HOUSE FINANCE COMMITTEE March 6, 1998 1:50 P.M. TAPE HFC 98 - 57, Side 1. TAPE HFC 98 - 57, Side 2. CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 1:50 P.M. PRESENT Co-Chair Hanley Representative Kelly Co-Chair Therriault Representative Kohring Representative J. Davies Representative Martin Representative Grussendorf Representative Moses Representative Foster Representative Mulder Representative G. Davis was not present for the meeting. ALSO PRESENT Representative Joe Ryan; Kathy Cronan, (Testified via Teleconference), CEO, Charter North Star Behavioral Health System, Anchorage; Barbara Brink, (Testified via Teleconference), Prosecuting Attorney, State of Alaska, Department of Law, Fairbanks; Theresa Tanoury, Child Protection Services Administrator, Division of Family and Youth Services, Department of Health and Social Services; Elmer Lindstrom, Special Assistant, Office of the Commissioner, Department of Health and Social Services; Mike Tibbles, Staff, Representative Gene Therriault; Janice Adair, Director, Division of Environmental Health, Department of Environmental Conservation; Bob Bartholomew, Deputy Director, Income and Excise Audit Division, Department of Revenue. SUMMARY HB 16 An Act relating to delinquent minors, to the taking of action based on the alleged criminal misconduct of certain minors, to the services to be provided to the victims of criminal misconduct of minors, and to agency records involving minors alleged to be delinquent based on their criminal misconduct; and amending Rule 19 and repealing Rules 6, 7, 11(a), 12(a), and 21(f), Alaska Delinquency Rules. HB 16 was HELD in Committee for further consideration. HB 144 An Act authorizing the Department of Environmental Conservation to charge certain fees relating to registration of pesticides and broadcast chemicals; and providing for an effective date. HB 144 was HELD in Committee for further consideration. HB 239 An Act relating to the liability of motor fuel dealers for payment of tax imposed on certain credit transactions involving motor fuel sales or transfers that become worthless debts or on sales or transfers to persons who declare bankruptcy; and providing for an effective date. CS HB 239 was reported out of Committee with a "do pass" recommendation and with a fiscal note by the Department of Revenue. HB 321 An Act relating to trusts, to the prudent investor rule, and to standards of care applicable to personal representatives, conservators, and trustees; and providing for an effective date. HB 321 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Commerce and Economic Development dated 2/18/98. HOUSE BILL NO. 321 "An Act relating to trusts, to the prudent investor rule, and to standards of care applicable to personal representatives, conservators, and trustees; and providing for an effective date." REPRESENTATIVE JOE RYAN urged the Committee's support in passage of HB 321. The bill would implement the Alaska Trust Act which was passed last year. Representative Foster MOVED to report HB 321 out of Committee with the individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HB 321 was reported out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Commerce and Economic Development dated 2/18/98. HOUSE BILL NO. 239 "An Act relating to the liability of motor fuel dealers for payment of tax imposed on certain credit transactions involving motor fuel sales or transfers that become worthless debts or on sales or transfers to persons who declare bankruptcy; and providing for an effective date." Co-Chair Therriault MOVED that 0-LS0768\H, Glover, 3/6/98, be the version before the Committee. There being NO OBJECTION, it was adopted. MIKE TIBBLES, STAFF, REPRESENTATIVE GENE THERRIAULT, highlighted the changes between the current working draft and the original version of the bill. He noted that in the committee substitute the "findings" section had been eliminated. The second change, eliminated the three-year credit limit and replaced it with five year per individual distributor. The final change removed Section F(2), leaving only Subsection F. He continued, as determined by Legal Services, both Sections E and F were understood to be mutually exclusive, however, Section E suggested a finite time period, whereas, Section F suggested an infinite period. By addressing this section, a potential conflict was eliminated. Mr. Tibbles spoke to the proposed Amendment #2. [Copy on file]. He noted that the amendment would change "sale and transfer" to "sales and transfers". When billing, there could be more than one particular sale. Co-Chair Therriault added that the action would make it an aggregate, not a credit on a single transaction. BOB BARTHOLOMEW, DEPUTY DIRECTOR, INCOME AND EXCISE TAX DIVISION, DEPARTMENT OF REVENUE, spoke to the deletion of Section F(2). That section would limit any transaction, which occurred right after bankruptcy. The language was confusing as to when the clock began. The deletion made the application simpler, clarifying the bill's credit while not removing the State's protection. Mr. Bartholomew added, by removal of that language, the State's protection would not be removed when reaching a bankruptcy level or an IRS write off to be eligible. The credit continues to work and yet does have safety valves. Co-Chair Therriault MOVED to adopt Amendment #2. There being NO OBJECTION, it was adopted. Representative Grussendorf proposed and MOVED that a conceptual amendment be added stipulating that the bill have a five-year sunset clause. There being NO OBJECTION, the amendment was adopted. For the record, Representative Kohring voiced his opposition to the addition of the sunset clause. Representative Foster MOVED to report CS HB 239 (FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 239 (FIN) was reported out of Committee