04/04/2013 05:00 PM Senate LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| Confirmation Hearings | |
| SB93 | |
| SB25 | |
| HB71 | |
| SB58 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | SB 93 | TELECONFERENCED | |
| += | SB 25 | TELECONFERENCED | |
| HB 71 | |||
| *+ | SB 58 | TELECONFERENCED | |
| *+ | SB 61 | TELECONFERENCED | |
| += | SB 79 | TELECONFERENCED | |
ALASKA STATE LEGISLATURE
SENATE LABOR AND COMMERCE STANDING COMMITTEE
April 4, 2013
5:26 p.m.
MEMBERS PRESENT
Senator Mike Dunleavy, Chair
Senator Peter Micciche, Vice Chair
Senator Donald Olson
MEMBERS ABSENT
Senator Bert Stedman
Senator Johnny Ellis
COMMITTEE CALENDAR
CONFIRMATION HEARINGS
Board of Marine Pilots
Hans Antonsen - Ketchikan
- CONFIRMATION ADVANCED
Board of Pharmacy
Taryl Giessel - Eagle River
- CONFIRMATION ADVANCED
Alaska Workers' Compensation Board
Ronald Nalikak - Anchorage
- CONFIRMATION ADVANCED
SENATE BILL NO. 93
"An Act extending the unemployment contributions for the Alaska
technical and vocational education program."
- MOVED SB 93 OUT OF COMMITTEE
SENATE BILL NO. 25
"An Act relating to electronic filing of certain information
with the Department of Labor and Workforce Development; relating
to surcharges, rate increase reduction, prohibition on the
relief of certain charges, the unemployment trust fund account,
and the offset of certain unemployment compensation debt under
the Alaska Employment Security Act; relating to the definition
of 'covered unemployment compensation debt' in the Alaska
Employment Security Act; and providing for an effective date."
- MOVED SB 25 OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR HOUSE BILL NO. 71(FIN)
"An Act requiring the Department of Commerce, Community, and
Economic Development to file an annual report to the legislature
regarding statewide and regional economic development projects
and regional development organizations; extending the
termination date of the Alaska regional economic assistance
program; and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 58
"An Act allowing an insurer to cancel an insurance policy if
property becomes entirely abandoned and the abandonment
increases the hazard insured against."
- HEARD & HELD
SENATE BILL NO. 61
"An Act relating to the board, loans, records, and lobbying
contracts of the Alaska Commercial Fishing and Agriculture Bank;
and providing for an effective date."
- BILL HEARING CANCELED
SENATE BILL NO. 79
"An Act establishing the Sport Fishing Guide Services Board and
licensing requirements for sport fishing guide-outfitters, sport
fishing outfitters, sport fishing assistant guides, and sport
fishing transporters; making conforming amendments; allowing the
Department of Fish and Game to collect information on guiding
services; providing for an effective date by repealing the
effective date of sec. 32, ch. 58, SLA 2010; and providing for
an effective date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: SB 93
SHORT TITLE: TECHNICAL/VOCATIONAL EDUCATION PROGRAM
SPONSOR(s): SENATOR(s) OLSON
03/29/13 (S) READ THE FIRST TIME - REFERRALS
03/29/13 (S) L&C
04/04/13 (S) L&C AT 5:00 PM BELTZ 105 (TSBldg)
BILL: SB 25
SHORT TITLE: UNEMPLOYMENT; ELEC. FILING OF LABOR INFO
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/18/13 (S) READ THE FIRST TIME - REFERRALS
01/18/13 (S) L&C, FIN
04/02/13 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
04/02/13 (S) -- MEETING CANCELED --
