120                                                                    
 SENATOR TAYLOR shared Senator Adams' concern about other people who           
 are denied their dividends unfairly and about the department's                
 system of acknowledging receipt of the applications.  He suggested            
 creating a hearing board to review such cases.  He commented the              
 department appears to go to extraordinary efforts to make sure                
 certain people do not get their dividends, especially military                
 SENATOR TAYLOR also commented the objective standards for allowable           
 absences has been deleted in Section 3.  MR. MOURANT explained that           
 at the department's request, the allowable absence section of                 
 statute was renumbered and restructured and appears in Section 2.             
 Number 164                                                                    
 MIKE McGEE, Chief of Permanent Fund Dividend Operations, stated the           
 department supports CSHB 4(STA) title am.  He clarified the                   
 allowable absences that the bill is designed to reinstate were                
 established in 1982, but were excluded because of the Zyler case.             
 The changes on page 3, section 3, separate the residency definition           
 from allowable absences, as that is part of the conflict in the               
 Zyler case.  Regarding the receipt of application issue discussed             
 by Senator Taylor, Mr. McGee noted the applicant is sent a receipt            
 card to verify receipt of the application.  The department has                
 announced that applicants who do not receive the receipt card by              
 April 15 should notify the department.  SENATOR TAYLOR stated the             
 problem is that the department does not know who did not apply                
 therefore does not know who to notify.  MR. McGEE indicated if an             
 applicant determines they did not receive a receipt card after the            
 filing deadline, but have certain proofs that they filed, they can            
 request to reapply until September.                                           
 Number 200                                                                    
 SENATOR ADAMS asked for the department's interpretation of Section            
 3, lines 10-11.  MR. McGEE replied that language defines a state              
 resident in conjunction with AS 01.10.055.  SENATOR ADAMS  asked              
 whether the bill requires a resident to be a registered voter.  MR.           
 McGEE responded a person does not have to be a registered voter to            
 be a resident.  SENATOR ADAMS asked if the spouse of an applicant             
 in the military in North Carolina could be a registered voter in              
 North Carolina, and still qualify for a permanent fund dividend.              
 MR. McGEE clarified if an applicant files from outside the state,             
 that person must fill out a supplemental schedule which requires              
 the disclosure of actions that may be inconsistent with being a               
 resident.  If a person registers to vote in another state, thereby            
 declaring residency in another state, that person would become                
 ineligible for a permanent fund dividend.                                     
 Number 236                                                                    
 SENATOR ADAMS noted the filing deadline keeps changing and asked              
 how many Alaskans, from rural or urban communities, have missed the           
 filing deadline.  MR. McGEE estimated there are 2100 unsolicited              
 late file applications per year.  SENATOR ADAMS felt those                    
 applicants should be accounted for in this bill.  SENATOR ADAMS               
 asked what the total cost of paying the retroactive dividends                 
 specified in CSHB 4 (STA) title am would be if the bill passes.               
 MR. McGEE replied the amount would differ each year.  MR. McGee               
 asserted this bill corrects a conflict between the statutes and               
 regulations, determined by a court decision.  The issue of filing             
 deadlines is a different one.                                                 
 Number 274                                                                    
 SENATOR MILLER referred to Section 3, and stated although he agrees           
 with what the bill does, statute should not follow regulations; and           
 Section 3 does just that.  MR. McGEE noted AS 01.10.055 contains              
 that language.  SENATOR MILLER commented different statutes pertain           
 to residency.                                                                 
 Number 294                                                                    
 SENATOR ELLIS asked if the Permanent Fund Division investigates               
 applicants to determine if they are registered to vote outside of             
 Alaska.  MR. McGEE replied the Permanent Fund Division is able to             
 match records with the Department of Defense and among state                  
 agencies, however it would not be practical to match records with             
 other states.  They do verify information on a case-by-case basis,            
 if an applicant appeals a denial.                                             
 SENATOR ELLIS asked about the fiscal impact of the retroactive                
 payments made under CSHB 4(STA) title am on future dividends.  MR.            
