Legislature(2007 - 2008)BELTZ 211

02/14/2008 01:30 PM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Including But Not Limited to:
Moved CSSSSB 230(L&C) Out of Committee
Moved SB 187 Out of Committee
Moved SB 183 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                       February 14, 2008                                                                                        
                           1:30 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Johnny Ellis, Chair                                                                                                     
Senator Gary Stevens, Vice Chair                                                                                                
Senator Bettye Davis                                                                                                            
Senator Lyman Hoffman                                                                                                           
Senator Con Bunde                                                                                                               
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 183                                                                                                             
"An Act  repealing the defined contribution  retirement plans for                                                               
teachers and for public  employees; making conforming amendments;                                                               
and providing for an effective date."                                                                                           
     MOVED SB 183 OUT OF COMMITTEE                                                                                              
SENATE BILL NO. 187                                                                                                             
"An  Act   increasing  the  minimum  wage;   creating  an  annual                                                               
adjustment to  the minimum wage  based on the rate  of inflation;                                                               
and providing for an effective date."                                                                                           
     MOVED SB 187 OUT OF COMMITTEE                                                                                              
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 230                                                                                      
"An  Act  establishing  the  film office  in  the  Department  of                                                               
Commerce,  Community, and  Economic Development;  and creating  a                                                               
transferable  tax credit  applicable to  certain film  production                                                               
expenditures incurred in the state."                                                                                            
     MOVED CSSSSB 230(L&C) OUT OF COMMITTEE                                                                                     
CS FOR HOUSE BILL NO. 233(L&C)                                                                                                  
"An  Act  relating  to  giving notice  of  unclaimed  net  margin                                                               
distributions made by electric and telephone cooperatives."                                                                     
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: SB 183                                                                                                                  
SHORT TITLE: REPEAL DEFINED CONTRIB RETIREMENT PLANS                                                                            
SPONSOR(s): SENATOR(s) ELTON                                                                                                    
05/16/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
05/16/07       (S)       L&C, STA, JUD, FIN                                                                                     
01/29/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
01/29/08       (S)       Heard & Held                                                                                           
01/29/08       (S)       MINUTE(L&C)                                                                                            
02/14/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 187                                                                                                                  
SHORT TITLE: ALASKA MINIMUM WAGE                                                                                                
SPONSOR(s): SENATOR(s) WIELECHOWSKI, THOMAS, ELTON                                                                              
01/16/08       (S)       PREFILE RELEASED 1/4/08                                                                                
01/16/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/08       (S)       L&C, FIN                                                                                               
01/31/08       (S)       L&C AT 2:00 PM BELTZ 211                                                                               
01/31/08       (S)       Heard & Held                                                                                           
01/31/08       (S)       MINUTE(L&C)                                                                                            
02/12/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/12/08       (S)       <Bill Hearing Rescheduled to 02/14/08>                                                                 
02/14/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: SB 230                                                                                                                  
SHORT TITLE: FILM OFFICE/ FILM PRODUCTION TAX CREDIT                                                                            
SPONSOR(s): SENATOR(s) ELLIS                                                                                                    
01/16/08       (S)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/08       (S)       L&C, FIN                                                                                               
01/25/08       (S)       SPONSOR SUBSTITUTE INTRODUCED-REFERRALS                                                                
01/25/08       (S)       L&C, FIN                                                                                               
02/05/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/05/08       (S)       Heard & Held                                                                                           
02/05/08       (S)       MINUTE(L&C)                                                                                            
02/12/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
02/12/08       (S)       Heard & Held                                                                                           
02/12/08       (S)       MINUTE(L&C)                                                                                            
02/14/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
BILL: HB 233                                                                                                                  
SHORT TITLE: UNCLAIMED PHONE/ELEC COOP DISTRIBUTIONS                                                                            
SPONSOR(s): RULES                                                                                                               
04/11/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/11/07       (H)       L&C                                                                                                    
