Legislature(1999 - 2000)
02/22/2000 01:38 PM Senate L&C
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SENATE LABOR AND COMMERCE COMMITTEE
February 22, 2000
1:38 p.m.
MEMBERS PRESENT
Senator Jerry Mackie, Chairman
Senator Tim Kelly, Vice Chairman
Senator Dave Donley
Senator Loren Leman
Senator Lyman Hoffman
COMMITTEE CALENDAR
SENATE JOINT RESOLUTION NO. 34
Proposing an amendment to the Constitution of the State of Alaska
relating to certain public corporations.
-MOVED CSSJR 34 (L&C) OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SJR 34 - No previous committee action.
WITNESS REGISTER
Mr. Ted Popley
Legal Counsel for House and Senate Majority
State Capitol Building
Juneau, Alaska 99801
POSITION STATEMENT: Testified on SJR 34
Mr. Jim Baldwin
Department of Law
P.O. Box 110300
Juneau, Alaska 99811-0300
POSITION STATEMENT: Testified on SJR 34
ACTION NARRATIVE
TAPE 00-5, SIDE A
Number 001
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee
meeting to order at 1:38 and brought up SJR 34 as the first order
of business.
SJR 34-CONFIRMATION OF BD MANAGING PERM FUND
SENATOR HALFORD, sponsor of SJR 34, said if the framers of the
constitution had envisioned the scope of public corporations today
they would have included them in the constitution. The framers
included cabinet members and regulatory or quasi-judicial boards as
well as the University of Alaska.
A bill was passed in the mid seventies that allowed the legislature
to enforce confirmation by law for deputy directors and people they
wanted more control over in the administration, but that bill was
found unconstitutional.
SJR 34 is within the intent of the original constitution. It makes
sense that the legislature have some input in confirming members of
the Alaska Railroad Corporation, the Permanent Fund Board, AHFC and
AIDA because they are quasi-judicial. There is no balance of power
or continuity in the continuation of these boards. The last two
governors removed the entire permanent fund board--this is not good
public policy for a corporation that is managing $27 billion worth
of assets.
Number 264
CHAIRMAN MACKIE asked Senator Halford to address section 2 of the
work draft.
SENATOR HALFORD answered the amendment Senator Pearce is offering
clarifies the provision as it applies to a hold-over commissioner,
a listed position, if confirmed under one administration has to be
confirmed under another administration if they continue in the same
job. This is consistent with the separation of powers and
clarifies this issue for the future.
Number 339
CHAIRMAN MACKIE asked if a governor is reelected and wants to
maintain the same cabinet will this effect the existing cabinet or
will it only effect a new governor and new cabinet.
SENATOR HALFORD responded it is not the intention of the sponsor
that it cover the same governor or attorney. A commissioner
serving under one governor is a different person serving under
another governor--the direction is different and it shows.
CHAIRMAN MACKIE commented that the language on the bottom of page
1 does not distinguish whether it is a new governor or a governor
that has been reelected.
SENATOR HALFORD responded it is not the intent to reconfirm the
cabinet of a two term governor, and it should not be a
controversial issue at the end of a governor's term.
SENATOR KELLY asked if there have been constitutional amendments in
the past.
SENATOR HALFORD responded yes and it is the only way to do this.
The Hammond vs. Bradner case clearly states the existing list is a
constitutionally controlled list.
SENATOR MACKIE asked if the reason the legislature does not confirm
the permanent fund board is because when the constitutional
provision for confirmations was created AHFC, the Permanent Fund
Corporation and other entities did not exist.
SENATOR HALFORD responded yes.
SENATOR LEMAN commented he has supported this legislation in the
past and feels it is not an overreach of legislative authority. He
would like to add another section for inclusion of judges.
SENATOR HALFORD stated he would support that amendment but it is
probably overreaching for this amendment.
By serving fixed overlapping terms a governor can reappoint all
members of the permanent fund board, but to replace a board without
cause lends itself to easily changing directions for political
purposes.
Number 627
CHAIRMAN MACKIE reconfirmed it is not the intent of this
legislation to have a governor who has been reelected have his
people go through the confirmation process again.
SENATOR HOFFMAN stated the public is probably the most concerned
with the permanent fund board and they are skeptical of what the
legislature does and they want as little interference as possible--
so why should the legislature interfere.
SENATOR HALFORD agreed the public should be skeptical, but this
legislation gives the public the opportunity to vote on a proposal
that provides continuity to the board. This will protect the board
from being removed with a change of administration.
