Legislature(2017 - 2018)BELTZ 105 (TSBldg)

04/10/2017 09:00 AM LABOR & COMMERCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SCR 10 ALASKA YEAR OF INNOVATION TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 81 AK ENERGY EFFICIENCY LOANS: ELIGIBILITY TELECONFERENCED
Heard & Held
-- Public Testimony --
+ HB 157 LIFE & HEALTH INSURANCE GUARANTY ASSN. TELECONFERENCED
Heard & Held
-- Public Testimony --
+ Bills Previously Heard/Scheduled: TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
          SENATE LABOR AND COMMERCE STANDING COMMITTEE                                                                        
                         April 10, 2017                                                                                         
                           9:03 a.m.                                                                                            
                                                                                                                                
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Mia Costello, Chair                                                                                                     
Senator Shelley Hughes, Vice Chair                                                                                              
Senator Kevin Meyer                                                                                                             
Senator Gary Stevens                                                                                                            
Senator Berta Gardner                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE CONCURRENT RESOLUTION NO. 10                                                                                             
Proclaiming 2018 to be the Alaska Year of Innovation.                                                                           
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 81(ENE)                                                                                 
"An  Act making  certain entities  that are  exempt from  federal                                                               
taxation  under 26  U.S.C.  501(c)(3), (4),  (6),  (12), or  (19)                                                               
(Internal  Revenue  Code),   regional  housing  authorities,  and                                                               
federally recognized tribes  eligible for a loan  from the Alaska                                                               
energy  efficiency revolving  loan fund;  relating to  loans from                                                               
the Alaska  energy efficiency revolving  loan fund;  and relating                                                               
to  the annual  report published  by the  Alaska Housing  Finance                                                               
Corporation."                                                                                                                   
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
HOUSE BILL NO. 157                                                                                                              
"An  Act  relating  to  the  Alaska  Life  and  Health  Insurance                                                               
Guaranty Association; and providing for an effective date."                                                                     
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: SCR 10                                                                                                                  
SHORT TITLE: ALASKA YEAR OF INNOVATION                                                                                          
SPONSOR(s): SENATOR(s) COSTELLO                                                                                                 
                                                                                                                                
04/07/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/07/17       (S)       L&C, STA                                                                                               
04/10/17       (S)       L&C AT 9:00 AM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: HB  81                                                                                                                  
SHORT TITLE: AK ENERGY EFFICIENCY LOANS: ELIGIBILITY                                                                            
SPONSOR(s): REPRESENTATIVE(s) KREISS-TOMKINS                                                                                    
                                                                                                                                
01/25/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/25/17       (H)       ENE, FIN                                                                                               
01/31/17       (H)       ENE AT 10:15 AM CAPITOL 17                                                                             
01/31/17       (H)       Heard & Held                                                                                           
01/31/17       (H)       MINUTE(ENE)                                                                                            
02/07/17       (H)       ENE AT 10:15 AM CAPITOL 17                                                                             
02/07/17       (H)       Heard & Held                                                                                           
02/07/17       (H)       MINUTE(ENE)                                                                                            
02/14/17       (H)       ENE AT 10:15 AM CAPITOL 17                                                                             
02/14/17       (H)       Moved  CSHB 81(ENE) Out of Committee                                                                   
02/14/17       (H)       MINUTE(ENE)                                                                                            
02/15/17       (H)       ENE RPT CS(ENE) NT 5DP 2NR                                                                             
02/15/17       (H)       DP:   JOHNSTON,   WESTLAKE,   SPOHNHOLZ,                                                               
                         CLAMAN, WOOL                                                                                           
02/15/17       (H)       NR: RAUSCHER, JOHNSON                                                                                  
03/06/17       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/06/17       (H)       Heard & Held                                                                                           
03/06/17       (H)       MINUTE(FIN)                                                                                            
03/16/17       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/16/17       (H)       Moved  CSHB 81(ENE) Out of Committee                                                                   
03/16/17       (H)       MINUTE(FIN)                                                                                            
03/17/17       (H)       FIN RPT CS(ENE) NT 6DP 4NR                                                                             
03/17/17       (H)       DP: KAWASAKI, ORTIZ, GUTTENBERG, GRENN,                                                                
                         SEATON, FOSTER                                                                                         
03/17/17       (H)       NR: WILSON, PRUITT, THOMPSON, TILTON                                                                   
03/24/17       (H)       TRANSMITTED TO (S)                                                                                     
03/24/17       (H)       VERSION: CSHB 81(ENE)                                                                                  
03/27/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/27/17       (S)       L&C, FIN                                                                                               
04/10/17       (S)       L&C AT 9:00 AM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
BILL: HB 157                                                                                                                  
SHORT TITLE: LIFE & HEALTH INSURANCE GUARANTY ASSN.                                                                             
SPONSOR(s): LABOR & COMMERCE BY REQUEST                                                                                         
                                                                                                                                
