HOUSE FINANCE COMMITTEE APRIL 13, 1993 1:30 P.M. TAPE HFC 93 - 104, Side 1, #000 - end. TAPE HFC 93 - 104, Side 2, #000 - #548. CALL TO ORDER Co-Chair Ron Larson called the meeting of the House Finance Committee to order at 1:30 P.M. PRESENT Co-Chair Larson Representative Brown Co-Chair MacLean Representative Foster Vice-Chair Hanley Representative Grussendorf Representative Therriault Representative Martin Representative Parnell Representatives Navarre and Hoffman were not present for the meeting. ALSO PRESENT Representative Bill Hudson; Frank Dillon, Executive Director, Alaska Trucking Association, Anchorage, Alaska; Juanita Hensley, Director, Division of Motor Vehicles, Department of Public Safety; Randy Welker, Legislative Auditor, Legislative Audit Division; Representative Gary Davis; Garry Peska, Vice President on Finance, Alaska State Hospital & Nursing Home Association, Anchorage, Alaska; Jerry McCune, President, United Fishermen of Alaska, Cordova, Alaska. SUMMARY INFORMATION HB 155 An Act relating to audits of health facilities. HB 155 was held in Committee for further discussion. HB 179 An Act relating to motor vehicles and mobile homes; and providing for an effective date. CS HB 179 (FIN) was reported out of Committee with a "do pass" recommendation and with a new fiscal note by the Department of Public Safety. HB 275 An Act relating to salmon marketing, a salmon marketing tax, and the Alaska Seafood Marketing 1 Institute; and providing for an effective date. CS HB 275 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by the Department of Revenue and the Department of Commerce and Economic Development. HOUSE BILL 179 "An Act relating to motor vehicles and mobile homes; and providing for an effective date." Co-Chair Larson explained the changes previously made by the Committee to the work draft #8-LS0679\K dated 3/30/93. FRANK DILLON, EXECUTIVE DIRECTOR, ALASKA TRUCKING ASSOCIATION (ATA), ANCHORAGE, ALASKA, stated he represented thirty-three companies in the State which provide trucking services. He urged the Committee to delete Sections 10 & 11, pointing out that portion of the bill had not been publicized nor had it been adequately discussed with the municipalities and would adversely impact the trucking industry. JUANITA HENSLEY, DIRECTOR, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF PUBLIC SAFETY, stressed there has not been an increase to fees since 1978. Representative Martin asked if it would be necessary for the municipal government go through the State to change taxes. Ms. Hensley replied only the municipalities which choose to have the state offices collect their taxes would be required to go through the State to request a statutory change to increase taxes and have the State collect them. The State currently collects taxes for the Municipality of Anchorage, the City of Bethel, Dillingham, Kenai Peninsula Borough, Ketchikan Gateway Borough, Kodiak Island Borough, Matanuska Borough, Nenanna, Nome, Petersburg, Unalaska and if Whittier were required to register by statute, they would be included. She added, the list of exempt cities is sited in A.S. 28.10.11. Those areas which are exempt can not have greater than 499 traffic vehicles on the roadways. Representative Brown expressed concern with the word "tax" on Page 4, Line 23. Ms. Hensley agreed a more appropriate term would be "fee". Representative Therriault MOVED to delete Section #11. There being NO OBJECTION, it was deleted. Representative Hanley MOVED to delete Section #19 which corresponds to Section #11. There being NO OBJECTION, it was so ordered. 2 Representative Brown MOVED to change the language on Page 4, Line 23, the second "tax" should be deleted and insert "fee". There being NO OBJECTION, it was so ordered. Representative Martin suggested a thirty-five percent increase was too high. He recommended that if the municipal government does tax, they should do it by adding a tax rather than taxing fees and services. Representative Grussendorf pointed out that the fees have not been increased since 1975. He MOVED to increase the fee by 25%. Representative Martin MOVED a 10% increase. Co- Chair MacLean OBJECTED to the 10% increase. A roll call was taken on the MOTION. IN FAVOR: Hanley, Martin, Parnell, Therriault, Grussendorf. OPPOSED: Brown, MacLean, Larson. Representatives Hoffman, Navarre and Foster were not present for the vote. The MOTION PASSED, (5-3). Co-Chair Larson asked that a vote be taken on adopting the main motion to change Section #10 from 35% to 10%. A roll call was taken on the MOTION. IN