04/25/07       (H)       L&C AT 3:00 PM CAPITOL 17                                                                              
04/25/07       (H)       Moved CSHB 233(L&C) Out of Committee                                                                   
04/25/07       (H)       MINUTE(L&C)                                                                                            
04/27/07       (H)       L&C RPT CS(L&C) 4DP 1NR                                                                                
04/27/07       (H)       DP: GARDNER, LEDOUX, BUCH, OLSON                                                                       
04/27/07       (H)       NR: NEUMAN                                                                                             
05/02/07       (H)       TRANSMITTED TO (S)                                                                                     
05/02/07       (H)       VERSION: CSHB 233(L&C)                                                                                 
05/03/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
05/03/07       (S)       L&C, FIN                                                                                               
02/14/08       (S)       L&C AT 1:30 PM BELTZ 211                                                                               
WITNESS REGISTER                                                                                                              
SENATOR BILL WIELECHOWSKI                                                                                                       
Alaska State Capitol                                                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Sponsor of SB 187.                                                                                        
MAX HENSLEY                                                                                                                     
Staff to Senator Ellis                                                                                                          
Alaska State Capitol                                                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Explained the CS for SSSB 230 for the                                                                     
DAMA CHASLE, Production Executive                                                                                               
The Incentives Office                                                                                                           
Los Angeles, CA                                                                                                                 
POSITION STATEMENT: Supported SB 230.                                                                                         
WILLIAM CAVAN, independent video and film producer                                                                              
Orlando, FL                                                                                                                     
POSITION STATEMENT: Supported SB 230.                                                                                         
MICHAEL COLLIER, independent film producer                                                                                      
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported SB 230.                                                                                         
KATE TESAR                                                                                                                      
Alaska Film Group                                                                                                               
Juneau, AK                                                                                                                      
POSITION STATEMENT: Supported SB 230.                                                                                         
DEREK MILLER                                                                                                                    
Staff to Representative Kelly                                                                                                   
Alaska State Capitol                                                                                                            
Juneau, AK                                                                                                                      
POSITION STATEMENT: Commented on HB 233 for the sponsor.                                                                      
DARREN SCOTT, CEO                                                                                                               
Kodiak Electric Association                                                                                                     
Kodiak, AK                                                                                                                      
POSITION STATEMENT: Supported HB 233.                                                                                         
RON VACERA, Director                                                                                                            
Member Service                                                                                                                  
Chugach Electric Association                                                                                                    
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported HB 233.                                                                                       
ROBERT WILKINSON, CEO                                                                                                           
Copper Valley Electric Association                                                                                              
Valdez, AK                                                                                                                      
POSITION STATEMENT: Supported HB 233.                                                                                         
MARILYN LELAND, Executive Director                                                                                              
Alaska Power Association                                                                                                        
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Supported HB 233.                                                                                         
RAY CRAIG, Chair                                                                                                                
Chugach  Consumers  and  Advocacy   Group  for  Electric  Utility                                                               
Anchorage, AK                                                                                                                   
POSITION   STATEMENT:   Supported    HB   233   with   additional                                                             
requirements for newspaper advertising.                                                                                         
ACTION NARRATIVE                                                                                                              
CHAIR JOHNNY ELLIS called the  Senate Labor and Commerce Standing                                                             
Committee meeting to order at 1:30:11  PM. Present at the call to                                                             
order were Senators Bunde, Davis, Hoffman and Ellis.                                                                            
         SB 183-REPEAL DEFINED CONTRIB RETIREMENT PLANS                                                                     
