Legislature(1997 - 1998)
03/05/1998 01:52 PM Senate L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE LABOR AND COMMERCE COMMITTEE
March 5, 1998
1:52 P.M.
MEMBERS PRESENT
Senator Loren Leman, Chairman
Senator Jerry Mackie, Vice Chairman
Senator Tim Kelly
MEMBERS ABSENT
Senator Mike Miller
Senator Lyman Hoffman
COMMITTEE CALENDAR
CS FOR HOUSE BILL NO. 135(RLS)
"An Act extending the termination date of the Board of Dental
Examiners to June 30, 2001; eliminating a requirement that a dental
applicant's photograph be autographed; specifying the circumstances
under which a person may be licensed as a dentist in this state
without examination when the person is licensed as a dentist in
another jurisdiction whose licensing requirements are not
equivalent to this state's requirements; and providing for an
effective date."
- PASSED SCSCSHB 135(L&C) OUT OF COMMITTEE
SENATE BILL NO. 160
"An Act relating to registration, inspection, and testing relating
to radiological equipment in dentists' offices."
- HEARD AND HELD
SENATE BILL NO. 212
"An Act relating to automated teller machines."
-HEARD AND HELD
CS FOR HOUSE BILL NO. 199(JUD)
"An Act relating to the property, transactions, and obligations of
spouses; relating to the augmented estate; amending Rule 301,
Alaska Rules of Evidence; and providing for an effective date."
- PASSED CSHB199(JUD) OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
HB 135 - No previous action to record.
SB 160 - See Labor and Commerce minutes dated 3/5/98.
SB 212 - See Labor and Commerce minutes dated 3/3/98 and 3/5/98.
HB 199 - No previous action to consider.
WITNESS REGISTER
Ms. Annette Kreitzer, Staff
Senator Leman
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Commented on HB 135.
Mr. Dan Pitts
Soldotna, AK
POSITION STATEMENT: Supported HB 135.
Ms. Catherine Reardon, Director
Division of Occupational Licensing
Department of Commerce and Economic Development
P.O. Box 110806
Juneau, AK 99811-0806
POSITION STATEMENT: Supported HB 135 and opposed SB 160.
Dr. Tim Woller, President
Alaska Dental Society
Fairbanks, AK
POSITION STATEMENT: Supported HB 135 and SB 160.
Dr. Art Hansen
Fairbanks, AK
POSITION STATEMENT: Supported HB 135 and SB 160.
Dr. Peter Nakamura, Director
Division of Public Health
Department of Health and Social Services
P.O. Box 110610
Juneau, AK 99811-0610
POSITION STATEMENT: Opposed SB 160.
Mr. Mike Helmbrecht, D.D.
421 3RD St.
Fairbanks, AK 99701
Fairbanks, AK
POSITION STATEMENT: Supported SB 160.
Mr. Dan Anderson, Repair Technician
Biomedical Equipment
510 Juneau Ave.
Fairbanks, AK 99701
POSITION STATEMENT: Supported SB 160.
Ms. Catherine Coleman
Division of Public Health
Department of Health and Social Services
P.O. Box 110610
Juneau, AK 99811-0610
POSITION STATEMENT: Commented on SB 160.
Mr. Sid Heidorsdorf
Juneau, AK 99801
POSITION STATEMENT: Commented on SB 160.
Mr. Jerry Weaver, Secretary
Alaska Bankers Association
305 W. Northern Lights Blvd.
Anchorage, AK 99503
POSITION STATEMENT: Opposed SB 212.
Mr. James Beveridge
Alaska Public Information Research Group (AKPIRG)
507 E St, Ste., 202
Anchorage, AK 99501
POSITION STATEMENT: Supported SB 212.
Mr. Terry Lutz, Chief
Financial Institution Examiner
Department of Commerce and Economic Development
P.O. Box 110807
Juneau, AK 99811-0907
POSITION STATEMENT: Commented on SB 212.
Representative Joe Ryan
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Sponsor of HB 199.
Mr. Richard Thwaites
Alaska Trust Co.
13741 Arne Erickson Circle
Anchorage, AK 99515
POSITION STATEMENT: Supported HB 199.
