HOUSE FINANCE COMMITTEE March 10, 1993 1:12 p.m. TAPE HFC 93-43, Side 1, #000 - end. TAPE HFC 93-43, Side 2, #000 - end. TAPE HFC 93-44, Side 1, #000 - 442. CALL TO ORDER Co-Chair Larson called the House Finance Committee to order at 1:12 p.m. PRESENT Co-Chair Larson Co-Chair MacLean Representative Martin Vice-Chair Hanley Representative Navarre Representative Brown Representative Parnell Representative Foster Representative Therriault Representative Grussendorf Representative Hoffman was absent from the meeting. ALSO PRESENT Representative Toohey; Representative Ulmer; Mike Greany, Director, Legislative Finance Division; Margot Knuth, Criminal Division, Department of Law; John Salemi, Director, Public Defender Agency, Department of Administration; Remond Henderson, Director, Division of Administrative Service, Department of Community and Regional Affairs; Andrew Grose, Western Legislative Conference; Marilynn May, Assistant Attorney General, Department of Law; Chris Christensen III, Staff Counsel, Alaska Court System. SUMMARY INFORMATION PRESENTATION BY WESTRENDS/WESTERN LEGISLATIVE CONFERENCE HB 55 "An Act making appropriations for the operating and loan program expenses of state government and to capitalize funds; and providing for an effective date." SUBCOMMITTEE CLOSEOUTS: DEPARTMENT COMMUNITY AND REGIONAL AFFAIRS HB 55 was HELD in Committee. HB 64 "An Act creating the crimes of stalking in the first 1 and second degrees and providing penalties for their violation; providing a peace officer with the authority to arrest without a warrant a person the peace officer has reasonable cause to believe has committed stalking; relating to the release before trial of a person accused of stalking; and prohibiting the suspension of imposition of sentence of a person convicted of stalking." CSHB 64 (FIN) was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Administration and with a zero fiscal note by the Department of Corrections and with a zero fiscal note by the Department of Public Safety, dated 3/1/93 and with a zero fiscal note by the Department of Law, dated 3/1/93. HB 116 "An Act directing the commissioner of natural resources to accept, under certain circumstances, the contract price agreed to between a lessee of federal land and a gas or electric utility as the value of the federal government's royalty share from natural gas production when royalty is payable to the state under applicable federal law; and providing for an effective date." CSHB 116 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Natural Resources. HB 151 "An Act relating to payment by indigent persons for legal services and related costs; and providing for an effective date." HB 115 was HELD in Committee. PRESENTATION BY WESTRENDS/WESTERN LEGISLATIVE CONFERENCE ANDREW GROSE, WESTERN LEGISLATIVE CONFERENCE gave a slide presentation regarding economic trends in Western states. He provided members with charts represented by the slide presentation (Attachment 1). Mr. Grose concluded that: * While the West continues to grow in population twice as fact as the rest of the country, the biggest demographic story of the 1980's was foreign immigration which accounted for 40 percent of the growth in the region. * Once the economic leader in income and gross state 2 product, the West has slipped badly, falling behind every other region in growth in median family income and GSP in the past 10 years. * The economic decline of the West is reflected in state government revenues in education. Mr. Grose stressed that: * Alaska was the only state in the West to grow faster in the 1980's than in the 1970's; * Alaska's foreign population growth has been slow; * Alaska's has a fast growing ethnic group; * Alaska was next to last in increase in personal income of Western states; * Alaska had the third lowest growth in family income; * Alaska had the next to last growth in Gross State Product of Western states; * Manufacturing jobs rose in the West; * Alaska had a 60 percent gain in tourism jobs from 1985 - 1990; * Alaska has less foreign tourists than other Western states; * Alaska has the highest export per capita in the United States; * The West has more foreign owned firms than other areas; * Alaska has more Asian investment than European; * Alaska ranks number two in the country in regards to the percentage of small businesses in the state; * Alaska ranks number one in the country in regards to the percentage of minority owned business; * Alaska is number six in women owned businesses; Mr. Grose concluded that: 3 * Per capita revenues are lagging; * Education has paid the price of a decline in Western state's economies; * Alaska had the slowest economic growth; * Alaska has the highest tax capacity in the country; * Alaskans have the lowest tax effort; Mr. Grose emphasized that Western states must pool their resources to offset their relative economic decline. DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS The House Finance Subcommittee on the Department of Community and Regional Affairs consists of Chair MacLean with members Representatives Olberg, Williams, B. Davis and Brice. Co-Chair MacLean noted that the Department of Community and Regional