FAVOR: Martin, Parnell, Therriault, Brown, Grussendorf, Hanley, Larson, MacLean. OPPOSED: - Representatives Hoffman, Navarre and Foster were not present for the vote. The MOTION PASSED, (8-0). Representative Brown recommended that the fees be rounded off to the nearest dollar. The Committee agreed. Representative Brown MOVED to report CS HB 179 (FIN) out of Committee with individual recommendations and the fiscal note. Representative Therriault OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Brown, Hanley, MacLean, Larson. OPPOSED: Martin, Parnell, Therriault, 3 Grussendorf. Representatives Navarre, Foster and Hoffman were not present for the vote. The MOTION FAILED, (4-4). HB 179 was HELD in Committee for further discussion. HOUSE BILL 275 "An Act relating to salmon marketing, a salmon marketing tax, and the Alaska Seafood Marketing Institute; and providing for an effective date." REPRESENTATIVE BILL HUDSON provided the Committee with Amendment #1. [Attachment #1] and noted that the amendment would accomplish what had previously been requested by the Committee to change the title. The change is an mechanism to provide for the reduction of the 3% Salmon Enhancement Tax. It would require at least 25% of people in the election to approve the change which has been reviewed by the Commissioners of the Department of Commerce and Economic Development and the Commissioner of Revenue. Representative Hudson urged the Committee to adopt the amendment. Representative Hanley noted his concern with Page 1, Section (b) -1 and the 25% present vote. He thought it should read 25% of the number of permits currently used in a region. Representative Hudson replied that the intent language would indicate the number of people signing the petition. Representative Brown MOVED to incorporate Amendment #1 into HB 275. Representative Hanley OBJECTED for the record. He remarked that it will change how the system currently works by allowing only qualified regional associations to conduct an election. The change will require 25% of the permit holders to submit a request to the commissioner at which time there can be an election. Representative Hudson understood the concern. He pointed out that the legislation has limited applications to the areas that currently have the 3% taxation. He urged the Committee to adopt the amendment. Representative Hanley WITHDREW THE OBJECTION. There being NO FURTHER OBJECTION, the amendment was adopted. Co-Chair MacLean questioned the increase to the board membership and quorum. Representative Hudson advised that twenty-four voting members are necessary to adequately represent all fishing areas in the Alaska. 4 JERRY MCCUNE, UNITED FISHERMEN OF ALASKA, CORDOVA, ALASKA, reiterated Representative Hudson's reasons for adding the additional members to the membership board. The increase would allow all seven regions to have a seat on the ASMI Board. Representative Hudson pointed out an important element to the legislation in allowing harvesters to be involved in the marketing. Representative Brown MOVED a language change on Page 3, Line 30, deleting "and" and insert after the word "distribute" the following language "and make available information to the public on prices". There being NO OBJECTION, it was adopted. Representative Hanley MOVED to report CS HB 275 (FIN) out of Committee with individual recommendations and with the two accompanying fiscal notes. There being NO OBJECTIONS, it was so ordered. CS HB 275 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by the Department of Revenue and the Department of Commerce and Economic Development. HOUSE BILL 179 "An Act relating to motor vehicles and mobile homes; and providing for an effective date." Co-Chair MacLean MOVED to RESCIND the action taken on HB 179. There being NO OBJECTION, it was so ordered. Co-Chair MacLean MOVED to report CS HB 179 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Martin OBJECTED. (Tape Change, HFC 93-104, Side 2). A roll call was taken on the MOTION. IN FAVOR: Parnell, Brown, Grussendorf, Hanley, Larson, MacLean. OPPOSED: Therriault, Martin. Representatives Navarre and Hoffman were not present for the vote. The MOTION PASSED, (7-2). CS HB 179 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the 5 Department of Public Safety. HOUSE BILL 155 "An Act relating to audits of health facilities." REPRESENTATIVE GARY DAVIS stated HB 155 addresses hospitals and nursing homes throughout the State which receive large portions of their revenue from the State/Federal Medicaid program. The Alaska statutes require that