1:31:13 PM                                                                                                                    
CHAIR ELLIS announced SB 183 to be up for consideration.                                                                        
SENATOR ELTON,  sponsor of  SB 183,  reminded the  committee that                                                               
this bill  hires new  employees into  Tier III  PERS and  Tier II                                                               
TRS. It gives them a chance  to earn a guaranteed benefit pension                                                               
and retiree  health coverage at  no cost  to the system.  He said                                                               
they had  talked in  the past  about how  the defined  benefit is                                                               
expensive and when you aggregate Tiers  I, II and III on the PERS                                                               
side, it is  more expensive, but you have to  remember that prior                                                               
to  the passage  of the  defined contribution  all new  employees                                                               
were going  into Tier  III. Now data  from the  state's actuaries                                                               
shows that  the Tier III is  slightly more expensive on  the PERS                                                               
side and slightly less expensive on  the TRS side so it's kind of                                                               
a wash  for the state,  but it does  give new employees  a better                                                               
He stated that most of the  state's public employees don't have a                                                               
safety net, the  defined benefit, of social  security under them.                                                               
Also  our   retiree  economy  in   this  state  is   almost  $1.5                                                               
billion/year. One of  the reasons it is so strong  is because the                                                               
defined benefit plan has a  cost of living adjustment (COLA) that                                                               
encourages  people to  stay here  and spend  the money  here. The                                                               
defined contribution  plan does  not have  that COLA.  He thought                                                               
that lack  would actually encourage  some retirees to  move south                                                               
especially  since   one  of  the  consequences   of  the  defined                                                               
contribution  system  is that  some  families  could run  through                                                               
their health benefit account in as little as 18 months.                                                                         
SENATOR ELTON  ended by  saying there are  some things  this bill                                                               
doesn't do. In  the review of the defined  contribution plan some                                                               
things made sense  and those things won't change.  Among them are                                                               
the requirement  for a second  actuary to  check the work  of the                                                               
first  actuary, mandatory  experience studies,  elected officials                                                               
are still out  of the system, the ARM board  having the important                                                               
financial experience of disinterested  members, the 2010 buy back                                                               
deadline and  no employer  under this bill  paying less  than the                                                               
normal cost.                                                                                                                    
CHAIR ELLIS reminded  the committee that the bill has  a long way                                                               
to  go. He  personally thought  the discussion  about recruitment                                                               
and retention of employees and  teachers was worth having because                                                               
the state  learns more as  it goes along  and hears not  just the                                                               
anecdotal experiences, but the statistics as well.                                                                              
1:36:57 PM                                                                                                                    
SENATOR DAVIS  moved to  pass SB 183,  version M,  from committee                                                               
with individual recommendations and attached fiscal notes.                                                                      
SENATOR BUNDE objected.  He said he understood both  sides of the                                                               
issue, but he opined that in  the pipeline era the state couldn't                                                               
match  salaries so  it provided  "pretty lucrative  benefits" and                                                               
we're having to pay for those now.                                                                                              
A roll  call vote was  taken. Senators Hoffman, Davis,  and Ellis                                                               
voted  yea;  Senator Bunde  voted  nay;  so  SB 183  passed  from                                                               
                   SB 187-ALASKA MINIMUM WAGE                                                                               
1:39:17 PM                                                                                                                    
CHAIR ELLIS announced SB 187 to be up for consideration.                                                                        
SENATOR BILL  WIELECHOWSKI, sponsor of  SB 187, recapped  that it                                                               
would raise the Alaska minimum wage  from $7.15 to $8 per hour in                                                               
2009 and adjust it annually for  inflation. It would also link it                                                               
to any  increases in the  federal minimum wage by  requiring that                                                               
Alaska be $1 more than the federal minimum wage.                                                                                
He then answered questions that came  up at the last hearing. One                                                               
was  regarding a  supporting statement  about where  Alaska ranks                                                               
among the 50 states  in cost of living; overall Alaska  ranks 47                                                                
- meaning we are the fourth highest.                                                                                            
Another  question was  asked about  how many  Alaskans this  will                                                               