Affairs had 42 positions transferred in the FY 93 Operating Budget. The Governor's FY 94 proposed budget for the Department of Community and Regional Affairs is $124,406.3 million dollars. Total funds represents a 15.6 percent decrease below FY 93 Authorized. The General Fund request is 21.1 percent below FY 93 Authorized. Co-Chair MacLean emphasized that the Subcommittee's intent is to increase support for service delivery in remote regions of the State. She noted that the Subcommittee reduced all designated grants. She provided members with the Transaction Summary for the House (Attachment 2). She reviewed the Subcommittee's proposed reductions: * Administrative Services - <$75.0> thousand dollars This reduction will eliminate at least 2 full time equivalent positions in administrative services. Co-Chair MacLean stated that the Subcommittee approved intent language regarding Reimbursable Service Agreement (RSA) (Attachment 3). She stressed that the Subcommittee is adamantly opposed to the transfer of funding from other areas of the Department by use of a RSA, to reinstate reductions made by the Legislature. * Designated Grants - <$160.3> thousand dollars Designated Grants were classified for reductions. 4 Gaming/Training Programs - 30 percent People Count - 15 percent Native Cultural Activities - 10 percent Life, Health and Safety - 10 percent * Training and Development/Travel - $20.0 Twenty thousand dollars was added for travel of local government specialists at the eight regional offices, to improve outreach to communities. It is the intention of the Subcommittee that additional travel money above that which is allocated in the Governor's proposal be equitably distributed among all regional offices. * Rural Utility Business Advisors (RUBA) - <$175.0 thousand dollars> The authorization of interagency receipts was reduced. Authorization was contingent upon a request of $1 million dollars in the Department of Environmental Conservation's capital budget. The capital appropriation has been reduced to $500.0 thousand dollars. * Community Development Assistance - <93.9 thousand dollars> The request for a deputy director position in Anchorage was denied. Three positions were approved. Co-Chair MacLean noted that the Subcommittee adopted intent language for the Day Care Assistance Program, urging the Department to request a supplemental if the program is short in FY 94. Representative Brown asked Co-Chair MacLean to reiterate the classification of reductions to designated grants. She asked why Native Cultural grants were given priority over Gaming and Training. Co-Chair MacLean declined to respond. Representative Brown expressed her concern with reductions to Alaska Legal Services. She asked if the Subcommittee considered restoring Alaska Legal Services to the FY 92 level. Co-Chair MacLean stated that the Subcommittee did consider increasing this component. She added that under the 1 percent reduction plan the Subcommittee did not feel the component could be increased. An office in Unalaska will remain closed. Representative Therriault asked if there is a criteria for 5 designated grants. REMOND HENDERSON, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS clarified that designated grants are at the discretion of the Legislature. Some grants have been in the Department's budget for eight years. Co-Chair MacLean provided members with a history of designated grants (Attachment 4). Representative Parnell asked for a clarification of the reductions to designated grants. Co-Chair MacLean clarified that Perseverance Theatre was reduced by 30 percent. Alaska Native Arts was reduced by 10 percent. Alaska Special Olympics and Arctic Winter Games were reduced 30 percent. Co-Chair MacLean MOVED to adopt the Intent Language, Attachment 3. There being NO OBJECTION, it was so ordered. Co-Chair MacLean noted that the Department has submitted budget amendments totaling $325.2 thousand dollars. The budget amendments were adopted but are not reflected in Attachment 2. Representative Brown observed that the Department estimates that the Subcommittee's proposed funding level for Day Care Assistance would result in 340 children or 240 families that would not be served. (Tape Change, HFC 93-43, Side 2) Co-Chair MacLean justified the Subcommittee's reduction to Day Care Assistance. She noted that Day Care Assistance is pure general fund dollars. She gave statistics regarding Child Care Programs: * Daycare Assistance Programs: subsidies to low income; parents has $11,173.9 million dollars left in the current year. * Funding has not been changed for Child Care Subsidy Grants, FSA Entitlement Program, At Risk Assistance Program and Block Grant Programs. Co-Chair MacLean emphasized that the funding level for Day Care Assistance has remained at the Governor's proposed level. Co-Chair MacLean observed that there was excess federal authorization for FY 93 because the State received two years of At-Risk funding in FY 92. In FY 92 $2.5 million dollars in child care was lapsed. All applicants were served. The Department voluntarily reduced $500.0 thousand dollars from 6 Child Care in FY 94. She asserted that the Department can request a