Legislature(2003 - 2004)

02/17/2004 01:34 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                                                                        
                       February 17, 2004                                                                                        
                           1:34 p.m.                                                                                            
TAPE(S) 04-11                                                                                                                 
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Con Bunde, Chair                                                                                                        
Senator Ralph Seekins, Vice Chair                                                                                               
Senator Gary Stevens                                                                                                            
Senator Hollis French                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Bettye Davis                                                                                                            
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 242                                                                                                             
"An Act relating to gaming."                                                                                                    
                                                                                                                                
     SCHEDULED BUT NOT HEARD                                                                                                    
                                                                                                                                
SENATE BILL NO. 286                                                                                                             
"An  Act relating  to direct  marketing fisheries  businesses, to                                                               
the  fisheries business  tax,  and to  liability  for payment  of                                                               
taxes  and  assessments  on  the  sale  or  transfer  of  fishery                                                               
resources; and providing for an effective date."                                                                                
                                                                                                                                
     MOVED CSSB 286(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 276                                                                                                             
"An Act  relating to the  Alaska Insurance  Guaranty Association;                                                               
relating to the  powers of the Alaska  Industrial Development and                                                               
Export Authority  concerning the  association; and  providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
     MOVED CSSB 276(L&C) OUT OF COMMITTEE                                                                                       
                                                                                                                                
SENATE BILL NO. 299                                                                                                             
"An Act relating to a charge for a bad check."                                                                                  
                                                                                                                                
     MOVED SB 299 OUT OF COMMITTEE                                                                                              
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SB 286                                                                                                                  
SHORT TITLE: DIRECT MARKETING FISHERIES BUSINESS                                                                                
SPONSOR(s): SENATOR(s) STEDMAN BY REQUEST OF SALMON INDUSTRY                                                                    
TASK FORCE                                                                                                                      
                                                                                                                                
01/30/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/30/04       (S)       L&C  FIN                                                                                               
02/12/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/12/04       (S)       Heard & Held                                                                                           
02/12/04       (S)       MINUTE(L&C)                                                                                            
02/17/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 276                                                                                                                  
SHORT TITLE: ALASKA INSURANCE GUARANTY ASSOCIATION                                                                              
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR                                                                                    
                                                                                                                                
01/23/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/23/04       (S)       L&C, FIN                                                                                               
02/03/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/03/04       (S)       Heard & Held                                                                                           
02/03/04       (S)       MINUTE(L&C)                                                                                            
02/10/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/10/04       (S)       Heard & Held                                                                                           
02/10/04       (S)       MINUTE(L&C)                                                                                            
02/17/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                                
BILL: SB 299                                                                                                                  
SHORT TITLE: BAD CHECK CHARGE                                                                                                   
SPONSOR(s): LABOR & COMMERCE                                                                                                    
                                                                                                                                
02/06/04       (S)       READ THE FIRST TIME - REFERRALS                                                                        
02/06/04       (S)       L&C, FIN                                                                                               
02/17/04       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
                                                                                                                              
WITNESS REGISTER                                                                                                              
                                                                                                                                
Mr. Ian Fisk                                                                                                                    
Staff to Senator Bert Stedman                                                                                                   
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Commented on SB 286 for the sponsor.                                                                     
                                                                                                                                
Mr. Bruce Schactler, President                                                                                                  
United Salmon Association (USA)                                                                                                 
PO Box 762                                                                                                                      
Kodiak AK 99615                                                                                                                 
POSITION STATEMENT: Supports SB 286.                                                                                          
                                                                                                                                
Mr. Kenny Oshbacker                                                                                                             
USA member                                                                                                                      
Kodiak AK                                                                                                                       
POSITION STATEMENT: Supports SB 286.                                                                                          
                                                                                                                                
Ms. Linda Hall, Director                                                                                                        
Division of Insurance                                                                                                           
Department of Community & Economic Development                                                                                  
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT: Supports SB 276.                                                                                          
                                                                                                                                
Mr. Scott King                                                                                                                  
Cornerstone Credit Services                                                                                                     
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 299.                                                                                          
                                                                                                                                
Mr. Ernest Madsen, Director                                                                                                     
Williams Express                                                                                                                
Anchorage AK                                                                                                                    
POSITION STATEMENT: Supports SB 299.                                                                                          
                                                                                                                                
