HOUSE FINANCE COMMITTEE April 19, 2000 2:00 P.M. TAPE HFC 00 - 127, Side 1 TAPE HFC 00 - 127, Side 2 TAPE HFC 00 - 128, Side 1 TAPE HFC 00 - 128, Side 2 TAPE HFC 00 - 129, Side 1 CALL TO ORDER Co-Chair Therriault called the House Finance Committee meeting to order at 2:00 p.m. PRESENT Co-Chair Mulder Co-Chair Therriault Representative Foster Vice Chair Bunde Representative Grussendorf Representative Austerman Representative Moses Representative J. Davies Representative Phillips Representative G. Davis Representative Williams ALSO PRESENT Senator Gary Wilken; Nanci Jones, Permanent Fund Division; Shirley Dean, Child Support Enforcement Division; Robert Buttcane, Department of Health and Social Services; Jane Demmert, Executive Director, Alaska Commission on Aging; Dick Bishop, Alaska Outdoor Council; Kara Moriarty, Staff, Senator Wilken; Mike Tibbles, Staff, Representative Therriault; Joe Dubler, Senior Finance Officer, Alaska Housing Finance Corporation (AHFC), Department of Revenue; Annalee McConnell, Director, Office of Management and Budget, Office of the Governor; Barbara Miklos, Director, Child Support Enforcement Division, Department of Revenue; Joe Balash, Staff, Representative Therriault; Kevin Brooks, Director, Division of Administrative Services, Department of Fish and Game; Bill Stolz. Staff, Senator Halford; John Bitney, Legislative Liaison, Alaska Housing Finance Corporation, Department of Revenue; Devon Mitchell, Executive Director, Alaska Municipal Bond Bank Authority, Department of Revenue; George Utermohle, Legal Counsel, Legislative Affairs Agency. TESTIFIED VIA TELECONFERENCE Monte Faye Lane, Fairbanks; Kevin Delaney, Department of Fish and Game; Stan Bloom, Fairbanks; Allen Barrette, Fairbanks; Lisa Harbo, Fairbanks; Mark Hem, Fairbanks; Greg Machacek, Fairbanks; Tom Scarborough, Fairbanks; Joseph Hart, AHTNA, Glennallen; Robert Buttcane, Department of Health and Social Services; Jon Sherwood, Kenai, Division of Medical Assistance, Department of Health and Social Services; Diane Wendlandt, Assistant Attorney General, Department of Law. SUMMARY HB 281 "An Act providing for the issuance of general obligation bonds in the amount of $665,000,000 for the purposes of paying the cost of design, construction, and renovation of public elementary and secondary schools, renovation of state buildings, capital improvements at the University of Alaska, and capital improvements to state harbors; and providing for an effective date." CSHB 281 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a "do pass" recommendation and with a new fiscal impact note by the Department of Revenue. HB 287 "An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date." CSHB 287 (FIN) was REPORTED out of Committee with a "do pass" recommendation. CSSB 4(FIN) "An Act relating to victims' rights; relating to establishing an office of victims' rights; relating to compensation of victims of violent crimes; relating to eligibility for a permanent fund dividend for persons convicted of and incarcerated for certain offenses; relating to notice of appropriations concerning victims' rights; and amending Rule 16, Alaska Rules of Criminal Procedure, Rule 9, Alaska Delinquency Rules, and Rule 501, Alaska Rules of Evidence; and providing for an effective date." CSSB 4(FIN) was heard and HELD in Committee for further consideration. CSSB 73(FIN) "An Act relating to assisted living homes; and providing for an effective date." CSSB 73(FIN) was heard and HELD in Committee for further consideration. CSSB 204 (FIN) "An Act extending the termination date of the Alaska Commission on Aging; and providing for an effective date." HCS CSSB 204 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a new fiscal impact note by the Department of Administration. SB 207 "An Act relating to the establishment and enforcement of medical support orders for children; and providing for an effective date." SB 207 was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Revenue, published 1/20/00. CSSB 301(FIN) "An Act relating to the Chitina dip net fishing permit; and providing for an effective date." HCS CSSB 301(FIN) was REPORTED out of Committee with a "do pass" recommendation and with a new fiscal impact note by the Department of Fish and Game. CS FOR SENATE BILL NO. 73(FIN) "An Act relating to assisted living homes; and providing for an effective date." MONTE FAYE LANE, FAIRBANKS testified via teleconference in support of SB 73. She noted that the situation is grave. Assisted living home providers are trying to survive financially and to stay in business. Care is given 24 hours a day. The hourly rate paid by the state is only $2 dollars an hour. The rate paid by the state is below the minimal wage and is not sufficient for financial survival. This results in a great number of persons housed in full nursing facilities. Co-Chair