03/06/17       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/06/17       (H)       L&C                                                                                                    
03/13/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/13/17       (H)       -- MEETING CANCELED --                                                                                 
03/15/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/15/17       (H)       -- MEETING CANCELED --                                                                                 
03/20/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/20/17       (H)       Heard & Held                                                                                           
03/20/17       (H)       MINUTE(L&C)                                                                                            
03/22/17       (H)       L&C AT 3:15 PM BARNES 124                                                                              
03/22/17       (H)       Moved  HB 157 Out of Committee                                                                         
03/22/17       (H)       MINUTE(L&C)                                                                                            
03/24/17       (H)       L&C RPT 6DP 1NR                                                                                        
03/24/17       (H)       DP: SULLIVAN-LEONARD, STUTES, WOOL,                                                                    
                         BIRCH, KNOPP, KITO                                                                                     
03/24/17       (H)       NR: JOSEPHSON                                                                                          
04/05/17       (H)       TRANSMITTED TO (S)                                                                                     
04/05/17       (H)       VERSION: HB 157                                                                                        
04/06/17       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/06/17       (S)       L&C, JUD                                                                                               
04/10/17       (S)       L&C AT 9:00 AM BELTZ 105 (TSBldg)                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
WESTON EILER, Staff                                                                                                             
Senator Mia Costello                                                                                                            
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced SCR 10 on behalf of the sponsor.                                                               
                                                                                                                                
JOHNATHON KREIS-THOMPSON                                                                                                        
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Sponsor of HB 81.                                                                                         
                                                                                                                                
BERETT WILBER, Staff                                                                                                            
Representative Kreiss-Tomkins                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Delivered the sectional analysis and                                                                      
answered questions related to HB 81.                                                                                            
                                                                                                                                
STACEY SCHUBERT, Director                                                                                                       
Government Relations and Public Affairs                                                                                         
Alaska Housing Finance Corporation (AHFC)                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Offered information related to HB 81.                                                                     
                                                                                                                                
CHRIS ROSE, Executive Director                                                                                                  
Renewable Energy Alaska Project (REAP)                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Testified in support of HB 81.                                                                            
                                                                                                                                
REPRESENTATIVE SAM KITO                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Introduced HB 157, speaking as chair of the                                                               
House Labor and Commerce Committee.                                                                                             
                                                                                                                                
LORI WING-HEIER, Director                                                                                                       
Division of Insurance,                                                                                                          
Department of Commerce, Community and Economic Development                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Provided an overview of HB 157.                                                                           
                                                                                                                                
SHEILA TALLMAN, Senior Manager of Legislative Policy                                                                            
Premera Blue Cross                                                                                                              
Seattle, Washington                                                                                                             
POSITION STATEMENT: Urged the committee to wait for the NCIS to                                                               
release the new model law before acting on HB 157.                                                                              
                                                                                                                                
DONALD THOMAS, Executive Director                                                                                               
Alaska Life and Health Insurance Guarantee Association,                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT: Responded to questions related to HB 157.                                                                 
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
9:03:28 AM                                                                                                                    
CHAIR MIA COSTELLO called the Senate Labor and Commerce Standing                                                              
Committee meeting to order at 9:03 a.m. Present at the call to                                                                  
order were Senators Meyer, Gardner, and Chair Costello.                                                                         
                                                                                                                                
                                                                                                                                
                SCR 10-ALASKA YEAR OF INNOVATION                                                                            
                                                                                                                                
9:04:14 AM                                                                                                                    
CHAIR COSTELLO announced the consideration of SCR 10. She asked                                                                 
Mr. Eiler to share the background leading to the resolution.                                                                    
                                                                                                                                
9:04:25 AM                                                                                                                    
WESTON EILER, Staff to Senator Mia Costello, sponsor of SCR 10,                                                                 
introduced the legislation on behalf of the sponsor, speaking to                                                                
the following sponsor statement:                                                                                                
                                                                                                                                
     Senate Concurrent Resolution 10  would proclaim 2018 as                                                                    
     the Year  of Innovation in Alaska.  Innovation has been                                                                    
     a constant  theme throughout the  first session  of the                                                                    
     30th  Alaska Legislature.  Whether growing  our state's                                                                    
     economy,  harnessing  technology to  improve  Alaskans'                                                                    
     quality of  life, or modernizing state  government in a                                                                    
     tough fiscal  environment; innovation can  help address                                                                    
     challenges facing Alaska.                                                                                                  
                                                                                                                                
