Legislature(2007 - 2008)BELTZ 211
04/24/2007 01:30 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB120 | |
| HB118 | |
| SB124 | |
| SB102 | |
| SB140 | |
| SB155 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 155 | TELECONFERENCED | |
| + | SB 28 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 140 | TELECONFERENCED | |
| += | SB 102 | TELECONFERENCED | |
| += | SB 124 | TELECONFERENCED | |
| += | HB 118 | TELECONFERENCED | |
| = | SB 120 | ||
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 24, 2007
1:34 p.m.
MEMBERS PRESENT
Senator Johnny Ellis, Chair
Senator Gary Stevens, Vice Chair
Senator Bettye Davis
Senator Lyman Hoffman
Senator Con Bunde
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 28
"An Act relating to limitations on mandatory overtime for
registered nurses and licensed practical nurses in health care
facilities; and providing for an effective date."
BILL POSTPONED TO APRIL 26
SENATE BILL NO. 120
"An Act relating to the calculation and payment of unemployment
compensation benefits; and providing for an effective date."
HEARD AND HELD
CS FOR HOUSE BILL NO. 118(RLS)
"An Act relating to underage possession of alcoholic beverages
in a dwelling."
MOVED CSHB 118(RLS) OUT OF COMMITTEE
SENATE BILL NO. 124
"An Act relating to the allocation of money appropriated to the
Alaska Workforce Investment Board; and providing for an
effective date."
MOVED CSSB 124(L&C) OUT OF COMMITTEE
SENATE BILL NO. 102
"An Act relating to mortgage lenders, mortgage brokers, mortgage
originators, state agents who collect program administration
fees, and other persons who engage in activities relating to
mortgage lending; relating to mortgage loan activities; relating
to an originator fund; relating to fees for mortgage loan
transactions; and providing for an effective date."
HEARD AND HELD
SENATE BILL NO. 140
"An Act requiring paid leave from employment for bone marrow
donation."
HEARD AND HELD
SENATE BILL NO. 155
"An Act relating to the exemption of water and wastewater
utilities of a political subdivision."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 120
SHORT TITLE: UNEMPLOYMENT COMPENSATION BENEFITS
SPONSOR(s): LABOR & COMMERCE
03/14/07 (S) READ THE FIRST TIME - REFERRALS
03/14/07 (S) L&C, FIN
03/22/07 (S) L&C AT 1:30 PM BELTZ 211
03/22/07 (S) Heard & Held
03/22/07 (S) MINUTE(L&C)
BILL: HB 118
SHORT TITLE: PROHIBIT ALLOWING MINORS TO HAVE ALCOHOL
SPONSOR(s): REPRESENTATIVE(s) MEYER
02/05/07 (H) READ THE FIRST TIME - REFERRALS
02/05/07 (H) L&C, JUD
02/16/07 (H) L&C AT 3:00 PM CAPITOL 17
02/16/07 (H) <Bill Hearing Canceled>
02/21/07 (H) L&C AT 3:00 PM CAPITOL 17
02/21/07 (H) Moved Out of Committee
02/21/07 (H) MINUTE(L&C)
02/22/07 (H) L&C RPT 4DP 2NR
02/22/07 (H) DP: GARDNER, RAMRAS, GATTO, OLSON
02/22/07 (H) NR: LEDOUX, NEUMAN
03/12/07 (H) JUD AT 1:00 PM CAPITOL 120
03/12/07 (H) Moved Out of Committee
03/12/07 (H) MINUTE(JUD)
03/14/07 (H) JUD RPT 2DP 4NR 1AM
03/14/07 (H) DP: LYNN, RAMRAS
03/14/07 (H) NR: COGHILL, DAHLSTROM, SAMUELS, HOLMES
03/14/07 (H) AM: GRUENBERG
04/02/07 (H) RLS AT 5:00 PM CAPITOL 106
04/02/07 (H) Moved CSHB 118(RLS) Out of Committee
04/02/07 (H) MINUTE(RLS)
04/03/07 (H) RLS RPT CS(RLS) 4DP 3NR
04/03/07 (H) DP: FAIRCLOUGH, KERTTULA, HARRIS,
JOHNSON
04/03/07 (H) NR: SAMUELS, GUTTENBERG, COGHILL
04/03/07 (H) TRANSMITTED TO (S)
04/03/07 (H) VERSION: CSHB 118(RLS)
04/04/07 (S) READ THE FIRST TIME - REFERRALS
04/04/07 (S) L&C, JUD
04/17/07 (S) L&C AT 1:30 PM BELTZ 211
04/17/07 (S) Heard & Held
04/17/07 (S) MINUTE(L&C)
04/19/07 (S) L&C AT 1:30 PM BELTZ 211
04/19/07 (S) Scheduled But Not Heard
04/24/07 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 102
SHORT TITLE: MORTGAGE LENDING
SPONSOR(s): SENATOR(s) HUGGINS BY REQUEST
03/02/07 (S) READ THE FIRST TIME - REFERRALS
03/02/07 (S) L&C, FIN
04/17/07 (S) L&C AT 1:30 PM BELTZ 211
04/17/07 (S) Scheduled But Not Heard
04/19/07 (S) L&C AT 1:30 PM BELTZ 211
04/19/07 (S) Heard & Held
04/19/07 (S) MINUTE(L&C)
04/24/07 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 140
SHORT TITLE: LEAVE FOR BONE MARROW DONATIONS
SPONSOR(s): SENATOR(s) ELTON
03/28/07 (S) READ THE FIRST TIME - REFERRALS
03/28/07 (S) L&C, STA, FIN
04/19/07 (S) L&C AT 1:30 PM BELTZ 211
04/19/07 (S) Scheduled But Not Heard
04/24/07 (S) L&C AT 1:30 PM BELTZ 211
BILL: SB 155
SHORT TITLE: REGULATION OF WATER/WASTEWATER UTILITIES
SPONSOR(s): LABOR & COMMERCE
04/16/07 (S) READ THE FIRST TIME - REFERRALS
04/16/07 (S) L&C, CRA, FIN
04/24/07 (S) L&C AT 1:30 PM BELTZ 211
WITNESS REGISTER
PETE PAWLOWSKI
Staff to Representative Kevin Meyer
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Commented on HB 118 for the sponsor.