04/03/13 (S) L&C AT 5:00 PM BELTZ 105 (TSBldg)
04/03/13 (S) Heard & Held
04/03/13 (S) MINUTE(L&C)
04/04/13 (S) L&C AT 5:00 PM BELTZ 105 (TSBldg)
BILL: HB 71
SHORT TITLE: AK REGIONAL ECONOMIC ASSISTANCE PROGRAM
SPONSOR(s): HUGHES
01/16/13 (H) READ THE FIRST TIME - REFERRALS
01/16/13 (H) L&C, FIN
02/18/13 (H) L&C AT 3:15 PM BARNES 124
02/18/13 (H) Heard & Held
02/18/13 (H) MINUTE(L&C)
03/04/13 (H) L&C AT 3:15 PM CAPITOL 106
03/04/13 (H) MILITARY TRAINING CREDIT/TEMP. LICENSE
03/05/13 (H) L&C AT 8:00 AM BARNES 124
03/05/13 (H) -- Meeting Continued from 3/4/13 --
03/07/13 (H) L&C RPT CS(L&C) 1DP 5NR
03/07/13 (H) DP: JOSEPHSON
03/07/13 (H) NR: MILLETT, REINBOLD, HERRON,
CHENAULT, OLSON
03/18/13 (H) FIN AT 1:30 PM HOUSE FINANCE 519
03/18/13 (H) Moved CSHB 71(FIN) Out of Committee
03/18/13 (H) MINUTE(FIN)
03/20/13 (H) FIN RPT CS(FIN) NT 10DP 1AM
03/20/13 (H) DP: T.WILSON, EDGMON, THOMPSON, NEUMAN,
MUNOZ, HOLMES, COSTELLO, GARA, STOLTZE,
03/20/13 (H) AUSTERMAN
03/20/13 (H) AM: KAWASAKI
03/27/13 (H) TRANSMITTED TO (S)
03/27/13 (H) VERSION: CSHB 71(FIN)
03/28/13 (S) READ THE FIRST TIME - REFERRALS
03/28/13 (S) L&C, FIN
04/04/13 (S) L&C AT 5:00 PM BELTZ 105 (TSBldg)
BILL: SB 58
SHORT TITLE: CANCEL INS. ON CERTAIN ABANDONED PROPERTY
SPONSOR(s): EGAN
02/15/13 (S) READ THE FIRST TIME - REFERRALS
02/15/13 (S) L&C
04/04/13 (S) L&C AT 5:00 PM BELTZ 105 (TSBldg)
WITNESS REGISTER
HANS ANTONSEN, Appointee
Board of Marine Pilots
Ketchikan, Alaska
POSITION STATEMENT: Testified as appointee to the Board of
Marine Pilots.
DAVID SCOTT, Staff
Senator Donny Olson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Introduced SB 93 on behalf of the sponsor.
FRED VILLA, Associate Vice President
Academic Affairs
Office of Workforce Programs
University of Alaska
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of SB 93.
BRYNN KEITH, Acting Deputy Commissioner
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Provided information related to SB 25.
PAUL DICK, Director
Division of Employment Security
Department of Labor and Workforce Development (DOLWD)
Juneau, Alaska
POSITION STATEMENT: Provided information related to SB 25.
CATHIE ROEMMICH, CEO
Juneau Chamber of Commerce
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 25.
REPRESENTATIVE SHELLY HUGHES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 71.
MERRILL SANFORD, Mayor
City and Borough of Juneau and
Board of Directors
Southeast Conference
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 71.
BRYANT HAMMOND, Director
Community Planning and Development
Bering Straits Development Council (BSDC)
Nome, Alaska
POSITION STATEMENT: Testified in support of HB 71.
DENISE BRAND, Grant Writer-Coordinator
Fairbanks North Star Borough
Fairbanks, Alaska
POSITION STATEMENT: Testified in support of HB 71.
BILL POPP, President and CEO
Anchorage Economic Development Corporation
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 71.
LORENE PALMER, Director
Division of Economic Development
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Testified in support of HB 71 on behalf of
DCCED.
MARILYN HEDDELL, Director
Prince William Sound Economic Development District
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 71.
SENATOR DENNIS EGAN
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of SB 58.
DANA OWEN, Staff
Senator Dennis Egan
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Provided information related to SB 58 on
behalf of the sponsor.