Mr. Richard Hompesch, Trust Attorney
119 Cushman, Ste 400
Fairbanks, AK 99701
POSITION STATEMENT: Supported HB 199.
Ms. Annette Kreitzer, Staff
Senate Labor and Commerce Committee
State Capitol Bldg.
Juneau, AK 99811-1182
POSITION STATEMENT: Commented on HB 199.
ACTION NARRATIVE
TAPE 98-11, SIDE A
Number 001
HB 135 - DENTISTS: LICENSING & EXTEND EXAMINING BD
CHAIRMAN LEMAN called the Senate Labor and Commerce Committee
meeting to order at 1:52 p.m. and announced HB 135 to be up for
consideration.
MR. DAN PITTS, Soldotna Dentist, supported HB 135.
SENATOR KELLY moved to adopt the CS to HB 135. There were no
objections and it was so ordered.
MS. CATHERINE REARDON, Director, Division of Occupational
Licensing, said she works with the Dental Board and expressed
strong support for HB 135. They provide the expertise needed to
make strong licensing decisions. She gave them credit for adopting
credentialling regulations which achieve a lot of what the audit
pointed out the need for, specifically they say that an applicant
who took an exam that has six out of eight of the same items on the
Alaskan exam requires is equivalent enough to be licensed. That
greatly lessened the problem they had where people were taking
exams in California without the endodontic section and were
ineligible in Alaska. She also noted the fiscal note indicated
that the Division spent $163,200 in FY 97 on the licensing and
regulation of dentists and intends to continue with roughly that
amount of expenditure.
DR. TIM WOLLER, President, Alaska Dental Society, said that they
are generally supportive of HB 135.
DR. ART HANSEN, said he had been in Fairbanks for 30 years and had
also been on the Board. He said that they do need a Board, but
something has to be done to change the Administrative Procedures
Act so the Board can act autonomously and not act under the
jurisdiction of OCC licensing. Also, under the Attorney General's
direction, he has seen investigators for OCC licensing bring in
their opinions and state them as fact. When he was on the Board,
they took those opinions and used them as the information they
needed to take action.
CHAIRMAN LEMAN responded that the title was too restrictive to deal
with his concerns, too.
MR. HANSEN said the Board is working under the guise of a figure-
head and he didn't think that was the way it should work.
SENATOR KELLY said that he is getting a little weary of these
Boards that come into the legislature asking to be given a monopoly
to practice a trade in the State and keep competitors out and
complain when the legislature tries to protect the public's
interest in this whole matter.
SENATOR MACKIE moved SCSHB 135(L&C) from Committee with individual
recommendations and a $0 fiscal note. There were no objections and
it was so ordered.
SB 160 - DENTAL RADIOLOGICAL EQUIPMENT
CHAIRMAN LEMAN announced SB 160 to be up for consideration.
SENATOR MACKIE moved to adopt CSSB 160(L&C), Lauterbach LS0825/L,
dated 2/20/98. There were no objections and it was so ordered.
SENATOR TAYLOR said he had correspondence saying that the State
Dental Association had met in convention recently and strongly
supported this legislation. He read a letter from a dentist to the
Department of Health and Social Services saying the last time his
office was inspected was seven years ago and that fees paid to the
Department have increased to 250 percent of original fees. He said
the State has been negligent in terms of radiological inspections.
They don't need inspections, but were promised inspections and paid
for them.
He explained that this bill provides that the Board, working
through the Department, would establish standards for those people
who could and would inspect x-ray machines. When you pay a company
to check out your machine, their technical person having the proper
qualifications, could be certified by our Department of Health and
Social Services as an inspector and would render a report back to
the Department noting that those machines had been inspected by an
appropriate person.
SENATOR TAYLOR said that Section one provides that the Governor
shall consider nominations made by the Alaska Dental Society which
he is not now required to do.
CHAIRMAN LEMAN asked what that section had to do with the rest of
the bill and radiological equipment.
SENATOR TAYLOR answered that's who's going to make up the Board.
CHAIRMAN LEMAN asked if there was going to be a new Board.
SENATOR TAYLOR answered no, but as appointments are made, they want
to be heard from.
SENATOR MACKIE said he was concerned that that subject wouldn't go
into the title and he also thought the Governor always considered
nominations from the Dental Society.