DAVE GRAY
Staff to Senator Donny Olson
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Commented on SB 124 for the sponsor.
DANA OWEN
Staff to the Labor and Commerce Committee
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Commented on the CS to SB 124.
MIKE ANDERS, Director
Alaska Works Partnership
Department of Labor and Workforce Development (DOLWD)
Juneau AK
POSITION STATEMENT: Supported CSSB 124 (L&C), version L.
WENDY REDMAN
Vice President for University Relations
University of Alaska
Anchorage AK
POSITION STATEMENT: Supported CSSB 124 (L&C), version L.
MARK DAVIS, Director
Division of Banking and Securities
Department of Commerce, Community & Economic Development
Juneau AK
POSITION STATEMENT: Explained and supported CSSB 102(L&C).
KEVIN BREELAND, President
Alaska State Mortgage Bankers Association
Juneau AK
POSITION STATEMENT: Supported CSSB 102(L&C).
SENATOR ELTON
Alaska State Legislature
Juneau, AK
POSITION STATEMENT: Sponsor of SB 140.
PAULA CADIENTE
Staff to Senator Elton
Alaska State Capitol
Juneau, AK
POSITION STATEMENT: Explained the CS to SB 140 for the sponsor.
MARK PREMO, General Manager
Anchorage Water and Wastewater Utility Authority (AWWU)
Anchorage, AK
POSITION STATEMENT: Supported SB 155.
CALVIN WEST, Chairman
Anchorage Water and Wastewater Authority Board
Anchorage, AK
POSITION STATEMENT: Supported SB 155.
VIRGINIA RUSH
AARP
Juneau, AK
POSITION STATEMENT: Opposed SB 155.
ACTION NARRATIVE
CHAIR JOHNNY ELLIS called the Senate Labor and Commerce Standing
Committee meeting to order at 1:34:06 PM. Present at the call to
order were Senators Stevens, Bunde, Davis and Ellis.
SB 120-UNEMPLOYMENT COMPENSATION BENEFITS
1:35:45 PM
CHAIR ELLIS said he was bringing SB 120 up for the purpose of
referring it to a subcommittee that he would chair. It would
meet April 26 in the Fahrenkamp Room and all interested parties
were welcome.
CSHB 118(RLS)-PROHIBIT ALLOWING MINORS TO HAVE ALCOHOL
1:36:10 PM
CHAIR ELLIS announced CSHB 118(RLS) to be up for consideration.
He said this was the bill's second hearing in the committee.
PETE PAWLOWSKI, Staff to Representative Kevin Meyer, sponsor of
HB 118, briefed the committee that the bill closes a gap in
statute and provides another tool for law enforcement to deal
with those parties where it's difficult or impossible to prove
that a person is hosting or has furnished alcohol to an underage
person. It would now enable police to assess a non-criminal
violation for hosting a party for underage people.
CHAIR ELLIS noted the zero fiscal note.
1:37:05 PM
SENATOR STEVENS moved to pass CSHB 118(RLS) from committee with
individual recommendations and attached fiscal note. There were
no objections and it was so ordered.
SB 124-ALASKA WORKFORCE INVESTMENT BD ALLOCATION
1:38:13 PM
CHAIR ELLIS announced SB 124 to be up for consideration. He said
it had already been before the committee.
1:39:57 PM
DAVE GRAY, staff to Senator Donny Olson, sponsor of SB 124, said
initially the bill had to do with funding for a VocTech effort
in Nome. Subsequent to that, the Senate was approach by a number
of interests to expand the bill's application to take a broader
look at the education needs of Alaska's workforce prior to any
kind of a pipeline construction effort.
1:41:42 PM
DANA OWEN, staff to the Labor and Commerce Committee, reviewed
the proposed CSSB 124, version L, saying it changes the
allocation scheme significantly on page 2. The University of
Alaska now gets 37 percent, the Galena project gets 3.5 percent,
Kotzebue is at 8.5 percent, Alaska Vocational Technical Center
will get 16 percent, Northwestern Alaska Career and Technical
Center will get 3.5 percent, Southwest Alaska Vocational and
Educational Center will get 3.5 percent, the Ute People's
Learning Center gets 8.5 percent, the Delta Career Advancement
center gets 3.5 percent and Alaska Works Partnership gets 16
percent. He said the idea was to find an equitable distribution
that would not disadvantage any of the centers and would try to
fairly distribute the monies. All the other provisions remain
the same.
