Legislature(2003 - 2004)

05/06/2003 01:35 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                          May 6, 2003                                                                                           
                           1:35 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Bettye Davis                                                                                                            
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 102                                                                                                             
"An Act  increasing the amount  of revenue received by  the state                                                               
from  charitable   gaming  activities;   and  providing   for  an                                                               
effective date."                                                                                                                
                                                                                                                                
     MOVED CSSB 102(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 192                                                                                                             
"An  Act  relating  to  teachers and  training  programs  in  the                                                               
Department of  Labor and Workforce Development,  to the placement                                                               
in  the exempt  service  of certified  teachers  employed by  the                                                               
Department  of   Labor  and   Workforce  Development,   to  their                                                               
eligibility to participate in the  Teachers' Retirement System of                                                               
Alaska, and to  the functions of the  Alaska Workforce Investment                                                               
Board  regarding the  Kotzebue  Technical Center  and the  Alaska                                                               
Vocational  Technical  Center;  and providing  for  an  effective                                                               
date."                                                                                                                          
                                                                                                                                
     MOVED CSSB 192(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 210                                                                                                             
"An  Act regarding  the computation  of overtime  compensation by                                                               
employers before  June 2,  1999; and  providing for  an effective                                                               
date."                                                                                                                          
                                                                                                                                
     MOVED SB 210 OUT OF COMMITTEE                                                                                              
                                                                                                                                
SENATE BILL NO. 154                                                                                                             
     "An Act relating to a student loan repayment program for nurses,                                                           
     and amending the duties of the Board of Nursing that relate to                                                             
     this program; and providing for an effective date."                                                                        
                                                                                                                                
          MOVED SB 154 OUT OF COMMITTEE                                                                                         
                                                                                                                                
     CS FOR HOUSE BILL NO. 51(HES)                                                                                              
     "An Act requiring pharmacists to include generic drug                                                                      
     information on containers in which brand-name prescription drug                                                            
     orders are dispensed."                                                                                                     
                                                                                                                                
          MOVED CSHB 51(HES) OUT OF COMMITTEE                                                                                   
                                                                                                                                
     SENATE BILL NO. 32                                                                                                         
     "An Act relating to insurance for and work on certain motor                                                                
     vehicle repairs; and providing for an effective date."                                                                     
                                                                                                                                
          HEARD AND HELD                                                                                                        
                                                                                                                                
     PREVIOUS ACTION                                                                                                          
                                                                                                                              
     SB 102 - See Labor and Commerce minutes dated 3/13/03, 4/24/03                                                             
     and 4/29/03.                                                                                                               
                                                                                                                                
     SB 192 - No previous action to consider.                                                                                   
                                                                                                                                
     SB 210 - No previous action to consider.                                                                                   
                                                                                                                                
     SB 154 - See HESS minutes dated 4/9/03.                                                                                    
                                                                                                                                
     HB 51 - See HESS minutes dated 4/7/03.                                                                                     
                                                                                                                                
     SB 32 - No previous action to record.                                                                                      
                                                                                                                                
     WITNESS REGISTER                                                                                                         
                                                                                                                                
     Commissioner Greg O'Claray                                                                                                 
     Department of Labor & Workforce                                                                                            
       Development                                                                                                              
     PO Box 21149                                                                                                               
     Juneau, AK 99802-1149                                                                                                      
     POSITION STATEMENT: Commented on SB 192 and supported SCR 210.                                                           
                                                                                                                                
     Mr. Fred Esposito, Director                                                                                                
     Alaska Vocational Technical Education Center (AVTEC)                                                                       
     Seward AK                                                                                                                  
     POSITION STATEMENT: Supported SB 192.                                                                                    
                                                                                                                                
Mr. Dave DeRuwe, Vice President                                                                                                 
Alaska Vocational Technical Education Center (AVTEC)                                                                            
Teacher's Association                                                                                                           
PO Box 62                                                                                                                       
Seward AK 99664                                                                                                                 
POSITION STATEMENT: Supported SB 192.                                                                                         
                                                                                                                                
Mr. John Alcantra, Director                                                                                                     
Government Relations                                                                                                            
National Education Association of Alaska                                                                                        
114 Second Street                                                                                                               
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supported SB 192.                                                                                         
                                                                                                                                
Ms. Jane Alberts                                                                                                                
Staff to Senator Bunde                                                                                                          
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Commented on SB 210.                                                                                      
                                                                                                                                
Mr. John Shively, Vice President                                                                                                
Government and Community Relations                                                                                              
Holland American Line                                                                                                           
POSITION STATEMENT: Supported SB 210.                                                                                         
                                                                                                                                
Mr. Don Etheridge                                                                                                               
AFL-CIO                                                                                                                         
710 West 9th Street                                                                                                             
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supported SB 210.                                                                                         
                                                                                                                                
Ms. Cathy Giessel                                                                                                               
Alaska Nurse Practitioners Association                                                                                          
12701 Ridgewood                                                                                                                 
Anchorage AK 99516                                                                                                              
POSITION STATEMENT: Supported SB 154.                                                                                         
                                                                                                                                
Ms. Camille Soleil, Executive Director                                                                                          
Alaska Nurses Association                                                                                                       
2207 E. Tudor Rd.                                                                                                               
Anchorage AK 99507                                                                                                              
POSITION STATEMENT: Supported SB 154.                                                                                         
                                                                                                                                
Ms. Laraine Derr                                                                                                                
Alaska State Hospital & Nursing Home Assn.                                                                                      
426 Main St.                                                                                                                    
     Juneau, AK  99801                                                                                                          
     POSITION STATEMENT: Supported SB 154.                                                                                    
                                                                                                                                
     Ms. Diane Barrans, Executive Director                                                                                      
     Postsecondary Education Commission                                                                                         
     Department of Education &                                                                                                  
      Early Development                                                                                                         
             th                                                                                                                 
     801 W 10 St.                                                                                                               
     Juneau, AK  99801-1894                                                                                                     
     POSITION STATEMENT: Supported SB 210.                                                                                    
                                                                                                                                
     Ms. Rhonda Richtsmeier, Deputy Chief                                                                                       
     Public Health Nursing                                                                                                      
     Department of Health &                                                                                                     
       Social Services                                                                                                          
     PO Box 110601                                                                                                              
     Juneau, AK  99801-0601                                                                                                     
     POSITION STATEMENT: Supported SB 210.                                                                                    
                                                                                                                                
     Representative Paul Seaton                                                                                                 
     Alaska State Capitol                                                                                                       
     Juneau, AK  99801-1182                                                                                                     
     POSITION STATEMENT: Sponsor of HB 51.                                                                                    
                                                                                                                                
     Ms. Annette Skibinski                                                                                                      
     Staff to Senator Cowdery                                                                                                   
     Alaska State Capitol                                                                                                       
     Juneau, AK  99801-1182                                                                                                     
     POSITION STATEMENT: Commented on SB 32 for the sponsor, Senator                                                          
     Cowdery.                                                                                                                   
                                                                                                                                
     Ms. Sandy Bass Cors, Executive Director                                                                                    
     Coalition for Auto Repairing Quality (CARE)                                                                                
     No address provided                                                                                                        
     POSITION STATEMENT: Opposed SB 32.                                                                                       
                                                                                                                                