supplement if the FY 94 demand exceeds the appropriation. Representative Brown referred to a letter from John Walsh, Deputy Director, Department of Community and Regional Affairs to Representative Bette Davis, dated March 3 1993. She quotes the letter as stating: "Should the FY 94 budget be approved as proposed, using an estimate of $345.00 per month for a child, 340 children would not be served... Based upon an average ratio of children to families, this reduction would impact approximately 240 families... As I stated during the overview, the Department was unaware of the marked increase in enrollment at the time we prepared our FY 94 budget document, nor do we have access to leading economic indicators that correlate to changes in child care demand." Representative Brown alleged that the Day Care Assistance Program will be under-funded. Co-Chair MacLean MOVED to adopt the Subcommittee's proposals as contained in Attachment 2. Co-Chair Larson clarified, for Representative Grussendorf, that the Subcommittee on Formula Programs will make recommendations for formula programs to the full House Finance Committee. Representative Brown noted her OBJECTION to not funding the Home Owners Property Tax Exemption and Renters Rebate Program. Co-Chair MacLean reiterated that formula programs were not considered by the Subcommittee. There being NO OBJECTION, the Subcommittee's proposals for the Department of Community and Regional Affairs non-formula programs were adopted and incorporated into HB 55. HOUSE BILL NO. 116 "An Act directing the commissioner of natural resources to accept, under certain circumstances, the contract price agreed to between a lessee of federal land and a gas or electric utility as the value of the federal government's royalty share from natural gas production when royalty is payable to the state under applicable federal law; and providing for an effective date." House Bill 116 was in a subcommittee consisting of Chair Representative Parnell with members Representatives MacLean, Hanley and Brown. Representative Parnell provided members with a proposed Committee Substitute of HB 116, Work Draft 8-LS0442\O, dated 7 3/10/93 (Attachment 5). He noted that two amendments were adopted. Representative Hanley MOVED to adopt Work Draft 8-LS0442\O, dated 3/10/93. There being NO OBJECTION, it was so ordered. Representative Brown discussed provisions adopted by the Subcommittee on HB 116. She referred to page 2, line 6. She explained that the provision will define which utilities will be involved. Only utilities that are in the business of providing service to the general public. The provision includes that the "utility with which the lessee has entered into the contract is not an affiliated interest, as that is defined in AS 42,05.990, with the lessee or with a subsequent purchaser of more than 10 percent of the utility's gas or electricity..." She emphasized that CSHB 116 (FIN) will require that the arms length provision is met before the State is locked into a contract price that may not represent the value of the resource. Representative Hanley discussed Section 3. The amendment clarifies that the State is able to collect excess royalties based on an increased federal assessment. Representative Hanley MOVED to report CSHB 116 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Grussendorf OBJECTED. He expressed concern that negotiations regarding the state/federal 90/10 distribution of future resource royalties will be adversely affected. Representative Brown shared Representative Grussendorf's concerns. She stated that it "generally sets a poor precedent for the Legislature to become involved in contract interpretations that affect the royalty value." She asserted that a selective benefit is being provided to a few. She noted the difficulty in retroactively collecting from individuals that may not have been involved when the original benefits were received. She cautioned that the North Slope interests may be affected. She stressed that a $21 million dollar benefit is being giving to a subset of the State's citizens. She wondered how many hundreds of millions of dollars may be "inadvertently passed down the pipe" by the adoption of CSHB 116 (FIN). Co-Chair MacLean asked for further clarification of Section 3. Representative Hanley explained that if the federal government, on its own, negotiates a higher contract price that the State can accept the State's portion of the higher amount. Representative Hanley observed that CSHB 116 (FIN) does not 8 change the fiscal note. Representative Therriault pointed out that the intertie was not active during the time disputed. Residents of the Fairbanks Northstar Borough would be asked to pay 25 percent although they did not receive electricity. Representative Brown stated that her husband is a public utilities Commissioner and she is an EnStar Gas consumer. Co-Chair Larson noted that he is an EnStar Gas consumer. Representative Navarre noted that he is an EnStar and Homer Electric Association consumer. Representative Martin stated that he is a consumer of EnStar Gas and Chugach Electric. Representative Parnell stated that he is a consumer of Chugach Electric. Co-Chair Larson