Therriault noted that the intent is to pass the legislation once funding for the fiscal note is resolved. CSSB 73 (FIN) was heard and HELD in Committee for further consideration. CS FOR SENATE BILL NO. 301(FIN) "An Act relating to the Chitina dip net fishing permit; and providing for an effective date." Co-Chair Therriault provided members with a proposed committee substitute, work draft 1-LS1516\S, dated 4/19/00 (copy on file). SENATOR WILKEN, SPONSOR testified in support of CSSB 301(FIN). The Chitina fishery is one of the largest in the state. Over 10,000 household permits are issued each year, with approximately 20,000 - 30,000 Alaskan residents participating. Last year approximately 118,000 salmon were harvested. In Dec. 1999, the Alaska Board of Fisheries reclassified the Chitina Personal Use fishery to a Subsistence fishery. The designation of the dip net fishery as subsistence will have little impact on the way the fishery is managed and has little to do with the need to secure public access and provide services. Regulations governing the Chitina Fishery require people to have a permit issued by the Department in their possession. This permit serves as the harvest record. AS 10.05.340 (a) (22) sets a fee for a "Chitina Personal Use Dip net Permit" at $10. This fee has been in place since 1990. Proceeds from this fee go the fish and game fund and have been used to pay Chitina & Ahtna Native Corporations for access across their lands and for outhouse and garbage services. An agreement between the Department of Fish and Game and the Corporations determines the percentage distribution and services. Senate Bill 301 amends the existing statute by renaming the "Chitina Personal Use Salmon Dip Net" fishing permit to the "Chitina Dip Net" fishing permit, and increases the permit fee from $10 to $25 dollars. It changes the name of the permit to remove the words "personal use", as it is no longer a "personal use" fishery. The legislation changes the fee to coincide with the new agreement reached between the Corporations and the Department of Fish and Game. This new agreement is intended to provide for maximum legal public access to the dip net fishery while minimizing conflicts between the private landowners and the fishermen at Chitina. The legislation was amended in the Senate to exempt senior citizens. Senator Wilken observed that private property owners are impacted by dip netters crossing their land to access the river. The legislation is an attempt to negotiate a settlement between corporations, private landowners and the state to resolve conflicts of private property and signs and fences. In 2000, dip netters will pay $25 for their permit. Since the fishery is now designated a subsistence fishery there is no requirement for a sport-fishing license to fish there. In 1999, people were required to have a $15 dollar sport fishing license and the $10 dollar Chitina permit, for a total expense of $25 dollars. Under this plan, only the proposed $25 dollar Chitina permit will be required. Since the Chitina permit is a household permit, families could save under this plan. For example a family of two adults paid a total of $40 dollars last year, this year it will only be $25 dollars. Services will be significantly increased and improved over past years. Access to the Native lands is more identified than in previous agreements. The process of obtaining the permit will be available from Department offices in Anchorage, Palmer, Fairbanks, Glennallen and Chitina. This will allow better service to the public, making it easier and faster to obtain the permit, and decreasing the management costs to the Department of Fish & Game. Without a change in the name of the permit, the Department is unable to collect a fee for the permit, because it is not a personal use fishery. Without the permit fee or other provisions, funding for services and access would be unavailable. It is uncertain what the Corporations would do with regard to affecting access to the river, but families going to Chitina this summer could be faced with the potential for conflict. Senator Wilkens noted that the legislation is supported by the Alaska Outdoor Council, Alaska Dip Netters Association, and the Fairbanks Fish and Game Advisory Committee. Vice Chair Bunde observed that the revenue collected by the Department of Fish and Game would be reduced. He pointed out that those that are not trespassing would still need permits. Senator Wilken responded that everyone has the opportunity to trespass. He emphasized that he would not have introduced the legislation if he didn't think that private land was being impacted. Boaters fish from the shore, which can be public or private. Representative J. Davies spoke in support of the legislation and stressed that there is a problem. Representative Phillips spoke in support of the legislation