     Mr. Jack Gillis                                                                                                            
  Executive Director, Certified Auto Parts Association (CAPA)                                                                   
     Director, Public Affairs, Consumer Federation of America                                                                   
     No address provided                                                                                                        
     POSITION STATEMENT: Opposed SB 32.                                                                                       
                                                                                                                                
     Ms. Eileen A. Sottile, Director                                                                                            
     Keystone Government Relations                                                                                              
     Co-chair, ABPA Government Affairs Committee                                                                                
     9970 N.W. 89th Court                                                                                                       
     Medley FL 33178                                                                                                            
POSITION STATEMENT: Opposed SB 32.                                                                                            
                                                                                                                                
Mr. Ken Miller                                                                                                                  
No address provided                                                                                                             
POSITION STATEMENT:  Supported SB 32.                                                                                         
                                                                                                                                
Mr. John Conley                                                                                                                 
Service Auto Parts                                                                                                              
3806 Tongass Ave.                                                                                                               
Ketchikan AK                                                                                                                    
POSITION STATEMENT: Opposed SB 32.                                                                                            
                                                                                                                                
Mr. George Gilbert                                                                                                              
Ford Motor Company                                                                                                              
No address provided                                                                                                             
POSITION STATEMENT: Supported SB 32.                                                                                          
                                                                                                                                
Mr. Kyle Krug                                                                                                                   
Toyota                                                                                                                          
Juneau AK                                                                                                                       
POSITION STATEMENT: Supported SB 32.                                                                                          
                                                                                                                                
Mr. Jim Kiley                                                                                                                   
Alliance of Automobile Manufacturers                                                                                            
No address provided                                                                                                             
POSITION STATEMENT: Supported SB 32.                                                                                          
                                                                                                                                
Mr. Bill Holden                                                                                                                 
General Motors                                                                                                                  
Detroit MI                                                                                                                      
POSITION STATEMENT: Commented SB 32.                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-29, SIDE A                                                                                                            
                                                                                                                                
             SB 102-CHARITABLE GAMING REVENUE/TAXES                                                                         
                                                                                                                                
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting  to order  at 1:35  p.m. Present  were SENATORS                                                               
STEVENS, DAVIS,  SEEKINS and FRENCH.  The Chair announced  SB 102                                                               
to be up for consideration.                                                                                                     
                                                                                                                                
SENATOR SEEKINS moved to adopt CSSB 102(L&C), Version Q.                                                                        
                                                                                                                                
     CHAIR BUNDE  explained the committee substitute  (CS) would allow                                                          
     for a 15% tax on the  ideal net, remove the bond for distributors                                                          
     and remove the  prohibition of municipalities having  a sales tax                                                          
     on pulltabs. There were no objections  to its adoption and it was                                                          
     so ordered.                                                                                                                
                                                                                                                                
     SENATOR  FRENCH asked  if the  payout [to  the winners]  would be                                                          
     impacted.                                                                                                                  
                                                                                                                                
     CHAIR BUNDE  replied it will  not have  any impact on  the payout                                                          
     amount.                                                                                                                    
                                                                                                                                
     SENATOR SEEKINS moved  to pass CSSB 102(L&C)  from committee with                                                          
     individual  recommendations and  attached fiscal  notes. SENATORS                                                          
     STEVENS, SEEKINS and  BUNDE voted yea; SENATORS  DAVIS and FRENCH                                                          
     voted nay; and CSSB 102(L&C) passed from committee.                                                                        
                                                                                                                                
     SENATOR SEEKINS announced that he  was looking forward to putting                                                          
     the comprehensive package together  for consideration in the next                                                          
     calendar year.                                                                                                             
                                                                                                                                
     SENATOR FRENCH said that his "no"  vote is based on the idea that                                                          
     he doesn't  feel like he has  a good enough grip  on this subject                                                          
     to make a good decision on it until next year.                                                                             
                                                                                                                                
     SENATOR SEEKINS  said that he  was looking  for a 1%  increase in                                                          
     the state's portion of the take as an interim move.                                                                        
                                                                                                                                
     CHAIR BUNDE  said he would be  happy to appoint Senator  Davis to                                                          
     the subcommittee [along with Senators Seekins and French].                                                                 
                                                                                                                                
                SB 192-DOLWD TEACHERS AND TRAINING PROGRAMS                                                                 
                                                                                                                              
     CHAIR BUNDE announced SB 192 to be up for consideration.                                                                   
                                                                                                                                
     SENATOR GARY STEVENS,  sponsor of SB 192, said  that the Governor                                                          
     proposed to  transfer the Alaska  Vocational Tech  Center (AVTEC)                                                          
     from the Department  of Education to the Department  of Labor and                                                          
     Workforce  Development  (DOLWD) for  the  purpose  of giving  the                                                          
     Department of  Labor the authority  to employ teachers  and allow                                                          
     them to remain  members of the Teacher's  Retirement System (TRS)                                                          
     rather  than having  to be  transferred to  the Public  Employees                                                          
     Retirement System (PERS). It would  also allow future teachers to                                                          
     become  TRS members.  If this  bill  does not  pass, the  current                                                          
     teachers at AVTEC  would be transferred into the  PERS system and                                                          
out of  the TRS system.  That wouldn't  be fair to  employees who                                                               
were originally  hired with  the understanding  they would  be in                                                               
TRS.  It would  also  have a  negative impact  on  AVTEC when  it                                                               
recruits new  teachers. It  is advantageous to  be able  to offer                                                               
TRS  retirement  as  an  incentive   to  get  teachers  into  any                                                               
educational institution.  Also, SB  192 would clarify  that AVTEC                                                               
and  Kotzebue Technical  Center  will continue  to  be under  the                                                               
oversight,  planning  and  coordination responsibilities  of  the                                                               
Alaska Workforce  Investment Board (AWIB) through  the Department                                                               
of Labor and Workforce Development.                                                                                             
                                                                                                                                
SENATOR STEVENS moved to adopt the  CS to SB 192(L&C), Version D,                                                               
as the working  document. There were no objections and  it was so                                                               
ordered.                                                                                                                        
                                                                                                                                
CHAIR  BUNDE clarified  that the  teachers  who have  transferred                                                               
from  one  department   to  another  would  have   the  same  job                                                               
assignments.                                                                                                                    
                                                                                                                                
SENATOR STEVENS agreed and said the bill has a zero fiscal note.                                                                
                                                                                                                                
SENATOR  SEEKINS   said  he  was  wondering   about  the  board's                                                               
structure.                                                                                                                      
                                                                                                                                
COMMISSIONER  GREG O'CLARAY,  Department of  Labor and  Workforce                                                               
Development,  said  the  legislature  wanted  to  see  vocational                                                               
training strengthened  in Alaska and  that's what this  bill will                                                               
do by  moving AVTEC  from one department  to another.  It freezes                                                               
the teachers' benefit  structure in place, which must  be done by                                                               
July  1. The  Governor believes  there are  too many  boards that                                                               
aren't being  efficient in terms  of delivering  federal training                                                               
dollars to  employers who are training  personnel. The department                                                               
is very supportive of this bill.                                                                                                
                                                                                                                                
CHAIR BUNDE said it  would be nice to know if SB  192 will have a                                                               
negative fiscal note.                                                                                                           
                                                                                                                                
COMMISSIONER O'CLARAY said DOLWD would save over $300,000.                                                                      
                                                                                                                                