 McGEE indicated there are only a few individuals that would be                
 served by the retroactive clause, and that cost would not have any            
 impact on future dividends because there is enough money in the               
 fund now from overestimates based on the projected number of                  
 eligible individuals for those years.                                         
 SENATOR ELLIS requested information from the division on the exact            
 number of applicants affected by the retroactivity clause, and the            
 cost of those payments.                                                       
 Number 339                                                                    
 SENATOR MILLER questioned if spouses of college students are the              
 largest group that have been denied, and spouses of military                  
 personnel are the second largest.  MR. McGEE replied affirmatively,           
 and clarified there are 677 spouses of college students, and 292              
 military spouses that have been denied.                                       
 SENATOR ADAMS asked about the effect of Section 6.  MR. McGEE                 
 stated that is to make the provisions in the bill consistent in               
 statute, during the years applicants were denied because of the               
 court decision.                                                               
 SENATOR ADAMS noted he wanted to review the possibility of                    
 including late filers in the bill.  Senator Taylor announced the              
 bill would be held over.                                                      
               SB  53 OMNIBUS INSURANCE REFORM                               
 The committee took up CSSB 53(L&C).  SENATOR TAYLOR announced the             
 proposed committee substitute deletes the credit/life provisions              
 due to testimony taken at the last meeting.  The department wishes            
 can submit another bill if it wishes to pursue those provisions.              
 SENATOR ADAMS asked if the proposed committee substitute includes             
 the three amendments.  SENATOR TAYLOR noted it does not.                      
 SENATOR ADAMS moved to adopt the work draft labeled 9-LSO467\G,               
 dated 3/30/95, as the committee substitute.  SENATOR ELLIS objected           
 for purposes of discussion.  He asked if the Division of Insurance            
 acquiesced to the elimination of the credit/life provisions of CSSB
 SENATOR TAYLOR relinquished the chair to Senator Miller in order to           
 testify before another committee.                                             
 Number 390                                                                    
 MARIANNE BURKE, Director of the Division of Insurance, stated the             
 Division received written comments on Sections 80-94 from the three           
 individuals who testified on the bill via teleconference.  The                
 Division's intent is to resubmit those sections as a separate bill,           
 incorporating the comments made where appropriate.  The Division              
 did agree to the deletion of those sections from CSSB 53(L&C) in              
 order for the bill to move forward.                                           
 Number 404                                                                    
 SENATOR ELLIS commented a new bill containing Sections 80-94 would            
 have to be submitted by the Governor, and will never see the light            
 of day.  He noted the comments were made by three insurance                   
 companies from elsewhere, and he believed the wise course would               
 have been to try to work with those comments and amend the bill to            
 retain those sections in the bill in a more agreeable form.                   
 SENATOR MILLER asked if Sections 80-94 were in last year's bill.              
 MS. BURKE replied affirmatively.                                              
 SENATOR ELLIS maintained his objection to the adoption of CSSB
 53(JUD).  A roll call vote was taken with the following result:               
 Senators Green and Miller voted "Yea," and Senators Adams and Ellis           
 voted "Nay," therefore the motion failed.                                     
 SENATOR TAYLOR returned.  SENATOR GREEN moved to adopt CSSB
 53(JUD).  SENATOR ELLIS objected.  A roll call vote was taken with            
 the following result:  Senators Miller, Green and Taylor voted                
 "Yea," and Senators Ellis and Adams voted "Nay."  The motion                  
 SENATOR MILLER moved the adoption of Amendment #1 by Ford (dated              
 4/4/95).  SENATOR ELLIS objected.  SENATOR ADAMS asked the                    
 Division's position on the amendments.                                        
 Number 440                                                                    
 SENATOR TAYLOR noted Amendment #1 makes the title more specific.              
 MS. BURKE agreed with Senator Taylor's assessment.                            
 SENATOR ELLIS removed his objection.  There being no further                  
 objection, Amendment #1 was adopted.                                          
 SENATOR GREEN moved to adopt Amendment #2 (Ford, 3/27/95).  MS.               