SENATOR HOFFMAN commented if the main issue of the bill is to just
protect an existing board the public would probably agree, but this
bill asks the legislature to confirm the board.
SENATOR HALFORD commented the record for confirmation of executive
appointments is about 95%, it is rare that anyone is turned down.
If a person is rejected, this is probably a person the public
should be worried about.
SENATOR HOFFMAN answered he agreed but it will probably seem to the
public that the politicians are trying to get more control over the
permanent fund.
SENATOR KELLY asked if Senator Halford was worried that by adding
this amendment it may be considered a revision to the constitution,
in the eyes of the supreme court, rather than an amendment. Will
sec. 2 jeopardize the effect of sec. 1?
SENATOR HALFORD responded he did not think so. This bill does not
change the basic principal it just says that when someone carries
over to a different governor the process has to be repeated.
SENATOR KELLY stated the bill does not say "different" governor,
but that can be changed.
Number 811
SENATOR HALFORD said it is his intent that confirmation be carried
over to a "different" governor. He wishes the supreme court had
been more artful in defining "revision."
CHAIRMAN MACKIE asked if the amendment in sec. 2 of the work draft
would require "each election" instead of "new governor." He would
have a hard time supporting the reconfirmation process in the
middle of an eight year term.
SENATOR DONLEY said he has seen this before--the drafted words were
contingent on "new governor."
SENATOR LEMAN asked what will happen if there is a transition in
the second term of a governor and the lieutenant governor takes
office. Would the intent apply to the new governor?
SENATOR HALFORD commented he had not thought of this and it bears
discussion.
CHAIRMAN MACKIE stated the language says, "following a general or
special election which votes for the office of governor or
[indisc.]." Resigning or death will not result in a special
election.
SENATOR LEMAN commented the hold-over language is clear, but is
this the intent the committee wants.
SENATOR KELLY commented he does not know if the public will support
sec. 1 of the bill, but he thinks it is important that the people
managing $27 billion of state assets, the railroad board and AHFC
be confirmed. He thinks sec. 2 weakens the case within the
legislature and with the public.
SENATOR KELLY asked the purpose of the bill--is it because of just
one person the legislature does not like? Sec. 2 weakens sec. 1,
and it may look like a legislative power grab in the eyes of the
public.
CHAIRMAN MACKIE asked why this legislation did not pass the House.
SENATOR HALFORD responded it was at the end of session and time ran
out. One of the bills went through the process on the Senate side
and died in the Rules Committee. In the House the bills died all
the way through the process.
CHAIRMAN MACKIE commented there has not been a strong argument as
to why the framers of the constitution did not include permissive
language for something like this.
SENATOR DONLEY stated a governor has certain assets and liabilities
that need to be blended against the nominees. This is why,
speaking on sec. 2, a nominee should be considered based on who
the governor is--an important dynamic is relevant in getting the
best mix.
This type of confirmation procedure clearly meets the pattern of
the federal system of government. The reason this was not
addressed by the convention in a permissive manner is because in
the 1950's these types of corporations did not exist nor were they
imagined.
CHAIRMAN MACKIE commented he feels a governor should have the
people he wants because he is held responsible.
Number 1333
MR. TED POPLEY, legal counsel for the Majority, commented he does
not know Senator Pearce's intent in sec. 2 as to whether or not it
would apply to a two term governor. He reads the bill to say:
not limited to new governors--it would apply to any gubernatorial
election year.
CHAIRMAN MACKIE said the amendment is in a proposed committee
substitute (CS) which the committee has the option of not adopting
until Senator Pearce has an opportunity to answer the question.
CHAIRMAN MACKIE asked Mr. Popley to comment on the issue Senator
Leman raised--if a Lt. Governor were to assume office will there be
a new confirmation?
MR. POPLEY responded there would be no need to reconfirm the board
after the death of a governor.
MR. JIM BALDWIN, Department of Law (DOL), stated he has not read
sec. 2 and he will address sec. 1. One problem with the bill is
the overall concept, and another problem is the "nit-picking"
drafting problems with the wording which will cause problems later
with interpretation.
SENATOR KELLY interrupted to ask if the "nit-picking" argument is
with SJR 34 or the proposed new language in sec. 1.
The meeting stopped for an at-ease so Mr. Baldwin could look at the
new language in sec. 1.
MR. BALDWIN stated there has been concern from this legislature and
prior legislatures about entities like the permanent fund
corporation. The debate has been about a need for continuity with
the board and not have it removed when there is a new governor.