SENATOR FRENCH asked  why this legislation is  necessary and what                                                               
would prevent him from hiring  a teacher who is currently covered                                                               
by TRS to work in the Department of Labor.                                                                                      
                                                                                                                                
COMMISSIONER O'CLARAY  replied that  nothing would  prevent DOLWD                                                               
from hiring the teachers, but  as state employees they would fall                                                               
under PERS because of the way the statute is structured.                                                                        
                                                                                                                                
     MR.  FRED  ESPOSITO,  Director  of  AVTEC,  testified  that  many                                                          
     professionals at  the institute are mid-career  and have invested                                                          
     a  lot  of  service  into  the TRS  system  and  should  be  held                                                          
     harmless. The TRS  system is an added benefit that  AVTEC can use                                                          
     to recruit instructional staff.                                                                                            
                                                                                                                                
     SENATOR STEVENS asked him to  comment on the negative results for                                                          
     teachers if SB 192 doesn't pass by the end of the session.                                                                 
                                                                                                                                
     MR. ESPOSITO confirmed [the results will be negative].                                                                     
                                                                                                                                
     MR.  DAVE DERUWE,  Vice President,  AVTEC Teacher's  Association,                                                          
     supported SB  192. The  Association realizes  this change  was an                                                          
     unintended consequence  of the move  to the Department  of Labor.                                                          
     Most of  the teachers have  put in  long years working  under the                                                          
     TRS  system  and are  not  interested  in  changing to  the  PERS                                                          
     system.                                                                                                                    
                                                                                                                                
     MR.  JOHN  ALCANTRA,   Government  Relations  Director,  National                                                          
     Education  Association  of  Alaska,  supported  SB  192  for  the                                                          
     reasons mentioned.                                                                                                         
                                                                                                                                
     SENATOR  SEEKINS moved  to pass  CSSB 192(L&C),  Version D,  from                                                          
     committee with  the promised fiscal  note from the  Department of                                                          
     Labor with individual recommendations.                                                                                     
                                                                                                                                
     SENATORS DAVIS, FRENCH, SEEKINS, STEVENS  and BUNDE voted yea and                                                          
     CSSB 192(L&C) passed from committee.                                                                                       
                                                                                                                                
                 SB 210-WAGE AND HOUR OVERTIME COMPUTATION                                                                  
                                                                                                                                
     CHAIR BUNDE announced SB 210 to be up for consideration.                                                                   
                                                                                                                                
     MS.  JANE  ALBERTS,  committee  aide  to  the  Senate  Labor  and                                                          
     Commerce  Committee, said  SB 210  closes a  loophole in  statute                                                          
     regarding the payment of overtime wages. She explained:                                                                    
                                                                                                                                
          In 1999,  the legislature  passed a  law to  correct an                                                               
          erroneous  court  interpretation   of  a  statute  that                                                               
          authorized the  pyramiding of overtime hours,  which is                                                               
          the  payment of  overtime wages  both daily  and weekly                                                               
          for the same hour of work.                                                                                            
                                                                                                                                
          In 1999, at the last minute on the floor the                                                                          
          retroactive date in that bill was taken out, which                                                                    
     left a  loophole for  the years  1997 to  1999, thereby                                                                    
     leaving  employers vulnerable  to pyramiding  lawsuits.                                                                    
     The  bill  made  clear  the   future  claims  would  be                                                                    
     forwarded,  but it  did not  address  the two  lawsuits                                                                    
     filed  in 1997  that  are still  active  cases at  this                                                                    
     time.                                                                                                                      
                                                                                                                                
     In those cases, the  employers computed the overtime in                                                                    
     accordance   with  the   Alaska  Department   of  Labor                                                                    
     methodology. The purpose of this  bill is to close this                                                                    
     loophole,  [and to]  make clear  the interpretation  on                                                                    
     computing overtime  wages under Alaska's Wage  and Hour                                                                    
     Act that  prohibits the use  of pyramiding  in overtime                                                                    
     pay....                                                                                                                    
                                                                                                                                
COMMISSIONER  GREG O'CLARAY,  Department of  Labor and  Workforce                                                               
Development, said  in his  38 years  of representing  laborers he                                                               
had never  seen an interpretation of  the Wage and Hour  Act like                                                               
this particular court's interpretation. He told members:                                                                        
                                                                                                                                
     Under  the Alaska  State  law, if  you  work more  than                                                                    
     eight hours  in a day  or 40 hours  in a week,  you are                                                                    
     entitled  to overtime  and time  and a  half times  the                                                                    
     basic straight time  rate. If a worker  worked 10 hours                                                                    
     on Monday and then a  series of four-eights, he got two                                                                    
     hours of  overtime for  his two  extra hours  on Monday                                                                    
     and  then  nothing  further  for  the  week,  but  this                                                                    
     particular court  interpreted that to mean  he got paid                                                                    
     for overtime  again, because  he worked  42 hours  in a                                                                    
     week -  unheard of anywhere  in the country that  I can                                                                    
     see. This  particular bill  will correct  that problem.                                                                    
     It  will  also wipe  out  the  continuing liability  of                                                                    
     those two  companies. The Department of  Labor supports                                                                    
     the  bill, supports  the concept  of  cleaning up  this                                                                    
     particular misinterpretation of the law....                                                                                
                                                                                                                                
MR.  JOHN  SHIVELY,  Vice  President,  Government  and  Community                                                               
Relations, Holland  America Line, said a  lawsuit against Holland                                                               
America  [filed by  an employee]  prompted this  legislation. The                                                               
case started  in a  superior court, went  to district  court, and                                                               
then  back to  a superior  court,  which ruled  the employee  was                                                               
entitled  to double  accounting of  his overtime,  or pyramiding.                                                               
Holland America paid  the claim because it was only  $21, but the                                                               
plaintiff  appealed  and it  went  to  the Supreme  Court,  which                                                               
remanded it and allowed a  class action suit. So, Holland America                                                               
is potentially  faced with  millions of  dollars in  liability if                                                               
Judge Weeks' decision is found  to be correct. A counter decision                                                               
     by Judge  Collins found the  Wage and Hour Law  interpretation to                                                          
     be exactly as Commissioner O'Claray said it should be.                                                                     
                                                                                                                                
     MR. SHIVELY  said this  legislation is  retroactive. It  puts the                                                          
     finishing touch  on a  piece of legislation  that passed  in 1999                                                          
     that had a  retroactive provision that was taken out  at the last                                                          
     minute. He thought this is  a reasonable bill; legal research had                                                          
     been done  on the issue of  retroactivity and that is  within the                                                          
     purview  of the  legislature.  No constitutional  right is  being                                                          
     violated and there has been no final judicial decision.                                                                    
                                                                                                                                
     CHAIR  BUNDE  informed members  that  he  also asked  Legislative                                                          
     Legal and Research Services counsel  to provide an opinion, which                                                          
     says that retroactivity is constitutional.                                                                                 
                                                                                                                                
     SENATOR FRENCH  asked if it  is true  that there was  no decision                                                          
     made on the pyramiding aspect of Judge Weeks' ruling.                                                                      
                                                                                                                                
     MR. SHIVELY replied that is correct.                                                                                       
                                                                                                                                
     SENATOR  FRENCH  asked   if  any  other  state   has  ruled  that                                                          
     pyramiding is the way to calculate overtime.                                                                               
                                                                                                                                