1:42:57 PM
SENATOR BUNDE said he had visited many of the centers he
mentioned and noticed their reductions and asked for the
rationale behind taking money away from people who are already
doing a successful job to give it to new places.
MR. OWEN responded that he has spoken with both the University
of Alaska and the Alaska Works Partnership and they are both
supportive of this bill. No one will receive an actual reduction
in funding amounts.
MR. GRAY had no comments on the proposed CS.
1:45:12 PM
SENATOR DAVIS asked where the numbers came from.
CHAIR ELLIS answered there was input from the Department of
Labor and Workforce Development (DOLWD), Alaska Works
Partnership, and the University of Alaska to his staff and he
had a discussion with Senator Stevens.
1:46:03 PM recess 1:50:08 PM
MIKE ANDERS, Director, Alaska Works Partnership, Inc., said the
one thing that wasn't stated earlier in looking at the changed
allocations is that actually the technical vocational education
fund has increased 50 percent as a result of this legislation.
Therefore, the overall allocations are changed. The formula was
arranged so that no current training facility loses money or
gets less money as a result.
1:51:14 PM
WENDY REDMAN, Vice President for University Relations,
University of Alaska, supported CSSB 124 (L&C) and getting money
into the other programs that the University partners with.
Adding to their capacity will be a great help to the state.
SENATOR BUNDE asked if she could use more money if it were
available.
MS. REDMAN replied that the University certainly could use more
money. It has a budget request with a lot of workforce training
requests and it is trying to get some money through the AGIA
bill that is more gasline related.
1:52:34 PM
SENATOR STEVENS moved to adopt the CSSB 124 (L&C), version L.
There were no objections and it was so ordered.
1:53:42 PM
SENATOR STEVENS moved to pass CSSB 124(L&C), version L, from
committee with individual recommendations and attached fiscal
notes. SENATOR BUNDE objected saying he thought success should
be rewarded by giving the successful programs more money rather
than siphoning some potential money away into new and unproven
programs.
A roll call vote was taken. Senators Stevens, Davis and Ellis
voted yea; Senator Bunde voted nay; and CSSB 124(L&C), version
L, passed from committee.
SB 102-MORTGAGE LENDING
1:56:13 PM
CHAIR ELLIS announced SB 102, version C, to be up for
consideration. He said they are in receipt of a second letter in
support of SB 102 from AARP that had worked through its concerns
with Mr. Davis.
MARK DAVIS, Director, Division of Banking and Securities,
Department of Commerce, Community & Economic Development
(DCCED), said he had conversations with the American Financial
Services Association (AFSA) and outside firms like Countrywide,
but they didn't come to an agreement that pleased all parties.
He explained that as division director, the difficulty he has is
if they exempt the originators who work for an affiliate of a
bank, that would include the state bank, and he didn't think
that would be in the consumers' best interest. Right now the
division regulates state bank mortgages, which is very
beneficial for consumers. If the change is adopted, the state
bank could adopt an affiliate and entirely avoid licensing as
originators.
He talked with them about carving out an exemption for federal
banks. But in looking at the state statutes, he is required to
preserve parity between the state and federal banks. However, he
said he understood their concerns more thoroughly now and had
made progress in one area - having to comply with different
education requirements in all 50 states - and a fellow regulator
said they were adopting Internet-based testing that is
standardized and adapted to each state - much like the multi-
state bar exam. He thought that would make it much easier for
out-of-state companies to comply.
On education, he does not want to discipline everyone, but he
also wants everyone to be educated. As an example he said he
gets complaints every month from young couples who have bought
their first home in Alaska and who have gone to a company that
is not familiar with Alaska law. That company does not tell them
about Alaska Housing Finance Corporation's first time homebuyer
program. Then they get told by a relative and realize they could
have saved one or two points. He gets called and he has to tell
them the company was not regulated. He also knows that certain
outside companies are writing mortgages that have prepayment
penalty clauses in them, which are not legal in this state. So,
he is a proponent of education. On the other hand, he can
understand AFSA not wanting to comply with 50 different
education requirements.
MR. DAVIS said it would cost $5,000 to license 20 originators in
Alaska per year. Some states have call center licensing where
all the originators meet all the other requirements. He thought
a lot things they are concerned with could be dealt by
regulation or perhaps some modification of the bill rather than
an exemption - if absolutely necessary. He reminded them that
the effective date is July 1, 2008 and the bill wouldn't apply
to the AFSA members until March 1, 2009.
1:59:51 PM
He also reported checking with the Department of Financing
Institutions in Washington State, which has adopted the AFSA
language allowing for exemptions. He was told they are
processing a couple thousand exemptions and it has become as
onerous as probably doing the licensing. Its statute also didn't
provide for payment of processing those exemptions. So it cost
Washington State money. So if you were going to process
exemptions, it might require another fiscal note.
MR. DAVIS said he thought the bill should be passed as is, but
they should be very careful not to target any part of the
industry. You don't want to discriminate against people from out
of state. He wanted everyone to have education and background
checks. Right now, people with felonies are mortgage originators
and last weekend a mortgage originator pled guilty to two counts
in federal court. This bill will correct that.