     Alaskans  are innovators  by  tradition and  necessity.                                                                    
     The pioneering spirit that founded  and built our state                                                                    
     is rooted  in innovation. These range  from engineering                                                                    
     marvels  that  built  early mines,  railroads  and  the                                                                    
     Trans-Alaska  Pipeline, to  public  policies that  have                                                                    
     transformed  life  in  our state  such  as  the  Alaska                                                                    
     Permanent Fund and Community Development Quotas.                                                                           
                                                                                                                                
     Collaboration between  regional and  statewide economic                                                                    
     development     groups,    universities,     investors,                                                                    
     businesses  and  entrepreneurs  has  helped  create  an                                                                    
     innovation community  in Alaska.  Aligning stakeholders                                                                    
     around   collective  action   helps  engage   the  next                                                                    
     generation of Alaskan  entrepreneurs. Events such UAF's                                                                    
     Arctic Innovation  Competition, the  Innovation Summit,                                                                    
     Alaska   Startup   Week,   and   the   Launch:   Alaska                                                                    
     accelerator  create  an  ecosystem for  innovation  and                                                                    
     help bring new ideas to market.                                                                                            
                                                                                                                                
     Innovation and  entrepreneurship are crucial  for long-                                                                    
     term  economic  development and  diversifying  Alaska's                                                                    
     economy.  The  National  Bureau  of  Economic  Research                                                                    
     reports that net job creation  is driven by startups --                                                                    
     creating  an average  of three  million jobs  annually.                                                                    
     Alaska's  current fiscal  climate calls  for innovative                                                                    
     solutions,  as seen  in the  work  of many  legislative                                                                    
     committees  and formation  of  a bipartisan,  bicameral                                                                    
     Innovation Caucus.                                                                                                         
                                                                                                                                
     Proclaiming 2018  as the Year  of Innovation  in Alaska                                                                    
     raises the level of this  discussion and highlights how                                                                    
     creativity  can improve  our  state. Senate  Concurrent                                                                    
     Resolution 10 directs the  attention of Alaskans toward                                                                    
     out-of-the-box thinking,  creating a culture  in Alaska                                                                    
     where innovation and entrepreneurship are accepted and                                                                     
     encouraged.                                                                                                                
                                                                                                                                
MR.  EILER  highlighted  that  over the  last  three  years  this                                                               
committee has  heard from  individuals who  were speaking  at the                                                               
Innovation  Summit  put on  by  the  Juneau Economic  Development                                                               
Corporation.  These   include  Harvard  business   professor  Dr.                                                               
Christian Ketels who  briefed the committee about  the concept of                                                               
economic clusters  and the  need for  a strategy;  Michael Shuman                                                               
who highlighted some of the  benefits of crowdfunding; and Robert                                                               
Tucker who talked  about innovation being everyone's  job. One of                                                               
Mr. Tucker's  suggestions was  to declare  a year  of innovation,                                                               
which is what this resolution proposes.                                                                                         
                                                                                                                                
Providing historical context, he  reminded the committee that the                                                               
  th                                                                                                                            
29   Alaska Legislature  passed HCR  5 that  proclaimed 2015-2017                                                               
                                             th                                                                                 
the Years of the Arctic. Before that, the  26  Alaska Legislature                                                               
declared 2009  the year of  the Noncommissioned Officer,  and the                                                               
  th                                                                                                                            
24    Alaska   Legislature   proclaimed   2005   to   be   Rotary                                                               
International Year.                                                                                                             
                                                                                                                                
He  mentioned the  innovations the  committee has  recently heard                                                               
about and opined  that this resolution will  help advance out-of-                                                               
the-box thinking,  ensuring that Alaska develops  a culture where                                                               
innovation and entrepreneurship is encouraged.                                                                                  
                                                                                                                                
9:10:11 AM                                                                                                                    
CHAIR COSTELLO  stated that she  would hold SCR 10  in committee.                                                               
She asked  the members to  pay special attention to  the language                                                               
on  page  1,  line  16  through  page  2,  lines  1-3  and  offer                                                               
suggestions  for  changes  or  additions.   She  noted  that  the                                                               
commissioner of  education is  particularly excited  about naming                                                               
2018 the Year of Innovation                                                                                                     
                                                                                                                                