 BURKE explained the amendment makes the term "public accountant"              
 more global.  SENATOR TAYLOR noted the references to lines in                 
 Amendment #2 are inconsistent with the new committee substitute,              
 therefore without objection, the motion was amended to synchronize            
 the pages and line numbers to CSSB 53(JUD).  There being no                   
 objection to the adoption of Amendment #2, the motion passed.                 
 Number  470                                                                   
 SENATOR MILLER moved CSSB 53(JUD) out of committee with individual            
 recommendations.  SENATOR ELLIS objected.  A roll call vote was               
 taken with the following result:  Senators Taylor, Green, and                 
 Miller voted "Yea," and Senators Adams and Ellis voted "Nay."  The            
 motion passed.                                                                
 The committee began its worksession on SJR 14.                                
        SJR 14 CONFIRMATION OF MEMBERS OF PUBLIC CORP                        
 SENATOR TAYLOR stated the issue before the committee is to make a             
 definitional change to provide for legislative confirmation of                
 entities that manage state assets.                                            
 TERRI LAUTERBACH, Division of Legal Services, stated the only                 
 definitional problem with the phrase "public corporation" is in               
 relation to the Commercial Fishing and Agriculture Bank (CFAB)                
 because it is not designated as a public corporation in statute.              
 She also noted concern with the term "state assets" since all state           
 agencies manage funds in one way or another.  She suggested                   
 deleting the reference to state assets in SJR 14.                             
 Number 510                                                                    
 SENATOR ADAMS referred to Ms. Lauterbach's memo and stated CFAB is            
 not included in the list.  He thought SJR 14 was designed to cover            
 the large corporations such as the Permanent Fund Corporation, the            
 Alaska Industrial Development Authority (AIDA), the Alaska Railroad           
 Corporation (ARRC), and CFAB.  MS. LAUTERBACH noted that is a                 
 policy question for Senator Halford.                                          
 MS. LAUTERBACH noted the committee could amend SJR 14 to include an           
 asset limit and define assets, in terms of loan portfolios or the             
 size of a corporation's operating budget.                                     
 Number 529                                                                    
 SENATOR MILLER commented more detail may create problems because a            
 verbose constitutional amendment is unlikely to be approved.  He              
 added if legislative confirmation of CFAB members, with assets of             
 $32 million, is included, all the others on the list will be picked           
 up.  He asserted the decision needs to be made to either include              
 all of the entities, or limit legislative confirmation to the very            
 SENATOR HALFORD explained the term "public corporation" was only              
 one of the terms suggested by the Division of Legal Services.  In             
 terms of priorities, he had focussed on the Permanent Fund, AHFC,             
 ARRC, AIDA and the Alaska Science and Technology Foundation (ASTF).           
 Those entities are prioritized in descending order according to the           
 amount of assets they control.  He discussed the Finance                      
 Committee's concerns with definitional language in SJR 14.  The               
 Administration will oppose anything that puts any requirement on              
 administrative appointments because that power is constitutionally            
 determined.  Language that defines the significant issues, and                
 avoids getting into ridiculous applications, such as legislative              
 involvement with the entity the Permanent Fund Corporation                    
 contracts with to manage their active portfolio, is what needs to             
 be designed.                                                                  
 Number 566                                                                    
 JIM BALDWIN, Assistant Attorney General, commented the Department             
 of Law discussed two problems with SJR 14 in the Finance Committee.           