2:01:19 PM
SENATOR BUNDE said he had written testimony from the Alaska
Association of Realtors dated this weekend and it says the
Division of Banking receives as many as 50 complaints a week.
MR. DAVIS responded that he receives about 20 complaints, but he
is getting 5 or 6 inquiries from mortgage companies a week that
want to enter into the state. The people who answer the phone
tell him that they get two reactions when they say there is no
licensing. Some say great and others say they don't want to come
here. His experience with payday lending is that loans to the
public were substantially cut with that bill, but the state also
had 30 new companies enter because it's now legal to do so. Ten
companies have exited who couldn't comply with the statute. He
thought a similar thing would happen with mortgage companies.
SENATOR BUNDE asked the average number of complaints a week over
the last year.
MR. DAVIS replied about 4 or 5. The complaints include not
knowing about the programs like AHFC, switching fees, and tying
groups into a closing, which is illegal, but no one can enforce
that. He said the State of Maine recommended the best thing for
state mortgaging to do is to adopt federal standards into state
law. That's exactly what this bill does.
2:02:05 PM
SENATOR HOFFMAN joined the committee.
2:03:54 PM
SENATOR STEVENS asked how the exemptions would be applied.
MR. DAVIS explained that Southcentral Mortgaging would be exempt
from this program. Some complaints are people not getting what
they were promised and education so originators can tell people
what programs are out there to help them if they fall into a
certain category.
CHAIR ELLIS asked if he was recommending the original bill after
talking to AFSA folks.
MR. DAVIS replied yes with the understanding that the regulatory
burden is evenly applied.
CHAIR ELLIS asked if he had all of the statutory authority to
promulgate the regulations that would address some if not all of
the concerns of the AFSA under this bill.
MR. DAVIS answered that after checking with other states on the
education, he thought he could work with that and make sure the
test is similar to other tests in states with licensure; he
could also offer reciprocity.
CHAIR ELLIS asked him what other states do to regulate AFSA
members.
2:06:29 PM
MR. DAVIS replied there are differences. The States of
Washington and Idaho have language similar to what AFSA is
proposing and they process exemptions. That just took place in
Washington on January 1, 2007; Montana just passed a new statute
that licenses originators and does not exempt the AFSA members.
Georgia does not license originators; they make the mortgage
banker responsible for the originator.
His division favors originator licensing because that's the
person who meets with the consumer and sits down with them and
makes the representations. If that person is education, less
enforcement will be needed. If he has to go to court, the
Department of Law would charge $170,000 to $200,000 for that
representation. The best thing to do is have the originators be
educated and be sensitive to minorities.
2:07:39 PM
SENATOR STEVENS asked if he intends to return at some point to
talk more about a bill that would concern predatory lending.
MR. DAVIS replied very much so. If Alaska wants to get in line
with other states, it needs to have a predatory lending act. He
intended to find a sponsor for that bill next session and it
would have to include enforcement powers.
2:09:09 PM
CHAIR ELLIS asked him for the history of the mortgage lending
bill.
MR. DAVIS replied that last year SB 272 proposed licensing
mortgage brokers and mortgage bankers and it was his intention
to come back with an originator licensing bill this year. But
over the summer the industry decided to prepare a bill that
included all three.
2:09:38 PM
KEVIN BREELAND, President, Alaska State Mortgage Bankers
Association, said he is also a partner in Residential Mortgage
in Anchorage. They both supported CSSB 102(L&C). This bill
defines an originator, which is exactly what he does every day -
and every originator in the State of Alaska should be doing
exactly what the definition says. He said Alaska is the only
state with no licensing for mortgage companies and it is one of
the few states left that doesn't require any licensing for loan
originators. Currently 26 states do require it and that number
continues to grow on an annual basis. He said that mortgage
originator licensing has become such an important component
against predatory lending that at the federal level a bi-
partisan bill with 236 sponsors was introduced with a component
for a nationwide mortgage originator national registry so that
all originators in the United State would have to be registered
there. This is a key component in looking at predatory lending
practices.
2:13:31 PM
He said that currently, when a consumer has a complaint the only
recourse he has is to contact the attorney general's office that
has limited resources and there's only so much they can do.
Under this bill, the Division of Banking and Securities gets an
opportunity to look at what companies and originators are doing
and it can fend off predatory lending and other illegal acts
that may be going on.
MR. BREELAND said that Alaska has a dual banking system, which
makes state banks competitive with federal banks. The proposed
AFSA amendment adding the word "affiliate," would start
stripping away at the core of the dual banking system by
allowing state banks to take their mortgage operations, move
them out of the bank and put them into an affiliate where they
would be completely unregulated.
2:16:11 PM
MR. BREELAND said he is sensitive to the fact that some of
companies would have 200 or 300 originators they would have to
license, but out-of-state lenders should not receive privileges
that instate lenders don't. Residential Mortgage has 70
originators statewide; it will spend thousands of dollars
licensing all of them and they welcome the opportunity to do it.