SENATOR TAYLOR said he didn't know.
SENATOR KELLY said that the wording was so vague he couldn't object
to it, but he didn't see where it fit into the title.
SENATOR TAYLOR said the drafters never mentioned it.
Number 304
SENATOR MACKIE said it didn't really do anything, so why put it
into statute.
CHAIRMAN LEMAN asked if those were the only changes in the
committee substitute.
SENATOR TAYLOR said there were other major changes. The second one
changes the responsibility for registration and inspection from the
Department of Health and Social Services to the Board of Dentistry
allowing the Board to establish those standards. He reviewed other
changes for the Committee.
DR. WOLLER strongly supported SB 160 because any time you can
privatize an inspection like this, it ends up being a more
efficient operation. They are also looking at very low emission
units and not the high emission industrial units, so public safety
is not being compromised.
DR. PETER NAKAMURA, Director, Division of Public Health, explained
what the registration and inspection process has been. When he
first came to the Department in 1991 there was only one person who
was responsible for doing not only the examinations of all the
equipment and providing the consultation needed on radiation health
issues like recent concerns with exposure to deposits at Point Hope
and the use of I-131 in the Fairbanks area. They have the
inability to do the kinds of inspections that are needed or wanted
to be done and hired a second individual in May 1997. Since that
date, he and Ms. Catherine Coleman have inspected 70 of the 241
dental devices that are in the State. At this time, there are
approximately 500 medical facilities that have radiation devices;
241 are related to dental services. When his staff is involved in
registration or an inspection process, it is more than just looking
at a piece of equipment. They look at the procedures, check to see
if the staff are trained, they see if procedures for appropriate
use of the equipment are posted anywhere, so there's some level of
comfort that whoever is using it is at least following a given
protocol. They go beyond checking the equipment and seeing if
there is release of radiation in the room beyond the head of the x-
ray unit.
DR. NAKAMURA said that Dr. Woller is right in that dental devices
are extremely safe, especially if used with the proper techniques
by properly trained people and taking into consideration any
unnecessary exposure to the provider or the patient. For instance,
inspectors look at the x-ray film to see if it's been well taken or
over-exposed. What commonly happens is when the film looks
inappropriate, the easiest way to correct it is to crank up the
kilovoltage and increase the amount of exposure resulting in a
brighter film. Often the problem is not the machine, but the
technique used to develop the film or the procedures. This is what
inspectors look at.
He had no problems with Section one having the Dental Association
recommend people it thinks would be most competent on the Board.
However, language in Section two saying "inspections of the control
panel" is very specific and doesn't involve looking at the device
itself in terms of the radiation heads. Their inspections have
found when a tube starts to go bad and gets a little "gassy," it
can emit at different levels, sometimes twice as much, each time
the test is repeated. It has nothing to do with the panel, but
with the tube.
Narrowing language down to just the control panel would
significantly reduce the fees which were established in 1993,
because they are based on the number of tubes registered. Dental
units are charged $50 annually per tube and medical units are
charged $80 annually per tube. The reason for the annual fee is
their annual budget for this program is $120,000 per year; of that,
$30,000 comes from the feds, about $26,000 comes from general
funds, and the rest of the $64,000 comes from fees that are
generated through the registration process. To maintain a staff to
do this, they need to collect fees. Finding staff qualified to do
this work is not easy. They do recruit in-state, but haven't found
anyone with the qualifications or the interest to assume this kind
of responsibility. Although the greatest hazard in the State from
radiation is medical devices, checking them is not the only thing
they do. This is why another person was hired.
He wouldn't mind moving all responsibilities from the Department of
Health, although that is the arm of government that is mandated by
the Constitution to protect public health, as long as the work is
done properly.
Number 450
DR. HANSEN said he did not know where information came from about
a dentist having continually overexposed his patients. He had
visited the office during an inspection of the equipment nothing
was nothing found other than a slight light leak under the door of
the dark room. He thought that statement should have never been
made. He had asked about the inspection done in 1978 and whether
the calibrations were done wrong and was told the equipment was old
and their calibrations could have been off.