MARTIN HESTER, Deputy Director
Division of Insurance
Department of Commerce, Community and Economic Development
Juneau, Alaska
POSITION STATEMENT: Provided information related to SB 58
SHELDON WINTERS, Lobbyist
State Farm Insurance
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 58.
ACTION NARRATIVE
5:26:41 PM
CHAIR MIKE DUNLEAVY called the Senate Labor and Commerce
Standing Committee meeting to order at 5:26 p.m. Present at the
call to order were Senators Olson, Micciche, and Chair Dunleavy.
^Confirmation Hearings
CONFIRMATION HEARINGS
5:27:39 PM
CHAIR DUNLEAVY announced the first order of business would be
confirmation hearings. He read the following names:
Board of Marine Pilots
Hans Antonsen - Ketchikan
Board of Pharmacy
Taryl Giessel - Eagle River
Alaska Workers' Compensation Board
Ronald Nalikak - Anchorage
5:28:35 PM
HANS ANTONSEN, appointee, Board of Marine Pilots, introduced
himself.
SENATOR OLSON asked how long he had been a marine pilot.
MR. ANTONSEN replied he'd been a marine pilot in Southeast
Alaska for nearly 25 years.
SENATOR OLSON asked what he would bring to the board.
MR. ANTONSEN stated that he had attended most of the board
meetings for the past 20 plus years so he was familiar with the
issues and the way the board operates. He expressed confidence
that would be a competent, reliable, and productive board
member.
CHAIR DUNLEAVY noted that neither Ms. Giessel nor Mr. Nalikak
were on-line. He closed public testimony and solicited a motion.
5:29:57 PM
SENATOR MICCICHE moved to forward the names presented to the
committee to the full body for consideration with the
understanding that it does not reflect intent by any members to
vote for or against the confirmation of the individuals.
CHAIR DUNLEAVY announced that without objection, the
aforementioned names would be forwarded to the full body for
consideration.
5:30:18 PM
At ease
SB 93-TECHNICAL/VOCATIONAL EDUCATION PROGRAM
5:31:23 PM
CHAIR DUNLEAVY reconvened the meeting and announced the
consideration of SB 93, sponsored by Senator Donny Olson. "An
Act extending the unemployment contributions for the Alaska
technical and vocational education program."
5:31:38 PM
DAVID SCOTT, Staff, Senator Donny Olson, introduced SB 93 on
behalf of the sponsor. He spoke to the following sponsor
statement: [Original punctuation provided.]
The Technical and Vocational Education Fund authorized
under AS 23.15.840 sunsets on June 30, 2014. Senate
Bill 93 extends the sunset date to June 30, 2024.
In 2000 the Alaska Legislature created the Training
and Vocational Education Program to provide financial
assistance to support facilities throughout the state
that provide technical and educational programs for
industry specific training.
Alaska was experiencing unemployment rates that were
reaching to above 50% of the national average in 2008.
With large projects on the horizon, there was a clear
need for a trained, resident work force. The TVEP
program was extended to provide training to Alaskan
residents to help reduce the unemployment rate and put
Alaskan residents to work. Figures released on March
14, 2013 by the Department of Labor indicated that
unemployment rates in Alaska for December of 2012 were
6.6%, while the national average was 8.1%. Alaska has
had a consistent lower rate than the national average
for the past forty-six months, indicating the
effectiveness of this program.
Funds for the TVEP program are appropriated from
amounts the state collects in unemployment insurance
contributions at a rate of .15 percent and are
allocated according to statute.
The more we can train our youth, as they enter the
work force, the more we will re-enforce the
desirability of staying in Alaska as part of a highly
skilled, resident work force. The last five years has
shown this fund works. We can double the effectiveness
with ten more years.
MR. SCOTT stated that by statute each of the ten entities in the
program is required to submit an annual report to the
legislature. He noted that the Department of Labor and Workforce
Development (DOLWD) and the University of Alaska each submitted
fiscal notes.