with "no recommendation" and with a fiscal note by the Department of Revenue. HOUSE BILL NO. 144 "An Act authorizing the Department of Environmental Conservation to charge certain fees relating to registration of pesticides and broadcast chemicals; and providing for an effective date." JANICE ADAIR, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH, DEPARTMENT OF ENVIRONMENTAL CONSERVATION (DEC), informed Committee members that the language referencing direct and indirect costs would limit the Department by charging only direct costs. The stipulation has been part of AS 44.60.025(a) since it was first adopted by the Legislature in 1990 in passage of HB 85. Direct versus Indirect Costs. Ms. Adair stated that in 1993, when the Legislature passed legislation establishing the comprehensive air program in the State (HB167), it included what is now AS 44.46.025(c), and allowed DEC to include in its air permit fees both direct and "indirect" costs. Adding the authority for "indirect" costs was necessary because AS 46.14.400(h), also a part of HB 167, prohibits the Department from delegating or enabling another department or government entity (i.e. municipalities) from establishing air permit fees or collecting them. Therefore, since the air fees established by DEC were intended to cover the costs of a municipality that might run the air permitting program rather than just the department's own costs of providing the service, the term "indirect" was added to give the necessary authority. Other Services Provided by the Department. Ms. Adair spoke to the language, which originated in AS 44.46.025(a)(1) relating to the food and public facility activities of DEC. The language was moved into the introductory paragraph of AS 44.46.025(a) as part of SB 99, which passed the Legislature in 1993. The language was moved in recognition of the fact that there are a number of other services the Department provides which directly benefit individuals. The Legislature wanted DEC to charge for those services. Ms. Adair noted, currently, the types of services charged for that are not included as part of an inspection, permit preparation, administration or plan review and approval include: ? Laboratory analyses of food products for export; ? Certification of seafood products for export; ? Certificates of Origin for seafood products for export; ? Sanitary surveys of public drinking water systems; ? Domestic wastewater installer certification; ? Dog and cat health certificates; ? Food Service facility recognition program (planned); ? Monitoring waivers for public drinking water systems; ? Determinations of whether or not a public water system is groundwater under the direct influence of surface water; ? Determination of optimal corrosion control for a public water system that exceeds the lead and copper action levels; ? Certified Pool and Spa operator training; ? Various other training opportunities as they arise and are needed. Ms. Adair continued, there are some services in the current statuary list for which the Department can charge fees that are not part of an inspection permit or plan approval. The proposed amendment to the introductory paragraph would make the Department's authority to charge a fee for those services highly questionable. This would create a problem of funding, not authority. In a program that is heavily reliant on fees, every hour of an employee's time must be charged to a project. The costs incurred by answering questions about a facility or permit have to be covered. The only way to do that is to charge the costs to the project because there are insufficient general funds to cover the costs. Water and Wastewater Operator Training. Ms. Adair noted that in this section, DEC specifies how to address the advisory board because they cover the training and certification of operators for certain public water and wastewater systems. The primary authority used for domestic wastewater certified installers program is found in AS 46.03.020(a)(10)(D). Prohibition on Hourly Fees. She noted that hourly fees are "tough" for the Department. The reason that they exist is that those who pay these fee have asked for them. Currently, the only fees on the books that would be affected by the prohibition are the solid waste fees. For the new industrial solid waste component, the prohibition would create a large problem since the Department was given direction by the Legislature, last session, to make that aspect of the solid waste program fully funded by fees. Reimbursement Agreements. Ms. Adair pointed out that the Department's ability to enter into these funding arrangements has been supported in previous testimony before the Committee. These arrangements are used for large development projects, primarily mines. They essentially pay the cost for DEC services. Ms. Adair thought that for site-specific determinations in the water quality program area, an hourly fee would be the fairest fee to establish. Pesticide registration. Ms. Adair continued that if the Department has fees strictly based on the cost to the Department to register a pesticide product, it would be approximately $100 dollars per label. However, the Department needs only to cover the match for the federal pesticide grant. If pesticides are not divided into categories, it would appear that a $50 dollar per label fee for all products would bring in enough money to provide the match. She recommended that a $50 dollar label might be too high, depending on how many of the 2,000-3,000 pesticides the market survey found being sold in the State. Ms. Adair pointed out that the distinction between a household pesticide and a non houseshold pesticide made in the bill is problematic for the Department. She added that if categories had to be divided, it would be much easier to determine