Number 495
MS. CATHERINE REARDON, Director, Division of Occupational
Licensing, said that she is here because her Division serves as
staff to the Dental Board to whom this duty is being transferred in
the bill. She is not knowledgeable about radiologic health risks
or x-ray equipment, so she deferred to Dr. Nakamura's comments on
that aspect. She would comment on the administrative aspects of
the transfer. She said the fiscal note was based on the original
draft and would need revising.
Her understanding of the work draft is that private sector
technicians would take over inspection of the equipment. She
checked with the Governor's Office and found that they have been
considering names that are given to them by the Dental Society and
didn't realize there was a problem.
CHAIRMAN LEMAN asked if every licensed dentist in Alaska was a
member of the Dental Society.
MS. REARDON answered that she didn't think they were.
CHAIRMAN LEMAN asked if there was a way to get input from those who
are not members. He assumed they would be eligible to be appointed
to the Board and asked if there was any organized group that might
submit their name.
MS. REARDON said she didn't know of any other organized group, but
anyone who has comments is free to send a letter off to the Office
of Boards and Commissions in the Governor's Office.
She said that sometimes people will lease equipment and, therefore,
it would be better to say "owners and lessors" throughout the bill.
Secondly, she has a concern with language saying the Board cannot
adopt standards that duplicate federal law or regulations, because
they might want to adopt a federal regulation so there would be a
corresponding State regulation that could be enforced.
On page 2 there is also a prohibition against the Board adopting
regulations that are lower than the manufacturers standard and she
questioned what would happen if the manufacturers standard is lower
than the federal standard.
She also thought they might want to say a dentist or anyone under
the dentist's supervision can use the equipment, because many times
it's the dental hygienist or the dental assistant who actually uses
the dental equipment.
She said that certification should be for entire calendar years, so
everyone would be due at the same time. If they want to send out
a list of equipment that hasn't been certified to dentists, they
can do that at one time. Machines could say certifications are
good up until a certain year, not just a specific month in a year.
In the enforcement section, she questioned why it wouldn't be
considered unprofessional or incompetent practice to have a machine
without a sticker on it, if it results in a $5,000 fine. They
could also do it repeatedly.
In the area of public health service or other federal facilities,
she didn't think we had the authority to require the federal
government to get a certification from the Dental Board.
TAPE 98-11, SIDE B
MS. REARDON said the basic task of the Dental Board would be to
develop standards for the private sector inspectors. She hoped
there would be people in the State who could meet the
qualifications and would want to serve. She said that inspectors
in Maryland must have degrees in physics, biological sciences,
engineering or math, and a certain amount of experience in the
field. She didn't know if that is typical for State inspectors and
didn't know how well that meshed with manufacturers reps.
SENATOR KELLY said regarding Section seven that this title does not
authorize the Department to register, inspect, test, or otherwise
regulate dental radiological equipment or records relating to
dental radiological equipment regulated by the Board of Dental
Examiners under law. He asked if she would even be in the game, if
this bill passes. He asked who would regulate the technicians.
Someone answered that the Board would.
MS. REARDON responded the reason she would be involved at all is
because the Board does not have any staff outside of her Division,
so in terms of who would be receiving the certifications, mailing
out the stickers, etc., under the current system, it is her staff.
She said that the Dental Board discussed this bill a couple of
meetings ago and opposed it in its original version. As
individuals they may not all oppose the bill.
MR. MIKE HELMBRECHT, Fairbanks Dentist, said he talked with Mr. Ken
Crooks who was neutral on the bill. He said he favored the bill
very much and that the current system of dental x-ray inspection is
broken and no longer effective. It's also not in the public's best
interest. There is no need for government inspection.
There are two problems with the State doing the inspections. The
first is that the Department by its own admission hasn't had the
personnel to do consistent inspections in over six years and since
dental x-rays comprise over 50 percent of the units that the
Department inspects and meet only .3 percent of the radiation that
Alaskans receive, they can transfer authority to regulate these
units to the Dental Board of Examiners which would free the
Department to inspect only those x-ray machines that are capable of
harmful doses of radiation.
MR. DAN ANDERSON, Repair Technician, said he repairs and calibrates
dental and medical x-ray equipment. He said the private sector
technicians are ready and willing to calibrate and repair the
dental x-ray units. He said there are a number of companies in
Anchorage that would do it there. He agreed with Dr. Nakamura's
concern that using "control panel" is not a good choice of words.