         HB  81-AK ENERGY EFFICIENCY LOANS: ELIGIBILITY                                                                     
                                                                                                                                
9:12:10 AM                                                                                                                    
CHAIR COSTELLO announced  the consideration of HB  81. She stated                                                               
that the intention  is to hear the  introduction, take questions,                                                               
open   public  testimony,   and   hold  the   bill  for   further                                                               
consideration. [CSHB 81(ENE) was before the committee.]                                                                         
                                                                                                                                
9:12:38 AM                                                                                                                    
JOHNATHON  KREIS-THOMPSON, Alaska  State Legislature,  sponsor of                                                               
HB  81,  introduced the  legislation  speaking  to the  following                                                               
sponsor statement:                                                                                                              
                                                                                                                                
     This bill gives  nonprofit organizations and federally-                                                                    
     recognized  tribes the  power to  apply for  loans from                                                                    
     the  Alaska  Energy  Efficiency  Revolving  Loan  Fund.                                                                    
     Because  AEERLF is  such a  god-awful acronym,  we call                                                                    
     this  bill  the  More Energy  Efficient  Buildings  Act                                                                    
     ("MEEBA").                                                                                                                 
                                                                                                                                
     The  AEERLF  was  created  by  the  Alaska  Sustainable                                                                    
     Energy Act  in 2010.  It authorized the  Alaska Housing                                                                    
     Finance  Corporation  to  make   $250  million  in  low                                                                    
     interest  loans for  energy efficiency  improvements to                                                                    
     public  entities,  namely   municipalities  and  school                                                                    
     districts.  Only one  loan has  been  closed since  the                                                                    
     program's creation in  2010, to the City  of Galena for                                                                    
     $2.6 million.                                                                                                              
                                                                                                                                
     Especially  given  our  new  and  more  austere  fiscal                                                                    
     climate  in which  legislative grants  are going  to be                                                                    
     rare to nonexistent, many  nonprofits are interested in                                                                    
     becoming  more  self-sufficient,  and  accessing  loans                                                                    
     from the program to invest  in energy efficiency. These                                                                    
     projects allow  them to    save money on  energy costs,                                                                    
     make  the state  money  in interest,  create jobs,  and                                                                    
     stimulates   the  economy.   Recognizing  these   clear                                                                    
     benefits,  the  MEEBA   authorizes  Alaska  Housing  to                                                                    
     accept applications from  non-profits, regional housing                                                                    
     authorities, and federally  recognized tribes to invest                                                                    
     in energy efficiency.                                                                                                      
                                                                                                                                
     The  More  Energy   Efficient  Buildings  Act  improves                                                                    
     energy   efficiency  in   Alaska.   It's  an   economic                                                                    
     stimulator, makes  the state money, and  helps create a                                                                    
     public  benefit for  a state  program that's  presently                                                                    
     underused.                                                                                                                 
                                                                                                                                
9:14:55 AM                                                                                                                    
REPRESENTATIVE KREISS-TOMKINS noted that HB 81 passed the other                                                                 
body by a 35:1 vote.                                                                                                            
                                                                                                                                
CHAIR COSTELLO asked Ms. Wilber to walk through a sectional                                                                     
analysis for HB 81.                                                                                                             
                                                                                                                                
BERETT WILBER, Staff, Representative Kreiss-Tomkins, Alaska                                                                     
State Legislature, delivered the following sectional analysis                                                                   
for HB 81.                                                                                                                      
                                                                                                                                
     Section   1  requests   the   Alaska  Housing   Finance                                                                    
     Corporation  to include  a report  of activities  under                                                                    
     the  Alaska Energy  Efficiency Revolving  Loan Fund  in                                                                    
     their annual report.                                                                                                       
                                                                                                                                
     Section  2 adds  federally recognized  tribes, regional                                                                    
     housing  authorities, and  non-profits to  the list  of                                                                    
     entities that  can be offered loans  through the Alaska                                                                    
     Energy Efficiency Revolving Loan Fund.                                                                                     
                                                                                                                                
     Section 3 is a conforming  change to existing law which                                                                    
     adds  tribes to  the  current  loan enforcement  terms.                                                                    
     Under  this  section, tribes  would  join  the list  of                                                                    
     entities  which agree  to  waive  a sovereign  immunity                                                                    
     defense  as  such a  defense  could  be applied  to  an                                                                    
     energy efficiency loan.                                                                                                    
                                                                                                                                
     Section 4  adds tribes  and nonprofits  to the  list of                                                                    
     those authorized to borrow from the loan program.                                                                          
                                                                                                                                
     Section 5 is  a conforming change which  adds the newly                                                                    
     eligible entities  to existing laws, which  lay out the                                                                    
     financial  responsibilities of  loan recipients  to the                                                                    
     State of Alaska if they default on a loan.                                                                                 
                                                                                                                                