an audit be performed by the Department of Health and Social Services to determine the rates charged for various medical services. There are 27 medical facilities in Alaska which the Department is obligated to perform an annual audits on. When these audits are completed, the facility and the Department agree what rates can appropriately be charged for the following fiscal year. The legislation adds clarity, consistency and timeliness in the Medicaid audit process. GARRY PESKA, VICE PRESIDENT OF FINANCE, ALASKA STATE HOSPITAL & NURSING HOME ASSOCIATION (ASHNHA), JUNEAU, ALASKA, remarked that ASHNHA and the Department have worked together to address concerns contained in the committee substitute. He added each area contains deadlines for the bill completion. Co-Chair MacLean noted her concerns with conflicts between the regulatory agencies. Mr. Peska pointed out that the deadline for the completion of the audit report extends by the same number of days in which ASHNHA must file late reports. Co-Chair MacLean recommended extending the time for facilities to complete the paper work due to the Department. Mr. Peska admitted there is a conflict between the Department of Health and Social Services and the nursing homes. The nursing homes feel that the process is broken. Consequently, provided the proposed legislation in order that the guidelines could be clearly defined. Representative Martin questioned how the back log of audits would be handled. Mr. Peska advised that the legislation does not address those audits. Representative Martin asked the most fair way to determine the situation. Mr. Peska stated that passage of the bill would guarantee fairness. Representative Hanley interjected that the Committee's concerns have been addressed in the work draft. He summarized, the bill currently is at a point of different opinions between the Legislature and the Department. The 6 Supreme Court ruling states that the Department does not have the ability to recoup payments even if they pass the audit if they have over-paid. They would then have to pay back the federal government the 50%. Co-Chair MacLean asked if a consideration was made to change the auditing procedure to every other year for the smaller facilities. Representative Gary Davis responded that most states do not perform annual audits of all facilities. The Alaska Department of Health and Social Services does annual audits of all facilities and do not intent to change that policy. Mr. Peska explained "retroactive" recoupment in relation to the federal governments position. The federal government has recognized that some states have prospective rate setting systems. They have not taken the position to go back and retroactively recoup when they have a prospective rate setting system in place. RANDY WELKER, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT DIVISION, addressed the HESS committee substitute. He noted the concern within the Department of Health and Social Services to seek recoupment resulting from overpayment. An additional issue is the rigid audit process. The House Finance Committee work draft addresses many of these concerns. Mr. Welker recommended that language to recoup overpayment when costs have been clearly determined be included. He acknowledged the frustration of the nursing home facilities recoupment process. Mr. Welker explained the conditions of overpayment. Representative Hanley noted the two varying processes occurring within the legislation, the rate setting process and the audit process. He thought, the audit process has been behind over the years. Representative Hanley recommended that the $4 million dollar fiscal note be zeroed out. The other fiscal notes for the additional audits can be met with staff currently employed. Representative Davis disagreed and thought that the fiscal notes would be necessary. He said that the original bill established a time line placing the Department in stress. The Department would not be able to complete an orderly audit. Representative Davis recommenced changing the wording in the bill from "shall" to "may" in order to meet to the guidelines. Mr. Peska explained the audit process. Retroactive recoupment is not provided for within the proposed 7 legislation. Although, the adjustment accounting is itemized. Representative Hanley MOVED to adopt the work draft #8- LS0451\J, 4/06/93 as the version before the Committee. There being NO OBJECTION, it was so ordered. HB 155 was HELD in Committee for further discussion. ADJOURNMENT The meeting adjourned at 2:50 P.M. HOUSE FINANCE COMMITTEE APRIL 