and stressed that there is a similar problem in Homer with hunting in the backcountry. STAN BLOOM, FAIRBANKS testified via teleconference in support of the legislation. He spoke in support of the intent language adopted by the Senate Finance Committee. He stressed that dip netters pay for their services. He observed that state funding is not available to pay for the services. He felt that the legislation would help to reduce conflicts. He pointed out that 30,000 dip netters impact land owned by Native corporations. Co-Chair Therriault clarified that Mr. Bloom supports the intent and findings included in the legislation. Mr. Bloom added that money should be appropriated for services. He added that the Department of Transportation and Public Facilities should be involved and included in the intent language. ALLEN BARRETTE, FAIRBANKS testified via teleconference in opposition to CSSB 301(FIN). He noted that the court ruled that there is a 300-foot easement to the river. There is a right-of-way provision included in state law. He maintained that there is plenty of public land available without trespassing. He expressed concern that the legislation would encourage other large property owners to negotiate trespassing taxs with the Department of Fish and Game. He noted that sportsmen and subsistence users use a state trail though his private property. He questioned if the Department of Fish and Game would collect a trespass fee for other areas. He asserted that other groups are not being charged an access fee. LISA HARBO, FAIRBANKS testified via teleconference in opposition to CSSB 301(FIN). She did not feel that she should pay an access fee to the state for fishing on the railroad right-of-way, which belongs to the state. She stressed that the state should establish where public access exists instead of requiring a fee. MARK HEM, FAIRBANKS testified via teleconference in opposition to the legislation. He pointed out that the Native Corporation is a conglomerate of landowners operating for profit. He suggested that money be set aside to survey the land and determine the problem. He acknowledged that there is no agreement and that there may be problems in Chitina, but emphasized that it is not a good reason to pass a law. He stressed that the state would be guilty of discrimination if it refused an access tax on other private land used to access state land. He noted that the fee was charged 10 years ago, but pointed out that the fishery has increased. He maintained that most people do not know that they are paying a trespass fee, but think they are paying a fishing permit. He asserted that there are objections to paying a fee to a private corporation. Co-Chair Therriault asked if Mr. Hem had seen the proposed committee substitute, which would provide funding to identify public lands within the Copper River Railroad right-of-way. Mr. Hem responded that he had reviewed the proposed committee substitute. He acknowledged that the proposal is a good attempt to try to reconcile something for the up coming year. He expressed concern that the state would give public money to survey private property. Co-Chair Therriault pointed out that when he surveyed his property that his neighbors also benefited. He stressed that the state's right-of-way is being surveyed. Mr. Hem noted that the corporations are putting forth the allegations of trespass. GREG MACHACEK, FAIRBANKS testified via teleconference in support of the legislation. He recommended that the problem be put to rest. He acknowledged that corporations may benefit from marking the right-of-way, but emphasized that it needs to be addressed. He felt that the fee was on the high end. He maintained that if the legislation does not pass that more people would access the fishery from boats. TOM SCARBOROUGH, FAIRBANKS testified via teleconference. He stressed that the Department of Transportation and Public Facilities is the manager of the right-of-way. He emphasized the need for a physical survey to establish the right-of- way. He felt that the Department of Natural Resources should manage the area as a state campground and that the Department of Fish and Game should manage the fishery. He did not think the legislation is a long-term solution. He estimated that it would take $100 thousand dollars to survey the land and recommended that the state purchase the land, He suggested a sunset clause. He questioned if the current Administration would address the situation. JOSEPH HART, ATTORNEY, AHTNA, GLENNALLEN testified via teleconference in support of the legislation. He noted that he represents the corporations that negotiated the agreement with the state. He pointed out that the mean high watermark has never been established. The private property owners provided the toilets that are present. He noted that other states require a fee for private property