Mr. David Gardner, Vice President                                                                                               
Member and Employee Services                                                                                                    
Golden Valley Electric Association                                                                                              
Fairbanks AK                                                                                                                    
POSITION STATEMENT: Supports SB 299.                                                                                          
                                                                                                                                
Ms. Pam LaBolle, President                                                                                                      
Alaska State Chamber of Commerce                                                                                                
217 Second Street                                                                                                               
Juneau, Alaska 99801                                                                                                            
POSITION STATEMENT: Supports SB 299.                                                                                          
                                                                                                                                
Ms. Thyes Shaub                                                                                                                 
National Federation of Independent Businesses (NFIB)                                                                            
217 Second St., Apt. 206                                                                                                        
Juneau AK 99801                                                                                                                 
POSITION STATEMENT: Supports SB 299.                                                                                          
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 04-11, SIDE A                                                                                                            
                                                                                                                              
           SB 286-DIRECT MARKETING FISHERIES BUSINESS                                                                       
                                                                                                                                
CHAIR CON  BUNDE called  the Senate  Labor and  Commerce Standing                                                             
Committee meeting  to order  at 1:34  p.m. Present  were Senators                                                               
Gary  Stevens,  Ralph  Seekins,  Hollis  French  and  Con  Bunde.                                                               
Senator Bettye Davis was excused.  The first order of business to                                                               
come before the committee was CSSB 286(L&C).                                                                                    
                                                                                                                                
MR. IAN FISK, Staff to  Senator Bert Stedman, sponsor, offered to                                                               
answer questions.                                                                                                               
                                                                                                                                
CHAIR BUNDE  noted that  a question from  Jim Smith  about shrimp                                                               
processing had been addressed and was no longer a problem.                                                                      
                                                                                                                                
MR. BRUCE SCHACTLER, President,  United Salmon Association (USA),                                                               
supported SB 286. He said, "Everybody  is all finally on the same                                                               
sheet of music and it's taken a long time."                                                                                     
                                                                                                                                
MR. KENNY OSHBACKER, USA member from  Kodiak, said he is a direct                                                               
marketer in the Lower 48 and supported SB 286.                                                                                  
                                                                                                                                
SENATOR SEEKINS moved  to pass CSSB 286(L&C)  from committee with                                                               
individual  recommendations and  attached  fiscal note.  Senators                                                               
Stevens, French,  Seekins and Bunde  voted yea and  CSSB 286(L&C)                                                               
moved from committee.                                                                                                           
                                                                                                                                
          SB 276-ALASKA INSURANCE GUARANTY ASSOCIATION                                                                      
                                                                                                                                
CHAIR CON BUNDE  announced SB 276 to be up  for consideration and                                                               
recapped that  a CS had  been discussed  at the last  meeting. An                                                               
additional amendment  had been proposed  that would  complete the                                                               
changes in the CS.                                                                                                              
                                                                                                                                
SENATOR RALPH SEEKINS  moved to adopt CSSB  276(L&C), version \H,                                                               
as the working document.                                                                                                        
                                                                                                                                
CHAIR  BUNDE  explained   that  the  CS  was   requested  by  the                                                               
Department  of  Community  and Economic  Development  (DCED)  and                                                               
reinserts (on  page 4, line  24) its  ability to seek  loans from                                                               
Alaska  Industrial  Development   and  Export  Authority  (AIDEA)                                                               
should the guaranty fund need to be filled, again, temporarily.                                                                 
                                                                                                                                
SENATOR HOLLIS  FRENCH maintained  his objection to  the adoption                                                               
of the CS  for the reasons he already stated  at the last meeting                                                               
[2/10/04].                                                                                                                      
                                                                                                                                
CHAIR BUNDE  asked for  the roll to  be taken.  Senators Seekins,                                                               
Stevens and  Bunde voted yea;  Senator French voted nay  and CSSB                                                               
276(L&C), version \H, was adopted.                                                                                              
                                                                                                                                
SENATOR SEEKINS moved to adopt amendment 1, version\H.1.                                                                        
                                                      23-GS2105\H.1                                                             
                                                           Bullock                                                              
                                                           1/13/05                                                              
                                                                                                                                
                                                                                                                                
                       A M E N D M E N T                                                                                    
                                                                                                                                
                                                                                                                                
OFFERED IN THE SENATE                          BY SENATOR BUNDE                                                                 
     TO:  CSSB 276(L&C), Draft Version "H"                                                                                      
                                                                                                                                