13, 1993 1:30 P.M. TAPE HFC 93 - 104, Side 1, #000 - end. TAPE HFC 93 - 104, Side 2, #000 - #548. CALL TO ORDER Co-Chair Ron Larson called the meeting of the House Finance Committee to order at 1:30 P.M. PRESENT Co-Chair Larson Representative Brown Co-Chair MacLean Representative Foster Vice-Chair Hanley Representative Grussendorf Representative Therriault Representative Martin Representative Parnell Representatives Navarre and Hoffman were not present for the meeting. ALSO PRESENT Representative Bill Hudson; Frank Dillon, Executive Director, Alaska Trucking Association, Anchorage, Alaska; Juanita Hensley, Director, Division of Motor Vehicles, Department of Public Safety; Randy Welker, Legislative Auditor, Legislative Audit Division; Representative Gary Davis; Garry Peska, Vice President on Finance, Alaska State Hospital & Nursing Home Association, Anchorage, Alaska; Jerry McCune, President, United Fishermen of Alaska, Cordova, Alaska. SUMMARY INFORMATION HB 155 An Act relating to audits of health facilities. 8 HB 155 was held in Committee for further discussion. HB 179 An Act relating to motor vehicles and mobile homes; and providing for an effective date. CS HB 179 (FIN) was reported out of Committee with a "do pass" recommendation and with a new fiscal note by the Department of Public Safety. HB 275 An Act relating to salmon marketing, a salmon marketing tax, and the Alaska Seafood Marketing Institute; and providing for an effective date. CS HB 275 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by the Department of Revenue and the Department of Commerce and Economic Development. HOUSE BILL 179 "An Act relating to motor vehicles and mobile homes; and providing for an effective date." Co-Chair Larson explained the changes previously made by the Committee to the work draft #8-LS0679\K dated 3/30/93. FRANK DILLON, EXECUTIVE DIRECTOR, ALASKA TRUCKING ASSOCIATION (ATA), ANCHORAGE, ALASKA, stated he represented thirty-three companies in the State which provide trucking services. He urged the Committee to delete Sections 10 & 11, pointing out that portion of the bill had not been publicized nor had it been adequately discussed with the municipalities and would adversely impact the trucking industry. JUANITA HENSLEY, DIRECTOR, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF PUBLIC SAFETY, stressed there has not been an increase to fees since 1978. Representative Martin asked if it would be necessary for the municipal government go through the State to change taxes. Ms. Hensley replied only the municipalities which choose to have the state offices collect their taxes would be required to go through the State to request a statutory change to increase taxes and have the State collect them. The State currently collects taxes for the Municipality of Anchorage, the City of Bethel, Dillingham, Kenai Peninsula Borough, Ketchikan Gateway Borough, Kodiak Island Borough, Matanuska Borough, Nenanna, Nome, Petersburg, Unalaska and if Whittier were required to register by statute, they would 9 be included. She added, the list of exempt cities is sited in A.S. 28.10.11. Those areas which are exempt can not have greater than 499 traffic vehicles on the roadways. Representative Brown expressed concern with the word "tax" on Page 4, Line 23. Ms. Hensley agreed a more appropriate term would be "fee". Representative Therriault MOVED to delete Section #11. There being NO OBJECTION, it was deleted. Representative Hanley MOVED to delete Section #19 which corresponds to Section #11. There being NO OBJECTION, it was so ordered. Representative Brown MOVED to change the language on Page 4, Line 23, the second "tax" should be deleted and insert "fee". There being NO OBJECTION, it was so ordered. Representative Martin suggested a thirty-five percent increase was too high. He recommended that if the municipal government does tax, they should do it by adding a tax rather than taxing fees and services. Representative Grussendorf pointed out that the fees have not been increased since 1975. He MOVED to increase the fee by 25%. Representative Martin MOVED a 10% increase. Co- Chair MacLean OBJECTED to the 10% increase. A roll call was taken on the MOTION. IN FAVOR: Hanley, Martin, Parnell, Therriault, Grussendorf. OPPOSED: Brown, MacLean, Larson. Representatives Hoffman, Navarre and Foster were not present for the vote. The MOTION PASSED, (5-3). Co-Chair Larson asked that a vote be taken on adopting the main motion to change Section #10 from 35% to 10%. A roll call was taken on the MOTION. IN FAVOR: Martin, Parnell, Therriault, Brown, Grussendorf, Hanley, Larson, MacLean. OPPOSED: - Representatives Hoffman, Navarre and Foster were not present for the vote. 10 The MOTION PASSED, (8-0). Representative Brown recommended that the fees be rounded off to the nearest dollar. The Committee agreed. Representative Brown MOVED to report CS HB 179 (FIN) out of Committee with individual recommendations and the fiscal note. Representative Therriault OBJECTED. A roll call was taken on the MOTION. IN FAVOR: Brown, Hanley, MacLean, Larson. OPPOSED: Martin, Parnell, Therriault, Grussendorf. Representatives Navarre, Foster and Hoffman were not present for the vote. The MOTION FAILED, (4-4). HB 179 was HELD in Committee for further discussion. HOUSE BILL 275 "An Act relating to salmon marketing, a salmon marketing tax, and the Alaska Seafood Marketing Institute; and providing for an effective date." REPRESENTATIVE BILL HUDSON provided the Committee with Amendment #1. [Attachment #1] and noted that the amendment would accomplish what had previously been requested by the Committee to change the title. The change is an mechanism to provide for the reduction of the 3% Salmon Enhancement Tax. It would require at least 25% of people in the election to approve the change which has been reviewed by the Commissioners of the Department of Commerce and Economic Development and the Commissioner of Revenue. Representative Hudson urged the Committee to adopt the amendment. Representative Hanley noted his concern with Page 1, Section (b) -1 and the 25% present vote. He thought it should read 25% of the number of permits currently used in a region. Representative Hudson replied that the intent language would indicate the number of people signing the petition. Representative Brown MOVED to incorporate Amendment #1 into HB 275. Representative Hanley OBJECTED for the record. He remarked that it will change how the system currently works by allowing only qualified regional associations to conduct an election. The change will require 25% of the permit holders to submit a request to the commissioner at which time there can be an election. 11 Representative Hudson understood the concern. He pointed out that the legislation has limited applications to the areas that currently have the 3% taxation. He urged the Committee to adopt the amendment. Representative Hanley WITHDREW THE OBJECTION. There being NO FURTHER OBJECTION, the amendment was adopted. Co-Chair MacLean questioned the increase to the board membership and quorum. Representative Hudson advised that twenty-four voting members are necessary to adequately represent all fishing areas in the Alaska. JERRY MCCUNE, UNITED FISHERMEN OF ALASKA, CORDOVA, ALASKA, reiterated Representative Hudson's reasons for adding the additional members to the membership board. The increase would allow all seven regions to have a seat on the ASMI Board. Representative Hudson pointed out an important element to the legislation in allowing harvesters to be involved in the marketing. Representative Brown MOVED a language change on Page 3, Line 30, deleting "and" and insert after the word "distribute" the following language "and make available information to the public on prices". There being NO OBJECTION, it was adopted. Representative Hanley MOVED to report CS HB 275 (FIN) out of Committee with individual recommendations and with the two accompanying fiscal notes. There being NO OBJECTIONS, it was so ordered. CS HB 275 (FIN) was reported out of Committee with a "do pass" recommendation and with fiscal notes by the Department of Revenue and the Department of Commerce and Economic Development. HOUSE BILL 179 "An Act relating to motor vehicles and mobile homes; and providing for an effective date." Co-Chair MacLean MOVED to RESCIND the action taken on HB 179. There being NO OBJECTION, it was so ordered. Co-Chair MacLean MOVED to report CS HB 179 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. Representative Martin OBJECTED. (Tape Change, HFC 93-104, Side 2). A roll call was taken on the MOTION. 