     MR. SHIVELY answered that he had  not done that kind of research,                                                          
     but  the commissioner  had indicated  that he  was unaware  of it                                                          
     anywhere.                                                                                                                  
                                                                                                                                
     MR. DON ETHERIDGE, AFL-CIO, supported  SB 210. The AFL-CIO worked                                                          
     in  1999 to  create the  current  statute and  believes that  the                                                          
     commissioner's interpretation is correct.                                                                                  
                                                                                                                                
     SENATOR SEEKINS moved  to pass SB 210, Version  A, from committee                                                          
     with individual recommendations and attached zero fiscal note.                                                             
                                                                                                                                
     SENATORS  FRENCH, DAVIS,  STEVENS, SEEKINS  and BUNDE  voted yea;                                                          
     and SB 210 moved from committee.                                                                                           
                                                                                                                                
     2:03 - 2:04 - at ease                                                                                                      
                                                                                                                                
                  SB 154-NURSE EDUC LOAN REPAYMENT PROGRAM                                                                  
                                                                                                                                
     CHAIR BUNDE announced SB 154 to be up for consideration.                                                                   
                                                                                                                                
     SENATOR FRENCH, sponsor, told members:                                                                                     
                                                                                                                                
     SB 154 addresses  one big issue, which  is the shortage                                                                    
     of  nurses in  the State  of Alaska.  According to  the                                                                    
     Alaska  Community   Health  and   Emergency  Management                                                                    
     Services,   about   30   communities  in   Alaska   are                                                                    
     designated  as  federal  health  professional  shortage                                                                    
     areas.  Another  study  by  the  Alaska  Colleagues  in                                                                    
     Caring showed a  vacancy rate for RNs  across the state                                                                    
     of 11.5% in  2002 and in other parts of  the state as a                                                                    
     20.8% vacancy  rate. The  rate of  turnovers in  RNs in                                                                    
     Alaska is  24% and probably most  interestingly, in the                                                                    
     year  2001, about  18% of  RNs working  in Alaska  were                                                                    
     non-residents, i.e.  traveling nurses and about  52% of                                                                    
     the RNs were over 45 years old.                                                                                            
                                                                                                                                
     The  need for  nurses is  going to  double by  the year                                                                    
     2010.  We've got  about 4,500  nurses  employed in  the                                                                    
     state right  now; the number  is going to go  to 8,500.                                                                    
     In the face of that  growing problem, we looked at ways                                                                    
     to increase the  number of nurses in the  state so that                                                                    
     our  citizens would  have adequate  health care  should                                                                    
     they  need it.  We  mulled over  a  bunch of  different                                                                    
     possibilities   and   arrived   at   this   one   after                                                                    
     discussions with  a variety  of interested  groups. The                                                                    
     idea is  to pay money  each year to nurses  employed in                                                                    
     the   state  in   qualifying   positions  and   correct                                                                    
     qualifying education,  to pay them  up to 20%  of their                                                                    
     student loan or $2,000, whichever  is less. The idea is                                                                    
     to  string those  payments out  over a  period of  five                                                                    
     years so  as to keep  folks who  come here who  may see                                                                    
     this as  an incentive  to move to  the state,  who come                                                                    
     here and  take up  jobs and  get them  to spend  a long                                                                    
     enough time here  so that they'll grow to  love it like                                                                    
     most of  the rest of  us have  and keep them  here when                                                                    
     their five-year period is up.                                                                                              
                                                                                                                                
     The idea is, frankly,  workforce development and to use                                                                    
     a  little bit  of government  stimulus to  increase the                                                                    
     number  of  nurses  working  here  in  the  state.  The                                                                    
     University  of  Alaska  has recently  gotten  money  to                                                                    
     double the  size of its nursing  program. Nevertheless,                                                                    
     that  program  is going  to  graduate,  even once  it's                                                                    
     fully up  and running, about  220 nurses a  year, which                                                                    
     is nowhere near the number  the state needs to maintain                                                                    
     an adequate nursing population....                                                                                         
                                                                                                                                
SENATOR STEVENS asked if the goal is to attract people from                                                                     
other states.                                                                                                                   
                                                                                                                                
     SENATOR FRENCH  answered that  is correct  and, according  to the                                                          
     Department  of  Labor  and  Workforce  Development,  the  nursing                                                          
     shortage is  nationwide. Alaska must  compete for RNs  or educate                                                          
     its own nurses to keep up  with demand caused by an aging society                                                          
     and the aging of RNs.                                                                                                      
                                                                                                                                
     SENATOR STEVENS asked what percentage is traveling nurses.                                                                 
                                                                                                                                
     SENATOR FRENCH  replied 17.7%  of the RNs  working in  Alaska are                                                          
     non-residents.                                                                                                             
                                                                                                                                
     MS. CATHY  GIESSEL, Alaska Nurse Practitioners  Association, said                                                          
     that Senator  French did  a great job  of portraying  the problem                                                          
     and  that  they  support  SB  154. She  asked  the  committee  to                                                          
     remember that when  there aren't enough nurses to  fill the jobs,                                                          
     less  qualified  personnel fill  them  and  in many  cases  those                                                          
     employees give  medications. She  said she gets  recruiting calls                                                          
     from the  Lower 48  and noted,  "I believe this  bill would  be a                                                          
     wonderful recruitment device."                                                                                             
                                                                                                                                
     MS. GIESSEL  said that  Florida, South  Dakota and  Virginia have                                                          
     loan repayment program offers for nurses.                                                                                  
                                                                                                                                
     CHAIR BUNDE noted  that in two years this bill,  if passed, would                                                          
     cost the  state about $3 million  and, in five years,  would cost                                                          
     over $5 million.                                                                                                           
                                                                                                                                
     MS.   CAMILLE   SOLEIL,   Executive   Director,   Alaska   Nurses                                                          
     Association, agreed  with previous  testimonies and  supported SB                                                          
     154.  She really  likes  the  discretion given  to  the Board  of                                                          
     Nursing that  allows it to target  the funds toward the  areas of                                                          
     need and  set up appropriate  criteria. It doesn't  guarantee the                                                          
     right to  the loan forgiveness.  The average graduating  nurse is                                                          
     looking at  $20,000 to $40,000 in  student loans that need  to be                                                          
     repaid. Nurses  like to  retire between  the ages  of 55  and 60,                                                          
  especially out of acute care where they are needed the most.                                                                  
                                                                                                                                
     CHAIR BUNDE noted  the discretionary part of  any potential state                                                          
     subsidy soon disappears in the  public's mind. When the longevity                                                          
     bonus first passed,  it was said in  the record that in  15 or 20                                                          
  years, if the state can't afford it, it can just cut it out.                                                                  
                                                                                                                                
     MS. LARAINE  DERR, President, Alaska  State Hospital  and Nursing                                                          
     Home  Association, said  she  has talked  to  the legislature  in                                                          
     previous years  about the impending nursing  shortage crisis. She                                                          
     is in  the process of doing  a survey and has  results from seven                                                          
of 17  hospitals. Last year  they spent $16 million  on traveling                                                               
nurses. That  money doesn't  necessarily stay  in the  state. She                                                               
said  the  University  is  doubling   the  number  of  nurses  it                                                               
graduates  by  2006  and  industry is  donating  more  than  $2.3                                                               
million over the next three years,  however there is a problem in                                                               
finding the faculty, as there is a shortage there as well.                                                                      
                                                                                                                                