Page 5, following line 30:                                                                                                      
     Insert a new bill section to read:                                                                                         
   "* Sec. 4.  AS 44.88.080 is  amended by adding a new paragraph                                                             
to read:                                                                                                                        
               (27) to guarantee loans made to the Alaska                                                                       
     Insurance  Guaranty Association  (AS 21.80.040), with  these                                                               
     guarantees   limited  to   loans  necessary   to  make   the                                                               
     association financially able  to meet cash flow  needs up to                                                               
     a  maximum  outstanding principal  balance  at  any time  of                                                               
     $30,000,000."                                                                                                              
                                                                                                                                
Renumber the following bill section accordingly.                                                                                
                                                                                                                                
MS. LINDA  HALL, Director, Division  of Insurance,  Department of                                                               
Community  &  Economic  Development  (DCED)  explained  that  the                                                               
amendment adds  the second piece  of the AIDEA loan  guarantee by                                                               
taking language  from the Alaska Insurance  Guarantee Association                                                               
(AIGA) statutes and puts it  in with the AIDEA statutes, enabling                                                               
it to provide the guarantee that is spoken to in the CS.                                                                        
                                                                                                                                
CHAIR  BUNDE  announced  that amendment  1  was  adopted  without                                                               
objection.                                                                                                                      
                                                                                                                                
SENATOR  FRENCH surmised  that the  bill  now goes  from being  a                                                               
series of  assessments on the  industry to what is  essentially a                                                               
funding mechanism  through the earnings reserve  of the Permanent                                                               
Fund.                                                                                                                           
                                                                                                                                
MS. HALL responded that was her understanding, as well.                                                                         
                                                                                                                                
SENATOR FRENCH  asked if  simply going  from a 2  percent to  a 4                                                               
percent assessment would be beneficial to the guaranty fund.                                                                    
                                                                                                                                
MS. HALL agreed  that the assessment increase  mechanism would be                                                               
simpler,  but objections  to  the  resulting increased  financial                                                               
obligations had been raised.                                                                                                    
                                                                                                                                
SENATOR FRENCH noted  that he heard objections  to the assessment                                                               
increase from  the self-insured groups  that had never  paid into                                                               
the fund  and couldn't ever get  a financial benefit from  it, an                                                               
obviously defensible position.                                                                                                  
                                                                                                                                
MS.  HALL  agreed  with  Senator  French  that  the  majority  of                                                               
objections  she  heard also  came  from  self-insureds and  joint                                                               
insurance  arrangements. She  admitted that  increased costs  are                                                               
probably   distasteful    for   the   employer    community   and                                                               
policyholders   at  large,   although  she   hadn't  received   a                                                               
significant number of complaints from them.                                                                                     
                                                                                                                                
SENATOR FRENCH noted that the original  bill also had a 2 percent                                                               
increase on  other lines of  insurance, but he hadn't  heard many                                                               
objections from  that group. He asked  if she had any  input from                                                               
them.                                                                                                                           
                                                                                                                                
MS. HALL replied that she  hadn't received a specific phone call,                                                               
but  had heard  a  couple of  general  complaints regarding  that                                                               
particular provision.                                                                                                           
                                                                                                                                
SENATOR FRENCH concluded  saying he appreciated the  work she had                                                               
put into creating SB 276. "If  there were compromises to be made,                                                               
it would  have been in  that final self-insured group,  the group                                                               
that would  derive no benefit  from paying into the  Workers Comp                                                               
fund, but that's behind us...."                                                                                                 
                                                                                                                                
SENATOR  SEEKINS asked  if self-insureds  could  argue that  they                                                               
didn't  receive   any  benefit   and  weren't  involved   in  the                                                               
bankruptcy  of  the companies  and  therefore  shouldn't be  held                                                               
responsible with an additional assessment.                                                                                      
                                                                                                                                
MS. HALL replied  that that argument could be raised,  but it was                                                               
an   oversimplification  to   think  that   Fremont's  [Insurance                                                               
Company]  insolvency was  caused  only by  reduced premiums.  She                                                               
sees  the issue  as a  public policy  call and  pointed out  that                                                               
other  states have  had  to  decide how  to  deal with  insolvent                                                               
insurers, as well.  The Fremont situation is an  extreme case and                                                               
Alaska  does  not have  the  ability  to  fund the  claims  under                                                               
current statutes.                                                                                                               
                                                                                                                                