reiterated the motion MOVED to report CSHB 116 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 116 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Natural Resources. HOUSE BILL NO. 64 "An Act creating the crimes of stalking in the first and second degrees and providing penalties for their violation; providing a peace officer with the authority to arrest without a warrant a person the peace officer has reasonable cause to believe has committed stalking; relating to the release before trial of a person accused of stalking; and prohibiting the suspension of imposition of sentence of a person convicted of stalking." Representative Brown asked what would be accomplished by extending the parole requirement. REPRESENTATIVE TOOHEY stated that the extended parole requirement will help to keep perpetrators in line. The original proposal was 5 to 99 years. Representative Parnell asked if other crimes would be impacted. Representative Toohey clarified that all crimes with a five year probation period would be brought up to ten years. Representative Brown noted that the legislation has been broadened to cover all crimes. She expressed concern that the zero fiscal note is inadequate. MARGOT KNUTH, CRIMINAL DIVISION, DEPARTMENT OF LAW explained 9 that the legislation originally addressed the stalking offense. The Department of Law expressed concern that probation for a single offense was dramatically altered. She pointed out that legislation in the prior legislative session would have extended probation for all felony offenses to ten years. The House Judiciary Committee incorporated the legislation to extend the probation period for all felony offenses into HB 64. She asserted that the fiscal cost will be minimal due to the fact that most probation violations are new crimes. She stressed that offenders would be returned to jail via a probation revocation rather than through a new prosecution. Probation revocation proceedings are faster and less costly than prosecution proceedings. Representative Brown emphasized that because the potential time that an offender could have their parole revoked is extended there would be an impact on the department of Corrections. JOHN SALEMI, DIRECTOR, PUBLIC DEFENDERS AGENCY (PD) stated that the parole extension will result in an increased caseload. He disagreed with Ms. Knuth. He stressed that most probation revocations are due to technical violations such as failure to appear for meetings with probation officers, failing to comply with rehabilitation programs or change of residence or employment without approval. He added that probation officers feel they must report technical violations because of civil liability concerns. He expected a number of new cases would be filed as a result of the parole extension. He disagreed with the Department of Corrections's assumption that the impact would be zero. The PD is asking for two paralegal assistants. Representative Brown observed that the fiscal note submitted by the Public Defenders Agency suggests that the anti- stalking provision may be susceptible to a constitutional challenge. Mr. Salemi stated that the sponsor has worked with the Department of Law to address the constitutional challenge. Representative Brown asked if the probation extension was limited to the anti-stalking provision if the fiscal note would be lower. Mr. Salemi stated that if the original probation provision was reinstated that the fiscal impact would be minimal. He stated that there would be no need for a fiscal impact note. Representative Toohey offered Amendment 1 (Attachment 6). She observed that the amendment would return the probation period to five years. 10 Representative Brown MOVED to adopt Amendment 1. Representative Martin OBJECTED for purpose of discussion. He asked for clarification of the amendment's effect. Representative Toohey clarified that the deletions in Amendment 1 would return current law. Co-Chair Larson reiterated the motion to adopt Amendment 1. There being NO OBJECTION, Amendment 1 was adopted. Representative Foster asked if a person sitting in a car all day long near to the victims place of employment would be considered "stalking." Ms. Knuth emphasized that in order for an offense to be committed the defendant must place the person in fear of death or physical injury. She did not think the example given would be an offense. Representative Brown MOVED to report CSHB 64 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. (Tape Change, HFC 93-44, Side 1) Representative Navarre questioned if the creation of a new law as proposed in Amendment 1 would have fiscal impact on the Public Defender Agency. Mr. Salemi clarified that the impact will be minimal. He stated that it would be difficult to quantify. Representative Navarre WITHDREW HIS OBJECTION. Representative Parnell referred to page 2, line 23, CSHB 64 (JUD). He asked if it is the intent that the victim be held in reasonable fear of death. Ms. Knuth answered that line 23 refers to the victims subjective fear. She added that there must be a basis for the fear in reality. She noted that since stalking often results from a prior relationship it is possible for the perpetuator to have an inside knowledge of what will frighten the victim. Representative Parnell asked Mr. Salemi to expound on the definition of "in fear of death". Mr. Salemi replied that the fear must be reasonable. He stated that the course of conduct issue may be a larger issue. He did not think that constitutional problems would arise. In response to a question from Representative Parnell, Ms. Knuth explained that the fear of death element is included in existing assault statutes. 