He cannot inspect a control panel without also inspecting the x-ray
tube. Also, if it is deemed by the Dental Board that more than the
x-ray machine be done, they could also do a dark room survey where
they would check the x-ray film processor.
SENATOR KELLY asked if he had to go to school to become a
technician.
MR. ANDERSON replied that he is a certified biomedical technician
and has a B.S. degree. To get the certification, one must have a
two- or four-year degree and a certain number of years experience.
Most technicians who repair dental equipment do not come from the
medical equipment side like he does. Some have gotten their
training from the military, some from factories, some from an
apprenticeship, etc.. He said training for medical x-ray units is
much more complicated than training for dental x-ray units.
Number 463
SENATOR MACKIE asked what people in the rural areas were supposed
to do.
MR. ANDERSON responded that any town that has enough people to have
a dental clinic will also have a medical clinic and so the
technician that goes to do the medical equipment could do the
dental, except for native clinics that are run by federal
employees.
MR. SID HEIDORSDORF, a neurological physicist, said he first became
involved with the State program in 1962 when he was first assigned
here. He said when proposals like this come up, there is a reason
behind it, and he thought they should look for the reason. He's
heard of two issues, one is an inspection fee problems, but if it's
a complaint about actions taken by the Department of Health and
Social Services, that should be looked at. It's either a
legitimate claim or it isn't. He thought it would be a terrible
mistake to transfer this responsibility out of the Division of
Health and Social Services to the Department of Commerce, because
the State already has radiation responsibilities split three ways.
The Department of Labor has responsibility for occupational
exposure to radiation, the Department of Environmental Conservation
has responsibility for contamination of the air, soil, water, and
subsurface soils by radioactive materials, and the Department of
Health and Social Services which is responsible for all public
health aspects of radiation protection.
Maintenance personnel are the mechanics and calibrate and repair x-
ray equipment, but that has nothing to do with use of the equipment
which is critical. Dental x-rays are reliable, but five years
isn't an acceptable limit to go back and try to recheck what
exposures were. When he left the State there were about 160 dental
offices with an average of 3 x-ray units per office. About 35
percent exceeded the "acceptable" exposure range and these are the
offices he placed a higher priority on.
He would not defend the statement, "An amount of radiation so
minute that there's no chance of harm." The philosophy of
radiation protection is to minimize exposure and there is always a
certain minimum amount you need to get a good x-ray. He did not
think maintenance personnel were equipped to do these kinds of
inspections on dental equipment.
MR. HEIDORSDORF also said he would like to hear a definition of an
outdated x-ray unit. Twenty-five-year-old equipment is perfectly
acceptable. He opposed the inspection fee when it was instituted,
but the legislature required the Department to start charging for
services in 1987 or 88. He emphasized that this is a registration
fee, not an inspection fee and a lot of people thought it was a fee
for inspection. The cost of getting to remote areas to inspect
equipment would be prohibitive, especially compared to a $50 per
tube registration fee today.
He explained that dental units and medical units both operate
within the same range of 65 - 90 kilovolts. Megavolts are therapy
units and are not diagnostic x-rays. The effect per exposure for
a medical x-ray unit is identical to the effect of dental x-ray
unit, if all other conditions are equal.
Number 325
SENATOR MACKIE asked if the $50 per tube fee was the only fee a
dentist has to pay. He asked how many tubes there are in a unit.
MR. HEIDORSDORF answered that is the only fee and they can have as
few as three or as many as six.
SENATOR MACKIE asked if there are any inspection fees if he does an
inspection.
MR. HEIDORSDORF answered no. The extra costs are covered by the
State.
SENATOR MACKIE asked if he ever had an instance where someone
wasn't ready to comply with his recommendations.
MR. HEIDORSDORF said he had a number of instances with medical
units, but not with dental. Generally the weak link is processing.
SENATOR MACKIE asked about inspecting the control panel only.
MR. HEIDORSDORF answered that he couldn't relate to that at all.
You can't inspect an x-ray unit unless you check the tube.
