Legislature(2001 - 2002)

03/20/2002 01:44 PM JUD

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    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                                                                                                               
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                                                                                                                
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                                                              
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                                                              
SENATOR COWDERY asked  how much land would be needed  at the start                                                              
and noted that  land sales could encompass one lot  or one million                                                              
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                                                              
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                                                              
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                                                              
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                                                              
     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                                                                   
     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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
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                                                              
         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                                                              
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                                                              
There being no  further business to come before  the committee, he                                                              
adjourned the meeting at 2:44 p.m.                                                                                              

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