affect. There are currently about  14,000 Alaskans in the minimum                                                               
wage  category. Most  are  in combinations  of  food service  and                                                               
retail trade, educational services and manufacturing areas.                                                                     
SENATOR  WIELECHOWSKI explained  that  the  fulltime worker  that                                                               
earns minimum wage earns about  $14,000 per year, which is barely                                                               
above poverty level for a single  person and it's $3,000 less for                                                               
a family of  two. Roughly 58 percent of minimum  wage earners are                                                               
adults with an average age of 38 years old.                                                                                     
1:40:57 PM                                                                                                                    
SENATOR STEVENS joined the committee.                                                                                           
1:41:06 PM                                                                                                                    
SENATOR  WIELECHOWSKI  said  another  question  was  asked  about                                                               
whether  the  impact  on  Alaskans  jobs  would  be  negative  or                                                               
positive. He said Dr. Wolfson  testified in the last meeting that                                                               
the  current body  of economic  science  in this  field shows  it                                                               
would have  no negative impacts  on jobs  or the economy.  No one                                                               
was able to  identify any impacts, particularly  when Alaska last                                                               
raised its minimum wage in 2002.                                                                                                
SENATOR HOFFMAN  asked if any  other state has provisions  for $1                                                               
higher than the federal minimum wage.                                                                                           
SENATOR WIELECHOWSKI answered no, but  other states have a higher                                                               
minimum wage  than Alaska.  Alaska's minimum  wage is  lower than                                                               
any  other  state  on  the   West  Coast.  Several  other  states                                                               
currently  tie theirs  to an  inflation rate.  Ten states  adjust                                                               
their minimum wage annually for inflation.                                                                                      
1:42:57 PM                                                                                                                    
CHAIR ELLIS said  the state doesn't have  an automatic adjustment                                                               
and went for a long time  without raising the minimum wage. There                                                               
was a lot of pent up  frustration because of that and a citizen's                                                               
initiative got the process going;  the legislature stepped in and                                                               
got the initiative off the  ballot. He asked Senator Wielechowski                                                               
to remind them of the state's history on this issue.                                                                            
SENATOR WIELECHOWSKI  recapped that  in 2002 raising  the minimum                                                               
wage to $7.15/hour  and having an annual COLA  adjustment tied to                                                               
the  inflation  rate  was  on  an  initiative  signed  by  47,000                                                               
Alaskans. It  was certified  by the  Lieutenant Governor  and was                                                               
about  to appear  on the  ballot, but  the legislature  passed an                                                               
identical  law.  Polls  indicated  that 80  percent  of  Alaskans                                                               
supported  it.  His own  unscientific  survey  of people  in  his                                                               
district found over 80 percent supported this proposal.                                                                         
He  said the  legislature had  already passed  a bill  similar to                                                               
this proposal,  but with  lower amounts, but  before the  cost of                                                               
living adjustment  kicked in for  the next year,  the legislature                                                               
reopened the  bill and  took it  out. This puts  it back  in. The                                                               
$8/hour is a  little lower than if the COLA  would have been left                                                               
in; it might be closer to $8.10 or $8.15.                                                                                       
1:45:25 PM                                                                                                                    
SENATOR HOFFMAN  said he didn't  know if he  supported everything                                                               
in  the  bill, but  he  did  support moving  it  on  to the  next                                                               
committee.  He  moved   to  pass  SB  187   from  committee  with                                                               
individual recommendations and attached fiscal note(s).                                                                         
1:46:07 PM                                                                                                                    
SENATOR BUNDE objected. He stated  that he understood the intent,                                                               
but thought the gains are  illusionary because the people who pay                                                               
the increased  cost of the  minimum wage  are the people  who are                                                               
going to be earning the  minimum wage. This would bring increased                                                               
pressure on people  who don't earn minimum wage to  say well that                                                               
went up, so  my salary should go up too,  causing an inflationary                                                               
spiral. He also opined:                                                                                                         
      I think as most minimum wage jobs are service jobs,                                                                       
     kind of temporary jobs, that people that are - they'll                                                                     
     get a temporary bump in one pocket and they'll lose it                                                                     