     Section 6 includes definitions  for the bill, including                                                                    
     definitions for  federally recognized  tribes, regional                                                                    
     housing authorities,  and nonprofits. Under  this bill,                                                                    
     nonprofits  that are  designated as  501(c)(3), (c)(4),                                                                    
     (c)(6), (c)(12)  and (c)(19) can apply  for loans under                                                                    
     the Alaska Energy Efficiency Revolving Loan Fund.                                                                          
                                                                                                                                
     Section 7  adds a provision  to the bill  that requires                                                                    
     the  loan  program  to preference  originally  eligible                                                                    
     entities, which are  municipalities, schools, and state                                                                    
     buildings,  or the  newly  eligible  entities. It  also                                                                    
     expressly  forbids for-profit  entities from  receiving                                                                    
     loans from the fund.                                                                                                       
                                                                                                                                
9:17:28 AM                                                                                                                    
CHAIR COSTELLO asked where the language is broadened to include                                                                 
schools.                                                                                                                        
                                                                                                                                
MS. BARRETT  advised that schools  are already eligible  to apply                                                               
for  these  energy loan  funds.  She  directed attention  to  the                                                               
language on  page 2, line  17, and  said that while  the language                                                               
doesn't  specifically mention  schools, Legislative  Legal agrees                                                               
that they are included.                                                                                                         
                                                                                                                                
CHAIR  COSTELLO  listed  the   individuals  available  to  answer                                                               
questions.                                                                                                                      
                                                                                                                                
SENATOR MEYER  asked if  just one entity  had taken  advantage of                                                               
the loan program.                                                                                                               
                                                                                                                                
REPRESENTATIVE   KREISS-TOMKINS   said  that's   correct.   "It's                                                               
dramatically underused."                                                                                                        
                                                                                                                                
SENATOR MEYER asked why that the case.                                                                                          
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS said  his anecdotal  assessment is                                                               
that  entities have  been  accustomed to  looking  for grants  or                                                               
getting money  through capital projects.  Why would you  assume a                                                               
loan when  there's free money?  He opined that  thought processes                                                               
are changing  as people look  to be more self-sufficient  in this                                                               
more austere environment.                                                                                                       
                                                                                                                                
9:21:21 AM                                                                                                                    
SENATOR  MEYER commented  that the  last sizeable  capital budget                                                               
was  in  2013  so  it's  surprising that  the  loan  fund  is  so                                                               
underused. He  asked if  he sees this  program as  competition to                                                               
banks.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS  said  him thinks  there  will  be                                                               
increased interest  in the program  going forward. The  fact that                                                               
the  first loan  was taken  out just  last December  supports the                                                               
notion that entities are realizing that  free money is a thing of                                                               
the past and  that the more austere fiscal  environment is likely                                                               
here  to  stay. He  explained  that  the  loan program  does  not                                                               
compete with  banks because the  financing for the  Alaska Energy                                                               
Efficiency Revolving Loan  Fund is highly unique  and banks don't                                                               
have an analog.  The way the program works is  that the structure                                                               
first  needs  an energy  audit  that  identifies specific  energy                                                               
efficiency  improvements and  the  amount  that the  improvements                                                               
will save. The loan is based on the cost of the improvements.                                                                   
                                                                                                                                
SENATOR  MEYER asked  if  he has  an estimate  of  the number  of                                                               
nonprofits and tribes that might apply for a loan.                                                                              
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS said  he's speculating  but a  few                                                               
facts  might inform  what would  happen  if this  becomes law.  A                                                               
partnership in  Fairbanks between the Denali  Commission, Foraker                                                               
Group,  Cold  Climate  Housing  Research  Center  and  others  is                                                               
looking at  energy efficiency  improvements for  nonprofits. That                                                               
pilot  program was  designed  to  look at  the  payback and  cost                                                               
benefits of making these sorts  of improvements. He said he knows                                                               
that those entities are interested  in scaling this in the future                                                               
and have  been involved in  drafting and supporting the  bill. He                                                               
pointed  out  that   many  of  the  nonprofits   in  Alaska  have                                                               
relatively  small  budgets  compared  to  a  school  district  or                                                               
municipality and  their loans would  conceivably be  just $20,000                                                               
to  $50,000, but  that size  energy efficiency  improvement would                                                               
proportionally make a big difference.                                                                                           
                                                                                                                                
9:27:04 AM                                                                                                                    
SENATOR GARDNER asked  if this applies to all  nonprofits such as                                                               
churches and the Girl Scouts.                                                                                                   
                                                                                                                                
