HOUSE FINANCE COMMITTEE February 13, 1995 1:30 P.M. TAPE HFC 95-20, Side 2, #000 - end. TAPE HFC 95-21, Side 1, #000 - 347. CALL TO ORDER Co-Chair Mark Hanley called the House Finance Committee meeting to order at 1:35 p.m. PRESENT Co-Chair Hanley Representative Kohring Co-Chair Foster Representative Martin Representative Mulder Representative Navarre Representative Brown Representative Parnell Representative Grussendorf Representative Therriault Representative Kelly ALSO PRESENT Representative Scott Ogan; Karl Luck, Director, Occupational Licensing, Department of Commerce and Economic Development; Jeff Logan, Staff, House Resources Committee; Neil Webster, Alaska Professional Hunters Association; Susan Cox, Assistant Attorney General, Department of Law; Joe McCormick, Executive Director, Postsecondary Education Commission; SUMMARY HB 19 An Act relating to the definition of 'fault' as that term is used for the purposes of determining the liabilities of parties in civil actions, setting limitations on civil liability, and authorizing the award, in conformance with applicable court rule, of attorney fees in civil actions." HB 19 was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Law, date 2/8/95 and the Department of Administration, dated 2/8/95; and with the House Judiciary Letter of Intent. HB 102 An Act extending the termination date of the Big Game Commercial Services Board." 1 HB 102 was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Commerce and Economic Development, dated 2/8/95. HB 135 An Act relating to student loans; and providing for an effective date." CSHB 135 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Education, dated 2/8/95. HJR 29 Relating to the federal balanced budget amendment. CS HJR 19 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Office of the Governor. Co-Chair Hanley informed members of his intention to waive HB 120 from Committee, on February 15, 1995. Members were advised to notify him of any concerns or objections before Wednesday. HOUSE JOINT RESOLUTION NO. 29 Relating to the federal balanced budget amendment. Representative Parnell, the sponsor of HJR 29, spoke in its support. He observed that HJR 29 urges Congress to support and pass a resolution proposing a constitutional amendment requiring a federal balanced budget. He noted that absent policy changes, entitlement and interest spending will consume almost all federal revenues in the year 2010. In the year 2030, federal revenues will not even cover entitlement spending. He noted that the United States House of Representatives passed HJR 1, a balanced budget amendment. Representative Brown provided members with Amendment 1 (Attachment 1). Representative Brown MOVED to adopt Amendment 1. Amendment 1 would insert after "WHEREAS" on page 1, line 7, "the goal of." "Could be accomplished" would also be deleted on page 1, line 8 after "spending" and "may be advanced" would be inserted. Representative Parnell had no objections. There being NO OBJECTION, Amendment 1 was adopted. Representative Brown provided members with Amendment 2 (Attachment 2). Amendment 2 would insert after "budget" on page 1, line 12, "with provisions that will allow a response to national economic emergencies and long-term investments 2 in national infrastructure." Representative Brown MOVED to adopt Amendment 2. She explained that Amendment 2 would allow capital improvement expenditures to be accounted for separately. Representative Mulder OBJECTED. He stated that the amendment would "open the door a crack". Representative Parnell objected to the amendment on the basis that the amendment would make HJR 29 too specific. He emphasized that HJR 1, introduced in the United States Congress, provides that total outlays for any fiscal year shall not exceed total receipts for the fiscal year unless three-fifths of the whole number of each House in Congress shall provide by law for a specific excess. He asserted that the breadth of the HJR 1 already allows response to national economic emergencies and long-term investments in national infrastructure upon a three-fifths vote of Congress. Representative Grussendorf spoke in support of Amendment 2. Representative Brown accentuated that the amendment would be compatible with HJR 1. She stressed that the amendment would send the message that the State of Alaska wants a solution that will respond to the needs of our state. A roll call vote was taken on the MOTION to move Amendment 2. IN FAVOR: Brown, Grussendorf OPPOSED: Kelly, Kohring, Martin, Mulder, Parnell, Foster, Hanley The MOTION FAILED (2-8). Representative Brown referred to remarks by Senator Ted Stevens made on the floor of the United States Senate on February 25, 1994 (Attachment 3). She noted that he stated that: "I think it will be a total, total disaster for a state such as mine to come under a balanced budget amendment. We will lose at least Fort Richardson and Eielson Air Force Base, and maybe one other. Alaska will lose 94,000 jobs; there will be 24 percent less personal income in Alaska; the rate of unemployment, which is already the Nation's highest, will increase by 6.4 percent." She observed that Senator Stevens, in his speech, detailed other effects the balanced budget amendment would have on Alaska. Senator Stevens concluded that "this is the wrong amendment at the wrong time to address the wrong problem." Representative Brown stressed that the effects of a balanced 3 budget amendment have not changed. Representative Brown acknowledged the philosophical correctness of helping Congress to restrain its spending. She questioned what will happen to Alaska if federal contraction occurs when state dollars available for expenditure are also being reduced. Representative Therriault stressed that Senator Stevens' change of heart in regards to the balanced budget amendment was based on the