HOUSE BILL NO. 90 "An Act relating to occupational licensing fees; relating to an occupational investigation surcharge; and providing for an effective date." 3:19:27 PM CRYSTAL KOENEMAN, STAFF TO REPRESENTATIVE SAM KITO, recapped that the bill intended to spread the investigative charges to all licensees and work similar to a surcharge, reducing the high fee fluctuations that some board experienced due to investigative costs and low number of licensees. Representative Wilson asked whether there were individuals who were members of more than one board. Ms. Koeneman answered in the affirmative. Representative Wilson asked whether an individual on two boards paid each individual licensing fee. Ms. Koeneman answered in the affirmative. Representative Wilson wanted to ensure that the legislation did not impact business licensing fees. Ms. Koeneman responded in the affirmative and added that the bill only impacted professional licensing fees. 3:22:36 PM Co-Chair Foster OPENED Public Testimony. 3:22:46 PM MARK RICHARDS, EXECUTIVE DIRECTOR, RESIDENT HUNTERS OR ALASKA, FAIRBANKS (via teleconference), spoke in opposition of HB 90. He spoke to the Big Game Commercial Services Board regarding how guiding affected resident hunting opportunities and the wildlife resources. He pointed out that the board was in debt due to investigative costs that were the second or third highest out of all boards. He reported that the Board of Nursing had the highest investigative costs. He pointed to the discrepancy in the costs of investigations per member due to differences in the number of licensees. Nurses had 20 thousand members and its portion of fees related to investigations was $47 versus two thousand guide licensees each paying $316 of their fee towards investigations. He stated that due to the nature of the guiding service that involved "taking of a public resource" the activity required a certain level of enforcement presence. Ninety five percent of all guides operated within the law, however the bad actors lead to high investigatory costs. He elucidated that under the bill the nurses would pay $300 thousand more in increased licensing fees to help cover the investigative costs of the Big Game Commercial Services Board. The guide board fees would significantly decrease. He relayed that the guide board's concern that the high cost of guide licensing fees deterred illegal behavior. He emphasized that by removing the burden of the high fee some guide's standards would relax and lead to "bad behavior." He urged members to vote in opposition of the bill or exempt the board from the provisions in the bill. 3:26:26 PM AL BRETT, SELF, FAIRBANKS (via teleconference), spoke in opposition of HB 90. He communicated his unease with allowing the division to adjust fees through regulation versus statute. He shared that he was a registered Class A guide and reported that the previous two times the fees were raised was during the hunting season and was inconvenient. He believed there was a problem with the government controlling businesses and resources. He suggested that investigations were a "civil process" where grievances were best addressed in civil court. He opined that it was unfair for the state to "intervene" in civil issues "on boards related to occupations." 3:28:55 PM Co-Chair Foster CLOSED Public Testimony. Representative Ortiz asked how Ms. Koeneman would respond to the first testifier. Ms. Koeneman deferred to the Department of Commerce, Community and Economic Development (DCCED) to answer the question. SARA CHAMBERS, ACTING DIRECTOR, ALCOHOL AND MARIJUANA CONTROL OFFICE, DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT, responded that the fee setting process was codified in statute and the bill did not alter the fundamental principle that the division set fees "in concert with the boards and the programs pay for their expenses." The investigative process was transparent with the exception of items that were necessary to remain confidential. She expounded that the bill served as an insurance policy for investigative costs. The state had historically struggled with setting licensing fees in a timely manner so licensees could budget to cover an increased license fee expense. She deemed that the volatility came from investigator's statutory responsibility, in concert with a board to pursue violations. The division lacked the resources to actively seek out violations but had a responsibility to investigate complaints. She related that the amount and level of investigations were impossible to anticipate. Some of the state's licensing programs had investigative fees of over $100 thousand for a single investigation either for violations or from challenges to a denied license. 