access. He observed that the agreement has been in place for more than ten years. He maintained that money should be put aside to pay for services. He noted that the Native Corporation pays people to pick up trash from those that are using their land to access the fishery. He observed that the corporation owns the land beneath the right-of-way. He maintained that the land is not for sale or trade. (TAPE CHANGE, HFC 00 - 127, SIDE 2) In response to a question by Co-Chair Therriault, Mr. Hart acknowledged that it would be good to establish the right- of-way. He felt that establishment of the right-of-way would strengthen their arguments that the public is going outside the right-of-way. He maintained that there are safety concerns with parking. The original fee request was $25 dollars and would make public money available for services. Representative Austerman pointed out that other private landowners establish and collect their own fees. Mr. Hart responded that the Department of Fish and Game agreed to work with private landowners and the public to collect fees. JOE BALASH, STAFF, REPRESENTATIVE THERRIAULT provided information on the legislation. He explained that the Department of Natural Resources was included since they manage state land. There was not a conscious decision to exclude the Department of Transportation and Public Facilities. Co-Chair Therriault suggested that the Department of Transportation and Public Facilities be included. He pointed out that the Corporation technically owns all the land within the right-of-way. DICK BISHOP, VICE-PRESIDENT, ALASKA OUTDOOR COUNCIL (AOC) testified in support of the legislation. He observed that the intent language reflects concerns and maintained that it is appropriate. The legislation is essential to allow people to fish in the coming summer. A long-term solution would still be needed. He agreed that the Department of Transportation and Public Facilities would need to be consulted. He pointed out that the intent is to assure that the fishery can begin at the start of the season. He acknowledged that not all of the members agree with the Council's position. Representative Austerman questioned if the state should be responsible for the collection of fees charged by other private property owners that imposed an access fee for hunting. Mr. Bishop responded that the ideal situation would be for the private landowner to take responsibility for the collection of fees. He stressed that it is not possible to address the issue in the context of the bill. He added the issue should not preclude resolution that would allow dip netters to have access in the current season. Vice Chair Bunde observed that a sport fishing license fee cannot be assessed, since it is no longer a sport fishery. He felt that there should be some cost associated with the use of the resource. He noted that the state would retain $7 dollars of each trespass fee that it collects. He questioned the financial impact on the Department of Fish and Game. KEVIN BROOKS, DIRECTOR, DIVISION OF ADMINISTRATIVE SERVICES, DEPARTMENT OF FISH AND GAME acknowledged that the change in designation has created problems. The entire amount would come to the state. The state would pay the corporations $18 dollars of the $25 dollar fee. The department will work to maintain efforts to manage the fishery. He noted that the legislation would be a solution for the upcoming season, while they continue to work on a long-term solution. Vice Chair Bunde questioned the cost of collecting the fee and stated that he would like to see the activity pay for itself. Mr. Brooks responded that the $7 dollars would cover the provision of services that have been described, such as bathrooms. The management cost would be born by the department. He noted that cost would not be under the Division of Sport Fish. He observed that it would be hard to quantify the cost of the collection because there is already an ongoing effort. He stressed that the fee is to cover access. In response to a question by Representative Austerman, Mr. Brooks confirmed that a portion of the $10 fee that was charged before it became a subsistence fishery covered access fees to the private landowner. Representative Austerman asked if there is a regulation to institute an agreement between the landowners and the fees that were collected. Mr. Brook responded that the department has statutory authority to enter into cooperative agreements under Title 16. He noted discussions are occurring regarding the collection of fees. Co-Chair Therriault amended the proposed committee substitute to read: Department of Natural Resources and the Department of Transportation and Public Facilities to identify the portion of the Copper River Railroad right-of- way, associated with the Chitina dip net fishery, to carry out this intent. There being NO OBJECTION, it