12 IN FAVOR: Parnell, Brown, Grussendorf, Hanley, Larson, MacLean. OPPOSED: Therriault, Martin. Representatives Navarre and Hoffman were not present for the vote. The MOTION PASSED, (7-2). CS HB 179 (FIN) was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Public Safety. HOUSE BILL 155 "An Act relating to audits of health facilities." REPRESENTATIVE GARY DAVIS stated HB 155 addresses hospitals and nursing homes throughout the State which receive large portions of their revenue from the State/Federal Medicaid program. The Alaska statutes require that an audit be performed by the Department of Health and Social Services to determine the rates charged for various medical services. There are 27 medical facilities in Alaska which the Department is obligated to perform an annual audits on. When these audits are completed, the facility and the Department agree what rates can appropriately be charged for the following fiscal year. The legislation adds clarity, consistency and timeliness in the Medicaid audit process. GARRY PESKA, VICE PRESIDENT OF FINANCE, ALASKA STATE HOSPITAL & NURSING HOME ASSOCIATION (ASHNHA), JUNEAU, ALASKA, remarked that ASHNHA and the Department have worked together to address concerns contained in the committee substitute. He added each area contains deadlines for the bill completion. Co-Chair MacLean noted her concerns with conflicts between the regulatory agencies. Mr. Peska pointed out that the deadline for the completion of the audit report extends by the same number of days in which ASHNHA must file late reports. Co-Chair MacLean recommended extending the time for facilities to complete the paper work due to the Department. Mr. Peska admitted there is a conflict between the Department of Health and Social Services and the nursing homes. The nursing homes feel that the process is broken. 13 Consequently, provided the proposed legislation in order that the guidelines could be clearly defined. Representative Martin questioned how the back log of audits would be handled. Mr. Peska advised that the legislation does not address those audits. Representative Martin asked the most fair way to determine the situation. Mr. Peska stated that passage of the bill would guarantee fairness. Representative Hanley interjected that the Committee's concerns have been addressed in the work draft. He summarized, the bill currently is at a point of different opinions between the Legislature and the Department. The Supreme Court ruling states that the Department does not have the ability to recoup payments even if they pass the audit if they have over-paid. They would then have to pay back the federal government the 50%. Co-Chair MacLean asked if a consideration was made to change the auditing procedure to every other year for the smaller facilities. Representative Gary Davis responded that most states do not perform annual audits of all facilities. The Alaska Department of Health and Social Services does annual audits of all facilities and do not intent to change that policy. Mr. Peska explained "retroactive" recoupment in relation to the federal governments position. The federal government has recognized that some states have prospective rate setting systems. They have not taken the position to go back and retroactively recoup when they have a prospective rate setting system in place. RANDY WELKER, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT DIVISION, addressed the HESS committee substitute. He noted the concern within the Department of Health and Social Services to seek recoupment resulting from overpayment. An additional issue is the rigid audit process. The House Finance Committee work draft addresses many of these concerns. Mr. Welker recommended that language to recoup overpayment when costs have been clearly determined be included. He acknowledged the frustration of the nursing home facilities recoupment process. Mr. Welker explained the conditions of overpayment. Representative Hanley noted the two varying processes occurring within the legislation, the rate setting process and the audit process. He thought, the audit process has been behind over the years. 14 Representative Hanley recommended that the $4 million dollar fiscal note be zeroed out. The other fiscal notes for the additional audits can be met with staff currently employed. Representative Davis disagreed and thought that the fiscal notes would be necessary. He said that the original bill established a time line placing the Department in stress. The Department would not be able to complete an orderly audit. Representative Davis recommenced changing the wording in the bill from "shall" to "may" in order to meet to the guidelines. Mr. Peska explained the audit process. Retroactive recoupment is not provided for within the proposed legislation. Although, the adjustment accounting is itemized. Representative Hanley MOVED to adopt the work draft #8- LS0451\J, 4/06/93 as the version before the Committee. There being NO OBJECTION, it was so ordered. HB 155 was HELD in Committee for further discussion. ADJOURNMENT The meeting adjourned at 2:50 P.M. 15