fact that the national situation is so severe that something absolutely has to be done. He highlighted that everybody feels there is a problem, but no one wants to give anything up or have the programs that they have come to rely on considered for reduction or elimination. He asserted that the State of Alaska cannot be separated from the Nation. Representative Grussendorf emphasized the importance of federal funding to the State of Alaska. He questioned members' priorities: "The economy of the State of Alaska" or "do we want to have a nation wide perspective." Co-Chair Hanley concluded that the Nation's credit card balance has reached its limit. He emphasized that tough decisions need to be made. He expounded that inaction could result in a worst scenario, in terms of the kinds of reductions that would have to be made in the future. He reiterated that the three-fifths vote allows flexibility. He asserted that a balanced budget amendment will focus public pressure. Representative Martin avouched that calamity will be the result of inaction. He stressed: "Either pay the bill or let your grandchildren pay it." He asserted that we have to "get control of this wild spending in Congress." Representative Mulder MOVED to report CSHJR 29 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HJR 19 (FIN) was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Office of the Governor. HB 19 was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Law, date 2/8/95 and the Department of Administration, dated 2/8/95. HOUSE BILL NO. 102 4 "An Act extending the termination date of the Big Game Commercial Services Board." JEFF LOGAN, STAFF, HOUSE RESOURCES COMMITTEE testified in support of HB 102. He observed that HB 102 extends the Big Game Commercial Services Board whose duties are set forth in AS 08.54.300 - 330. He noted that the Board replaced the Big Game Guide Board as a result of legislation passed in 1989 (HB 112). The Board is the product of the Legislative Task Force on Guiding and Game which was commissioned to resolve conflicts between guides and outfitters. The Board is mandated to terminate its operation one year after its sunset date. He explained that unless the Legislature passes HB 102 this session the Board will be terminated. REPRESENTATIVE SCOTT OGAN testified in support of HB 102. He noted that he served two years on the Big Game Commercial Services Board. He noted that the Alaska Supreme Court determined that exclusive use of guide use areas is unconstitutional under the Common Use Clause. Statutes implemented by the Board restrict guides to three Guide Use Areas. Any guide can register for any area for a period of five years. At the end of five years the guide can re- register into another area. He asserted that the lack of control and chaos that would result from the Board's termination would be detrimental to the industry. Representative Mulder asked why the Board was not extended beyond one year during the last legislative session. Representative Ogan did not know. Representative Martin asked if the statutes pertaining to the Board's powers or duties were repealed. Representative Ogan replied that the statutes were not changed. Representative Ogan emphasized that the Board takes in more than it costs to run. He added that the Board plans to lower fees. He stressed that the Board pursues violators. Representative Martin expressed concern that fees might be lowered. He questioned the benefit, to the State, of harvesting the resource. Representative Ogan clarified that the license fee would be lowered. Out-of-state tag fees are not controlled by the Board. NEIL WEBSTER, GUIDE testified via the teleconference network from Anchorage. He testified that the changes implemented by the Board have allowed him to become involved in the guide industry. He spoke in support of retention of the Board. He maintained that the Board has been a gain for the overall industry. He noted that the current regulation 5 allows him to know what guides are using the areas adjacent to the Guide Use Area he is operating in. In response to a question by Representative Kohring, Mr. Logan explained that the revenue fluctuations indicated in the fiscal note reflect a two year licensing renewal of some licenses. KARL LUCK, DIRECTOR, OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT clarified that funding was not reduced for the Board in FY 95. He stressed that the Board's responsibilities have not been reduced. Funding for the Board was included in the FY 96 proposed budget. He further clarified that revenue reflected in the fiscal note is all general fund program receipts. The fiscal note reflects that there are greater program receipts in years that the two year licenses are renewed. The program receipts are added over the two year period and then divided in half to derive the Board's yearly budget. He noted that there is a $10.0 thousand dollar increase in FY 97 to accomplish a new statutory mandate. Representative Brown asked if AS 08.54310 (b)(1) is constitutional. Mr. Luck acknowledged that the statute is being challenged in Superior Court. Representative Navarre assured her that the law will be found constitutional. He emphasized, as a former member of the Legislative Task Force on Guiding and Game, that the legislation was designed to allow access. Representative Therriault cautioned that the Board will be asked to absorb the $10.0 thousand dollar increase from FY 96 to FY 97. He observed that there is also a $30.0 thousand dollar increase from FY 95 to FY 96. Mr. Luck noted that the Board is required by statute to charge licensing fees that are approximately equal to the cost of regulating the Board. He emphasized that the amount needed to run the Board depends on the number of licenses obtained. Mr. Luck reviewed personal services costs. There is one range 12 licensing examiner position which is dedicated solely to the Board. One range 12 licensing examiner position has some of its time dedicated to other boards. Positive time keeping is used to allocate the cost of the position to whichever board worked for at a particular time. He added that services provided by the Hearing Officer Unit, Investigative Unit, and any clerical support are also charged through positive time keeping. There is one investigator position which works solely on the Board's investigations. 