3:33:08 PM Representative Ortiz understood the concept of an insurance pool and understood the volatility in costs. He was specifically concerned with the testifier's scenario that his board would be charged less and nurses more under the bill. Ms. Chambers relayed that the division had done some modeling and determined that nurses would pay $9 in additional fees each licensing period. She detailed that very few boards would have increased license fees of over $50 every two years and boards with extremely high fees and deficits such as the midwifery and guide boards would save several hundred dollars. The state was looking "at a greater savings" with nominal fee increases to larger licensing programs that had investigative costs but had the "economy of scale to spread the expense across its membership." Representative Kawasaki appreciated the bill. He asked how the different boards would change their future fees with the addition of the surcharge. Ms. Chambers indicated that the division analyzed board's expenses and revenue and set their fees accordingly. The investigative costs would be deducted from the equation and allocated through the surcharge. The remainder of the fees would be set based on the current fee analysis model. The investigative fees would be allocated separately. Representative Thompson reported receiving feedback from licensees that the investigators were not familiar with the profession they were investigating. He commented that the situation made the investigations longer. He wondered how many investigators were on staff and if they were trained in regards to what they investigated. Ms. Chambers stated that the investigative process included board members, which assured appropriate expertise. She indicated that many licensing programs lacked boards. When investigating a licensure program with a board, the division relied on board member review by an advising board member before proceeding with an investigation. Rarely, an area was so specialized an investigation required expert witnesses to speak to the specialty. The division requested the board's consent before an expert witness was retained. Representative Thompson was satisfied with her answer. Representative Wilson was concerned with the person who engaged in an activity without a license yet the board's licensees had to pay for the investigation. She asked why the state did not pass the investigatory costs on to the offender instead of the board. Ms. Koeneman responded that she had a good point. She explained that when the guiding statutes were established the licensees wanted to protect their industry through regulation of unlicensed activity under their purview. She asserted that addressing unlicensed activity was a larger policy call and board members should engage in the discussion over relinquishing their duty. 3:40:39 PM Representative Wilson clarified that she did not want boards to relinquish anything. She was suggesting that an unlicensed individual caught engaging in the licensed activity should be held responsible for the investigatory costs and not the board. REPRESENTATIVE SAM KITO, thought that the issue was "broad and complicated." In attempting to address the unlicensed practice issue he discovered that even if the activity was covered under criminal statutes, the Department of Law (DOL) investigations would still need to rely on the DCCED investigators for their expertise. He voiced that Representative Wilson's inquiry was a broader question that he contemplated would need to be addressed as a second step after the changes in HB 90 were implemented. He commented that if costs were recovered from unlicensed violators he wanted the revenue deposited into the general fund (GF). He worried that an "adverse motivation" might arise within the division to pursue unlicensed practice if the department knew the money was dedicated to its licensing fund. Representative Wilson referred to a chart in members packet titled, "FY 2016 Professional Licensing Statistics" by the Division of Corporations, Business and Professional Licensing [copy on file]. She asked how much the bill would save or increase the guide board licensing fees. Ms. Koeneman responded that the big game guides currently paid $316 per licensing period and would save $261 in their licensing costs under the bill. Representative Wilson stated that when boards were formed the costs to run them were accessed and paid by the board. She declared that the bill was a "big policy change." She understood what the sponsor intended to accomplish but she felt that the approach was penalizing the licensees who were not breaking the law. Ms. Koeneman added that she had reviewed the FY 2016 investigative actions and discovered that 22 percent was due to unlicensed activity and 88 percent of the investigations were from licensees doing their job and having some missteps. Representative Wilson replied that the licensees should pay as well. 3:45:48 PM Representative Kito added that spreading out all of the investigatory costs including for unlicensed activity, benefitted all boards and the public service. He offered that the lower costs decreased the "barrier to entry" for certain professions that had a small number of licensees. Representative Thompson remembered that previously the legislature passed laws requiring fees recovered from an offender would cover the cost of the licensees' fees. Ms. Chambers answered that if the legislation was passed it did not pertain to Title 8, which contained licensing statutes. Vice-Chair Gara was aware that a number of people with business licenses were not tied to a board. He asked for confirmation that the costs would not be spread to individuals that were not regulated by a board. Ms. Chambers indicated the state had 43 licensing programs but only 22 operated under boards. However, all professional licensees were required to pay into the proposed system. She exemplified that construction contractors had professional licensure but did not have a board and were required to pay into the new system. Vice-Chair Gara asked whether there was an error in the bill. He referred to section 7 of the bill [page 4, line 8] that addressed an investigation surcharge added to AS 08.01.065 and cited (a) (2). He did not see (a) (2) in existing statute but deduced that it was a reference to the new provision in the bill. Ms. Koeneman responded in the affirmative. 