Legislature(2003 - 2004)
05/08/2003 01:36 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE SENATE LABOR AND COMMERCE STANDING COMMITTEE May 8, 2003 1:36 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 CS FOR HOUSE BILL NO. 242(L&C) "An Act relating to licensing of certified public accountants; and providing for an effective date." MOVED CSHB 242(L&C) OUT OF COMMITTEE CS FOR HOUSE BILL NO. 120(RLS) am "An Act excluding service contracts from regulation as insurance; relating to insurance licensing for motor vehicle service contracts and home warranties; and providing for an effective date." MOVED CSHB 120(RLS) am OUT OF COMMITTEE SENATE CS FOR CS FOR HOUSE BILL NO. 151(L&C) "An Act relating to claims and court actions for defects in the design, construction, and remodeling of certain dwellings; limiting when certain court actions may be brought; and amending Rules 79 and 82, Alaska Rules of Civil Procedure." MOVED SCSCSHB 151(L&C) OUT OF COMMITTEE SENATE CS FOR CS FOR HOUSE BILL NO. 135(HES) "An Act relating to marital and family therapists." HEARD AND HELD SENATE BILL NO. 209 "An Act relating to pilotage of certain foreign pleasure craft." MOVED CSSB 209(L&C) OUT OF COMMITTEE CS FOR HOUSE BILL NO. 194(L&C) "An Act creating a tax credit under the Alaska Net Income Tax Act for contributions to regional development organizations; and providing for an effective date." MOVED SCS CSHB 194(L&C) OUT OF COMMITTEE PREVIOUS ACTION HB 242 - No previous action to consider. HB 120 - No previous action to consider. HB 151 - No previous action to consider. HB 135 - See HESS minutes dated 4/23/03. SB 209 - No previous action to consider. HB 194 - See CRA minutes dated 5/5/03. WITNESS REGISTER Representative Kevin Meyer Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 151. Mr. Mike Milligan 12056 Gara Dr. Kodiak, AK 99615 POSITION STATEMENT: Supported HB 151. Mr. Richard Tilly, President Interior Alaska Building Association PO Box 72080 Fairbanks, AK 99707 POSITION STATEMENT: Supported HB 151. Ms. Robin Ward No address provided POSITION STATEMENT: Supported HB 151. Mr. Steve Orr PO Box 871277 Wasilla AK POSITION STATEMENT: Supported HB 151. Mr. Alan Wilson Alaska Home Builders Association 6014 Lund St. Juneau AK 99801 POSITION STATEMENT: Supported HB 151. Mr. John Bitney Alaska State Home Builders Juneau AK 99801 POSITION STATEMENT: Commented on HB 151. Ms. Sarah Wright Staff to Representative Mike Hawker Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Commented on HB 242 for the sponsor. Representative John Coghill Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 120. Ms. Linda Hall, Director Division of Insurance Department of Community & Economic Development PO Box 110800 Juneau, AK 99811-0800 POSITION STATEMENT: Commented on HB 120. Mr. Chuck Spinelli Alaska Home Builders Association 9200 Vanguard No. 102 Anchorage AK 99507 POSITION STATEMENT: Supported HB 151. Representative Peggy Wilson Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 135. Ms. Susan Arenth No address provided POSITION STATEMENT: Commented on HB 135. Ms. Caren Robinson Marriage and Family Therapist Association No address provided POSITION STATEMENT: Commented on HB 135. Representative Tom Anderson Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 194. Mr. Larry Crawford, President Anchorage Economic Development Corporation 900 W 5th Street, Ste 300 Anchorage AK 99501 POSITION STATEMENT: Supported HB 194. Mr. Phelan Straube Staff to Senator Ben Stevens Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Commented on SB 209 for the sponsor. Captain Bob Winter Southeast Alaska Pilots Association Juneau AK 99801 POSITION STATEMENT: Supported SB 209. Ms. Kate Tesar Alaska Yacht Services Juneau AK POSITION STATEMENT: Supported SB 209. Ms. Heather Beaty Staff to Representative Anderson Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Commented on HB 194. Mr. Mark Graber, Audit Manager Tax Division Department of Revenue PO Box 110400 Juneau, AK 99811-0400 POSITION STATEMENT: Commented on HB 194. Mr. James Armstrong Municipality of Anchorage Anchorage AK POSITION STATEMENT: Supported HB 194. Mr. Edward Lamb, CEO Alaska Regional Hospital Anchorage AK POSITION STATEMENT: Commented on HB 194. ACTION NARRATIVE TAPE 03-31, SIDE A CSHB 151(JUD)am-DWELLING DESIGN/CONSTRUCTION CLAIMS CHAIR CON BUNDE called the Senate Labor and Commerce Standing Committee meeting to order at 1:36 p.m. Present were SENATORS STEVENS and SEEKINS. The Chair announced HB 151 to be up for consideration. REPRESENTATIVE KEVIN MEYER, sponsor of HB 151, said it provides homeowners and construction professionals