He also drew their attention to language on page 36, lines 18 -
27, that does not require loan processors, loan underwriters,
shipping departments, and clerical staff to be licensed saying
it is not the intent to license all the support staff, only
originators. "If someone gains financially from the origination
of a loan, they should be licensed. It's that simple."
He said he gets up to 80 emails a day from out-of-state
mortgagers, which he doesn't respond to, but he knows that other
Alaskans do respond to them. He reminded them that SB 102 is a
collaboration effort between the Mortgage Bankers Association
and the Alaska Association of Mortgage Brokers; they are both
asking for regulation and this level of consumer protection.
2:18:10 PM
He said SB 102 [version C] is an industry friendly bill that
will promote competition and doesn't bar anybody from competing
in Alaska.
2:18:49 PM
SENATOR STEVENS asked if his employees would need additional
training to become licensed and if they are talking about a
major investment in education.
MR. BREELAND replied that continuing education would take a
sizeable investment from his company. He explained that one of
the components of the bill is an education committee consisting
of seven members. He said the Alaska Mortgage Bankers has an
association with the National Mortgage Bankers Association and
within that association they have what is called Campus NBA that
has a lot of training programs that can be submitted to this
education committee for approval. They would more than likely be
approved. The Alaska Association of Mortgage Brokers through
their national chapter has the same thing; Countrywide has in-
house training programs that can be submitted for approval and
on and on. That was the intent of this bill - to allow all of
these education programs that already exist to just be submitted
for approval so they can be used for continuing education.
MR. BREELAND said the competency test is going to be a test that
basically anyone who is an originator of mortgage loans in the
State of Alaska should be able to pass. The "Kevin provision"
will allow him or anyone else to take it more than once in case
he fails it the first time. It is not a difficult test, but it
gives some level of competency to the people who are talking to
families about the purchase of a home. He said money his company
spends on educating its people will at the very least enhance
their current understanding. The mortgage industry is extremely
technical and always changing and people need to keep abreast
through education.
2:22:09 PM
CHAIR ELLIS noted that Roger Prince with the State of Alaska,
John Martin with the Alaska Association of Mortgage Brokers and
Julia Koester from the Department of Law, were available to
answer questions. He asked the committee to have their questions
ready for next Thursday and held SB 102.
SB 140-LEAVE FOR BONE MARROW DONATIONS
2:23:10 PM
CHAIR ELLIS announced SB 140 to be up for consideration and that
it already had a hearing before this committee.
SENATOR ELTON, sponsor of SB 140, briefly summarized that the
leave donation component of this bill kicks in only when a donor
is selected as a potential donor in and individual case. Section
1 applies the provisions of this bill to private employers who
employ more than 20 people, municipalities and school districts.
He worked with the Alaska State Chamber of Commerce and tried to
address some of its concerns by capping the leave donation that
an employer had to grant at 60 hours.
Sections 2 and 3 are part statutory cleanup and part technical.
Section 4 is the part of the bill that applies the donor program
to state employees. This part of the bill says that the employer
must provide 40 hours minimum and then the caps will be done by
the department in regulation. Section 5 is technical. He noted
that he was speaking to the version M committee substitute. In
the previous version section 4 had a provision that the bill
applied to the Alaska Railroad Corporation. The CS creates a new
section 6 and applies the provisions to the Alaska Railroad
there instead of combining it with section 4.
2:25:36 PM
SENATOR ELTON said a person who is selected as a potential donor
who then becomes a donor has a certain timeframe in which to do
things. Most often a component of the time is travel. The
donation procedure is usually done in Seattle where they try to
do it on Friday because of the recovery time that is necessary
after the donation is made. That is usually done over the
weekend and then the donor is released. The bill removes an
impediment to getting on the register. It means most people
won't have to take personal leave to join a registry.
2:28:09 PM
SENATOR ELTON explained that recently a Juneau boy received a
donation from an out of state person and this made him realize
that it is good state policy to have a pool of people who can
become a donor.
The several fiscal notes are all zero and that played into his
decision as sponsor to include private employers, since the
legislature doesn't normally extend mandates to private
employers. The state didn't believe there would be many donors
and that's why it came up with a zero fiscal note. This will not
have much an impact on private employers.
2:30:25 PM
SENATOR ELTON asked his staff, Paula Cadiente, to join him in
answering questions about this bill. He continued saying,
however, that the fact is that figures from the National Marrow
Donor Program indicate that lack of financial resources can
delay donor searches or limit opportunities for post transplant
care. For patients who qualify for financial assistance, the
Donor Program offers the Marrow Foundation Patient Assistant
Program. In 2006 more than 1000 requests for funds were approved
and more than $4 million were made available to patients in
need. So, a non profit group recognizes there is a financial
impact on donors. This bill is the right thing to do just as
there is a program that the non profit group does.
2:31:22 PM
SENATOR STEVENS asked if the donation procedure really takes a
full week and why there is a difference between public employer
and private employer leave.
SENATOR ELTON responded that he tried to respond to a concern of
the Alaska State Chamber of Commerce that there could be
circumstances in which the employee would want things that would
grow into a bigger issue that would have a bigger financial
impact on businesses. Public employees were left some latitude
for people who write the regulations.
Responding to the first question, Senator Elton said it doesn't
take long to join the registry; it's a simple swab on the cheek.