SENATOR SEEKINS said:                                                                                                           
                                                                                                                                
     I  understand that.  I just  think that  some of  those                                                                    
     same  people who  weren't involved  in those  companies                                                                    
     [and] are  in the  fallout that  came have  exactly the                                                                    
     same argument as those people  who are self insured who                                                                    
     have no input ever into the fund....                                                                                       
                                                                                                                                
CHAIR BUNDE refrained:                                                                                                          
                                                                                                                                
     I think  my intent is to  put a little reverse  spin on                                                                    
     that and  say we're  all potential beneficiaries  so we                                                                    
     perhaps  all should  be part  of the  solution.... Just                                                                    
     for  the record,  I have  heard Pam  LaBolle testifying                                                                    
     that  Alaska's  businesses are  under  a  good deal  of                                                                    
     pressure   and  an   additional  assessment   would  be                                                                    
     difficult  for them  to absorb  - that  there would  be                                                                    
     some  negative  consequences  to businesses  in  Alaska                                                                    
     having  faced  in  the  recent   past  an  increase  in                                                                    
     assessment, so...                                                                                                          
                                                                                                                                
SENATOR SEEKINS noted that an  assessment on employers eventually                                                               
trickles  down to  being  an assessment  on  employees. "It  goes                                                               
right to  the pocketbooks of  the people  who are doing  the work                                                               
every day."                                                                                                                     
                                                                                                                                
CHAIR BUNDE  quipped, "Again,  oversimplifying, I'm  just cutting                                                               
out the middle man."                                                                                                            
                                                                                                                                
CHAIR BUNDE closed public testimony on SB 276.                                                                                  
                                                                                                                                
SENATOR SEEKINS  moved to  pass CSSB  276(L&C), version  \H, from                                                               
committee with  individual recommendations, attached  fiscal note                                                               
and letter of intent.                                                                                                           
                                                                                                                                
SENATOR  FRENCH  objected saying  he  understands  the point  the                                                               
chairman is  trying to make, but  it seems like the  committee is                                                               
adopting  a course  that will  lead to  non-passage of  the bill,                                                               
which is ultimately  a bad idea. It discredits the  work that Ms.                                                               
Hall did  in creating a  feasible funding mechanism  for covering                                                               
the shortfall  and raises the stakes  on this issue to  the point                                                               
where many people  will feel uncomfortable voting  for it because                                                               
of  the  fact  that  it  goes to  the  earnings  reserve  of  the                                                               
Permanent  Fund.  It  makes  the   argument  for  enshrining  the                                                               
dividend  in  the  constitution  stronger,  because  the  funding                                                               
mechanism in  SB 276 will be  characterized by many as  a raid on                                                               
the Permanent Fund.                                                                                                             
                                                                                                                                
CHAIR BUNDE defended his philosophical stand on policy saying:                                                                  
                                                                                                                                
     Just  for the  record, to  point  out that  we are  not                                                                    
     broaching  new   ground  here.  The  earnings   of  the                                                                    
     Permanent  Fund, and  we definitely  need to  point out                                                                    
     there is  a big difference  between the corpus  and the                                                                    
     earnings,  you understand.  The earnings  are currently                                                                    
     used  on several  levels.  They are  used  to fund  the                                                                    
     application process  at some  $5 million;  they're used                                                                    
     for the hold  harmless for tens of  millions of dollars                                                                    
     for people who  would lose their welfare  when they get                                                                    
     their dividend; they're used,  of course, for inflation                                                                    
     proofing; and,  of course, used  for the  dividend. So,                                                                    
     the  Legislature  currently  has  the  power  and  does                                                                    
     indeed  appropriate monies  from the  earnings. If  the                                                                    
     worst-case scenario  that you  ascribe to  occurs, well                                                                    
     there's always a  possibility of funding it  out of the                                                                    
     general fund.                                                                                                              
                                                                                                                                
SENATOR SEEKINS  said, having  been on the  Board of  Trustees of                                                               
the Permanent  Fund and understanding that  the Legislature spent                                                               
$35 million  last year  for a  hold harmless  [agreement], public                                                               
safety and  other issues, he  could equate the Permanent  Fund to                                                               
his  family  checkbook  and  would,   therefore,  not  choose  to                                                               
inflation proof  his savings account,  if his kids  were starving                                                               
to death.                                                                                                                       
                                                                                                                                