SENATOR MICCICHE said he only had one fiscal note.
5:33:34 PM
At ease
5:34:18 PM
CHAIR DUNLEAVY reconvened the meeting and recognized Fred Villa.
5:34:29 PM
FRED VILLA, Associate Vice President, Academic Affairs, Office
of Workforce Programs, University of Alaska (UA), testified in
support of SB 93. He thanked the committee for hearing the
legislation and Senator Olson for sponsoring it, because it is a
critical part of the university's career and technical education
programs. He reported that the University of Alaska has over 200
workforce development programs and it uses TVEP funding for
startup, for bridging from federal or other programmatic funds,
and for sustainable funding. He explained that the university's
role in workforce development is threefold: pre-college programs
to connect youth with career pathways and help prepare them for
academic rigors, academic certificates and degree programs, and
professional development programs. The priorities in workforce
development are economic and community development, career
pathways that provide a series of connected education and
training programs, and high demand jobs.
MR. VILLA explained that TVEP funding has been critical in
helping UA meet Alaska's workforce training and educational
needs. The Workforce Programs Office works with representatives
from the UA campuses, the Department of Labor and the Alaska
Workforce Investment Board to identify state priority industry
sectors and high-demand jobs, including regional priorities for
occupational training programs. The campuses submit proposals
based on the identified needs, and funding is distributed to the
highest priority programs. He described specific pre-college and
professional development programs.
CHAIR DUNLEAVY noted that Greg Cashen with the Department of
Labor and Workforce Development (DOLWD) was available to answer
questions on the bill.
5:40:21 PM
SENATOR MICCICHE summarized that the bill extends for ten years
an extremely successful program. He stated support for the bill.
5:41:04 PM
At ease
SENATOR MICCICHE moved to report SB 93, labeled 28-LS0728\A,
from committee with individual recommendations and attached
fiscal note(s).
CHAIR DUNLEAVY announced that without objection SB 93 moved from
the Senate Labor and Commerce Standing Committee.
5:41:58 PM
At ease
SB 25-UNEMPLOYMENT; ELEC. FILING OF LABOR INFO
5:43:47 PM
CHAIR DUNLEAVY announced the consideration of SB 25. "An Act
relating to electronic filing of certain information with the
Department of Labor and Workforce Development; relating to
surcharges, rate increase reduction, prohibition on the relief
of certain charges, the unemployment trust fund account, and the
offset of certain unemployment compensation debt under the
Alaska Employment Security Act; relating to the definition of
'covered unemployment compensation debt' in the Alaska
Employment Security Act; and providing for an effective date."
He noted that this was the second hearing.
5:44:29 PM
BRYNN KEITH, Acting Deputy Commissioner, Department of Labor and
Workforce Development (DOLWD) introduced herself.
PAUL DICK, Director, Division of Employment Security, Department
of Labor and Workforce Development (DOLWD) introduced himself.
5:45:03 PM
SENATOR OLSON asked what provisions are being made with regard
to electronic filing for those employers and employees in rural
areas that don't have Internet access.
MR. DICK explained that in rural areas, claimants for
unemployment insurance and employers would have the option of
paper or telephonic filing in addition to the Internet.
SENATOR MICCICHE asked if the bill allowed the unemployment
insurance tax rate to fluctuate .3 percent from year to year.
MR. DICK described the two components to calculate the final tax
rate. One measures the benefits versus wages over the past three
years. The other is called the trust fund solvency adjustment
and it has a limitation of .3 percent. The base tax and
surcharge together equal the final tax rate.
SENATOR MICCICHE asked if the increase/decrease percentage was a
combination of the two.
MR. DICK said yes.
SENATOR MICCICHE asked Ms. Keith and Mr. Dick if they could
alleviate the concerns about the future solvency of a fund that
to date has been healthy and intact.