SENATOR  STEVENS  said the  loans  would  repay not  only  Alaska                                                               
student loans, but out-of-state loans as well.                                                                                  
                                                                                                                                
MS. DERR replied that is correct.                                                                                               
                                                                                                                                
SENATOR  FRENCH  said  he contemplated  setting  the  forgiveness                                                               
provision up for Alaska residents  who, for example, went outside                                                               
to school and  came back, but that wouldn't  supply enough nurses                                                               
to fill the vacancies.                                                                                                          
                                                                                                                                
CHAIR BUNDE asked how he defines a resident.                                                                                    
                                                                                                                                
SENATOR FRENCH  replied that tying  eligibility to  the Permanent                                                               
Fund is a  possibility. He added that the size  of the loan could                                                               
be lowered to reduce the impact to the state.                                                                                   
                                                                                                                                
SENATOR  SEEKINS asked  how the  University plans  to double  the                                                               
output of nurses with a zero budget increase.                                                                                   
                                                                                                                                
SENATOR FRENCH  replied that the  University got more  money this                                                               
year [for that program].                                                                                                        
                                                                                                                                
SENATOR SEEKINS said  that issue is before  the Finance Committee                                                               
and cannot be counted on.                                                                                                       
                                                                                                                                
TAPE 03-29, SIDE B                                                                                                            
                                                                                                                              
SENATOR  SEEKINS  asked  if  the  money to  be  provided  to  the                                                               
University program is matching money or what.                                                                                   
                                                                                                                                
MS. DERR replied  that the University is going to  match the $2.3                                                               
million.  She explained  that  the University  of  Utah has  been                                                               
providing distance  delivered nursing education here  and through                                                               
the process of getting more  nurses, she realized that Alaska was                                                               
paying money  to Utah to educate  our students. That is  why they                                                               
came up  with the money and  the University matched it.  Utah has                                                               
agreed that it  will no longer be providing  nursing education in                                                               
the state when the University of Alaska takes it over.                                                                          
                                                                                                                                
     CHAIR BUNDE said  he wished the university would use  some of the                                                          
 $5 million they use on intercollegiate athletics for nursing.                                                                  
                                                                                                                                
     SENATOR STEVENS said he likes this  bill because it is similar to                                                          
     one that  he has been  working on about forgiveness  of teachers'                                                          
     loans.  He  said  all  the  money  in  the  fund  is  subject  to                                                          
     appropriation by the legislature each year.                                                                                
                                                                                                                                
     MS.  DIANE  BARRANS,  Executive  Director,  Alaska  Postsecondary                                                          
     Education  Commission (ACPE),  supported SB  154. The  Commission                                                          
     would  administer   the  benefits  as   they  are  paid   out  to                                                          
     individuals who  qualify under the  criteria set by the  Board of                                                          
     Nursing. Also,  she suggested the  legislature might  look toward                                                          
     the  Alaska Student  Loan Corporation  dividend for  the funding,                                                          
     although  the fiscal  note calls  for an  appropriation from  the                                                          
     general fund each year.                                                                                                    
                                                                                                                                
     CHAIR BUNDE  asked what  the fiscal  note would  be for  the bill                                                          
     that Senator Stevens is working on.                                                                                        
                                                                                                                                
     MS. BARRANS replied  that those costs are  somewhat comparable to                                                          
     this bill.                                                                                                                 
                                                                                                                                
     CHAIR BUNDE asked if she worked  with the Legislature a few years                                                          
     ago  when   the  Washington,   Alaska,  Montana,   Idaho  Medical                                                          
     Education   Program   (WAMI),   that  subsidizes   doctors,   was                                                          
     restructured  so  those  students  had to  repay  some  of  their                                                          
     subsidy if they didn't come back to Alaska and work.                                                                       
                                                                                                                                
     MS. BARRANS replied that she did.                                                                                          
                                                                                                                                
     CHAIR BUNDE  asked her  how effective that  has been  in bringing                                                          
     students back to Alaska to practice.                                                                                       
                                                                                                                                
     MS. BARRANS  replied at  this point none  of those  students have                                                          
     reached  the point  in  their  careers yet  where  they would  be                                                          
     returning to  the state.  She the  suggested, to  prevent putting                                                          
     the  legislature in  a  position of  being  morally obligated  to                                                          
     forgive loans,  that ACPE solicit for  participants, identify the                                                          
     amount of debt that would be  repaid as a benefit, and reserve at                                                          
     the  time they  begin their  service  in Alaska  the amount  that                                                          
     would be  paid to  them. That  way, they would  not be  saying to                                                          
     those participants  the state  can pay for  their first  year but                                                          
     not  their second  year, etc.  In the  years when  no funding  is                                                          
     available,  they would  shut off  enrollment so  no one  would be                                                          
     enrolled for  benefits that were,  at best,  speculative. Numbers                                                          
     would be revisited on an annual basis.                                                                                     
                                                                                                                                
CHAIR BUNDE  said some places  have provided  substantial bonuses                                                               
to attract  people to come  to work in  an area of  shortage, but                                                               
after acquiring the  bonuses they moved elsewhere. He  asked if a                                                               
nurse had  to work here for  five years, whether he  or she would                                                               
be free to move after that.                                                                                                     
                                                                                                                                
MS. BARRANS said that is correct.                                                                                               
                                                                                                                                
CHAIR BUNDE asked if this bill would reimburse any originator.                                                                  
                                                                                                                                
MS. BARRANS replied any commercial lender.                                                                                      
                                                                                                                                
CHAIR BUNDE  asked how  limiting this bill  to only  borrowers of                                                               
Alaska loans would impact the fiscal note.                                                                                      
                                                                                                                                
MS.  BARRANS guessed  that it  would potentially  cut the  fiscal                                                               
note in half.                                                                                                                   
                                                                                                                                
MS.  RHONDA RICHTSMEIER,  Deputy  Chief,  Public Health  Nursing,                                                               
agreed with  the nursing shortage  estimates: in 2000,  30 states                                                               
had  significant nursing  shortages and  in 2020,  46 states  are                                                               
anticipated to  have shortages. She  said the reasons  are multi-                                                               
pronged. There is  an aging population with  more chronic disease                                                               
and 71 percent of nurses in Alaska  are 41 to 71 years of age; 25                                                               
percent of those are going to retire in the next 5 to 10 years.                                                                 
                                                                                                                                
MS. RICHTSMEIER  said fewer students are  graduating from nursing                                                               
schools.  It is  difficult to  get people  interested in  nursing                                                               
because a  lot of alternative  careers offer higher  salaries. In                                                               
addition, there  aren't enough  nursing instructors.  Since 1995,                                                               
there  has  been  a  31%  reduction in  the  number  of  students                                                               
graduating from colleges of nursing.  She believes there needs to                                                               
be a  multi-pronged approach to this  multi-pronged problem. They                                                               
need to  address salary to  bring new people into  the profession                                                               
and keep them in the profession.                                                                                                
                                                                                                                                
SENATOR  DAVIS asked  her  to  comment on  the  cost of  training                                                               
nurses instate and out-of-state.                                                                                                
                                                                                                                                