MS. WILBER  clarified that  the bill only  applies to  a specific                                                               
subsection of  nonprofits. It  specifically opens  eligibility to                                                               
501(c)(3)s   that  include   churches,  religious,   educational,                                                               
charitable,  literary,  and  scientific groups;  501(c)(4)s  that                                                               
include civic and social welfare  organizations such as Lions and                                                               
Rotary  Clubs;  501(c)(6)s  that  tend to  be  business  leagues,                                                               
chambers of  commerce, and  industry umbrella  organizations such                                                               
as  the Alaska  Pharmacist  Association and  the Alaska  Truckers                                                               
Association;  501(c)(12)s   that  are  mutuals   and  cooperative                                                               
associations  like  telephone  and electrical  cooperatives;  and                                                               
501(c)(19)s that are  organizations that have to do  with past or                                                               
present  members of  the armed  forces such  as VFWs  or American                                                               
Foreign Legions.                                                                                                                
                                                                                                                                
CHAIR COSTELLO asked Stacey Schubert  to address the question why                                                               
schools and other nonprofits haven't  taken advantage of the loan                                                               
fund.                                                                                                                           
                                                                                                                                
9:29:29 AM                                                                                                                    
STACEY  SCHUBERT,  Director,   Government  Relations  and  Public                                                               
Affairs,  Alaska Housing  Finance Corporation  (AHFC), Anchorage,                                                               
said  she  agrees  with  the   sponsor's  explanation.  When  the                                                               
legislation passed in 2010, authorizing  AHFC to go to the market                                                               
and bond  up to $250 million  for the program, schools  and other                                                               
public facilities had  grant money available so  they didn't need                                                               
to  go to  AHFC for  a loan.  As the  fiscal climate  has changed                                                               
there has  been more interest  in the program. For  example, AHFC                                                               
worked  with   the  Department   of  Transportation   and  Public                                                               
Facilities  on projects  they identified  for public  facilities,                                                               
but  the  department  found less  expensive  funds  from  another                                                               
source. AHFC  is participating with  the Alaska  Municipal League                                                               
and others to make sure they are aware of the program, she said.                                                                
                                                                                                                                
9:30:36 AM                                                                                                                    
CHAIR COSTELLO opened public testimony on HB 81.                                                                                
                                                                                                                                
9:30:48 AM                                                                                                                    
CHRIS ROSE,  Executive Director, Renewable Energy  Alaska Project                                                               
(REAP),  stated that  REAP  supports  HB 81.  He  said  we are  a                                                               
statewide nonprofit education advocacy  group that has focused on                                                               
promoting renewable energy and energy  efficiency for the last 13                                                               
years. HB 81 offers nonprofits  and tribes an opportunity to take                                                               
advantage  of this  loan  program. He  said  REAP estimates  that                                                               
Alaskans   collectively  spend   about   $5   billion  on   heat,                                                               
transportation,  and electricity  each  year.  He estimated  that                                                               
about  20  percent  of  the energy  consumption  could  be  saved                                                               
through energy  efficiency. Keeping  close to  $1 billion  in the                                                               
economy is  a worthy goal.  The nonprofits and tribes  around the                                                               
state  often   reside  in   energy  inefficient   buildings.  The                                                               
structure of  the loans that  AHFC is offering is  something that                                                               
tribes  and nonprofits  could  take advantage  of.  He urged  the                                                               
committee to consider and move the bill forward.                                                                                
                                                                                                                                
9:32:42 AM                                                                                                                    
CHAIR  COSTELLO closed  public testimony  on HB  81 and  held the                                                               
bill in committee for further review.                                                                                           
                                                                                                                                
         HB 157-LIFE & HEALTH INSURANCE GUARANTY ASSN.                                                                      
                                                                                                                                
9:33:07 AM                                                                                                                    
CHAIR COSTELLO announced the consideration of HB 157.                                                                           
                                                                                                                                
9:33:34 AM                                                                                                                    
REPRESENTATIVE SAM  KITO, Alaska State Legislature,  Chair, House                                                               
Labor and Commerce  Committee, introduced HB 157  speaking to the                                                               
following sponsor statement:                                                                                                    
                                                                                                                                
     House  Bill  157 updates  the  Alaska  Life and  Health                                                                    
     Insurance  Guaranty   Act  (Act)  to  conform   to  the                                                                    
     National  Association of  Insurance Commissioners  Life                                                                    
     and  Health Guaranty  Model Act.  These changes  update                                                                    
     the  Act  and  improve  uniformity  nationwide  in  the                                                                    
     administration   of    life   and    health   guarantee                                                                    
     associations.                                                                                                              
                                                                                                                                