5:48:27 PM
MS. KEITH explained that the bill provides the commissioner of
labor limited discretion under very controlled circumstances to
suspend part or all of the tax increase from year to year. She
offered her belief that, given those limitations, the health of
the Alaska Unemployment Insurance Trust Fund was not in
jeopardy. She described this as a "tweak around the margins" to
help the trust fund work a little better and circulate a bit
more money through the economy.
SENATOR MICCICHE inquired if it represents 100 percent of the
benefits of covered unemployment compensation debt.
MR. DICK restated that this legislation allows the commissioner
to suspend the increase component in the tax rate under certain
circumstances.
SENATOR MICCICHE asked what "100 percent funding of the fund"
represents.
MR. DICK stated that SB 25 doesn't change the formula. It looks
at solvency at the targeted rate of 3-3.3 percent of wages.
SENATOR MICCICHE summarized that the 100 percent rate is 3
percent of the worst case benefits of those represented by the
fund.
MR. DICK clarified that the target rate is 3-3.3 percent.
SENATOR MICCICHE asked if the fund has historically been funded
at 3-3.3 percent.
MR. DICK replied it has varied through the years. In some years
there have been adjustment credits to the Trust Fund Solvency
Adjustment and other years there are adjustment debits. This
year the rate was 2.2 percent so there was a .8 trust fund
solvency adjustment to get to the 3 percent target.
SENATOR MICCICHE inquired if it was sometimes a struggle to
maintain 3 percent. He asked, for example, if the fund was
adequately maintained in the late 1980s.
MR. DICK acknowledged that the trust fund decreased severely in
the mid-1980s, but once the economy turned around the fund
gradually recovered to its current level.
5:52:51 PM
CATHIE ROEMMICH, CEO, Juneau Chamber of Commerce, read the
following letter to Governor Parnell into the record:
Thank you for all your efforts to keep our state
strong by working for small business growth. It's not
often these days that we find ways to lower the cost
on anything so we applaud you for bringing forward the
solvency of Alaska's Unemployment Trust Fund Account.
The Juneau chamber of Commerce represents nearly 400
business members and their employees. It is our job to
promote and support a positive business climate not
only in Juneau but throughout the state. Our members
support legislation that updates and clarifies laws as
they relate to doing business in an effort to improve
Alaska's business environment. Therefore we would like
to add our support to SB 25.
We are pleased that this legislation will insure that
business owners as well as Alaskan workers are not
paying more to state government in unemployment
insurance taxes than necessary.
The Juneau Chamber also understands the importance of
compliance with the federal unemployment insurance
laws. Maintaining the significant Federal Unemployment
Tax Act credit that our employers currently receive is
another critical piece of responsible taxation. The
federal compliance components of SB 25 ensure that
Alaska businesses will not be sending any more money
to Washington DC than necessary for the unemployment
insurance program.
We are also supportive of the greater efficiencies
that the Department of Labor will be able to provide
by allowing electronic filing of unemployment claims.
5:54:59 PM
CHAIR DUNLEAVY closed public testimony. Finding no questions or
discussion, he asked for a motion.
5:55:09 PM
SENATOR MICCICHE moved to report SB 25, labeled 28-GS1494\A,
from committee with individual recommendations and attached
fiscal note(s).
CHAIR DUNLEAVY announced that without objection, SB 25 moved
from the Senate Labor and Commerce Standing Committee.
5:55:27 PM
At ease
HB 71-AK REGIONAL ECONOMIC ASSISTANCE PROGRAM
5:56:58 PM
CHAIR DUNLEAVY announced the consideration of HB 71. "An Act
requiring the Department of Commerce, Community, and Economic
Development to file an annual report to the legislature
regarding statewide and regional economic development projects
and regional development organizations; extending the
termination date of the Alaska regional economic assistance
program; and providing for an effective date."