This bill does not provide for any leave for getting on to the
registry. Once one is selected, a series of tests are made; the
first is a blood test which can be done in a simple way.
However, once you're selected, time is needed even if you live
in an urban area. You have to catch a plane and go to Seattle
where you undergo additional testing. The harvest then occurs
and the person is kept to make sure he didn't suffer any
consequences.
2:34:31 PM
SENATOR BUNDE agreed that people should be encouraged to be
organ and tissue donors, but they are also telling the private
employer they have to give up one week of salary. He asked why
not have the state reimburse private enterprise and that would
encourage people to be organ, tissue or bone marrow donors even
more.
SENATOR ELTON replied that would be the legislature's policy
call, but he cautioned that in most cases private employers will
bend over backwards to accommodate and protect their employees
from a financial hit. So every employer would apply for
reimbursement.
CHAIR ELLIS announced that the proposed CS just arrived.
2:36:31 PM
PAULA CADIENTE, staff to Senator Elton, walked the committee
through the new CS. She said language on page 2, lines 1 - 9
changes the definition of employee to a person who works for a
political subdivision of the state or a private employer. It
also defines "political subdivision." Section 4, on page 3, line
8, deletes the Alaska Railroad Corporation (ARRC) because it is
not subject to Title 39. Language is added on page 4 in section
6 to Title 42 to include employees of the ARRC.
2:38:46 PM
CHAIR ELLIS asked if the changes in the definition of "employee
and political subdivision" on page 2 are just for the purposes
of this statute change (for bone marrow).
MS. CADIENTE replied that is correct.
CHAIR ELLIS asked if the change expands the definition of
employee compared to the original bill.
MS. CADIENTE replied that it is actually more restricted. In the
original bill, an employee was a public or private employer.
CHAIR ELLIS asked how the definition of "political subdivision"
is changed.
MS. CADIENTE replied that it is defined as a municipality and
its subdivisions - as most political subdivision are defined.
2:40:06 PM
CHAIR ELLIS said adopting the CS to SB 140 would be held until
the next hearing.
SB 155-REGULATION OF WATER/WASTEWATER UTILITIES
2:41:02 PM
CHAIR ELLIS announced SB 155 to be up for consideration.
MARK PREMO, General Manager of the Anchorage Water and
Wastewater Utility Authority (AWWU), supported SB 155. He said
this bill would exempt AWWU from economic regulation by the
Regulatory Commission of Alaska (RCA) and place it in the same
status as every other municipally owned water/wastewater utility
in Alaska, except one, Pelican. He related:
The AWWU is two separate utilities, both subject to
economic and service area regulations by the RCA. The
Water Utility, a former City of Anchorage utility, has
been under RCA regulation since inception of the
Alaska Public Utilities Commission (APUC) in 1970.
The Anchorage Sewer Utility, which was formerly owned
by the Greater Anchorage Area Borough, was voluntarily
submitted to the APUC for regulation in 1971. An
umbrella organization, AWWU, was formed in 1975,
following unification of the Borough and City into the
Municipality of Anchorage. The Municipality of
Anchorage in 1991 petitioned the then APUC to exempt
AWWU and its electric utility from regulation.
The Commission split evenly, by a 2-2 vote, on the
question of exempting the electric utility and AWWU.
The opinion by the commissioners opposing self-
regulation cited competition by the Municipality's
electric utility and telephone utility with other
utilities as the primary reason why AWWU should remain
regulated by the state.
No commissioner suggested then or has since suggested
that competition between the water and wastewater was
present, nor is there any competition there today.
Also the telephone utility is no longer owned by
Anchorage.
The House of Representatives previously approved HB
515 and HB 108. Both of these bills would have
exempted AWWU from economic regulation by the RCA. The
Senate did not act on either bill.
HB 108 included a requirement from the House that the
Municipality of Anchorage create an AWWU Authority
with a Board of Directors that reports directly to the
Municipal Assembly to provide oversight of AWWU and
remove AWWU from under the Mayor of Anchorage.
In September 2005, the Municipal Assembly created the
AWWU Authority with a seven member Board of Directors
which are approved by the Assembly and serve 5-year
overlapping terms. Five of the seven Board members
must be customers of AWWU and four must be experts in
the respective fields of engineering, business, public
health and law. A supermajority (five of the seven)
must be AWWU customers, thereby ensuring a strong
level of consumer input into decision-making.
The work of the Board of Directors is written into
Municipal Code by Assembly Ordinance passed in
September, 2005. The Board is empowered to recommend
rates to be charged by the utility to its customers.
Code requires that ratemaking follow standard industry
practice of developing revenue requirements on the
basis of true and documented costs. Public hearings
for proposed rates are required before Board Approval
and public hearings are required again at the
Municipal Assembly level prior to the current practice
of filing tariff adjustments with the RCA. We know of
no other utility in the country that faces three tiers
of public approval prior to establishment of new
rates.
With the Board of Directors in place, the RCA approval
process becomes redundant and value-less
Why does the Municipality of Anchorage desire
exemption from RCA Regulation?
1) The current RCA regulation processes and
procedures are slow and expensive.
From 1993 to 2003, AWWU filed only minor housekeeping
and procedural matters with the RCA and never
requested a rate increase. Yet AWWU ratepayers have
paid approximately $2.8 million in regulatory
assessments to the RCA during this period as part of
every monthly bill. Currently, annual cost to
ratepayers for regulatory commission charges amount to
more than $600,000.