MS. RICHTSMEIER responded that she  could only speak recently for                                                               
instate  and that  UAA's four-year  program costs  around $20,000                                                               
just for tuition and books.                                                                                                     
                                                                                                                                
SENATOR SEEKINS asked if the  administration supports the bill as                                                               
well.                                                                                                                           
                                                                                                                                
     MS. RICHTSMEIER said she understood that to be the case.                                                                   
                                                                                                                                
     SENATOR  DAVIS  moved   to  pass  SB  154   from  committee  with                                                          
     individual   recommendations  and   the  attached   fiscal  note.                                                          
     SENATORS  FRENCH, STEVENS  and DAVIS  vote yea;  SENATORS SEEKINS                                                          
     and BUNDE voted nay; and SB 154 passed from committee.                                                                     
                                                                                                                                
                    HB  51-LABELING OF PRESCRIBED DRUGS                                                                     
                                                                                                                              
     CHAIR BUNDE announced HB 51 to be up for consideration.                                                                    
                                                                                                                                
     REPRESENTATIVE PAUL SEATON,  sponsor, said HB 51 is  a health and                                                          
     safety bill that requires the generic  drug name be placed on all                                                          
     brand name  prescription labels. There  have been a lot  of cases                                                          
     of senior  citizens overdosing because they  get one prescription                                                          
     filled with  only the generic  name and another labeled  with the                                                          
     name  brand,  thus  ending  up  with  two  bottles  of  the  same                                                          
     medication from the same doctor that  both say take three times a                                                          
     day. He noted members' packets contain many letters of support.                                                            
                                                                                                                                
     CHAIR  BUNDE  asked what  financial  impact  would this  have  on                                                          
     pharmacies.                                                                                                                
                                                                                                                                
     REPRESENTATIVE  SEATON  answered  that  there  would  be  minimal                                                          
     impacts  as most  pharmacies  have software  that  is capable  of                                                          
     doing the  labeling. It would  take realigning the fields  on the                                                          
     computer. The bill specifies that the names be in the same area.                                                           
                                                                                                                                
     CHAIR  BUNDE asked  how citizens  could educate  themselves about                                                          
     the generic name and use it  for comparison purposes. He asked if                                                          
     the pharmacists would point it out to the customer.                                                                        
                                                                                                                                
     REPRESENTATIVE SEATON said  that right now a consumer  has no way                                                          
     of knowing the  difference between two bottles.  He presumed that                                                          
     pharmacists would do that. He  thought the naming would be pretty                                                          
     obvious. The  Alaska Pharmaceutical  Corporation does  not oppose                                                          
     this bill.                                                                                                                 
                                                                                                                                
     SENATOR  FRENCH asked  if other  states were  adopting laws  like                                                          
     this one.                                                                                                                  
                                                                                                                                
     REPRESENTATIVE SEATON  answered yes  and said it  was recommended                                                          
     by the FDA.                                                                                                                
                                                                                                                                
SENATOR STEVENS  moved to pass  CSHB 51(HES) from  committee with                                                               
individual  recommendations   and  zero  fiscal   note.  SENATORS                                                               
STEVENS, DAVIS,  FRENCH, SEEKINS  and BUNDE  voted yea;  and CSHB                                                               
51(HES) moved from committee.                                                                                                   
                                                                                                                                
           SB  32-INSURANCE FOR MOTOR VEHICLE REPAIRS                                                                       
                                                                                                                                
CHAIR  BUNDE announced  SB  32  to be  up  for consideration.  He                                                               
announced an at-ease from 2:47 to 2:53 p.m.                                                                                     
                                                                                                                                
MS. ANNETTE  SKIBINSKI, staff to  Senator Cowdery,  sponsor, said                                                               
SB 32 deals with two  different types of automobile repair parts,                                                               
original   and  aftermarket.   Senator   Cowdery  believes   that                                                               
consumers are often unaware of  the crash or collision parts that                                                               
are  being  used  to  repair their  vehicles.  He  believes  that                                                               
customers have  a reasonable expectation  to have  their vehicles                                                               
repaired after an  accident to the same condition  they were when                                                               
they  purchased them  and they  should have  a choice  on whether                                                               
original  parts  or  other  parts   that  are  certified  or  not                                                               
certified  are used.  The insurance  that car  owners rely  on to                                                               
cover the parts should not dictate what they can or can't have.                                                                 
                                                                                                                                
MR.  KEN  MILLER,  owner  of  an auto  body  shop  in  Anchorage,                                                               
provided two  Ford fenders that  look almost identical,  but were                                                               
very different  in quality; one  was certified and the  other was                                                               
aftermarket and obviously was not as strong.                                                                                    
                                                                                                                                
MS.  SANDY  BASS  CORS, Coalition  for  Auto  Repairing  Quality,                                                               
representing  NAPA,  Car  Quest,  Chets, Jiffy  Lube  and  Midas,                                                               
opposed  SB   32.  She  explained  that   aftermarket  parts  are                                                               
manufactured by  the same companies that  manufacturer car dealer                                                               
parts.  The  only   difference  is  the  price   and  the  better                                                               
aftermarket warranty. Aftermarket parts cost  up to 50% less than                                                               
the car  dealer parts  and most come  with lifetime  or long-term                                                               
warranties, which car dealer parts  do not. The description in SB                                                               
32 that  an aftermarket part  must meet the equivalent  or better                                                               
standard is based on the wrong premise.                                                                                         
                                                                                                                                
She did not think that  any car part manufacturer would purposely                                                               
manufacture  inferior  aftermarket  parts.   SB  32  is  also  in                                                               
violation of  the Magnus-Moss  Warranty Act,  a federal  law that                                                               
prohibits a  warranty from being  tied to repairs.  Motorists are                                                               
intimidated  when  they read  that  using  aftermarket parts  can                                                               
invalidate the remainder of their vehicle's warranty.                                                                           
                                                                                                                                
     MS.  CORS  said   that  SB  32  is  also   dangerously  close  to                                                          
     interfering  with first  amendment rights  by stating  an insurer                                                          
     may  not  require directly  or  indirectly  that a  shop  install                                                          
     aftermarket parts. A  few years ago, the state of  Montana lost a                                                          
     court case  on constitutional grounds because  of first amendment                                                          
     rights  based  on   what  an  insurer  could   recommend  and  on                                                          
     interference  with interstate  commerce laws.  By mandating  that                                                          
     motorists  must give  consent  only for  the  use of  aftermarket                                                          
     parts, but not  the use of car dealer parts,  SB 32 discriminates                                                          
     against certain  Alaska industries  and intimidates  motorists by                                                          
     planting  doubt  in  their  minds   about  the  high  quality  of                                                          
     aftermarket  parts.  Aftermarket shops  do  business  in low  and                                                          
     fixed income neighborhoods because people  depend on them for the                                                          
     high quality and the lower  pricing. After a warranty has expired                                                          
     on a  part, the aftermarket  gets 80% of repeat  business because                                                          
     of the high quality.                                                                                                       
                                                                                                                                
     MS. CORS said that car dealers  and manufacturers have had a long                                                          
     history of trying to dismantle  the aftermarket part industry and                                                          
     restrict the use  of those parts. They do not  believe this issue                                                          
     is  about  the  quality  of  parts, but  about  car  dealers  and                                                          
     manufacturers   getting   a    higher   profit   margin   through                                                          
     legislation. Car dealer  parts cost up to 50% more,  so this will                                                          
     be  at the  expense of  the working  people. A  recent GAO  study                                                          
     concluded that there were so  few problems with aftermarket parts                                                          
     that no further action was necessary.                                                                                      
                                                                                                                                