with a process to solve construction issues on new homes or homes that are being remodeled. He stated, "HB 151 requires homeowners to provide written notice to the construction professionals of any defects at least 90 days prior to taking a civil action against the builder." He explained that most of the time, this action isn't necessary because most owners have a relationship with the builder and could simply call the builder with a concern. However, if the builder is too busy to take care of those concerns, this process is in place. If the homeowner's complaints have not been resolved within a 90-day period, the homeowner can proceed with litigation. Under this bill, the homeowner has one year from the time he or she detects the problem, but it cannot exceed the 10- year statute of limitation for civil suits. Once the process has begun, the statute of limitation is stopped until the homeowner becomes aware that a settlement using this process will not succeed. REPRESENTATIVE MEYER said this litigation is important for many of reasons. In Alaska, contractors and builders are required to carry general liability insurance and many liability insurance providers have stopped providing insurance or will provide it only at a very expensive rate. The rise in insurance coverage, sometimes $3,000 to $5,000, is often passed on to the homebuyer. He said three conforming amendments need to be made as a result of amendments adopted on the House floor and those were incorporated into a proposed committee substitute. SENATOR FRENCH arrived at 1:40 p.m. SENATOR STEVENS moved to adopt SCS CSHB 151(L&C) as the working document. There were no objections and it was so ordered. CHAIR BUNDE asked if there has been any opposition. REPRESENTATIVE MEYER replied that he has heard no opposition from the public or the construction community. SENATOR STEVENS asked him to explain the language on page 2, line 18, about how the written notice takes place. REPRESENTATIVE MEYER indicated that serving of notice is defined on page 8, line 7, as delivery by personal service or by certified mail. MR. MIKE MILLIGAN, Kodiak resident, said he works in the construction industry and supports this bill. He generally supports local control and consensus and favors legislation that doesn't require a winner or a loser. MR. RICHARD TILLY, President, Interior Alaska Building Association, supports HB 151. He thought it would show the building industry and insurance industry that builders are trying to deal with a resolution process for minor building issues. SENATOR DAVIS arrived at 1:45 p.m. MS. ROBIN WARD said she was recently in Washington D.C. working on this issue with 50 other state representatives in an effort to make the industry more attractive to the insurance industry. Although Alaska does not have many of the problems the Lower 48 has, Alaskans have to pay the same premiums because insurers operate nationwide. She said that insurance premiums on her homes will go up $2,000 per home next year. MR. STEVE ORR, Mat-Su builder, supported HB 151, not only because his insurance went up 1,500% this year (adding $2,000 per house for a total of $3,300), but because a bill like this will end a two-year senseless battle that he has been in. MR. ALAN WILSON, Alaska Home Builders Association - Juneau, supported HB 151 and said his comments had been covered. SENATOR FRENCH said his concern is that the two parties might get into some kind of a stalling process and a huge amount of time could go by, which isn't a good way to do business. He wanted to know if the 21-day clock is ticking during the initial exchange while the construction professional awaits videos or something like that from the homeowner. REPRESENTATIVE MEYER replied that he thought the clock stopped during talks. MR. JOHN BITTNEY, Alaska State Homebuilders Association, referred him to page 2, line 4, to answer that question. SENATOR FRENCH asked if that means the 21-day clock is not ticking or that the right to eventually file a suit is not ticking. He said he has two clocks in mind. One is the general right to sue in court. The bill says a person does not have the right to go to court and sue until they have been through this process. He pointed out: That's giving up something. That's giving up a person's right to go to court and file suit. If you only have to give that up for 21 days, I think that's pretty reasonable. You can see the end of the time period coming up pretty quickly, but what I don't want to see is have the builder say, well, you can't go to court until you give me the evidence to back up your claim. So, then you could