     The   Alaska  Life   and  Health   Insurance  Guarantee                                                                    
     Association (Association)  is composed of  insurers who                                                                    
     transact   life   insurance,   health   insurance,   or                                                                    
     annuities in Alaska. The purpose  of the Association is                                                                    
     to  guarantee that  residents and  certain nonresidents                                                                    
     will continue to  receive benefits in the  event one of                                                                    
     the members becomes impaired or  insolvent. In order to                                                                    
     accomplish this,  the Act directs the  insurers to form                                                                    
     a  board and  collect assessments  from members  to pay                                                                    
     for the  operations of the Association  and obligations                                                                    
     of insolvent or impaired members.                                                                                          
                                                                                                                                
     House Bill  157 amends  terms for consistency  with the                                                                    
     model  act,   raises  payment  limits,   adds  language                                                                    
     clarifying  what  products  are included  and  excluded                                                                    
     from the  protections under the Act,  and adds language                                                                    
     clarifying   that   medical    and   hospital   service                                                                    
     corporations  and their  products  are  subject to  the                                                                    
     provisions  of  the  Act. House  Bill  157  amends  the                                                                    
     powers  and  duties  section  for  the  Association  to                                                                    
     follow the model act, authorizes  the board to increase                                                                    
     assessments,  grants  the  Association the  ability  to                                                                    
     develop  procedures to  remove an  Association governor                                                                    
     for cause, and adds new definitions.                                                                                       
                                                                                                                                
9:34:49 AM                                                                                                                    
LORI WING-HEIER,  Director, Division of Insurance,  Department of                                                               
Commerce,  Community  and  Economic Development  (DCCED),  stated                                                               
that there  are two insurance  guarantee associations  in Alaska.                                                               
One was formed  for property and casualty and one  was formed for                                                               
life   and  health.   She  agreed   with  Representative   Kito's                                                               
explanation that  if an insurance company  becomes insolvent, one                                                               
of the associations steps in  and assesses the member insurers up                                                               
to two percent to pay the  claims that have been presented to the                                                               
insolvent insurer.                                                                                                              
                                                                                                                                
She advised that  about three weeks ago a  long-term care insurer                                                               
went insolvent nationwide  and about 36 consumers  in Alaska were                                                               
at  risk of  not having  their  claims paid.  The claims  totaled                                                               
about $2 million. The association  sent out assessment letters to                                                               
collect the  money and they  will hold it  and pay the  claims as                                                               
they  are  presented. She  reported  that  this has  happened  to                                                               
workers' compensation insurers and  property insurers in the past                                                               
even though the Division of  Insurance closely monitors insurance                                                               
company financials. She summarized  that, "These two associations                                                               
are  the protections  that  stop consumers  from  not having  any                                                               
recourse  from  which  to  collect   the  claims  they  may  have                                                               
presented to the insurance company prior to the insolvency."                                                                    
                                                                                                                                
MS. WING-HEIER  said SB 157 does  two things. It updates  the Act                                                               
to  conform with  the current  National Association  of Insurance                                                               
Commissioners (NAIC)  model law,  and it brings  hospital medical                                                               
service corporations in  as member insurers. She  noted that most                                                               
of  the changes  are technical  and offered  to walk  through the                                                               
sectional analysis.                                                                                                             
                                                                                                                                
9:37:52 AM                                                                                                                    
SENATOR HUGHES joined the committee.                                                                                            
                                                                                                                                
SENATOR  GARDNER   asked  what   the  hospital   medical  service                                                               
corporations think of the bill.                                                                                                 
                                                                                                                                
MS.  WING-HEIER said  Premera  Blue Cross  is  the only  hospital                                                               
medical service  corporation in  Alaska and  their representative                                                               
is  on  line  to  comment  on   the  bill.  She  added  that  the                                                               
representative will probably say  Premera doesn't oppose the bill                                                               
entirely, but would  like to wait for the new  model law that has                                                               
not  been released.  It  brings in  life  insurance companies  to                                                               
address  long term  care, which  is a  problem nationwide.  These                                                               
claims   are  huge   and  health   care  insurers   alone  cannot                                                               
sufficiently address these policies.                                                                                            
                                                                                                                                
9:40:38 AM                                                                                                                    
CHAIR COSTELLO opened public testimony on HB 157.                                                                               
                                                                                                                                
SENATOR STEVENS joined the committee.                                                                                           
                                                                                                                                