     out of the other. It's illusionary.                                                                                        
1:47:37 PM                                                                                                                    
A roll  call vote was  taken. Senators Davis, Hoffman,  and Ellis                                                               
voted yea; Senators Bunde and Stevens  voted nay; so SB 187 moved                                                               
to the next committee.                                                                                                          
        SSSB 230-FILM OFFICE/ FILM PRODUCTION TAX CREDIT                                                                    
1:48:00 PM                                                                                                                    
CHAIR ELLIS  announced SSSB  230 to be  up for  consideration. He                                                               
said  there  were concerns  about  internships  and a  few  other                                                               
issues at the last meeting.                                                                                                     
MAX  HENSLEY,  staff  to  Senator Ellis,  sponsor  of  SSSB  230,                                                               
explained new  CS SSSB 230  (L&C) 25-LS1275\O. He  explained that                                                               
in the  last hearing they  discussed the internship  program with                                                               
Senator Stevens and as a result on  page 2, lines 15 and 16 allow                                                               
the  film office  to certify  Alaska  film production  internship                                                               
training  programs.  To promote  the  employment  of the  program                                                               
interns  by eligible  productions this  version removes  the link                                                               
between  the internship  program and  the university  and removes                                                               
the  questions   about  private  industry  wishing   to  maintain                                                               
internship  programs for  individual people  wanting to  apply to                                                               
the  film office.  The film  office has  assured him  it is  well                                                               
within  its  ability  to  do  this  kind  of  certification  with                                                               
MR. HENSLEY said the  other change was on page 4,  lines 13 - 16,                                                               
that  has  a  tighter  definition  of  what  the  duties  of  the                                                               
independent CPA  are regarding verification of  the spending done                                                               
in  the state  - in  response to  Senator Bunde's  concerns about                                                               
fraud. This  language was suggested  by the drafters as  the most                                                               
1:51:31 PM                                                                                                                    
SENATOR  BUNDE asked  if that  language  guaranteed if  something                                                               
fraudulent was found beforehand the  film office wouldn't have to                                                               
seek recourse.                                                                                                                  
MR. HENSLEY replied that was the intention.                                                                                     
CHAIR ELLIS added  that there's always legal  recourse for fraud,                                                               
but  you don't  want  the  incentive to  be  in  danger of  being                                                               
MR.  HENSLEY   said  that  is   a  concern  with  this   kind  of                                                               
transferable  credits.  The secondary  market  for  them will  be                                                               
significantly weakened if there is  the potential for a party not                                                               
involved  in  the production  who  purchases  the credits  to  be                                                               
liable for the activity of the producers.                                                                                       
CHAIR  ELLIS clarified  that  this language  is  for the  state's                                                               
protection and to avoid the problem.                                                                                            
MR. HENSLEY said the final issue  that was raised was the listing                                                               
of  qualified expenditures  on page  4. The  language on  line 26                                                               
says the  spending has  to happen directly  within the  state. He                                                               
said that  some things like  technical lighting  aren't available                                                               
in  the state  and  will  have to  be  transported here.  Alaskan                                                               
businesses will  be involved in  that and  that would be  part of                                                               
the qualified expenses.                                                                                                         
1:54:13 PM                                                                                                                    
SENATOR STEVENS said he wasn't  sure this language meant what Mr.                                                               
Hensley  said it  did.  He asked  if it  talks  only about  post-                                                               
production expenditures  in the  state or about  everything above                                                               
that directly incurred in this state.                                                                                           
MR.  HENSLEY  responded  any  of   the  three  -  pre-production,                                                               
production  and post-production  expenditures -  incurred in  the                                                               
state of Alaska would qualify.                                                                                                  
CHAIR ELLIS and SENATOR BUNDE stated  that it was their intent to                                                               
include all three.                                                                                                              
1:56:41 PM                                                                                                                    
DAMA CHASLE, production executive,  wanted to address some points                                                               
from  last  Tuesday's meeting  and  urged  them to  consider  the                                                               
increased  cost of  getting equipment  to Alaska.  She reiterated                                                               