get into a standoff and you'd never get anywhere.... CHAIR BUNDE said he would hold this bill temporarily until that question gets resolved. CSHB 242(L&C)-EXAM FOR CPA'S CHAIR BUNDE announced CSHB 242(L&C) to be up for consideration. MS. SARAH WRIGHT, staff to Representative Mike Hawker, sponsor, said HB 242 updates Alaska statute to recognize changes in the standardized testing procedures for Certified Public Accountants adopted by the American Institute of Certified Public Accountants (AICPA). The Alaska Board of Public Accountancy has been administering this nationally used test since the 1960s that CPAs are required to pass. The examination will change from a paper and pencil format to a computerized examination in May 2004. Current Alaska statute requires a written examination. HB 242 makes the test acceptable in any form. It also allows the Board to establish by regulation what constitutes a passing grade using AICPA prepared exam regulations. The AICPA provides national uniformity of scheduling credits and passing requirements. Several sections of Alaska statute would be repealed for consistency with a computerized exam and transitional language is provided for people who have begun the CPA exam process and are now moving into the computerized exam arena. She noted that the Division of Occupational Licensing helped to draft the bill. SENATOR STEVENS assumed the paper and pencil test is taken in front of an examiner and asked if that will be true of the computer tests. MS. WRIGHT replied yes. CHAIR BUNDE asked if they have questions about security concerns. MS. WRIGHT replied none that she was aware of. SENATOR STEVENS moved to pass CSHB 242(L&C) with individual recommendations and its zero fiscal note. SENATORS DAVIS, FRENCH, STEVENS, and BUNDE voted yea and it passed out of committee. CSHB 120(RLS)am-SERVICE CONTRACTS CHAIR BUNDE announced CSHB 120(RLS)am to be up for consideration. REPRESENTATIVE JOHN COGHILL, sponsor of HB 120, said this bill speaks to a gray area in law about service contracts. He said the past administration made a ruling that a company like Sears can provide a service contract through a direct retailing outfit. However, if service is provided under other contracts, it must be provided as insurance rather than as a contract. The present administration wants this issue clarified. The bill will take service contracts out of the insurance statute. He noted he has made sure the service contracts in the motor vehicle industry are very clearly not a part of this discussion. CHAIR BUNDE noted a letter from Linda Hall, Director of the Division of Insurance, in which she states that HB 120 is beneficial to both the division and those entities that provide service contracts. He asked if it will benefit consumers as well. MS. LINDA HALL, Director, Division of Insurance, replied that she thought so. The issue of what is and is not insurance has been problematic for a number of years. This bill clarifies that issue, which should benefit all involved. SENATOR STEVENS asked if a service contract and an extended warranty are the same thing. MS. HALL replied that they are technically the same thing. An extended warranty is normally offered by a manufacturer; a service contract does similar things, but is from a different entity and is purchased. This bill addresses the service contracts. CHAIR BUNDE said he thought a service contract would take care of routine maintenance that wouldn't be part of a warranty. MS. HALL elaborated that service contracts cover things that are generally operational. SENATOR FRENCH said he was interested in the exemption that takes service contracts out of the purview of the Division of Insurance and that service contracts include servicing things made by other people. He asked if once they are taken out of the division's purview, another entity will police how they are administered and regulated. He asked who he would complain to if Best Buy conned him into buying a $30 service contract on his new television but wouldn't come out and fix it. MS. HALL replied that court would be an option, but there is a consumer protection agency somewhere. SENATOR STEVENS moved to pass CSHB 120 (RLS) am from committee with its zero fiscal note and individual recommendations. SENATORS FRENCH, DAVIS, STEVENS and BUNDE voted yea and it moved on to its next committee of referral. CSHB 151(JUD)am-DWELLING DESIGN/CONSTRUCTION CLAIMS CHAIR BUNDE announced that CSHB 151(JUD)am was up for consideration again and that Representative Meyer would address the earlier question. REPRESENTATIVE MEYER said that Representative Gara's amendment