was so ordered. Co-Chair Mulder MOVED to ADOPT work draft 1-LS1516\S, dated 4/19/00 as amended. There being NO OBJECTION, it was so ordered. Senator Wilken expressed his appreciation for the amendments to the legislation, but questioned if the change from a 5- year to a 3-year negotiated agreement would be of concern to the Department of Fish and Game. Representative J. Davies suggested that the sunset be on June 1, 2001. Co-Chair Therriault noted that there is a contract for the current year and that the next negotiation would be for three years. Senator Wilken noted that the legislation only fixes the fee. Negotiations on the agreement can occur without changing the fee or requiring additional legislation. Representative J. Davies responded that the sunset date would require the legislature to review the issues. Representative J. Davies MOVED to ADOPT a sunset date of on June 1, 2001. Co-Chair Mulder OBJECTED. KARA MORIARTY, STAFF, SENATOR WILKEN explained that the department expressed concern that a sunset would be detrimental to negotiations. Representative J. Davies WITHDREW his motion. Representative Austerman questioned the fee structure. Mr. Brooks explained that there would be a new fiscal note of $150 thousand dollars in contractual: $130 fish and game funds and $20 general funds from the senior exemption. Representative Austerman observed that the legislation specifies that the survey would be paid from the fee collected. Mr. Brooks noted that there is $100 thousand dollars from the $10 dollar that was collected. Co-Chair Therriault observed that the cost of the survey would be negotiated; it would not preclude the department from requesting general fund support from a future legislature. Mr. Brooks clarified that the revenue estimate is based on 10,000 permits resulting at $150 thousand dollars. This money would be fully allocated for the current year. Co-Chair Mulder MOVED to report HCS CSSB 301 (FIN) out of Committee with the accompanying fiscal note. Representative J. Davies OBJECTED for the purpose of discussion. Mr. Brooks explained that the amount collected, which goes to the department is the existing $100 thousand dollars. Co-Chair Therriault noted that there is enough authorization to reflect the portion of the money that is retained by the department. Representative Austerman noted that the survey would not be done until the next year. There being NO OBJECTION, it was so ordered. HCS CSSB 301(FIN) was REPORTED out of Committee with a "do pass" recommendation and with a new fiscal impact note by the Department of Fish and Game. CS FOR SENATE BILL NO. 4(FIN) "An Act relating to victims' rights; relating to establishing an office of victims' rights; relating to compensation of victims of violent crimes; relating to eligibility for a permanent fund dividend for persons convicted of and incarcerated for certain offenses; relating to notice of appropriations concerning victims' rights; and amending Rule 16, Alaska Rules of Criminal Procedure, Rule 9, Alaska Delinquency Rules, and Rule 501, Alaska Rules of Evidence; and providing for an effective date." Co-Chair Therriault provided members with a proposed committee substitute, work draft 1-LS0029\S, dated 4/19/00 (copy on file). BILL STOLZ. STAFF, SENATOR HALFORD spoke in support of the legislation on behalf of the sponsor. He noted that the primary purpose of the legislation was to fill the mandate of the victim's right constitutional amendment that was enacted in 1994. The legislation would create an Office of Victim's Rights, which would have an advocate with powers to help facilitate the constitutional rights of victims. The legislation creates a funding mechanism by increasing the pool of incarcerated persons that would be ineligible for permanent fund dividends. The Office was placed in the legislative branch in order to avoid conflicts with other agencies. Victims for Justice support the legislation. MIKE TIBBLES, STAFF, REPRESENTATIVE THERRIAULT provided information on the proposed committee substitute. He noted that there were two changes in the proposed committee substitute. The first change addresses the concern of increasing the size of government. The victims' advocate shall appoint a person to serve as acting victims' advocate in the absence of the victims' advocate. The victims' advocate shall also appoint assistants and clerical personnel necessary to carry out the provisions of this chapter. Subject to AS 36.30.020 and subject to the approval of the Alaska Legislative Council, the victims' advocate shall, to the maximum extent practicable, conduct the duties and work of the office by entering into personal services and other contracts the victims' advocate finds necessary to carry out the provisions of this chapter. Co-Chair Therriault observed that there are portions of the work that could not be