that currently  Alaska doesn't  have adequate  infrastructure and                                                               
trained  crew available.  She supported  keeping  the 30  percent                                                               
base tax credit to offset these costs.                                                                                          
She underscored  the many jobs that  will come to the  state as a                                                               
result of  having this industry,  saying a studio  film typically                                                               
employs several  hundred people  in high  paying, high  tech jobs                                                               
that last  for months. They  plow considerable monies  into local                                                               
economies, from  the obvious hotels  and rental cars to  the less                                                               
obvious lumber yards,  dry cleaners, teachers for  minors who are                                                               
on  the set,  seamstresses, caterers,  extras, animal  wranglers,                                                               
film  digital  lab  processing,   et  cetera.  "And  it's  always                                                               
preferable to hire trained local  crew, because of the savings in                                                               
travel  and living  and the  local knowledge  of the  customs and                                                               
1:58:28 PM                                                                                                                    
WILLIAM CAVAN, independent video  and film producer, Orlando, FL,                                                               
commended them on  this bill. He said he  was presently producing                                                               
a low-budget  film in Florida, and  a few of the  people he talks                                                               
to  recognize Alaska  is  the  place to  film  this  and to  hire                                                               
1:59:20 PM                                                                                                                    
MICHAEL   COLLIER,  independent   Anchorage   film  producer   in                                                               
Anchorage, noticed that the crew  base in Alaska is dwindling. He                                                               
has had  many friends who  go from college  and want to  get into                                                               
film,  but  they  just  decide  they can't  do  it  here  and  go                                                               
somewhere else.  So when he  makes his small projects,  it's hard                                                               
to find  crew, and he  imagined it  would be even  more difficult                                                               
for larger productions that would  have to hire from other places                                                               
outside the state. An incentive to  build a crew base up here and                                                               
to develop  more talent  would also bring  up more  projects that                                                               
would develop into a range of films from big to small.                                                                          
2:01:11 PM                                                                                                                    
CHAIR ELLIS thanked him for being  a part of the response on this                                                               
bill.  He noted  the  "avalanche of  support  from the  strangest                                                               
corners of Alaska."                                                                                                             
2:01:34 PM                                                                                                                    
KATE TESAR,  Alaska Film Group,  thanked the committee  and noted                                                               
that  the  Cohen Brothers  have  purchased  rights to  produce  a                                                               
recent best  seller in Alaska  so the  timing of this  bill could                                                               
not be  better. She  said the  bill has  become even  better with                                                               
their help.                                                                                                                     
SENATOR STEVENS asked if this  bill could actually have an impact                                                               
on that film.                                                                                                                   
MS. TESAR  responded that they  hoped to get  regulations written                                                               
in this fiscal year.                                                                                                            
2:03:43 PM                                                                                                                    
SENATOR DAVIS  moved to adopt  CSSSSB 230(L&C), version  O. There                                                               
were no objections and it was so ordered.                                                                                       
SENATOR  BUNDE commented  that they  are giving  transferable tax                                                               
credits to  an entity  that doesn't  pay any  taxes and  he hoped                                                               
they  wouldn't  become  an  unsustainable   drain  on  the  state                                                               
treasury  and have  to  be  canceled like  the  previous one.  He                                                               
thought a more accurate title would be "the film subsidy bill."                                                                 
CHAIR ELLIS noted that the State  of Alaska chooses to operate in                                                               
a  certain  way with  its  corporate  taxation and  its  personal                                                               
taxation, whether  it be income tax  or sales tax. It  chooses to                                                               
operate the  state on oil revenues;  whether that is wise  or not                                                               
remains  to  be  seen.  This   is  an  opportunity  for  economic                                                               
development and  employment. The  state makes  it choices  at the                                                               
state level, but that may change in the future.                                                                                 
SENATOR  BUNDE  mentioned  that  he can't  help  but  think  it's                                                               
somewhat ironic that  they are about to move a  bill forward that                                                               
provides  tax incentives  because it  will increase  development,                                                               
when  a  few short  months  ago  they  raised  huge taxes  on  an                                                               