5:57:32 PM
REPRESENTATIVE SHELLY HUGHES, sponsor of HB 71, explained that
there are 12 Alaska Regional Development Organizations (ARDOR)
across the state. The program will expire June 30, 2013, and HB
71 extends the expiration date to July 1, 2016. The bill also
requires the Department of Commerce, Community and Economic
Development (DCCED) to prepare an annual report to the
legislature as a means of improving accountability of the
ARDORs. The report will include information about how each ARDOR
is using state funds to improve the economic health of the
particular region, about statewide and regional projects and
activities of the ARDORs, and individual information about
finances, work plans, strategies, and projects.
She explained that ARDORs serve as the state's contribution to
economic development in the urban and rural areas throughout the
state. ARDORs are based on the premise that the best strategy
for regional economic development is a locally driven initiative
using local leaders who know the regional conditions,
challenges, and opportunities. They are best suited to work in
partnerships with the state and other entities. She opined that
this was an effective model where local businesses can pool
resources across multiple communities to work on the projects,
develop partnerships, and provide needed technical assistance.
5:59:38 PM
SENATOR OLSON asked how these organizations are measured to
ensure that the state's money is being spent for worthwhile
endeavors.
REPRESENTATIVE HUGHES explained that the individual ARDORS
provide reports to DCCED and as they apply for grants each year
they are expected to provide certain plans and meet certain
criteria. To alleviate concerns about the success of the program
she requested an audit through the Legislative Budget and Audit
Committee. That is one reason that the extension is for three
years as opposed to five years. The audit and the new, required
reports to the legislature will improve accountability of the
individual ARDORs. She acknowledged that some could use
improvement.
SENATOR OLSON asked about the penalties for nonperformance.
REPRESENTATIVE HUGHES replied the ARDOR could be denied a
subsequent grant, but she was unaware of any other penalties.
SENATOR OLSON commended the sponsor for requesting the audit.
6:02:06 PM
LORENE PALMER, Director, Division of Economic Development,
Department of Commerce, Community and Economic Development
(DCCED) introduced herself and Nicole Grewe, the manager of the
ARDOR program. She stated that the DCCED supports the
reauthorization of the ARDOR program and believes that the model
using local leaders continues to be sound. However, refinements
are needed. She said ARDORs are a vital extension of DCCED, and
the department relies on them to report on the strengths and
challenges in their region. That information helps DCCED form
programs, initiatives, and policies to assist the individual
ARDORs. DCCED funnels programs through the ARDORS to help local
businesses with technical assistance, marketing assistance, and
loan programs all of which help economic development efforts.
She highlighted that DCCED has worked hard to help each ARDOR to
be successful, but each performs differently because each region
is vastly different. She reiterated support for the legislation.
6:04:30 PM
MERRILL SANFORD, Mayor, City and Borough of Juneau stated that
he was a board member of Southeast Conference (SEC), the ARDOR
for all of Southeast Alaska. This ARDOR communicates with more
than 30 communities from Yakutat to Metlakatla and receives up
to $65,000 per year for the program. This ARDOR has been very
successful in its efforts to further economic development over
the region. One of the larger projects has been the Ketchikan
dry dock, which should bring needed jobs to that community. SEC
has also worked to bring back timber industry jobs and to
develop mariculture potential. He emphasized that SEC brings
large and small communities together to further economic
development.
CHAIR DUNLEAVY noted that public testimony was open.
6:08:08 PM
BRYANT HAMMOND, Director, Community Planning and Development,
Kawerak Inc., said he was speaking on behalf of the Bering
Straits Development Council (BSDC), the ARDOR for the Bering
Straits region. He explained that BSDC serves 16 communities and
20 federally recognized tribes and provides economic
development, community planning, and small business assistance
to the region.
He described the specific duties of the energy development
specialist, the business planning specialist, the e-commerce
technician, the grant writing specialist, and the planning and
development specialist for the BSDC ARDOR. He noted that much
the ARDOR funding goes toward the latter position. Some of the
local projects are Lemonade Day Alaska, a strategic energy plan,
tax assistance services in each community, and a sustainable
teen center in Savoonga based on locally generated revenue
streams. He concluded that the ARDOR program is vital in the
Bering Straits region.