had to do with the concept of tolling and didn't pertain to the 21-day clock, but instead to the 10-year statute of limitations. He said the concern about the builder requiring substantial evidence and how that would impact the 21-day time frame wouldn't be an issue because the builder knows the problem has to be resolved in 21 days. As soon as a builder received notification, he would make his own inspection. SENATOR FRENCH wanted to clarify that time won't be tolled and the pressure is on the builder to get back to look at the house. REPRESENTATIVE MEYER agreed. SENATOR FRENCH expressed concerned that all houses aren't built on the road network and if a dispute came up, a builder might not want to invest the money to fly back out to a rural area. He didn't want the homeowner stuck in some kind of a discovery dispute and be in a standoff because he can't get to court and can't get the builder to drop his demand for photographs and video tape documentation, etcetera of the home defect. REPRESENTATIVE MEYER responded that he shares his concern but felt that all builders statewide would know the process and understand if they built in a remote area they would have to do it right. SENATOR STEVENS asked if builders will no longer have to carry general liability insurance if this bill passes. REPRESENTATIVE MEYER replied that builders are required to carry general liability insurance, but currently insurance rates are extremely high because so many cases are either being resolved in court or builders are resolving them outside of court. Nevertheless, insurance companies are having to pay claims and rates are going up as a result. CHAIR BUNDE inserted that he has never known insurance rates to go down, but this bill might slow the rate of increase. REPRESENTATIVE MEYER added that it's getting out of control nationwide. MR. CHUCK SPINELLI, Alaska Home Builders Association, supported HB 151 and said the problem came from condominium construction in the Lower 48 states where teams of attorneys sue condo associations who in turn sue builders and do discovery for years without ever fixing anything. The project then gets traumatized because of the pending litigation and bankrupts the builder and the condo association. He said his general liability insurance is increasing from $55,000 last year to a quote of $435,000 this year. A lot of people who are building condominiums are not getting insurance. He thought this bill is a good first step to having a healthy building industry. CHAIR BUNDE closed public testimony. SENATOR STEVENS moved to pass SCS CSHB 151(L&C) from committee with individual recommendations and its zero fiscal note. SENATORS STEVENS, DAVIS, FRENCH and BUNDE voted yea and it was moved from committee. HB 135-MARITAL & FAMILY THERAPISTS CHAIR BUNDE announced HB 135 to be up for consideration. REPRESENTATIVE PEGGY WILSON, sponsor, said that HB 135 is just a simple bill. The law that established the Board of Marital and Family Therapists has been in place for 10 years and it's time to update the language within the statute. This bill will bring state statutes up to the same standards as other counseling services in the state and to the national marriage and family therapy statutes. She explained: Section 1 adds the Board of Marital and Family Therapists to the list of boards that may request the Division of Occupational Licensing to contract out for substance abuse and treatment under licensed therapists. It just gives more options for treatment. Section 2 gives the board authority to order a licensed marital and family therapist to submit to a reasonable physical or mental examination if the board has gotten word somewhere that there was sufficient evidence to conclude that the therapist's physical or mental capacity to practice safely is at issue. Section 3 allows for individual client contacts to be used as hours toward licensing. Section 4 requires the therapist to communicate to a potential victim or law enforcement officer if there is a threat of imminent serious physical harm to an identified victim that had been made by one of their clients. Section 5 imposes disciplinary sanctions in regard to a therapist's sexual misconduct. Sexual misconduct between client and therapist is probably the biggest problem in any kind of therapy type situation. This just makes sure the client is protected. Section 7 is just disclosure information and consumer protection. CHAIR BUNDE referred to the provision that requires communication about danger to a potential victim or to law enforcement and suggested saying "and law enforcement." He asked if that had been