However, the greater cost to AWWU and its customers is
in the form of the cost of preparing filings and
regulatory lag. The cost of staff, consultants and
attorneys currently exceed $700,000 per year over and
above the $600,000 in fees to RCA. A typical tariff
rate adjustment case takes a minimum of 15 months and
requires the preparation of thousands of pages
filings, responses to discovery questions, testimony
and exhibits to adjudicate the case before the RCA.
The large delays substantially increase the jeopardy
for the AWWU rate payers and AWWU in the event that a
portion of the requested rates have to be refunded.
History and present events show that local regulation
is faster, less structured and more economical.
2) Current RCA regulations and procedures are non-
responsive to local needs.
The RCA process was designed for private utilities and
is not entirely appropriate for municipal utilities.
The RCA process is a very structured and adversarial
process that is not consumer friendly.
The RCA is not accountable to Anchorage residents. The
Municipal Assembly and Authority Board of Directors
are more responsive to local needs and are directly
accountable to the ratepayers who are served by the
utilities. These customers are Municipal voters.
Public hearings are now required by Code to be held by
both the new Authority Board and the Municipal
Assembly on all rate matters. The public hearings are
non-adversarial and are much more customer friendly.
I ask for the Committee's support of SB 155. Self
regulation has worked effectively across the nation,
in other Alaskan communities, and in Anchorage.
Anchorage has regulated its own public utilities for
many more years than have state regulators. The
Municipality of Anchorage has a proven track record of
effectively regulating the Port of Anchorage, Merrill
Field and Solid Waste Services. All are financially
strong, highly reputable enterprises that provide
excellent customer service.
For nearly 20 years, rate payers have benefited as
AWWU has reduced staff positions and labor expenses by
leveraging technology and improving business processes
while at the same time increasing spending on system
repairs and rehabilitation. In 1987, AWWU employed 339
people on staff for 84,000 customer accounts (water
and sewer). Today, we serve over 110,000 accounts with
a staff of 266 individuals. This has all been done
without direction and assistance (or value added) from
the RCA.
Over the years, the municipal assembly has made sound
decisions in their oversight of AWWU and other
municipally owned utilities, including such decisions
as the creation of the AWWU Authority Board to
specifically address governance of the utility with
focused, local expertise and consumer interests in
mind.
In conclusion, the passage of SB 155 provides for
local regulation of municipal water and wastewater
utilities and facilitates the proper local-regulation
of the AWWU Authority like other utilities across
Alaska and the rest of the nation. It will also
facilitate the most efficient and effective operation
and management of the AWWU Authority. Thank you.
2:48:22 PM
CALVIN WEST, Chairman, Anchorage Water and Wastewater Authority
Board, supported SB 155 saying it will exempt the AWWU from
economic regulation from the RCA. The following is a transcript
of his testimony:
This bill would exempt the Anchorage Water and
Wastewater Utility, commonly referred to as AWWU, from
economic regulation by the Regulatory Commission of
Alaska. This action will allow AWWU to operate like
every other municipally owned water and/or wastewater
utility in Alaska, except the City of Pelican which
voluntarily opted for economic regulation.
Some history is necessary to understand why AWWU is
economically regulated. Currently, AWWU is two
separate utilities, both subject to economic and
service area regulations by the RCA. The Water
Utility, a former City of Anchorage utility, has been
under economic regulation since inception of the APUC
in 1970, because of competition with other local
utilities.
The Anchorage Sewer Utility, which was established by
the Greater Anchorage Area Borough, and the Borough
voluntarily submitted to the APUC for economic
regulation in 1971 to facilitate the creation of the
utility. In 1975, following unification of the Borough
and City into the Municipality of Anchorage, the two
utilities were organized into single operation forming
AWWU.
The current status today - In September 2005, the
Municipal Assembly created the AWWU Authority with a
seven member Board of Directors to provide governance
and oversight of the utilities. This action
transferred responsibility for guidance and direction
of AWWU from the Mayors Office to the Authority Board.
Board members are approved by the Assembly and serve
5-year overlapping terms. Five of the seven Board
members must be customers of AWWU and four must be
experts in the respective fields of engineering,
business, public health and law. Since five of the
seven Board Members must be AWWU customers, a strong
level of consumer input is ensured in the decision-
making process.
Oversight of AWWU and the Authority Board is provided
by the Municipal Assembly in three key areas:
appointment of board members, approval of changes in
the tariffs, including rates, and approval of debt.
Through Municipal code the Board is empowered to
recommend rates charged for utility services. The
Municipal code requires that ratemaking follow
standard industry practice. Public hearings before
the Board are required for new proposed rates prior to
Board approval. Board approved rates are then
submitted to the Municipal Assembly and public
hearings are again required prior to Assembly
approval. Following Assembly approval the current
practice is the filing of tariff adjustments with the
RCA. We know of no other utility in the United States
that has three tiers of public approval prior to
establishment of new rates.
It is important to note that the initiation of this
legislation, allowing AWWU to become economically
self-regulated, emanates from the Board and is
endorsed by the Municipal Assembly. While Mayor Begich
may also embrace the concept of self-regulation, he
has not expressed his opinion to the Board.