6 (Tape Change, HFC 95-21, Side 1) Representative Mulder MOVED to report HB 102 out of Committee with individual recommendations and with the accompanying fiscal note. HB 102 was reported out of Committee with a "do pass" recommendation and with a fiscal impact note by the Department of Commerce and Economic Development, dated 2/8/95. HOUSE BILL NO. 19 "An Act relating to the definition of 'fault' as that term is used for the purposes of determining the liabilities of parties in civil actions, setting limitations on civil liability, and authorizing the award, in conformance with applicable court rule, of attorney fees in civil actions." Representative Therriault, sponsor of HB 19, gave a brief overview of the legislation. He noted that the legislation is intended to clarify civil liability law that allows defendants to argue that they are not liable for offenses they have committed intentionally. The need arises from Alaska court cases in which defendants have argued that because the law refers only to acts that are "negligent or reckless" and not specifically to acts that are "intentional," it does not allow for the apportionment of fault of those who have committed offenses intentionally. In cases in which more than one person contributes to the injuries, the law is unclear as to whether or not the person who committed an offense intentionally can be held responsible for any of the fault. To date, cases utilizing this argument have been found to be without merit. The legislation would eliminate the need for costly court proceedings. Representative Therriault observed that the House Judiciary Committee adopted a Letter of Intent with HB 19. He asserted that the legislation reflects the court's determination in an attempt to clarify the law. Representative Therriault pointed out that in some cases the plaintiffs are using the same argument in order to bring their case against the person or entity that can best afford the recovery. He used the example of a current case involving a mail bomb. The plaintiffs are claiming that the State is negligent in preventing the defendant from sending the bomb. If the intentional tortfeasor is excluded all the blame can be placed on the "deep pocket" of the State. 7 SUSAN COX, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW testified that the legislation will clarify current law and close a loop hole. She added that the Letter of Intent by the House Resources Committee accomplishes its intent. Representative Therriault stated that the House Judiciary Committee wanted to clarify that all parties would not necessarily be on the "same playing field." The courts are not precluded from finding that the intentional party should bear one hundred percent of the fault. Representative Therriault MOVED to report HB 19 out of Committee with individual recommendations and with the accompanying fiscal notes and the House Judiciary Committee's Letter of Intent. There being NO OBJECTION, it was so ordered. HB 19 was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Law, date 2/8/95 and the Department of Administration, dated 2/8/95; and with the House Judiciary Letter of Intent. HOUSE BILL NO. 135 "An Act relating to student loans; and providing for an effective date." Representative Brown provided members with Amendment 1 (Attachment 4). Amendment 1 deletes "relating to student loans" from the title and adds "authorizing the Alaska Commission on Postsecondary Education to adopt regulations necessary to determine and set an interest rate applicable to a student loan for which money is disbursed on or after July 1, 1995, and regulations necessary to implement certain loan default sanctions and consolidation of loan provisions beginning July 1, 1995." JOE MCCORMICK, EXECUTIVE DIRECTOR, POSTSECONDARY EDUCATION COMMISSION testified in support of HB 135. He explained that it provides transition language which will allow the Commission to implement the provisions of HB 506, which were passed by the previous legislature. He noted that the transition language which normally accompanies a statute, was inadvertently left out of HB 506. The Department of Law notified the Commission of the problem in November 1994. The Department of Law advised that HB 135 needs to be adopted before the Commission can propose regulations to implement HB 506 by July 1, 1995. He emphasized that HB 506 set forth a new method of calculating the interest in Alaska student loans, effective July 1, 1995. If regulations are not implemented before July 1, 1995 the Commission will have 8 13,000 loans that will not be dispersed. Representative Martin recalled that teachers were excluded from the provisions of HB 506. Mr. Luck agreed that section 2 would allow the implementation of provisions passed in HB 506 which exclude teachers. He observed it would not prevent initial license holders to conduct their business. Renewals would be denied if the holder's student loan payments are not current. If section 2 is not adopted the Commission would be out of compliance with the law. Co-Chair Hanley MOVED to adopt Amendment 1, on behalf of Representative Brown. There being NO OBJECTION, it was so ordered. Representative Navarre MOVED to report CSHB 135 out of Committee with individual recommendations and with the accompanying fiscal notes. ADJOURNMENT The meeting adjourned at 2:39 p.m. 9