SENATOR KELLY said his first concern is the health of the public
and that's why this law was passed originally. It would appear the
dental x-ray units are not dangerous as some of the higher medical
equipment. He asked if there was a public health reason they
couldn't split the dental radiological equipment off from the
medical equipment.
MR. HEIDORSDORF said there was a good reason and it's because they
are both ionizing radiations of the same type and both involve some
type of radiation exposure to patients. Therefore, it should be
under the jurisdiction of people who are trained in radiation
safety.
SENATOR TAYLOR asked if it wasn't a matter of drawing up
regulations and having the right person do it.
Number 260
MR. HEIDORSDORF said that could be done. There are a number of
states allowing private consultants to do these inspections right
now. He is not aware of a single state that accepts anything other
than "a radiological health person" (backgrounds in physics and
chemistry).
SENATOR TAYLOR asked who replaced him at the Division of Public
Health and if he had the same qualifications.
MR. HEIDORSDORF said after he left the position was vacant for a
couple of years and the person who replaced him was qualified, but
has left.
MS. CATHERINE COLEMAN, Division of Public Health, said there was a
three and a half year gap.
MR. HEIDORSDORF repeated that radiation safety is not the concern
of a repair technician, they make sure the equipment works
properly. That doesn't Ensure that it is used properly and there
is a big difference. The feeling is that when you have an x-ray
exam, the benefit from that exam will far exceed any risk. There
is some risk, but it's impossible to count up x-rays and then tell
a person they can't have any more. There is a clear benefit to
having them. He explained there are about 100 milligrams of
background radiation per year for the whole body. It's very
difficult to compare medical or dental exams, because they are not
whole body radiation.
SENATOR MACKIE added that he has a strong concern for what happens
in the outlying areas and if they have to fly someone in from
Fairbanks or Anchorage, that could be done by the State.
SENATOR TAYLOR responded that in Ketchikan they would send
inspectors to the outlying areas during their scheduled stops for
the City. According to testimony he has heard, dental equipment is
the least dangerous and most reliable of all. He thought what has
been happening for the last several years is that all the dentists
have been paying their $50 per tube to basically keep the
inspectors away. That's why there is a three and a half year gap
with no one to do it and why some machines have gone six to 10
years without an inspection. He said that he was gearing up to
have inspections every five years.
CHAIRMAN LEMAN said SB 160 would be held over for further work by
the Committee.
SB 212 - FEES FOR USE OF AUTOMATED TELLER MACHINES
CHAIRMAN LEMAN announced SB 212 to be up for consideration.
SENATOR ELLIS, sponsor, explained this bill relates to automated
teller machines in Alaska, "a multi-billion dollar industry." This
bill emphasizes safety and notice to the customer and the issue of
double-charging. There is a trend nationwide to charge ATM holders
a second fee. Up until a year ago the private sector itself had a
ban on double-charging of customers for these services. He does
not have a problem with charging a customer for the cost of the
convenience, but the double-charge offends him. For someone with
a lot of money that is not a big concern, but for lower income and
working people, the charges get out of hand. He thought notice to
the consumer was getting to be more important, because the machines
are soon going to dispense coupons, tickets, and other things that
will divert the attention of the consumer. Initiative for work on
this issue came from Senator D'Amato who is working on this on a
national level. Other aspects of the bill are patterned after the
state of Washington and are based on some investigative news
reports on ATMs being crime magnets across the country. There are
provisions for safety evaluations, lighting requirements, etc. that
will make them less likely to be points of crime commission.
CHAIRMAN LEMAN asked regarding the first charge which is shared by
banks, if there is a mechanism for the charge to be split.
SENATOR ELLIS said the only mechanism he knows of is the agreements
between the banks and, frankly, how they charge the fees is a
mystery to him. He said there are banks that don't charge fees.
It is also a mystery about how profitable these ATMs are. They are
talking not just about the bank affiliated ATMs, but also the
independent ATMs for which there's a much greater projected growth
in that area.
TAPE 98-12, SIDE A
Number 001
SENATOR MACKIE asked how many actual ATM transactions there are in
this State.
SENATOR ELLIS said he didn't know, but could probably get that
information.
SENATOR MACKIE asked if the fee was a percentage or a set amount.