considered. SENATOR FRENCH guessed that about 90% of the reports would be to a domestic partner and that victims might not take any steps to protect themselves for all sorts of reasons. He thought it would be a good idea to let law enforcement know if the threat is that serious and imminent. REPRESENTATIVE WILSON said that section allows the therapist to break the confidentiality agreement. TAPE 03-31, SIDE B SENATOR FRENCH asked how other board-controlled occupations deal with confidentiality between the doctor and patient and threat disclosures. REPRESENTATIVE WILSON said she thought they do so in a similar manner. MS. SUSAN ARENTH commented that this issue was talked about in another committee. She said even if a threat isn't imminent but seems likely, she believes any therapist would inform the victim and she didn't see any reason not to inform law enforcement. CHAIR BUNDE guessed that would require law enforcement to use professional judgment too. MS. CAREN ROBINSON, Marriage and Family Therapist Association, said that therapists are required, just like all other professional counselors, to report child sexual abuse and this bill would not change that at all. She explained that in some situations, a victim who was notified may become so fearful that she may pull out a gun and kill the person who is coming to her house, thereby becoming the perpetrator. She felt it's in the best interest of the therapist in the counseling session to determine which is the right place to call. In other hearings most therapists have said generally speaking they would call the law enforcement agency first if they really felt someone's life was in danger. CHAIR BUNDE asked Ms. Robinson if she had input from people who prosecute domestic violence cases. He added that he wanted to give her an opportunity to investigate this question. MS. ROBINSON responded that the legal professionals she has spoken with said that right now therapists don't have the ability to notify either and are quite thrilled that the marriage and family therapists have brought this issue forward. CHAIR BUNDE agreed and said he didn't want to destroy the good in search of the perfect but wanted her to talk with some prosecutors. SENATOR STEVENS asked her to also address Section 3 on page 3, line 7, that removes the timeframe of three-years after a master's degree and another "and or" question where it says "practice marital and family therapy including frequent hours of direct contact with couples, individuals and families." He asked if a person has to work with individuals to get a license or work with all three types. REPRESENTATIVE WILSON commented that sometimes three years is not enough time to get the necessary hours. Previously, hours couldn't be counted when individuals were counseled separate from other family members if they were also being counseled together. CHAIR BUNDE said the committee would bring the bill up again next Tuesday. CSHB 194(L&C)-REGIONAL DEVELOPMENT ORG TAX CREDIT CHAIR BUNDE announced CSHB 194(L&C) to be up for consideration. REPRESENTATIVE TOM ANDERSON, sponsor, said HB 194 is the result of a partnership between the business development community and corporate Alaska and creates a tax credit of up to $10,000 to a corporation that donates to an Alaska regional development organization (ARDOR). This credit, when combined with various existing tax credits, may not exceed $150,000 and that will not change. This bill provides alternative recipients for donations. There are 13 ARDORs throughout the state, the biggest being the Anchorage Economic Development Corporation (AEDC). REPRESENTATIVE ANDERSON said a (committee substitute) CS was requested by the Division of Tax to clarify the definition of a regional development organization to definitively limit the credit to ARDORS. Another CS was introduced to remove the sunset provision. MR. LARRY CRAWFORD, President, Anchorage Economic Development Corporation, supported CSHB 194(L&C). He thought it would help AEDC build a stronger relationship with local businesses. He noted the AEDC board passed a resolution supporting this bill as well. CHAIR BUNDE said he would set the bill aside until the new information could be copied. SB 109-MEDICAID COST CONTAINMENT & PRIORITY LIST MR. PHELAN STRAUBE, staff to Senator Ben Stevens, prime sponsor of SB 109, said this bill authorizes an exemption from marine pilotage in Alaskan waters for certain foreign registered pleasure craft. Vessels of 60 ft. or less will be exempted from all pilotage laws. Yachts greater than 60 ft. and less than 173 ft. may be granted a waiver from pilotage laws after