6:11:51 PM
DENISE BRAND, Grants Writer-Coordinator, Fairbanks North Star
Borough, testified in support of HB 71. She said being an ARDOR
has been very valuable for the community. The local commission
meets monthly to address critical economic issues such as the
cost of energy, maintaining military presence in the Interior,
and sustainable agriculture projects. Through its ARDOR, the
Fairbanks North Star Borough has been able to update its
comprehensive economic development strategy, initiate geothermal
exploration, and complete the biomass cluster project. She
reiterated support for reauthorizing the ARDOR program.
6:13:25 PM
BILL POPP, President and CEO, Anchorage Economic Development
Corporation (AEDC), testified in support of HB 71. He said that
the ARDOR program is an important component of the AEDC budget.
The funds are used for business retention and expansion and to
attract national and international investment opportunities
throughout Southcentral and the Interior. He said this program
is also an important part of the efforts to promote
entrepreneurship within the community of Anchorage and the
Southcentral region. An important aspect of the program is to
provide core seed funding to the ARDORS serving the rural
regions. They can use that to attract other funding to leverage
the difficult effort of economic and community development in
many of the communities that they serve. He reiterated support
for HB 71.
6:15:28 PM
MARILYN HEDDELL, Director, Prince William Sound Economic
Development District, voiced support for the ARDOR program. It
has sponsored many projects in the region including harbor
improvements, a new cold storage plant in Valdez, new tsunami
sirens, and educational and cultural programs throughout the
region. These grant funds are crucial to the way of life in
Prince William Sound.
6:16:32 PM
CHAIR DUNLEAVY closed public testimony.
SENATOR MICCICHE disclosed that he was a former board member of
the Kenai Peninsula Economic Development District and a
supporter of the ARDOR program.
CHAIR DUNLEAVY stated he would hold HB 71 in committee and take
action on it on Saturday, barring any problems.
6:17:18 PM
At ease
SB 58-CANCEL INS. ON CERTAIN ABANDONED PROPERTY
VICE-CHAIR MICCICHE reconvened the meeting and announced the
consideration of SB 58. "An Act allowing an insurer to cancel an
insurance policy if property becomes entirely abandoned and the
abandonment increases the hazard insured against."
6:19:30 PM
SENATOR DENNIS EGAN, sponsor of SB 58, introduced SB 58 speaking
to the following sponsor statement:
SB 58 clarifies that insurance can be cancelled when a
property owner abandons the property, thereby
increasing a hazard covered by the insurance.
AS 21.36.210 lists allowable reasons for cancelling
personal insurance, including a grossly negligent act
by the insured that increases a covered hazard and
physical changes in the insured property that result
in the property becoming uninsurable. As this statute
is currently written, it is not clear whether these
reasons would include abandonment of the property by
the insured.
Homeowners insurance is underwritten based on the
property generally being occupied. An abandoned home
greatly increases the risk of damage beyond what was
contemplated in the insurance contract, including
damage caused by vandalism, broken water pipes and
fire. Cancellation of insurance when the property is
abandoned is necessary to manage insurance costs for
all consumers.
SB 58 clarifies that insurance on property that has
been entirely abandoned can be cancelled in Alaska, as
it can in all other states. However, it is important
to note that SB 58 would establish the most
restrictive circumstances in the country. For
instance, thirty days advance written notice must be
given to the insured and any lender on record. In
addition, insurance cannot be cancelled where the
owner demonstrates that the property is being
reasonably maintained and monitored. SB 58 is
responsible legislation that helps manage claims
costs, the risk pool and the cost of insurance
coverage for Alaska homeowners.
SENATOR EGAN said representatives of the insurance and real
estate industries have worked on this version of the bill, and
he believes that the current language protects the interests of
both groups.
SENATOR OLSON asked if property owners had weighed in on the
bill because it appeared to favor the insurance industry.