SENATOR ELLIS answered that it is a set amount.
SENATOR KELLY asked if he was specifically exempting credit unions
that have automatic teller machines in this legislation. He noted
that there is one credit union that is larger than all but one or
two of the banks.
SENATOR ELLIS said he thought the definition clause was big enough
to cover everyone; it's not his intent to exclude credit unions or
give them any advantage over banks.
MR. JERRY WEAVER, Secretary, Alaska Bankers Association, said he is
also an employee of the National Bank of Alaska. He said that
anyone who wants to can set up a cash machine, if they have the
money, but he didn't think the definition was expansive enough to
fully include those people. The bulk of NBA's business is by
customers of the bank and they aren't charged for use of ATM's.
The machines cost roughly $25,000 and about $1,500 per month to
service. The second fee is basically part of the service charge
that comes from Cirrus and is 50 - 75 cents. Plus and Cirrus both
have regulations that require two types of notice to be given to
customers which has to be placed physically on the outside of the
machine and before the transaction can be completed, the fees have
to come up on the screen. All 120 machines the NBA has are lit and
have video cameras with them, since video cameras require lighting
to operate effectively.
MR. WEAVER said they view this as a free enterprise issue; business
competing against business. Consumers are very smart and quickly
figure out what the fees are. They look for convenience the same
as with the hundreds of other electronic products that are
available to consumers.
Alaska is unique because in some areas these machines almost act as
banks, especially in bush locations. If they regulate fees and
pass a bill such as this, they would see a fairly fast reduction of
those machines in the availability and convenience to the
consumers. There is competition out there and those people who
have put out the heavy capital investment to get the machines out
there should be allowed to make an adequate recovery.
MR. JAMES BEVERIDGE, AKPIRG, explained that a surcharge like this
to a person who was not a customer of the bank would mean they
would be charged a fee by their own bank and the new surcharge
would be billed to them at the time of the transaction. He said
that bigger banks have a much broader network of ATM's and by
placing this fee on customers who aren't members of their own bank,
they are disadvantaging small banks and credit unions. The effect
of these surcharges are not felt evenly by all people and
disadvantage people of lower incomes who need to use them more
frequently for smaller withdrawals. They are often compelled to
receive their welfare or benefit checks electronically.
MR. TERRY LUTZ, Chief Examiner, Division of Banking, said he had
relatively few complaints, but he had a problem with the bill,
because it seems to target banks. If they get rid of the first
section identifying banks as the culprit, he thought the bill would
be good. He thought we needed something statewide if the federal
government doesn't.
SENATOR KELLY asked if he thought the definition should be expanded
to anyone who operates an ATM.
MR.LUTZ answered yes.
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CHAIRMAN LEMAN said they would hold the bill and work on language
to take care of the concerns and bring it up next Tuesday.
HB 199 - COMMUNITY PROPERTY
CHAIRMAN LEMAN announced HB 199 to be up for consideration.
REPRESENTATIVE JOE RYAN, sponsor, said HB 199 allows Alaskans to
take advantage of a loophole in the federal tax law that says if
you have property that is designated community property when one of
two married people dies, the property gets adjusted up from its
original value to its present value and there is a capital gains
liability of 20 percent. This bill exempts the property from tax
liability, because it is community property. This bill allows
people by election to take some or all of their assets and name
them community property. Both people have to sign an agreement and
can have the advantages. Family law people felt that somehow a
woman would be taken advantage of and wanted more than a 50/50
split, and so cautionary language was put in to consult an attorney
before signing an agreement.
The other aspect of this is that it ties in with a series of
investment bills he is introducing, with the Alaska Trust Act being
one. He is trying to make Alaska a favorable place to bring money
to invest.
SENATOR KELLY asked if enactment of this legislation makes Alaska
a community property state.
MR. RICHARD THWAITES, Alaska Trust Co., answered no. He explained
in 1981 a change was made with regard to estate taxes and community
property states had an advantage we didn't have as a separate
property state. In community property states, if one person died,
the surviving spouse got a stepped up income tax basis in both
halves of the property. He has proposed here an optional community
property provision which is much like the one passed in Oklahoma in
1938 (which was approved by the federal statutes), with an opt out
clause which has passed IRS muster. Alaska can have the best of
both worlds by staying a separate property state and by offering an
optional community property designation for spouses to elect asset
by asset. There would be three classifications of states:
community property, separate property, and Alaska which would be a
separate property state with a community property option available
on a designated basis and you could go into it or out of it as long
as both people consented.