11 Co-Chair Larson reiterated the motion to MOVE CSHB 64 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. CSHB 64 (FIN) was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Administration and with a zero fiscal note by the Department of Corrections and with a zero fiscal note by the Department of Public Safety, dated 3/1/93 and with a zero fiscal note by the Department of Law, dated 3/1/93. HOUSE BILL NO. 151 "An Act relating to payment by indigent persons for legal services and related costs; and providing for an effective date." CHRIS CHRISTENSEN, III, STAFF COUNSEL, ALASKA COURT SYSTEM provided members with a letter dated February 28, 1993, explaining CSHB 151 (JUD) (Attachment 7). He observed that CSHB 151 (JUD) was introduced by the Judiciary Committee at the request of the Supreme Court. Under both the United States and Alaska Constitutions, a criminal defendant has the right to an attorney. The State must appoint attorneys to defendants that cannot afford representation. Mr. Christensen observed that in 1990 the Legislature amended AS 18.85.120 (c) to allow judgments to be entered against defendants represented by the Public Defender or OPA. If a defendant became solvent the judgement would be enforced. Judgments could not be collected for three years following incarceration. He explained that HB 151 would allow judgments to be entered against defendants who are represented by the public defender or OPA whether or not the defendant is convicted. Indigent defendants would be treated the same as non- indigent defendants. In addition, HB 151 would eliminate the three year moratorium on repayment following incarceration. Representative Grussendorf expressed concern that CSHB 151 (JUD) would prevent innocent indigent persons from seeking counsel. Co-Chair Larson presented members with a proposed House Finance as for CSHB 151 (JUD) (Attachment 8). He also provided members with an analysis of the proposed changes to CSHB 151 (JUD) (Attachment 9). 12 Co-Chair MacLean MOVED to adopt the proposed as, Work Draft 8-LS0618\E, dated 3/10/93. Representative Parnell OBJECTED for purpose of discussion. Representative Brown asked that CSHB 151 (JUD) be HELD in Committee. She expressed concerns with how poor persons access to the criminal justice system will be effected. She asked what will be accomplished by taking resources from indigent individuals. Co-Chair MacLean reviewed the proposed as. She explained changes to CSHB 151 (JUD): (See Attachment 9) * Expands the title; * Takes out language that would require people who are acquitted to pay for costs of legal services. This change returns to existing law that, "upon a person's conviction, the court may enter a judgement..."; * Takes out language that could allow the court to impose costs for services and facilities. This change narrows CSHB 151 (JUD) to the costs of representation; * Allows delay of payment if the case is under appeal; * Allows the court to remit or reduce the judgement or to change the method of payment if there is a hardship on the defendant or his family; * Adds a report requirement to review and study the effect of the law. Representative Martin asked if the report is necessary. Co- Chair MacLean stressed that the Committee Substitute will be revenue enhancing. She felt that a study would be inexpensive. Co-Chair MacLean asked why the Alaska Court System did not supply a fiscal note reflecting enhanced revenues. She noted the Office of Public Advocacy has estimated that the legislation would result in $3 million dollars a year. Mr. Christensen stressed that there would be no financial or administrative benefit to the court. He clarified that income resulting from the legislation will be deposited in the General Fund. He suggested that the Department of Law and the Department of Corrections would incur administrative savings. 13 MARILYN MAY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW clarified that 1200 judgments have been issued since July 1, 1992. The judgments are worth approximately $240.0 thousand dollars. One hundred and Twenty-three have been paid voluntarily. The Department of Law has collected $21.0 thousand dollars. Ms. May emphasized that there is an administrative burden since some judgments cannot be executed immediately. The Department of Law coordinate with the Department of Corrections to determine when collections can begin. She asserted that an additional administrative burden is caused by a hardship provision which allows petitions to the Department. She stated that the Department of Law can comply with the reporting provision with the existing computer system. CSHB 151 (JUD) was HELD in Committee. ADJOURNMENT The meeting adjourned at 3:15 p.m. 14