between restricted use and non-restricted use pesticides. If these categories were to be delineated, it would become an administrative nightmare for the Department and the companies involved. Co-Chair Therriault asked how many chemicals registered in the State would fall under "restricted". Ms. Adair noted that it would be the smallest amount presented. She added that the Department's proposed number of 2,000 - 3,000 was based on a recently conducted market survey. She pointed out that Alaska does not have a lot of pesticides being used in comparison to other states. Most of the agriculture here is organic. She reiterated that the determination is problematic and is another reason why the Department would like to have the fee established in a regulatory process which matches the federal grant. Co-Chair Therriault commented that the proposed committee substitute would not preclude the Department from entering into the reimbursable service agreement. Ms. Adair noted that the proposed water fees are creating angst and that they have not gone out for public comment yet. She stated that many changes occur during the public comment process. Co-Chair Therriault asked if there was an appeal process available for those who want to challenge their permit application. Ms. Adair replied there is. Some cases have been more informal than others. The regulations are in the process of being amended. Co-Chair Therriault questioned if training Department personnel was included in the fees. Ms. Adair responded that the hourly fees only cover the actual personnel service costs plus a certain percentage of the common costs. The fees do not cover costs associated with travel or training. This requires a well-trained staff. Ms. Adair concluded her testimony. HB 144 was HELD in Committee for further consideration. (Tape Change HFC 98- 57, Side 2). HOUSE BILL NO. 16 "An Act relating to delinquent minors, to the taking of action based on the alleged criminal misconduct of certain minors, to the services to be provided to the victims of criminal misconduct of minors, and to agency records involving minors alleged to be delinquent based on their criminal misconduct; and amending Rule 19 and repealing Rules 6, 7, 11(a), 12(a), and 21(f), Alaska Delinquency Rules." Co-Chair Therriault questioned the fiscal impact of the legislation. THERESA TANOURY, ADMINISTRATOR, CHILD PROTECTION SERVICES, DIVISION OF FAMILY AND YOUTH SERVICES, DEPARTMENT OF HEALTH AND SOCIAL SERVICES, commented that there are two ways for a child to be placed in a locked facility. The first is if the child commits a delinquent act; the other is through the mental health commitment door if that child presents a danger to himself or others. She spoke to the situation of a child falling under the "Children needing aid Statutes". The Department has increasingly witnessed that group of kid's need the locked and more secured care. The Department supports Amendment out that many physicians across the State have recommended more locked and secure settings for these youth. Often times, youth need to be moved out of State for this level of care. Ms. Tanoury noted that Medicaid has changed the way the Department provides secure settings for these children. At present time, the average stay is 3 to 5 days. Amendment Division by broadening the definition so that residential care providers could be better utilized. KATHY CRONEN, (TESTIFIED VIA TELECONFERENCE), CEO, CHARTER NORTH STAR BEHAVIORAL HEALTH SYSTEM, ANCHORAGE, commented that the amendments proposed to HB 16 are critical in providing comprehensive treatment for this classification of youth in Alaska. Expanding the continuum of care by adding semi-secure and secure residential treatment centers will provide in-State treatment for youth. There is a large group of in-need youth that do not or cannot travel outside the State. These children's needs are attempted to be met by having multiple admissions to acute care inpatient psychiatric facilities. She stressed that this is not optimal clinical treatment and that in the long run, it is more expensive. Ms. Cronen advised that these children do not belong in acute care hospitals. Their symptoms or behavior cannot be adequately addressed in a 2-week period. They need long term treatment. A small group of children cannot safely be maintained in a semi-secure setting. The children may be sexual perpetrators, chronic runners, sniffers or haffers who have failed at or left the semi-secure program. She stressed that they need a locked facility. The secure residential psychiatric treatment center proposed in the amendment would be such a facility. Ms. Cronen emphasized that both the semi-secure and the secure facilities are vitally important pieces of the treatment continuum. BARBARA BRINK, (TESTIFIED VIA TELECONFERENCE), PROSECUTING ATTORNEY, DEPARTMENT OF LAW, FAIRBANKS, asked for more time to adequately digest the language proposed in Amendment #1. Co-Chair Hanley requested that Ms. Brink also address if the Department would be fiscally affected by adopting the proposed amendments. Representative J. Davies distributed Amendments #2 & #3. [Copies on file]. He stated that the amendments would provide options regarding fiscal obligations. Amendment #2 would remove all dual sentencing, thus reducing the fiscal impact. Amendment #3 would remove 13, 14 and 15 years olds from the effective dual sentencing, making the language more permissive. He believed that language in Amendment #3 would reduce the original bill's fiscal note by about $57 thousand dollars. Representative Kelly distributed Amendment #4. [Copy on file]. He noted that the amendment would repeal a drafting oversight. HB 16 was HELD in Committee for further consideration. ADJOURNMENT The meeting adjourned at 2:50 P.M. H.F.C. 10 3/06/98 p.m.