industry and  said it  wouldn't affect its  ability to  invest at                                                               
CHAIR ELLIS said  "The proof is in the pudding.  We'll see how it                                                               
all turns out. And I think we'll be here to take note."                                                                         
2:07:06 PM                                                                                                                    
SENATOR STEVENS moved to report  CSSSSB 230(L&C) [version O] from                                                               
committee  with individual  recommendations  and attached  fiscal                                                               
note(s). There being no objection, the motion carried.                                                                          
     CSHB 233(L&C)-UNCLAIMED PHONE/ELEC COOP DISTRIBUTIONS                                                                  
2:07:54 PM                                                                                                                    
CHAIR ELLIS announced CSHB 233(L&C) to be up for consideration.                                                                 
DEREK MILLER, staff  to Representative Kelly, sponsor  of HB 233,                                                               
explained  that   it  addresses  the  sometimes   burdensome  and                                                               
ineffective  noticing  requirements  of  unclaimed  property  law                                                               
regarding   capital    credits   of   electric    and   telephone                                                               
cooperatives.  From  time  to  time  these  cooperatives  receive                                                               
excess  revenues from  its members  that exceed  the expenses  of                                                               
operations.  They hold  funds  in  member-owned capital  accounts                                                               
called  capital  credits  (sometimes  called  "net  margins")  on                                                               
behalf of the  member. These coops may refund a  portion of these                                                               
accumulated credits,  but in some  cases the  cooperative seeking                                                               
to  refund the  capital credits  can  no longer  find the  member                                                               
through their  last known address.  As a result, many  credits go                                                               
Current unclaimed property law allows  the credits to be reverted                                                               
back to the cooperative as long as  it has mailed a notice to the                                                               
last known  address at  least six months  prior to  the reversion                                                               
and published a notice in  a newspaper of general circulation. It                                                               
has been  found the newspaper notification  has not significantly                                                               
increased the number  of members who cash  their capital credits;                                                               
as a  result the cost  of compliance of that  part of the  law is                                                               
significant, while the effectiveness  is questionable at best. HB                                                               
233 allows cooperatives the option  of using the Internet instead                                                               
of  newspaper  publications  to   notify  its  members  of  these                                                               
unclaimed capital  credits. He  noted that Alaska  is one  of the                                                               
most wired states in the nation.                                                                                                
As  an   example,  Mr.  Miller  noted   Alaska  Village  Electric                                                               
Cooperative (AVEC)  serves 52 villages and  spends many thousands                                                               
of dollars to  publish in several different  newspapers, but they                                                               
also  have a  website where  the names  of unlocated  members are                                                               
continuously published.                                                                                                         
MR.  MILLER said  this  legislation is  supported  by the  Alaska                                                               
Power  Association  as well  as  several  other rural  coops  and                                                               
2:11:07 PM                                                                                                                    
SENATOR HOFFMAN asked how many newspapers AVEC advertises in.                                                                   
MR. MILLER didn't know that answer.                                                                                             
SENATOR STEVENS said they are  talking primarily about people who                                                               
have moved; if they are  still customers, it's relatively easy to                                                               
locate them. He asked how many people they are talking about.                                                                   
MR.  MILLER  said  other  folks could  better  answer  that.  The                                                               
problem is that  the cost of complying with the  law is more than                                                               
the actual amounts that are in the accounts.                                                                                    
2:12:27 PM                                                                                                                    
DARREN  SCOTT, CEO,  Kodiak  Electric  Association, supported  HB                                                               
233.  He said  the association  spends  about $4000  per year  to                                                               
advertise in the  newspaper and it's very  ineffective. Using the                                                               
Internet to contact people works a lot better.                                                                                  
2:13:49 PM                                                                                                                    
RON   VACERA,  Director,   Member   Services,  Chugach   Electric                                                               
Association,  supported  HB  233.  He explained  that  a  lot  of                                                               
Anchorage people  move and Chugach Electric  pays capital credits                                                               
on  a  regular  basis.  It  spends  about  $55,000  annually  for                                                               
publishing names in the newspaper,  and it typically takes up 16-                                                               
20 pages in the  paper. It ends up issuing 2500  - 3000 checks to                                                               