There has also been expressed a need for some type of insulation of
the board from political influence. The boards duty is to manage
state funds in a reasonable and prudent manor.
Confirmation has been defined to be the legislature's opportunity
to share the executive power of appointment. This is what Bradner
vs. Hammond was about.
Bradner vs. Hammond said that the constitution establishes the
power of appointment as being an executive power, and in a limited
way it allows for the sharing of that power by the legislature. It
cannot be shared in any other way unless it is expressly stated in
the constitution--it cannot be implied from the constitution.
DOL agrees that a constitutional amendment is the way to do this,
but the concept of breaking through the insulation of the board by
making the appointment subject to the action of two political
departments of government breaks down the insulation that was
aspired for by the legislature when it created the permanent fund.
The one concept that was embodied in the executive article of the
constitution was that there should be accountability by one person.
The people should have recourse through the governor--he can be
held responsible at an election. To make the permanent fund board
totally insulated, only removable for cause, means that this state
asset can be managed by someone who is not answerable to anyone at
all. The constitution is not set up this way, it is set up so the
governor will be answerable.
Mr. Baldwin cautioned the committee about going too far down the
road without considering the possibility of appointments being made
in a way so that incompetent or unfit persons are placed in charge
of the permanent fund. It can happen and has happened with some of
the regulatory boards in the past. The problem of breaking through
those "remove for cause" type provisions is not an easy legal
procedure.
SENATOR DONLEY asked that if the legislature confirms an
appointment are there automatic provisions in the statute that will
kick in the "only removal for cause" provision.
MR. BALDWIN responded no, principal department heads are "removal
at pleasure," this is specifically provided for in the
constitution. The constitution states: "they can be removed as
provided by law," and it also states:
This member shall be appointed by the governor so [indisc]
confirmation by majority members and may be removed as
provided by law.
Number 1765
SENATOR DONLEY asked if the legislature passes a law saying the
permanent fund trustees cannot be removed except for due cause,
will this make it too difficult for a governor to remove them even
though he appointed them.
MR. BALDWIN responded it could be a problem.
CHAIRMAN MACKIE asked how valid is it for the legislature to
confirm boards and commissions that are not dealing with
significant state assets.
MR. BALDWIN responded it is appropriate for the legislature to
confirm boards such as hair dressers and barbers because they
regulate a profession that performs a service for the public. They
are a quasi-regulatory board that regulates how people make a
living--this is what the framers of the constitution wanted.
Mr. Baldwin said he cannot make a comparison between the hair
dressers and barbers board and the permanent fund board in
importance, but he is not sure that is what the constitutional
framers had in mind. Public corporations were understood at the
time the constitution was framed and it was clear they were not to
be covered, but it is also true that corporations did not have the
same importance they have today.
CHAIRMAN MACKIE clarified that this was a debate that took place
during the drafting of the constitution.
MR. BALDWIN responded yes and he submitted an opinion that was
written in 1991 by legislative legal counsel on this issue.
CHAIRMAN MACKIE asked if the law is challenged does the opinion
show significant legislative intent that can be argued, or is this
an opinion on one issue such as the University.
MR. BALDWIN stated the question is not how important the board or
commission is, it is the function it carries out. Quasi-regulatory
and judicial boards are regulating peoples employment and they are
affecting the way people make their living. This was the framers
decision--how it was to be done. Broadening this says the
legislature should share more in the governor's executive
appointment and wants executive appointment power.
CHAIRMAN MACKIE interjected "confirmation" power not "appointment"
power.
Number 1925
MR. BALDWIN responded confirmation is a sharing of the power of
appointment. Without the legislature having confirmation power,
there would just be the governor making appointments, and when the
legislature undertakes confirmation power it is sharing in that
power. This is what Bradner vs. Hammond stood for.
CHAIRMAN MACKIE asked if Mr. Baldwin considered SJR 34 an amendment
or revision.
MR. BALDWIN's responded the legislature has introduced, by bringing
in sec. 2, another subject matter. There is a question as to
whether or not you can have more than one subject in an amendment.
The legislature has said by rule that a constitutional amendment
should be limited to a single subject. You can possibly view this
as being addressed to a single subject, but when another subject is
introduced it can bring you within the realm of the issue of
whether it is a revision or an amendment. The supreme court says
amendments are few and simple and limited to a single subject
matter.