     MS. CORS said that Ms. Skibinski  mentioned that when a car is in                                                          
     a crash, it  should be restored to its pre-crash  value. MS. CORS                                                          
     believes that a car cannot be  restored to its pre-crash value or                                                          
     condition by  virtue of having been  in a crash. People  buying a                                                          
     used  car request  information on  whether a  car has  been in  a                                                          
     crash, not whether it has aftermarket parts.                                                                               
                                                                                                                                
     MR. JACK  GILLIS, Executive Director, CAPA,  and Director, Public                                                          
     Affairs,  Consumer Federation  of America,  the nation's  largest                                                          
     consumer advocacy  organization, said  he is  also the  author of                                                          
     The Car  Book, a consumer  guide to buying  cars. NAPA is  a non-                                                          
     profit organization,  which certifies  the quality of  parts used                                                          
     for auto body repair. He pointed out:                                                                                      
                                                                                                                                
          First of all, this bill  protects the car company parts                                                               
          monopoly. Alaskans  need more,  not less  choices. They                                                               
          need  less expensive,  not  more  expensive car  parts.                                                               
          Alaskans need  their cars fixed by  insurance companies                                                               
          after accidents, not totaled  by them because they cost                                                               
          too  much   to  repair.   This  bill   would  encourage                                                               
       competition rather than protect car company parts                                                                        
     monopolies....                                                                                                             
                                                                                                                                
SENATOR  COWDERY asked  him if  he felt  it is  reasonable for  a                                                               
customer to expect that his or  her car should be repaired to its                                                               
pre-crash condition,  not the condition  when it was  purchased -                                                               
and carry all the same warranties.                                                                                              
                                                                                                                                
MR. GILLIS agreed 100%.                                                                                                         
                                                                                                                                
MS.  EILEEN  SOTTILE,  Director, Keystone  Government  Relations,                                                               
said she  also represented the Automotive  Body Parts Association                                                               
(ABPA).  Both  oppose  SB  32, because  they  feel  that  written                                                               
consent  is  discriminatory  and  would take  money  out  of  the                                                               
pockets of their  employees and place it into  the car companies'                                                               
pockets.  The  warranties  for  aftermarket  parts  are  actually                                                               
better than  car companies' warranties.  In terms of  safety, the                                                               
Institute  for Highway  Safety has  conducted a  crash test  of a                                                               
Toyota   Camry  hood,   which  demonstrated   clearly  that   the                                                               
aftermarket hood performed the same  way as the car company hood.                                                               
Keystone,  the largest  distributor of  aftermarket parts  in the                                                               
country, has  never recorded an injury  caused by the use  of its                                                               
parts and the National Highway  Traffic and Safety Administration                                                               
has   reported   consistently    that   cosmetic   non-structural                                                               
automotive parts have no safety ramifications.                                                                                  
                                                                                                                                
In  terms  of  quality,  the Collision  Industry  Conference  has                                                               
tested the quality of their  parts against car company parts over                                                               
the past years and has found  that in some cases, the aftermarket                                                               
parts  score better  in terms  of  fit and  accessibility and  in                                                               
other cases  they tie. The  parts manufacturers they use  are the                                                               
same as those used by the car companies.                                                                                        
                                                                                                                                
MS.  SOTTILE said  their concerns  about  competition are  great,                                                               
because the  car companies already  have 79% of market  share and                                                               
the aftermarket  share is 15%;  the salvage industry has  6%. She                                                               
said if car company parts are  solely used to repair a vehicle, a                                                               
$22,000  1999-Toyota Camry  can cost  $101,000. She  compared the                                                               
cost  of a  Camry rear  bumper from  the car  company at  $159 to                                                               
Keystone's price  of $61.75; a Tacoma  grill would be $220  and a                                                               
Keystone  grill  would cost  $91.45.  She  said the  car  company                                                               
fender  that was  in  the  committee room  cost  $192.10 and  the                                                               
Keystone  fender cost  $94.00. A  Ford Taurus  headlight assembly                                                               
cost $176.80 and the Keystone price was $94.47.                                                                                 
                                                                                                                                
She said making  a consumer consent to using  an aftermarket part                                                               
and  not a  car company  part gives  the consumer  the impression                                                               
     that  not only  are the  parts possibly  inferior, but  unsafe as                                                          
     well. Eighty-seven percent  of the time, if  an insurance company                                                          
     is paying  the bill  for the repair,  customers will  most likely                                                          
     not choose the  aftermarket part because they are  not paying for                                                          
     the repairs. She stated, "This  bill is highly discriminatory and                                                          
     it  will  deliver  a  monopoly  right to  the  feet  of  the  car                                                          
     companies."                                                                                                                
                                                                                                                                
     MR. MILLER said he provided the  fenders in the committee room so                                                          
     that members could  see for themselves that there is  quite a bit                                                          
     of difference  between the two.  He didn't think they  would want                                                          
     the aftermarket  parts on  their trucks. It  is about  4.5 ounces                                                          
     lighter,  has no  rust prevention,  and the  spot welds  were not                                                          
     even touching and would pop right off.                                                                                     
                                                                                                                                
     TAPE 03-30, SIDE A                                                                                                       
                                                                                                                              
     MR.  MILLER said  his main  concern is  the sheet  metal fenders,                                                          
     doors, bumpers  and that type of  thing - and how  they relate to                                                          
     safety.                                                                                                                    
                                                                                                                                
     SENATOR COWDERY asked him if he is a car dealer.                                                                           
                                                                                                                                
     MR.  MILLER  replied  that  he  is  an  independent  and  doesn't                                                          
     represent anyone but himself.                                                                                              
                                                                                                                                
     MR.  JOHN CONLEY,  Service Auto  Parts, said  he is  a NAPA  auto                                                          
     parts dealer. He  also served nine years on  the Borough Assembly                                                          
     of Ketchikan and  a couple terms as vice-mayor.  He spoke against                                                          
     SB 32.  He said legislation  like SB  32 is being  introduced all                                                          
     across the  nation right  now and,  as an  auto parts  person who                                                          
     incorporated  in   the  State  of   Alaska  in  1966,   he  feels                                                          
     threatened. SB 32  defines what aftermarket means  in section (a)                                                          
     and that concerns him. It says:                                                                                            
                                                                                                                                
          In  this section,  an aftermarket  crash  part means  a                                                               
          motor vehicle replacement part that  is not supplied or                                                               
          manufactured   at  the   direction   of  the   original                                                               
          equipment manufacturer and  that is generally installed                                                               
          as a result of a crash or a collision.                                                                                
                                                                                                                                
     He  said that  includes a  lot  of things:  screws, belts,  light                                                          
     bulbs, etc. Many of the parts  that his firm sells meet or exceed                                                          
     the original equipment manufacturer  specifications and he offers                                                          
     a better warranty than the original.                                                                                       
                                                                                                                                
He said  Section 1  troubles him,  as well,  and he  provided the                                                               
committee with a  copy of the Magnus Moss Warranty  Act. He asked                                                               
the sponsor to work with him  and others on different language to                                                               
protect consumers and businesses.                                                                                               
                                                                                                                                