about 15-20  percent of  the names  listed, which  indicates some                                                               
success,  but a  lot  are left  listed. He  said  that using  the                                                               
Internet was  much more economical  and the list could  remain on                                                               
line for an extended period of time unlike the newspaper.                                                                       
2:16:16 PM                                                                                                                    
ROBERT  WILKINSON,  CEO,   Copper  Valley  Electric  Association,                                                               
supported HB  233. He agreed  with all the previous  testimony in                                                               
support  of this  bill and  said  they had  been advertising  for                                                               
invalid  addresses  on their  website  already  for a  number  of                                                               
years.  People  who  work  with  it have  told  him  it  is  more                                                               
successful than  newspaper advertising. He added  that a majority                                                               
of the Alaska coops use  these credits for scholarships for youth                                                               
of member owners. Copper Valley  Electric over the past 15 years,                                                               
had put over $100,000 into scholarships.                                                                                        
2:18:14 PM                                                                                                                    
MARILYN  LELAND, Executive  Director,  Alaska Power  Association,                                                               
supported HB 233.  She said this process would  be more effective                                                               
for locating  former customers who  are owed capital  credits. In                                                               
addition it  would save them  and their customers  many thousands                                                               
of  dollars  in  advertising  expense.   The  current  method  of                                                               
publishing names  four times in  local newspapers  is cumbersome,                                                               
expensive and not  even terribly effective in  most small Alaskan                                                               
communities, where even if their  names are published, they don't                                                               
live there any more and aren't likely to see it.                                                                                
She  said that  using the  Internet for  notice already  has some                                                               
precedence in  Alaska's unclaimed property statutes  and that the                                                               
Department  of   Revenue  already  gives  notice   to  owners  of                                                               
unclaimed property using an Internet website.                                                                                   
SENATOR  BUNDE assumed  that  the expense  of  the publishing  is                                                               
passed on as an operating expense to the consumer.                                                                              
MS. LELAND answered that was her understanding.                                                                                 
SENATOR STEVENS  asked how she  tries to contact someone  who has                                                               
left the community,  whose physical address no  longer exists, by                                                               
using the Internet.                                                                                                             
MS. LELAND answered rather than  advertising a long list of names                                                               
four times  there would be  a smaller advertisement in  the paper                                                               
that would  direct people to  the Internet where they  could look                                                               
at  the names.  She  mentioned  that finding  one's  name in  the                                                               
newspaper is  a hit or miss  proposition, but it would  be on the                                                               
coops' websites all the time.                                                                                                   
2:22:04 PM                                                                                                                    
RAY  CRAIG,  Chair,  Chugach Consumers  and  Advocacy  Group  for                                                               
Electric  Utility  Customers,  supported   HB  233  for  all  the                                                               
previously mentioned  reasons. However  he was concerned  that it                                                               
went  too far  by not  putting any  minimum requirements  on what                                                               
kind of an advertisement the  utilities would do. A utility could                                                               
possibly bury  a fine print ad  in the back of  the legal notices                                                               
of the  paper out of  the view of  the public  - in light  of the                                                               
fact that utilities can keep unclaimed capital credits.                                                                         
He suggested a possible fix to  require a minimum size display ad                                                               
four times a year with  an attention-getting headline like "Do we                                                               
owe you money?"  He reminded them that  the newspaper advertising                                                               
does allow thousands of people to recover their capital credits.                                                                
2:25:57 PM                                                                                                                    
CHAIR  ELLIS asked  Mr. Miller  if he  had heard  this suggestion                                                               
MR. MILLER replied it  was new to him, and he  offered to work on                                                               
CHAIR ELLIS  said he would  be interested in  seeing a CS  with a                                                               
minimum  size ad  and  possibly a  requirement  that the  utility                                                               
collect the  email address of  the consumers.  He held HB  233 in                                                               
There being  no further  business to  come before  the committee,                                                               
Chair Ellis adjourned the meeting at 2:29:05 PM.                                                                              

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