an application process and review by the Board of Marine Pilots or its designee. A fee based on the size of the vessel will be charged for each waiver granted. A waiver for a 60 ft. boat would cost $1,500; every additional foot up to 173 ft. would cost $50. If a waiver is granted, upon entering pilotage waters, a yacht would need to employ a marine pilot at the first pilot station into the initial port of entry in each pilotage region. The same procedure would also be followed when the vessel leaves Alaskan waters. These vessels would also be required to work with an agent licensed in Alaska. The legislation authorizes a civil penalty of $10,000 vessel for non-compliance. He told members this change was in part recommended in a legislative budget and audit report for the renewal of the Board of Marine Pilots. This legislation is supported by the communities of Sitka, Ketchikan, Whittier, Juneau, Haines, and many other chambers of commerce and economic development organizations. He concluded saying that this legislation would encourage the growth of this small but growing industry, which brings in new cash from out of state to local coastal communities. It also adds revenue to the general fund by charging the fees to come into our waters. The pilotage requirements promote safety, protect the marine environment and provide a penalty for failure to comply. SENATOR STEVENS moved to adopt CSSB 201(L&C), version D, as the committee's working document. There were no objections and it was so ordered. CAPTAIN BOB WINTER, Southeast Alaska Pilot Association, supported SB 209 and said the Association looks forward to working with the sponsor and staff to produce a bill that serves the interests of all parties, including the State of Alaska. MS. KATE TESAR, Alaska Yacht Services, said her client books services for yachts that are traveling to Alaska. Her client's problems served as the impetus for this legislation. She said the new fees would bring in around $100,000. SENATOR SEEKINS moved to pass CSSB 209(L&C), version D, with attached fiscal notes from committee with individual recommendations. SENATORS DAVIS, FRENCH, SEEKINS, STEVENS and BUNDE voted yea and SB 209 passed from committee. CSHB 194(L&C)-REGIONAL DEVELOPMENT ORG TAX CREDIT CHAIR BUNDE announced CSHB 194(L&C) to be back before the committee and that the committee was considering version Q. MS. HEATHER BEATY, staff to Representative Anderson, said Representative Anderson would be available soon. MR. MARK GRABER, Audit Manager, Tax Division, said the amendment adds confusion for the following reason: The contributions contemplated under this statute do not cover memberships and sponsorships; they would be contributions that would provide a direct business benefit to the corporation. Alaska adopted the Internal Revenue Code and in that is section 170 that allows the deduction to a charitable organization. ARDORS are not charitable organizations, therefore we don't need a reference to section 170 and a deduction in any event would not be allowed for a contribution because the contribution would provide no direct benefit to the corporation and therefore would not be an ordinary and necessary business expense. CHAIR BUNDE said he was confused and that he thought Mr. Graber asked for the amendment. MR. GRABER said that was correct and that the division doesn't need the current section (b)(2) in the previous version. The amendment is to delete lines 28 and 29. SENATOR DAVIS moved to adopt amendment 1. There were no objections and it was adopted. MR. JAMES ARMSTRONG, Municipality of Anchorage, supported HB 194. SENATOR SEEKINS said he thought the state is funding an ARDOR when a person decides to contribute to an ARDOR instead of paying a $10,000 tax bill, because that person gets a credit for it. CHAIR BUNDE said he thought a zero fiscal note was submitted because existing legislation allows that to occur. Any time a tax credit is allowed, it costs the state something. SENATOR SEEKINS said he wanted to clarify that regional development corporations are state funded organizations with no state control. MR. ARMSTRONG said he could see his point. MR. EDWARD LAMB, CEO, Alaska Regional Hospital, said the state needs to do everything it can to encourage organizations to contribute to the ARDORS whose efforts go out to bring new businesses into the state. SENATOR SEEKINS moved to pass SCS CSHB 194(L&C), version Q, from committee with attached fiscal notes and individual recommendations. SENATORS DAVIS, STEVENS, SEEKINS, FRENCH and BUNDE voted yea and the motion carried. CHAIR BUNDE adjourned the meeting at 3:10 p.m.