CHAIRMAN MACKIE asked Mr. Baldwin in his opinion is sec. 1 clearly
an amendment. He also asked for his opinion about sec. 2.
Number 1997
MR. BALDWIN stated in his opinion sec. 1 is probably an amendment.
When combining more than one subject in a single resolution it
becomes less clear as to whether it is an amendment or resolution.
The only way to get an answer to this question is for the supreme
court take up a series of cases and rule on them.
CHAIRMAN MACKIE asked if Mr. Baldwin likes the language in the
proposed CS for sec. 1 more than the original version.
Number 2096
MR. BALDWIN stated the second version is somewhat better because it
has fewer words which is always better in dealing with the
constitution, but he has a problem with the breadth of the
language. It will probably apply to the permanent fund corporation
without further interpretation because the permanent fund is a
corporation. The language in the statute does not say it has a
separate independent legal existence, it just says it is a public
corporation. AHFC, AIDA and the Railroad Corporation have language
in their statutes which says they are a public corporation created
with separate, independent legal existence. There is a statute,
AS 44.88.19.0B, in AIDA that says it is not part of the state.
AIDA's money and property is not state property, it is a separate
political subdivision of the state--it owns its own assets.
Does the language in this bill do anything when it talks about
state assets? These entities are separate and independent because
the state wants their debt to be separate from the state treasury.
The language says that corporations are managing state assets, and
he wonders if the bill does what the sponsor intends.
MR. BALDWIN advised the committee to say what is wanted and if the
permanent fund is the goal state that, but it will have to be
created in the constitution.
CHAIRMAN MACKIE commented he thinks Senator Halford is trying to
reach things that are in existence now and in the future.
Number 2175
SENATOR HALFORD nodded in agreement.
MR. BALDWIN read, "or is the governor entering a public corporation
established by law that manages significant state assets." He
wonders if this means "established by state law," or will there be
another public corporation that will manage state assets such as a
municipal corporation. This is a vague term and these are
questions that need to be addressed. Will this create something
that is not wanted?
SENATOR HALFORD stated the last consideration included all public
corporations and there was not the language "as provided by law."
The concern is that all types of things should be picked up in the
future that are not anticipated. "Significant state assets as
provided by law" was added to avoid this problem.
The first draft provides for specific exemptions per [indisc]. The
draft for the CS provides for defining what significant state
assets are as a category. The drafters of the constitution did not
have examples, other than the University, of this magnitude.
Number 2357
SENATOR LEMAN asked for a clarification of "significant," does "as
defined by law" take care of this issue.
MR. BALDWIN responded this does make it easier to apply. He has a
problem with saying the assets of AHFC and AIDA are state assets.
"Using this language has a lot of drawbacks to it."
Tape 00-5, Side B
CHAIRMAN MACKIE asked for Mr. Baldwin's opinion on sec. 2.
MR. BALDWIN commented that sec. 2 addresses an old opinion that
dates back to 1971 or 1972 saying that once a public official has
been confirmed he need not stand for confirmation again--the office
is a continuous office. If the legislature wishes to amend the
constitution to change this legal interpretation they have the
power to do this.
SENATOR KELLY commented the legislature's attitude is that
governor's come and go but the legislature remains.
SENATOR HOFFMAN stated that the regional resolution talks about
"heads of corporations" confirmed, and the CS talks about
"governing entities" (board members). He asked if the legislature
will not be confirming heads of corporations under the CS, just the
board members?
Number 2278
MR. BALDWIN responded he did not know the intent of the drafter but
the language of the CS is clearer.
SENATOR HOFFMAN asked Mr. Baldwin if his interpretation of the CS
is not "heads of corporations" but just the "boards."
MR. BALDWIN responded he thought that was correct.
CHAIRMAN MACKIE stated, for the record, on the draft CS, deleting
language on page 1, line 14 through line 5 on page 2, and
renumbering section 3 back to section 2, will accomplish what the
committee wants.
SENATOR KELLY asked staff to forward a list of public corporations
that will come under the auspices of this new confirmation.
CHAIRMAN MACKIE asked if there were any objections to removing sec.
2 from the draft CS. This will be approving the new sec. 1 as well
the title change.
SENATOR KELLY made the motion to adopt the new CS. There being no
objection the motion carried.
SENATOR LEMAN moved CSSJR 34(L&C) from committee with individual
recommendations. There being no objection, the motion carried.
With nothing else to come before the committee, CHAIRMAN MACKIE
adjourned at 2:35 p.m.
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