SENATOR MACKIE asked why other states hadn't come up with this
option.
MR. THWAITES answered that they hadn't thought about it, yet.
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He said after Alaska adopted its Trust Act a couple of years ago,
Delaware tried to copy it, but it changed three things in its
statute which rendered it unworkable. The banks, family lawyers,
and personal injury lawyers wanted and were granted special
exceptions. Now Delaware is trying to fix it.
SENATOR KELLY asked if another state besides Delaware did a trust
statute after us.
MR. THWAITES answered that South Dakota introduced a bill and the
legislature tabled it.
SENATOR KELLY asked where is the advantage to the State?
MR. THWAITES answered that over the last two years we have gotten
a lot of publicity around the country.
SENATOR KELLY asked if our law is known as the Alaska Trust.
MR. THWAITES answered yes, but the trusts are being called Tundra
Trusts.
SENATOR KELLY asked how many trusts had been established in Alaska
as a result of the Trust Law.
MR. THWAITES answered they have over 50 in the Alaska Trust
Company, some as high as $26 million from Florida. Key Bank is
doing a major marketing campaign across the country as a result of
it.
SENATOR KELLY asked if he knew how much total money had come to
Alaska as a result of that legislation.
MR. THWAITES answered he just knew of the 50 with his company, but
meetings he has been to have had the largest attendance in the
Alaska section. He said that the Delaware law works from a
creditor's standpoint, but it wouldn't work with the IRS. If you
want the estate planning rationale, you need to go with the IRS.
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There has been an attack on the Alaska Trust as being a sham by the
off-shore trust people. But most of the people he talked to at an
institute said it's obvious if Alaska does work, all the people
with legal purposes are going to go to Alaska and all the drug
people and O.J. Simpson are going to be the only ones left off-
shore - and there's $1 trillion off-shore right now. He has seen
three trusts come to Alaska from California that were off-shore
before by people who didn't like the off-shore stuff. He thought
HB 199 would further enhance that trend and get it down to where
more practitioners would want to do it. From the tax standpoint,
this is a pretty straightforward option.
SENATOR KELLY asked how the State of Alaska benefits from passage
of this bill.
MR. THWAITES answered that the citizens of Alaska are going to
benefit in that they will not pay as much (federal) income tax as
they would have paid before. This is somewhat decreased by the
after 55 one-time $125,000 exemption which has been changed by
Congress to the $250,000 exemption for as many times as you want to
with no age limit. Very often at a liquidation stage, most of the
cash that comes in on a sale like that goes to commissions and
taxes. This will take the tax part of that away to the extent the
assets were elected.
SENATOR KELLY asked if there were any fees the State of Alaska
receives from any of these trusts that are being established up
here.
MR. THWAITES answered yes, that they are $25 for the registration
and whatever fees or taxes other trusts pay.
SENATOR MACKIE asked if there was any correlation between estate
taxes and assets received by heirs.
MR. THWAITES said there was in the Trust Act, but this is purely an
income tax bill.
MR. RICHARD HOMPESCH, Fairbanks Trust Attorney, supported HB 199.
CHAIRMAN LEMAN asked if there were any downside to this at all.
MR. THWAITES answered that the only loser is the IRS.
MR. HOMPESCH agreed, he added that it this is purely optional.
SENATOR KELLY asked what the administration thought of it.
REPRESENTATIVE RYAN said he had discussed this with Willis
Kirkpatrick, Director, Division of Banking, who endorsed the bill.
He noted the $0 fiscal note.
(Mr. Kirkpatrick had to leave the hearing for another appointment.)
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MS. ANNETTE KREITZER, Staff to Senate Labor and Commerce, said she
also had talked to Mr. Kirkpatrick who had no problems with the
bill.
SENATOR MACKIE moved to pass HB 199 with individual
recommendations. There were no objections and it was so ordered.
CHAIRMAN LEMAN adjourned the meeting at 4:05 p.m.
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