He  added  if  this  bill  passes   and  he  went  to  the  Chevy                                                               
dealership,  which doesn't  have a  body shop,  and said  he only                                                               
wanted OEM  parts, the vehicle  could not be legally  repaired in                                                               
Alaska because  some functions that  happen at the plant  are not                                                               
duplicated in  the field, such  as painting of the  vehicle. Body                                                               
shops do not  use the same process or materials.  This bill would                                                               
require  a person  to go  to a  metropolitan area  to have  a car                                                               
repaired.                                                                                                                       
                                                                                                                                
MR. CONLEY said  he had copies of similar  legislation enacted in                                                               
other states that the committee could use to improve the bill.                                                                  
                                                                                                                                
CHAIR  BUNDE  asked   if  it  is  true  that   the  same  company                                                               
manufactures  dealer  parts and  aftermarket  parts  and, if  so,                                                               
whether "less expensive" parts are made.                                                                                        
                                                                                                                                
MR. CONLEY  replied that is a  big issue with a  lot of different                                                               
components.  He  said he  doesn't  sell  sheet metal,  but  sells                                                               
chassis and brake parts. Dana  Automotive, one of the largest REM                                                               
suppliers in  the world, manufactures  his chassis  components. A                                                               
company  called   Brake  Parts,   Inc.,  which  many   REMs  use,                                                               
manufactures the brake components. He commented:                                                                                
                                                                                                                                
     A whole lot of what we  sell is made for REMs and we're                                                                    
     very proud of  our quality. To make  the statement that                                                                    
     all parts are of equal quality  at REM, I would have to                                                                    
     be honest and say that's not true.                                                                                         
                                                                                                                                
SENATOR STEVENS said  he wanted to learn more  about Mr. Conley's                                                               
statement  that  consumers  would  have   to  take  a  car  to  a                                                               
metropolitan area for repairs.                                                                                                  
                                                                                                                                
MR. CONLEY said he would get together with him afterwards.                                                                      
                                                                                                                                
MR. GEORGE GILBERT,  Ford Motor Company, clarified  that they are                                                               
talking about  exterior crash parts  like fenders and  hoods, not                                                               
about shocks or  filters. This bill is about  giving the consumer                                                               
a choice.  The reason  for this  type of  legislation is  that in                                                               
most cases,  the consumer  doesn't have  a choice  when insurance                                                               
companies pay  the bill. This is  what led to the  national class                                                               
action lawsuit against  State Farm Insurance who  was using these                                                               
     parts  and  not  informing  the  consumer  that  the  parts  were                                                          
     different than the OE parts.                                                                                               
                                                                                                                                
     MR. KYLE KRUG  said he came mainly to answer  questions, but also                                                          
     wanted  to ask  if  Jim  Kiley with  the  Alliance of  Automobile                                                          
     Manufacturers could provide testimony.                                                                                     
                                                                                                                                
     MR. JIM  KILEY, Alliance of  Automobile Manufacturers,  said that                                                          
     SB 32 contains  many concepts that benefit  consumers and promote                                                          
     a  fair playing  field. Consumers  should be  informed about  the                                                          
     repair options  available to them.  However, he pointed  out that                                                          
     AS 25.45.95(a) contains language  the Alliance cannot support. It                                                          
     would require  consumer consent to  a certain time  period, three                                                          
     years. The Alliance  believes the consumer should  have the right                                                          
     to consent  to using the  parts for the  life of the  vehicle. He                                                          
     thanked Senator  Cowdery for  his actions  and said  the Alliance                                                          
     would work with the committee  to craft legislation that protects                                                          
     consumers and provides them with choices.                                                                                  
                                                                                                                                
     MR. BILL HOLDEN said:                                                                                                      
                                                                                                                                
          The reason  all the  studies are around  on aftermarket                                                               
          parts  not being  of equal  quality to  the OEM  is why                                                               
          they  are  around  to  begin   with.  Also,  they  have                                                               
          degenerated because of  consumers complaining about the                                                               
          use of  these parts.  So, they  may comment  at certain                                                               
          times  or lead  people to  believe that  what is  being                                                               
          said or  the studies  are exactly what's  being proved.                                                               
          The  bottom line  is  that since  the  early '80s  when                                                               
          these parts came on the  market, they were looked at as                                                               
          a  way for  the insurance  companies to  save costs  in                                                               
          repairing  vehicles. In  the late  '80s, the  six major                                                               
          insurance companies  formed [indisc.], which is  then a                                                               
          company that  would start telling people  that the part                                                               
          that was being  put on their car  were not aftermarket;                                                               
          they were being certified parts  that were being put on                                                               
          the car...                                                                                                            
                                                                                                                                
          When you buy a Fram oil  filter, the Fram oil filter is                                                               
          engineered and  designed by people at  Fram. They spend                                                               
          time,   they  spend   money,   they   go  through   the                                                               
          engineering process,  they don't do  a copy of  the DAC                                                               
          filter.  So, there's  some credibility  to some  of the                                                               
          aftermarket car parts we're talking about.                                                                            
                                                                                                                                
          When I've  talked to aftermarket parts  people, and the                                                               
          testimony  you've heard,  you  never  hear things  like                                                               
     reengineering and stuff;  it's reverse engineering that                                                                    
     you hear.  That does not  pass the test of  quality and                                                                    
     durability and  some of  the things that  go in  to the                                                                    
     OEM parts.                                                                                                                 
                                                                                                                                
     The last  part I want  to touch on  is there is  no OEM                                                                    
     manufacturer, and  I'm talking to the  Ford people, the                                                                    
     Toyota and the  Honda people on a daily  basis. None of                                                                    
     us know a single manufacturer  that makes a fender or a                                                                    
     hood and  then turns  around and  sells it  as anything                                                                    
     other than OEM. That's just not true....                                                                                   
                                                                                                                                
MR. HOLDEN said that  no one makes a hood and  then has the money                                                               
to go  make another dye and  make the same hood.  He stated, "The                                                               
dye is too expensive."                                                                                                          
                                                                                                                                
MR. HOLDEN explained:                                                                                                           
                                                                                                                                
     They'll make  a certain number of  hoods for production                                                                    
     and off the same line  at almost the same time, they're                                                                    
     producing  hoods that  are then  going to  be used  for                                                                    
     their parts operation. That's  what General Motors does                                                                    
     and,   as  far   as  I   know,  that   is  what   other                                                                    
     manufacturers do.                                                                                                          
                                                                                                                                
He  also noted  when  people talk  about the  price  of one  hood                                                               
versus  the other,  General Motors  competes with  the other  big                                                               
companies and  the best way  to lose a customer  is to go  to the                                                               
dealership,  get  the  car  repaired  and have  the  guy  at  the                                                               
dealership tell you:                                                                                                            
                                                                                                                                
     The hood  is $200, but  if you bought  the aftermarket,                                                                    
     it's  $25. That  aggravates consumers.  Consumers don't                                                                    
     want  to be  taken and  for the  most part  when things                                                                    
     like that happen, people tend not to buy your brand.                                                                       
                                                                                                                                
CHAIR BUNDE  said the committee  needs to be more  educated about                                                               
this topic and held the bill for further work.                                                                                  
                                                                                                                                
CHAIR BUNDE adjourned the meeting at 3:35 p.m.                                                                                  

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