 The first problem relates to the careful balance of power between             
 the branches of government created in the Constitution.  The power            
 of confirmation is one of those balances and belongs to the                   
 Governor.  It is shared in a limited respect when the Constitution            
 permits it.  He stated a constitutional amendment to change the               
 situation is a commendable approach, rather than a statutory                  
 change.  In researching minutes of the Constitutional Convention,             
 he found little discussion on this issue, however it appears the              
 framers intended to ensure that the Legislature had the power to              
 reach principal department heads.  Most of the corporations have              
 department heads on their boards, although they are not in control            
 of the corporation.  Governor Hammond sought to have the boards of            
 directors of the larger corporations controlled by the department             
 heads.  Because the corporations have become powers unto                      
 themselves, that might be a separate basis for imposing a separate            
 right of confirmation.                                                        
 TAPE 95-17, SIDE B                                                            
 MR. BALDWIN stated his belief that legislative confirmation power             
 over department heads should be enough power to affect the workings           
 of the corporations.  If the Legislature chooses to make statutory            
 changes, it could do as Governor Hammond did, by making the public            
 corporations controlled by the department heads.                              
 MR. BALDWIN discussed the Department of Law's second concern with             
 the amendment.  The phrase, "at the head of a public corporation              
 that manages State assets," may create problems, because some of              
 the corporations contend that once they are created and endowed               
 with assets, the assets become corporate assets.  The corporation             
 is a creature of statute, and therefore controlled by law, but once           
 established it has its own assets.  The Legislature directs the               
 corporate board of directors to adopt a resolution to turn over               
 surplus assets to the state, which comforts Wall Street, since the            
 corporations are voluntarily giving things back to the state.  The            
 "state asset" language is technically incorrect when referring to             
 AHFC or the ARRC, but it may apply to the Permanent Fund                      
 Corporation since it is investing a state trust fund.  The reason             
 the corporations were established with a separate and independent             
 legal existence is to protect the state treasury from the debt                
 those corporations underwrite.                                                
 Number 562                                                                    
 SENATOR HALFORD disagreed with Mr. Baldwin's initial comments about           
 the disruption of the balance of power since the constitutional               
 framers did not envision a $15 billion corporation when they                  
 drafted the Constitution.  He indicated the language needs to be              
 targeted to accomplish specific tasks, and that is the purview of             
 the attorneys who have worked for the Department of Law for years,            
 and attorneys from the Division of Legal Services.                            
 Number 549                                                                    
 SENATOR ADAMS asked if the Department of Law has any suggested                
 language to resolve the corporate/state asset problem.  MR. BALDWIN           
 offered to provide suggestions to the committee.  He added the                
 Governor is unable to veto a resolution.                                      
 SENATOR TAYLOR agreed the language needs to target those concerns             
 shared by all.  He noted it is ludicrous that the Board of                    
 Hairdressers and Barbers needs to be confirmed by the Legislature,            
 but people that control hundreds of millions of dollars do not have           
 to be.                                                                        
 Number 535                                                                    
 SENATOR HALFORD explained the problem is not that this Governor               
 opposes SJR 14.  The former Governor replaced virtually all of the            
 members of the Permanent Fund Corporation board as well.  If these            
 huge corporations are managing state assets, some kind of                     
 continuity must exist, such as legislative confirmation and fixed             
 terms.  That way, no Governor can change the entire direction of              
 the Permanent Fund Corporation with a major shift in investment               
 SENATOR TAYLOR expressed concern that by defining these entities as           
 public corporations, new entities created in the future will be               
 called something else to protect the autonomy of the executive                
 branch.  SENATOR HALFORD stated he had considered the term "public            
 entity" but as the term is broadened, the question of what entities           
 are included becomes convoluted.                                              
 MR. BALDWIN noted Senator Sharp suggested to the Finance Committee            
 that the corporation be required to have a dollar limit on its                
 assets, however including a dollar amount in the Constitution is              
 inadvisable because of inflation.                                             
 SENATOR TAYLOR did not want to include a dollar limitation, but               
 felt the language needs to be broad enough to include CFAB.                   
 SENATOR ELLIS clarified Senator Sharp's suggestion referred to an             
 asset floor, not limit.                                                       
 Number 468                                                                    
 SENATOR HALFORD stated the first step is to define the term to be             
 used, then to define the things not included by the term, and to              
 then make sure the term does not allow for the invention of new,              
 alternative terms to avoid this application.  Language that fits              
 those three criteria would fit the Constitution and be strongly               
 supported by the voters, and would not do violence to the balance             
 of power.                                                                     
 SENATOR TAYLOR asked Senator Halford if he contemplated the                   
 constitutional amendment as also relieving the Legislature of the             
 burden of having to confirm members of other boards and                       
 commissions.  SENATOR HALFORD stated he had not contemplated that.            