9:40:48 AM                                                                                                                    
SHEILA  TALLMAN, Senior  Manager of  Legislative Policy,  Premera                                                               
Blue Cross,  Seattle, Washington, stated that  Premera recognizes                                                               
that the instability in health  care and long-term care insurance                                                               
markets is occurring and solvency  is a concern. She advised that                                                               
the National  Association of  Insurance Commissioners  (NAIC) has                                                               
been  discussing  this  issue  since   early  this  year  and  is                                                               
considering   updates  to   their  life   and  health   guarantee                                                               
association  models to  respond to  the changing  marketplace for                                                               
life,  health,  and  long-term   care  policies  and  to  address                                                               
insolvencies. Premera is working with  Blue plans in other states                                                               
and  with  the Blue  Cross  Blue  Shield Association  to  provide                                                               
comments on new approaches that  will not negatively impact costs                                                               
to consumers.                                                                                                                   
                                                                                                                                
She said it  is Premera's view that some of  the changes in House                                                               
Bill  157 would  negatively impact  Premera customers  through an                                                               
assessment and increased rates when there is an insolvency.                                                                     
                                                                                                                                
MS.  TALLMAN urged  the committee  to consider  the work  NAIC is                                                               
doing right now  before making any changes  to Alaska's guarantee                                                               
association  that  may not  be  consistent  with the  forthcoming                                                               
model.  She opined  that  there  may be  other  ways of  tackling                                                               
insolvency  issues,   particularly  in   a  state   with  limited                                                               
competition in  the health care  market when the policies  at the                                                               
crux of the  issue typically are not offered  by health insurance                                                               
companies.                                                                                                                      
                                                                                                                                
She concluded  advising that  the new  administration in  D.C. is                                                               
open to  new ideas that  offer long term solutions  and increased                                                               
competition in  insurance markets  and Premera  urges legislators                                                               
to take time before implementing new ideas there too.                                                                           
                                                                                                                                
SENATOR GARDNER asked if she has  a sense of the timeline for the                                                               
new model through NAIC.                                                                                                         
                                                                                                                                
MS.  TALLMAN said  she  has  heard that  the  intent  is to  have                                                               
something ready by the end of 2017.                                                                                             
                                                                                                                                
9:43:58 AM                                                                                                                    
CHAIR COSTELLO  noted that  David Phifer  and Donald  Thomas were                                                               
available to answer questions.                                                                                                  
                                                                                                                                
SENATOR  GARDNER asked  Mr.  Phifer or  Mr.  Thomas would  advise                                                               
waiting until the model law is released or moving forward now.                                                                  
                                                                                                                                
9:44:31 AM                                                                                                                    
DONALD  THOMAS,  Executive  Director,   Alaska  Life  and  Health                                                               
Insurance  Guarantee  Association,  Anchorage, said  he  was  not                                                               
aware  until  this  hearing  that  a  new  model  law  was  being                                                               
prepared.  The association  administers  the law  and he  doesn't                                                               
have a feel for the timeline.                                                                                                   
                                                                                                                                
9:45:44 AM                                                                                                                    
CHAIR COSTELLO  closed public  testimony on HB  157 and  held the                                                               
bill in committee for further consideration.                                                                                    
                                                                                                                                
                                                                                                                                
9:46:12 AM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair Costello  adjourned the Senate Labor  and Commerce Standing                                                               
Committee meeting at 9:46 a.m.                                                                                                  

Document Name Date/Time Subjects
HB 81 - Background Document - Memo Legal.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Background Document - AEERLFP.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Fiscal Note - DOR-AHFC.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Sponsor Statement.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Summary of Changes ver A to ver D.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Support Letter - AAHA.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81 - Support Letters.pdf SL&C 4/10/2017 9:00:00 AM
HB 81
HB 81.PDF SL&C 4/10/2017 9:00:00 AM
HB 81
HB 157 - Fiscal Note.pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157 - Sectional Analysis.pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157 - Sponsor Statement.pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157.PDF SL&C 4/10/2017 9:00:00 AM
HB 157
SCR 10.PDF SL&C 4/10/2017 9:00:00 AM
SCR 10
SCR 10 - Fiscal Note.pdf SL&C 4/10/2017 9:00:00 AM
SCR 10
SCR 10 - Sponsor Statement.pdf SL&C 4/10/2017 9:00:00 AM
SCR 10
HB 157 - Support Letter - Div. of Insurance.pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157 - Support Letter - AK Life & Health Guaranty Assoc..pdf SL&C 4/10/2017 9:00:00 AM
HB 157
HB 157 - Support Letter - ACLI.pdf SL&C 4/10/2017 9:00:00 AM
HB 157