     When I  take a look at  the challenge we are  facing on                                                                    
     some  of  the issues  -  fully  funding education  -  I                                                                    
     support that;  the PERS and  TRS downfall - I  think we                                                                    
     need to  address that; these  kinds of  situations that                                                                    
     were  uncontrollable by  the state,  unforeseeable -  I                                                                    
     think these  are areas where if  it came down to  it, I                                                                    
     don't think it's competition for  the dividend. I don't                                                                    
     think that the  competition is for the  dividend at all                                                                    
     when I  look at we  might be  spending as much  as $575                                                                    
     million  this next  year to  inflation proof  a savings                                                                    
     account when we can't educate  our children. So, to me,                                                                    
     I  understand the  funds  are  available for  different                                                                    
     things  and  in   inflation  proofing,  we're  actually                                                                    
     inflation proofing appreciating  assets, which normally                                                                    
     is  not done.  So,  the wisdom  of  the Legislature,  I                                                                    
     think has  to take a look  at a portion of  this and it                                                                    
     does not  jeopardize the  dividend. I'm  concerned that                                                                    
     some     members     now     who     have     supported                                                                    
     constitutionalizing  the  dividend are  concerned  that                                                                    
     this might speed the process.                                                                                              
                                                                                                                                
SENATOR FRENCH refuted his argument saying:                                                                                     
                                                                                                                                
     The Permanent  Fund is not your  family checkbook. It's                                                                    
     the checkbook of the people  of the State of Alaska, if                                                                    
     you will, and  they have been pretty  adamant about the                                                                    
     methods  in which  they prefer  to see  it spent  and I                                                                    
     don't think this is one of them.                                                                                           
                                                                                                                                
CHAIR BUNDE  asked for the  roll to be called.  Senators Seekins,                                                               
Stevens and Bunde  voted yea; Senator French voted  nay; and CSSB                                                               
276(L&C), version H, passed from committee.                                                                                     
                                                                                                                                
                    SB 299-BAD CHECK CHARGE                                                                                 
                                                                                                                                
CHAIR CON BUNDE  announced SB 299 to be up  for consideration and                                                               
that this  issue was brought to  his attention by the  public. He                                                               
explained that currently a fee of  $25 can be charged to a person                                                               
for writing a  bad check. The original  enabling legislation said                                                               
the fee  is for the  costs incurred  in processing the  bad check                                                               
and doing  whatever had to be  done to recoup on  it. Some people                                                               
have said  that the $25  fee needs to  be accounted for.  A whole                                                               
separate  accounting  system  would  need   to  be  created  -  a                                                               
challenge for a great many businesses.                                                                                          
                                                                                                                                
CHAIR  BUNDE  suggested clarifying  the  statute  by saying  that                                                               
separate accounting  is not needed and  that there is a  cost for                                                               
writing bad  checks and the  cost should  be borne by  the people                                                               
who write them.                                                                                                                 
                                                                                                                                
MR.   SCOTT  KING,   Cornerstone   Credit  Services,   Anchorage,                                                               
supported SB 299. He said:                                                                                                      
                                                                                                                                
     The  reason we  feel  the legislation  is necessary  is                                                                    
     because  of   a  recent  Superior  Court   decision  in                                                                    
     Fairbanks that  would require  a significant  change in                                                                    
     the way  we do business  in collecting bad  checks. The                                                                    
     decision,  which   copies,  I  think,  I   provided  to                                                                    
     everyone,  would require  that businesses  document and                                                                    
     account  for  all the  costs  incurred  when we  go  to                                                                    
     collect a bad  check. The cost incurred could  be up to                                                                    
     a maximum  of $25. Historically, this  statute has been                                                                    
     interpreted as allowing the maximum  fee to be simply a                                                                    
     $25 fee  to be  collected upon and  help repay  for the                                                                    
     costs incurred in  taking a bad check as  a business or                                                                    
     a merchant. Those costs typically  include bank fees to                                                                    
     the  merchant. When  the merchant  deposits the  check,                                                                    
     there's a  fee associated  with that -  personnel costs                                                                    
     and   making    phone   calls,    letters,   accounting                                                                    
     documentation,  fees to  pay collection  agencies, such                                                                    
     as myself, to  collect on these bad  checks. The effect                                                                    
     of  the decision  would further  require businesses  to                                                                    
     keep  track  of each  expense  incurred  prior to  them                                                                    
     mailing out  their notices. They  would have to  keep a                                                                    
     line item incurring of costs  until they reach the $25,                                                                    
     which  will   be  extremely  cumbersome   and  somewhat                                                                    
     impractical.                                                                                                               
                                                                                                                                