 SJR 14 merely adds to the "regulatory or quasi-judicial agency"               
 Number 458                                                                    
 SENATOR GREEN stated SJR 14 does not do anything to change the                
 Legislature's ability to obtain information from the corporations.            
 SENATOR HALFORD agreed with Senator Green's concern about a lack of           
 information.  The confirmation process brings those members back to           
 the table, at which time they can be questioned.                              
 MS. LAUTERBACH commented there is nothing unconstitutional about              
 increasing reporting requirements, which could be done by statute.            
 She also suggested changing the term "public corporation" to                  
 "public entity" in SJR 14, then listing the exceptions by function,           
 such as advisory boards.  SENATOR HALFORD suggested using the                 
 phrase "public entities that directly control state assets."  MS.             
 LAUTERBACH noted that would not resolve the issue of what assets              
 SENATOR TAYLOR discussed an attempt several years ago to establish            
 a Marine Highway Authority.  He wanted the Authority to have                  
 legislative oversight.  SENATOR HALFORD felt it could be defined as           
 a principal department.                                                       
 MR. BALDWIN indicated art. IX, sec. 11 uses similar language that             
 says that restrictions on debt don't apply to a public enterprise             
 or public corporation of the state or a political subdivision. The            
 only security is the revenues of the enterprise or corporation. He            
 suggested using language that would include entities that issue               
 Number 380                                                                    
 JUDGE STEWART arrived.  SENATOR TAYLOR reviewed the issues being              
 discussed by the participants up to that point.  He explained the             
 committee is trying to find appropriate language that is                      
 sufficiently inclusive to take in those aspects of government now             
 being operated, such as the Aerospace Energy Authority, without               
 embroiling the Legislature in the micro-management of those                   
 entities, such as the Permanent Fund Corporation's portfolio                  
 contractors, or union pension fund representatives.  The committee            
 does not feel it would be appropriate for the Legislature to                  
 confirm people elected to those seats.  He also discussed the                 
 moving target aspect, and the need to design a definition that will           
 capture the entities created in the future, by both the Legislature           
 and Executive branch, that should be confirmed.                               
 SENATOR HALFORD asked Judge Stewart what kind of thought was given            
 to these kinds of entities at the time of the Constitutional                  
 Convention.  He asked for advice on the balance of power issue, and           
 whether the Legislature is reaching too far, and whether this was             
 something that was considered in depth at the time of the                     
 Constitutional Convention.                                                    
 Number 350                                                                    
 JUDGE STEWART began by suggesting revising lines 5-7 to eliminate             
 a redundancy as follows:                                                      
  SECTION 26.  BOARDS AND COMMISSIONS.  When a board or                       
 commission is at the head of a principal department, a                        
 regulatory or quasi-judicial agency, or a public corporation                  
 that manages State assets,....                                                
 He noted "State assets" would have to be defined.  Regarding the              
 Constitutional Convention, he stated he managed the business of the           
 Convention and was not on the floor, but doubted the issue of                 
 confirmation of public corporation members was addressed, since               
 those corporations did not exist at the time.  He thought the                 
 underlying philosophy of the Constitution, on the separation of               
 branches, would provide for Executive branch determination of the             
 policy of those agencies so that the people who manage those                  
 agencies express the Governor's philosophies for which he/she was             
 elected.  He stated he, personally, would be reluctant to extend              
 legislative authority beyond what it is, however, depending on how            
 the Governor uses this authority,  some may see it as a significant           
 misuse of that authority.  He stated it was the philosophy of the             
 majority of the Convention that the Legislature is not the                    
 Executive branch and should not be overly involved in the execution           
 of the laws.  If they don't like the Executive branch's management,           
 they can change the laws to restrict the Governor's powers, but               
 having authority over the election of his/her appointees is too far           