6:21:16 PM
DANA OWEN, Staff, Senator Dennis Egan, explained that when the
bill was originally introduced last year members of the
community and the real estate industry voiced concern with the
language. Since then the sponsor has worked with real estate
agents to make sure that the interests of property owners are
protected. The current language will allow insurance companies
to exercise the authority to cancel an insurance contract, but
not precipitously. Property owners who leave their homes for
several months won't have their insurance canceled.
SENATOR OLSON posed a hypothetical situation where he left his
boat after it went aground. He asked if his insurance would be
cancelled if the boat looked abandoned and perhaps was
vandalized while he was away.
MR. OWEN explained that it would have to be entirely abandoned
under the new language. That means that nothing of substantial
value is left behind.
SENATOR OLSON questioned how he could protect himself, because
he'd have nothing left if the insurance company could cancel his
insurance after an involuntary circumstance like he described.
MR. OWEN offered his understanding is that the property would be
protected in that scenario.
SENATOR OLSON asked if his insurance could be cancelled even if
his payments were up to date.
MR. OWEN said the intention is that as long as a person intends
to maintain the property the insurance will not be cancelled.
6:25:25 PM
VICE-CHAIR MICCICHE reviewed the notice provision in AS
21.36.220.
6:26:05 PM
MARTIN HESTER, Deputy Director, Division of Insurance,
Department of Commerce, Community and Economic Development
(DCCED), introduced himself.
VICE-CHAIR MICCICHE asked him to discuss what constitutes
abandonment.
MR. HESTER explained that AS 21.36.220 provides 30 day, 20 day,
and 10 day notice requirements for cancellation depending on the
circumstances.
VICE-CHAIR MICCICHE opened public testimony.
6:27:37 PM
SHELDON WINTERS, Lobbyist, State Farm Insurance, Juneau, Alaska,
informed the committee that State Farm is the largest insurer of
homes in both the state and the nation. He explained that the
intent of SB 58 is to clarify that personal insurance on a
property may be cancelled in those limited circumstances when a
property is truly and entirely abandoned. Foreclosure is the
classic example. Although the current statute has five reasons
that insurance may be cancelled, the Division of Insurance has
said that under a technical and strict interpretation those
don't allow for abandoned property. Alaska is unique in this
regard. In no other state has State Farm had problems cancelling
insurance when the property is truly abandoned.
MR. WINTERS said this is important because claims drive rates.
When a property is left in the middle of the winter with no heat
and nobody taking care of it, the exposure is significant. That
increases claims and puts upward pressure on rates for everyone
in the risk pool. The goal with SB 58 is to keep claim costs
down, manage the risk pool, and hopefully have a better product
for everyone. Referencing the hypothetical that Senator Olson
described, he said the bill doesn't apply to that situation.
It's not talking about the insurance company trying to cancel
the policy after an accident or a claim. The bill doesn't
address cancelation after there's been a claim.
MR. WINTERS reviewed the proposed new provision to the statute.
It says the insurer may not cancel a policy of personal
insurance except for the circumstance of entire abandonment of
the property that increases a hazard insured against. Entire
abandonment means the property is no longer occupied by the
insured as defined by the policy and it no longer has contents
of substantial utility. In addition to the current notice of
cancellation provisions in AS 21.36.220, the bill requires the
insurer to give notice to the lender. Another safeguard to the
insured is that the property is not considered entirely
abandoned if the insured or their agent demonstrates that the
property is being reasonably maintained and monitored. Finally,
the Division of Insurance oversees the statute. With the
protections provided, it's difficult to imagine a situation
where property would be cancelled other than the total
abandonment/foreclosure situation. He reviewed the work that has
gone into this legislation, which he believes it is the best
statute in the country.
6:37:36 PM
VICE-CHAIR MICCICHE announced he would hold SB 58 in committee
and keep public testimony open.
6:38:01 PM
There being no further business to come before the committee,
Vice-Chair Micciche adjourned the Senate Labor and Commerce
Standing Committee meeting at 6:38 p.m.