     SB 299  will make two  simple changes to  AS 09.68.115.                                                                    
     And  the  first,  and I  believe  the  most  important,                                                                    
     change  is  to  remove   the  language  of  'for  costs                                                                    
     incurred' and the check fee  and make it simply a check                                                                    
     penalty or fee. The second is  to raise the $25 to $30,                                                                    
     bringing  it more  in line  with other  states as  they                                                                    
     have  moved   along....  The   cost  of   business  has                                                                    
     obviously gone  up in  the last  18 years.  To increase                                                                    
     this  to $30  is something  we thought  was reasonable,                                                                    
     but not  too much. Some states  are as high as  $40 and                                                                    
     charging  interest  on the  checks  from  the date  the                                                                    
     check is written, which might be a little excessive.                                                                       
                                                                                                                                
MR. KING said Cornerstone represents over 2,000 businesses                                                                      
throughout Alaska and is very supportive of this bill.                                                                          
                                                                                                                                
CHAIR BUNDE noted that he had approximately 15 additional                                                                       
letters of support.                                                                                                             
                                                                                                                                
MR. KING said he thought more letters would be forthcoming as                                                                   
businesses become aware of the legislation.                                                                                     
                                                                                                                                
CHAIR BUNDE asked who would collect the $30 fee.                                                                                
                                                                                                                                
MR. KING replied that the merchant is the entitled entity.                                                                      
Cornerstone collects on behalf of the merchant and is                                                                           
compensated by them.                                                                                                            
                                                                                                                                
SENATOR STEVENS asked Mr. King to estimate a range of costs that                                                                
a company has to go through in a collection process.                                                                            
                                                                                                                                
MR. KING  replied that  the range  of costs  is dependent  on the                                                               
effort that  is used to  collect on the check.  Certain immediate                                                               
costs can be  assumed for noticing and bank fees  that range from                                                               
$2  or $3  to $25,  depending on  the bank,  to the  merchant who                                                               
accepted the check in return for  goods and had it bounced out of                                                               
his account.  Any mailing or  phone calls would  create personnel                                                               
time.  Expenses  can get  way  beyond  $30 very  quickly.  Thirty                                                               
dollars  is a  reasonable fee  for  what a  merchant has  already                                                               
suffered  from not  receiving compensation  for goods  delivered.                                                               
The  problem is,  if the  merchant or  his representative  has to                                                               
calculate  costs on  each check,  as soon  as the  calculation is                                                               
done, more  than $25 or $30  worth of value has  already added up                                                               
in  personnel costs.  That  is  why he  is  suggesting setting  a                                                               
standard fee so the merchant isn't harmed.                                                                                      
                                                                                                                                
SENATOR FRENCH asked for the  spectrum between people who write a                                                               
bad check  by mistake  and make  good on the  check the  next day                                                               
(low end) to people who  just steal other people's checkbooks and                                                               
write bad checks  and have no intention of paying  the debt (high                                                               
end).                                                                                                                           
                                                                                                                                
MR. KING said  his experience indicates that 10 to  15 percent of                                                               
bad checks  will be collected with  one notice or phone  call; 30                                                               
to  40 percent  of  the checks  will be  paid  with a  reasonable                                                               
amount  of effort  - multiple  phone calls,  letters etc.;  and a                                                               
high percentage of checks are never collected.                                                                                  
                                                                                                                                
SENATOR  FRENCH  asked  if the  middle  percentage  would  settle                                                               
within 30 days.                                                                                                                 
                                                                                                                                
MR. KING replied that typically payment takes up to 90 days.                                                                    
                                                                                                                                
SENATOR FRENCH  asked at  what point does  the collector  cut his                                                               
losses.                                                                                                                         
                                                                                                                                
MR.  KING replied  that  he  doesn't stop  until  the statute  of                                                               
limitations runs out.                                                                                                           
                                                                                                                                