 of a reach.  He recommended, if the Legislature feels the policy              
 change is necessary, adding a sentence to the end of SJR 14 that              
 would constitutionally give the Legislature the power, by statute,            
 to extend the list to these kinds of agencies.  That would give the           
 Legislature something to hang its hat on if it wished to expand or            
 contract the list.                                                            
 Number 286                                                                    
 SENATOR MILLER commented the corporations are new beasts that have            
 come into government in the last 20 years, and he wondered what the           
 conversation would have been at the Constitutional Convention                 
 regarding the balance of powers if a government agency that was               
 managing eight times the annual budget existed.  JUDGE STEWART                
 suspected they would have wanted to confirm people selected to do             
 the job by the Governor.  He felt that is consistent with his basic           
 notion that the Governor runs the Executive branch, not the                   
 Legislature.  They put in the basic language to include the head of           
 a principal department.  His concern was more with the Legislature            
 misusing its confirmation powers to try to bind the Governor and              
 prevent him/her from selecting his/her people.  He stated he would            
 not have a great problem with extending legislative confirmation              
 power to the significant governmental agencies.  He added there               
 should be some limiting phrase that would ensure the Legislature              
 does not get involved in micro-management.                                    
 Number 245                                                                    
 MS. LAUTERBACH remarked the limitation could come by the fact that            
 any statute is subject to veto.  Therefore, as the Legislature goes           
 through the process of making the list, adding future agencies                
 would be part of the bargaining process with the Governor.  JUDGE             
 STEWART clarified that would work if SJR 14 gives the Legislature             
 constitutional authority to pass legislation.                                 
 SENATOR HALFORD commented at the time the Legislature considered              
 the purchase of the Alaska Railroad, one of the railroad purchase             
 packages had a constitutional amendment in it that would allow for            
 confirmation of the ARRC board.  He offered to research that                  
 debate.  He agreed if the Legislature passed a bill requiring                 
 legislative confirmation of the Permanent Fund Corporation board,             
 and fixed terms, the Governor would take a lot of heat from the               
 public if he/she vetoed it.  However, if the battle was over a                
 small agency because of a management argument between the                     
 Legislature and Executive branch, the public would support a veto.            
 He added if lines 5-7 of SJR 14 are changed, and a sentence is                
 added to the end, the implication is that the confirmation of                 
 regulatory and quasi-judicial agencies is optional, not required.             
 He suggested leaving lines 5-7 as is, and adding a sentence to the            
 end that allows that any other entity may require confirmation if             
 provided in the statute that creates the entity.                              
 MS. LAUTERBACH added the issue of whether the Legislature has the             
 power to relinquish legislative confirmation authority has to be              
 decided.  She noted lines 5-7 were purposely drafted that way                 
 because there is some concern that the current language of the                
 Constitution is ambiguous.  She purposely did not try to resolve              
 the ambiguity as to whether the "head of" applies to a principal              
 department only, or to regulatory or quasi-judicial agencies as               
 Number 171                                                                    
 SENATOR TAYLOR asked MS. LAUTERBACH to work on additional language            
 to make the suggested changes to SJR 14, especially the last                  
 sentence.  He indicated he wanted to move SJR 14 out of committee             
 in the near future.  SENATOR HALFORD stated by adding the final               
 sentence, the language can be broad since it will not apply until             
 a law is passed.                                                              
 JUDGE STEWART commented in territorial days, it was common for the            
 Legislature to express by statute, its right to confirm.  MR.                 
 BALDWIN asked if the confirmations were by one house.  JUDGE                  
 STEWART replied it was, however the Convention moved away from that           
 to a simple majority.  MR. BALDWIN added there used to be a statute           
 that required that confirmation be taken up and considered within             
 five days.                                                                    
 SENATOR TAYLOR adjourned the meeting at 3:10 p.m.                             

Document Name Date/Time Subjects