Some key points to consider regarding economic self-
regulation for AWWU are:
1) No other municipally-owned utility in the United
States has three tiers of public governance and
oversight.
2) The seven-member AWWU Authority Board, comprised of
at least five AWWU customers, is more responsive to
the needs of the utilities and its customers than a
state-wide board appointed to oversee a number of
utilities throughout the state.
3) The Municipal Assembly, elected by the citizens of
the Municipality, is more responsive to the citizens
of the Municipality and the customers of AWWU than a
board appointed by the state.
4) The reasons that brought economic regulation of the
water and wastewater utilities are no longer valid.
The water utility does not compete with other adjacent
utilities and the wastewater utility is now well
established and accepted by the community.
5) The current RCA regulation processes and procedures
are slow and expensive: Annual cost to AWWU ratepayers
for regulatory commission charges amount to more than
$600,000 a year. The cost of staff, consultants and
attorneys currently exceeds $700,000 per year for rate
case filings. A typical tariff rate adjustment case
takes a minimum of 15 months to complete. Current RCA
regulations and procedures are non-responsive to local
needs for municipally-owned utilities; it is designed
to regulate privately-owned utilities.
In conclusion, the passage of SB 155 provides for
local regulation of Anchorage's water and wastewater
utilities. It facilitates the proper local regulation
of the AWWU Authority like other utilities across
Alaska and the rest of the nation. It will also
facilitate the most efficient and effective operation
and management of the AWWU Authority.
I ask for the Committee's support of SB 155. Thank
you.
2:54:20 PM
VIRGINIA RUSH, AARP, opposed SB 155 because it removes the AWWU
from RCA oversight that provides consumer protections. She said
that she served as an Assistant Attorney General in Alaska for
23 years, 14 of those years she was assigned to the RCA and so
has a lot of experience with the RCA's expertise in utility
rate-making and its processes.
She said she wanted to respond today to the arguments they had
just heard from Mr. Premo and Mr. West. They say that the Board
that has been established and the Anchorage Assembly adequately
do the job that the RCA does, but the RCA is an independent
judicial-type agency that is given the responsibility of
protecting consumers by assuring that the rates they pay are
just and reasonable. They do that through a rate-making process
which Mr. Premo has described as "adversarial and not consumer
friendly."
MS. RUSH responded further:
But in fact let me tell you what that process is. It's
that the utility files a rate case with the cost
justification for the rates it wants and then a state-
funded consumer organization, which is now in the
Attorney General's Office, has a chance to audit and
carefully examine the cost justification for those
rates. It files a report and then to the extent there
is a disagreement between the utility and the AG as
consumer advocate, there is a hearing for the
independent judicial body that the RCA represents to
decide those issues.
Now, AARP has also participated in a couple of rate
cases because of its concern for consumer rates. Let
me compare that with the process that AWWU proposes as
I understand it. There are consumer hearings - they
said - before the Board and I believe that means that
any citizen can come in and talk for three or five
minutes without the opportunity to audit or have
professional expertise to look at those costs.
The Board is not independent like the RCA. It is the
Board; it's just like the Board of Enstar might be.
It's the number of people who are in charge of running
that utility. Do they take an independent consumer-
protection look at the rates they themselves have
proposed? Well. No.
The Anchorage Assembly, we have talked to and they
have been very helpful and I have nothing but
admiration for people who spend so much time in the
role of Assembly members, but their plates are stacked
a foot high with numerous numerous issues that they
have to decide. They do not have the time or the
expertise to look at the data on cost justification
that the RCA does.
2:58:48 PM
As far as local control goes, the utility and its
management along with its municipal budgeting have all
kinds of authority. They decide if a new main line is
needed through south Anchorage; they decide what
facilities to repair - local needs like that are
addressed exclusively by those bodies. But the RCA's
area of authority is rate making and they do it
independently.
Now, there is a great need for it as illustrated by
AWWU's four new requests for rate increases since the
beginning of 2004 and a large percentage of that
increase that the utility sought - and they are
currently getting it - is to pay additional money
right into the municipalities' coffers as a payment in
lieu of taxes. And when the RCA was asked to look at
the fairness of that, they rejected that. They said it
doesn't follow our precedence; it doesn't follow good
utility policy and currently that issue is on appeal.
But look back and realize that AWWU's first effort to
deregulate itself came just at the same time about
three years ago that the City of Anchorage was
attempting to put more money into its own pocket
through this extra charge in the utility bills, which
they don't come out and declare it to be tax. They
don't call it a tax; it's well hidden in the utility
base, but it is a tax.
3:00:47 PM
CHAIR ELLIS apologized for interrupting and asked her to wrap up
and said that he would hold this bill over for further testimony
and consideration.
MS. RUSH concluded that the RCA is more responsive to consumers
and protects them in a way that is independent and has more
expertise as opposed to two in-house layers that are not
independent at all.
SENATOR STEVENS asked if they could get some response from
Pelican on whether it would want to be exempt as well.
CHAIR ELLIS replied that Pelican would be contacted. He held SB
155 in committee.
There being no further business to come before the committee,
Chair Ellis adjourned the meeting at 3:01:53 PM.
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