3:49:38 PM Representative Kito clarified that the bill included all of the professions regulated under Title 8 that included those with a board or exclusively a license. He used the example of acupuncturists in the scenario of a professional license without a board. Representative Ortiz had some of the same concerns as Representative Wilson. He clarified that unlicensed activity comprised of 22 percent of investigations. Ms. Koeneman responded in the affirmative. Representative Ortiz asked if the position was that the passage of the bill brought greater good for the law abiding licensees but did not impact whether the "bad actors had a greater stake or lesser stake in the issue." Ms. Koeneman agreed with his statement. Representative Wilson was concerned that under existing law a mechanism did not exist to collect investigatory fees unless a case was a criminal one. She reiterated her previous concerns and still had a problem with the legislation. She added that if no one was found guilty the board still had to pay the investigative costs. Ms. Koeneman relayed that currently there was a $5000 fine for licensed activity in AS 08.01.102. However, the fine would not cover the entire costs and was deposited into the general fund. Ms. Chambers interjected that even though a board and the division was able to charge fines for unlicensed and licensed violations, the finds did not cover any of the investigatory expenses because the fees went into GF. She addressed Representative Kito's remarks regarding incentivizing the division to enforce unlicensed activity. She did not think that increased fees for unlicensed activity deterred negative behavior. She shared that all of the boards were in favor of the legislation. 3:54:53 PM Representative Guttenberg suggested that if the issue was an easy one to fix it would have been dealt with years ago. He wondered whether DOL assumed the cost of a criminal licensing investigation. Ms. Koeneman deferred the question to the division. ANGELA BIRT, CHIEF INVESTIGATOR - CORPORATIONS, BUSINESSES AND PROFESSIONAL LICENSING, DEPARTMENT OF COMMERCE, ANCHORAGE (via teleconference), answered that a small portion of the caseloads became criminal and were prosecuted through the Office of Special Prosecutions and Appeals without charges to the division. She furthered that civil prosecutions through DOL and any Administrative Hearings costs were part of the board's investigative costs. Representative Guttenberg clarified his question by restating it. Ms. Birt responded that typically a criminal case began with DOL and the board was not charged for the criminal component. She explained that at the conclusion of the criminal case statute allowed board punishments. She exemplified that the Big Game Commercial Services Board could fine up to two times the criminal conviction. She stated that she was less familiar of the route Representative Guttenberg had described. 3:58:26 PM Co-Chair Foster MOVED to ADOPT Amendment 1: Page 1, line 11, following "chapter" Insert "; the regulations may provide for a reduction in the amount of the surcharge imposed under this paragraph for a licensee who is required by law to hold and maintain one license in order to qualify for and maintain another license" Representative Wilson OBJECTED for discussion. Ms. Koeneman explained the amendment. She stated that Amendment 1 allowed for the department to reduce a surcharge imposed under the bill if a licensee was required to hold and maintain another license in order to qualify for a license. She exemplified that in order for a nurse to hold an Advanced Practice Registered Nurse License it was necessary to maintain a Registered Nurse license. She reported that the situation affected 960 licensees out of 11 thousand registered nurses. Representative Wilson WITHDREW her OBJECTION. There being NO OBJECTION, it was so ordered. 4:00:21 PM Vice-Chair Gara relayed that there was one fiscal impact note in the amount of $3.4 thousand from DCCED FN 1 (CED) for the implementation of regulations, postage, and printing. Co-Chair Seaton MOVED to report CSHB 90 (FIN) out of Committee with individual recommendations and the accompanying fiscal note. Representative Wilson OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Gara, Guttenberg, Kawasaki, Ortiz, Thompson, Seaton, Foster OPPOSED: Tilton, Wilson, Grenn, Pruitt The MOTION PASSED (7/4). CSHB 90 (FIN) was REPORTED OUT of Committee with a "do pass" recommendation and with a previously published fiscal impact note: FN1 (CED). 4:04:36 PM AT EASE 4:06:47 PM RECONVENED Co-Chair Foster reviewed the agenda for the following day. He recessed the meeting to a call of the chair [Note: the meeting never reconvened].