MR. ERNEST  MADSEN, Director, Williams Express  Stores, supported                                                               
SB 299.  His businesses receive  several thousand checks  per day                                                               
and most  of them are good,  but collecting on the  ones that are                                                               
bad is  really difficult. He also  thought the fee for  bad check                                                               
writing should go up to $30.                                                                                                    
                                                                                                                                
CHAIR BUNDE asked how much bad checks cost his company.                                                                         
                                                                                                                                
MR.  MADSEN replied  that he  didn't  have an  exact amount,  but                                                               
right off  the bat, the commodity  that was sold is  lost as well                                                               
as the amount  that is spent on collections. He  also pointed out                                                               
that there  is a cost for  in-store devices to screen  for people                                                               
who write bad checks.                                                                                                           
                                                                                                                                
CHAIR BUNDE  asked if he had  an average purchase amount  for his                                                               
stores.                                                                                                                         
                                                                                                                                
MR. MADSEN replied that the average check is around $20 to $25.                                                                 
                                                                                                                                
MR. DAVID GARDNER, Vice President,  Member and Employee Services,                                                               
Golden  Valley  Electric  Association,   supported  SB  299.  The                                                               
Association does  not feel  its members  should have  to shoulder                                                               
the burden of collecting bad checks written by the very few.                                                                    
                                                                                                                                
CHAIR BUNDE asked him if he had a monthly value for bad checks.                                                                 
                                                                                                                                
MR. GARDNER replied that the Association  has a bad debt ratio of                                                               
about .05  percent, but  he didn't know  what percentage  was bad                                                               
checks as opposed to default  on payment. They quit keeping track                                                               
of expenses once the $25 threshold is reached.                                                                                  
                                                                                                                                
MS.  PAM LABOLLE,  President, Alaska  State Chamber  of Commerce,                                                               
supported  SB 299.  She related  how recently  the State  Chamber                                                               
received a bad  check for about $100 and worked  with the bank to                                                               
monitor the account daily for a month until the check was paid.                                                                 
                                                                                                                                
TAPE 04-11, SIDE B                                                                                                            
                                                                                                                                
MS. LABOLLE  concluded that calculating  costs for  recovering on                                                               
bad checks is a burden on  businesses and that is why the Chamber                                                               
supports the bill.                                                                                                              
                                                                                                                                
MS. THYES  SHAUB, National  Federation of  Independent Businesses                                                               
(NFIB), supported  SB 299.  She added that  because of  bed check                                                               
writing, some businesses  have decided not to  accept checks, but                                                               
to  only accept  cash or  VISA  cards. This  is inconvenient  for                                                               
customers  and detrimental  to consumers  who  don't have  credit                                                               
cards. Ease  of collecting on bad  checks is a factor  in whether                                                               
businesses continue to accept them as a form of payment.                                                                        
                                                                                                                                
SENATOR FRENCH said he thinks SB 299  is a good bill, but he is a                                                               
little  concerned about  raising the  fee  from $25  to $30.  His                                                               
reasoning  is that  26 states  charge $25  or less  currently and                                                               
eliminating the accounting frees  the collection agencies to know                                                               
they are going to get the  $25 every single time. Keeping the fee                                                               
at $25 would avoid "price creep"  and be fair. He moved to change                                                               
the fee back to $25.                                                                                                            
                                                                                                                                
SENATOR  STEVENS  maintained  that  the  potential  loss  to  the                                                               
merchant  can be  far beyond  the $30  and he  sees no  reason to                                                               
change that.                                                                                                                    
                                                                                                                                
SENATOR SEEKINS  commented that if  someone accidentally  wrote a                                                               
bad  check, it  just  takes a  phone  call to  get  some kind  of                                                               
resolution; but  he doesn't have  that much sympathy  for someone                                                               
who writes bad checks deliberately.                                                                                             
                                                                                                                                
CHAIR BUNDE  asked for the  roll to be called.  Senators Stevens,                                                               
Seekins and Chair Bunde voted  nay; Senator French voted yea; and                                                               
amendment 1 failed to be adopted.                                                                                               
                                                                                                                                
SENATOR  STEVENS moved  to pass  SB 299  from committee  with the                                                               
attached  fiscal note  and  individual recommendations.  Senators                                                               
Seekins, Stevens,  French and Chair  Bunde voted yea; and  SB 299                                                               
moved from  committee. There  being no  further business  to come                                                               
before the committee, he adjourned the meeting at 2:30 p.m.                                                                     
                                                                                                                                
                                                                                                                                

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