contracted out with a private non- profit organization. He clarified that it is not the intent that the entire portion be contracted. Representative Phillips observed that she had not seen the issue before the Legislative Council. Mr. Tibbles explained that contracting is under the competitive process set up by for the Legislative Council. The Legislative Council would be requested to review the contracts. Representative Phillips tried to clarify that the Legislative Council would not be taking the job of victims' rights under its umbrella and that the Council would only be responsible for letting out the contract. Mr. Tibbles noted that the effective date was changed to July 1, 2002. This would allow receipts to be collected before the Office is created. Vice Chair Bunde MOVED to ADOPT work draft 1-LS0029\S, dated 4/19/00. There being NO OBJECTION, it was so ordered. Co-Chair Therriault noted that updated fiscal notes were needed. Representative Phillips noted that the authority was originally under the Department of Corrections. She questioned why it was transferred to the Legislative Council. Mr. Stolz did not know why the authority was transferred but guessed that the intent was to avoid conflicts. Representative Grussendorf observed that the Department of Corrections is required to notify the victim every time certain things happen and questioned if the authority is being removed too far. He asked where the office would be located. Co-Chair Therriault noted that the entity would be located within the legislative branch. Mr. Stolz pointed out that section 10 of the public notice section was amended to conform to section 9. Representative J. Davies observed that "traditionally", ombudsmen are located in the legislative branch since they are checking up on the administrative branch. (TAPE CHANGE, HFC 00 - 128, SIDE 1) Representative Phillips observed that the Legislative Council had not discussed the transfer of authority. She requested that the proposed committee substitute be held. Mr. Stolz pointed out that similar legislation (SB 219, 1998) and the original bill did provide for the ombudsman authority to be under the legislative branch. The Legislative Affairs Agency has previously submitted fiscal notes. ROBERT BUTTCANE, DIVISION OF JUVINELLE JUSTICE, DEPARTMENT OF HEALTH AND SOCIAL SERVICES provided information regarding the legislation. He expressed appreciation for the participation of victims. He observed that victims help to hold juvenile offenders accountable for their actions and have helped reduce recidivism. He noted that portions of SB 4 would add victims' services. He expressed concern that the legislation would create an "entity to watch the doers of service, provide services to victims." He suggested that agencies that work directly with victims be given additional resources to do more of what they are mandated to do under the Constitution. He acknowledged that the legislation is part of the movement toward restorative justice. In response to a question by Representative Grussendorf, Mr. Buttcane noted that in the juvenile system, victims are notified of proceedings of delinquency hearings. Victims are provided an opportunity to give statements to the court for juvenile delinquency dispositions. Victims advocacy groups help arrange victim/offender mediation in the informal process. Victims are notified when juveniles are being released from youth facilities. Victims are also given access to the criminal justice system: notification and opportunities to be present at sentencing. Representative Grussendorf questioned what would be the role of the paralegals and ombudsman mandated by the legislation. Mr. Buttcane observed that victims sometimes hesitate to participate in the system and felt that an advocate would give victims support and help them to take a more active role in the juvenile and criminal justice processes. He felt that one of the drawbacks would be that the ombudsman would highlight deficiencies in the Department of Health and Social Services' ability to do all that they are asked to do through negligence or inadequate resources. There is a civil penalty that could result in punitive action against an individual or agency. The Department of Health and Social Services felt that the civil penalty would be problematic. He stressed the need for more resources and front line services and questioned the need for an ombudsman. ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW noted that she had not had time to look at the committee substitute. She echoed the comments made by Mr. Buttcane. She stated that there are some concerns that resources would be spent on an ombudsman level of services rather than on direct services to victims that are already given by other agencies. She observed that legislation sponsored by Representative Dyson would provide a provision for negotiated pleads between defendants and victims. She stressed that if this legislation were enacted into law an ombudsman would be kept busy negotiating pleas on behalf of victims. She noted concern with the potential level of increased work considering the level of funding accompanying the legislation. Representative Phillips noted that the responsibilities of the Legislative Council go beyond negotiating the contract. She observed that the legislation states that: (a) Subject to restrictions and limitations imposed by the executive director of the Legislative Affairs Agency, the administrative facilities and services of the Legislative Affairs Agency, including computer, data processing, and teleconference facilities, may be made available to the victims' advocate to be used in the management of the office of victims' rights and to carry out the purposes of this chapter. (b) The salary and benefits of the victims' advocate and the permanent staff of the victims' advocate shall be paid through the same procedures used for payment of the salaries and benefits of other permanent legislative employees. (c) The victims' advocate shall submit a budget for each fiscal year to the Alaska Legislative Council, and the Council shall annually submit an estimated budget to the governor for information purposes in the preparation of the executive budget. After reviewing and approving, with or without modifications, the budget submitted by the victims' advocate, the Council shall submit the approved budget to the finance committees of the legislature. Representative Phillips concluded that an agency is being created. SB 4 was heard and HELD in Committee for further consideration. HOUSE CS FOR SENATE BILL NO. 204(HES) "An Act extending the termination date of the Alaska Commission on Aging; transferring the office of the long-term care ombudsman from the Alaska Commission on Aging to the legislative branch; and providing for an effective date." JANE DEMMERT, EXECUTIVE DIRECTOR, ALASKA COMMISSION ON AGING, provided information on SB 204. She observed that the bill would extend the sunset on the Commission. The Commission is in a role that directly impacts the lives the older Alaskans around the state through its grant programs. The Commission assists in funding direct services. She observed that discussion has occurred regarding the organizational out-stationing of the long-term care function. She noted that the Commission looked at out- stationing options during the interim in consultation with four different agencies: State Ombudsman, Alaska Mental Health Trust Authority, Disability Law Center and Alaska Legal Services. Given the youth of Alaska's assisted living industry and rapid growth in developing long-term care, the Commission concluded that it would have a higher level of status within state government. The State Ombudsman Office concluded that it would not be in the best interest of persons with concerns regarding the performance of state government to have the two offices merged. The Alaska Mental Health Trust Authority was not ready to assume the responsibility, but has remained interested and involved in the Search Committee. The Commission has restructured its bylaws to provide a clear definition of the role of the Commission in interfacing with the Ombudsman Office. The Commission feels that it has crafted a healthy and responsive approach to support that function. She acknowledged that there are merits to a transfer. Representative Grussendorf asked if the Commission would be satisfied with an extension of time to allow further discussions. Ms. Demmert responded that the Commission would be satisfied with a time extension. Representative Phillips pointed out that the legislation passed from the Senate Finance Committee only contained the provision to extend the sunset date. On the House side, there was an amendment to place it under the Legislative Council. She noted that the Legislative Council was not consulted. No research was done regarding cost. An audit of the issue concluded several options. She observed that a long-term care task force would consider the issue during the interim and recommended that the ombudsman be placed under the Alaska Mental Health Trust Authority for the meantime. She maintained that the long-term ombudsman would not be properly placed in Legislative Council. Representative J. Davies agreed that the issue should be discussed further. He felt that it might be appropriately placed under the Legislative Council with more consideration. SHARON CLARKE, STAFF, SENATOR MIKE MILLER, mentioned that the sponsor's intent was solely to extend the Commission on Aging. The discussion on the ombudsman was added at the direction of another senator. She clarified that the intent was not to place it under the Legislative Council: the Legislative Council was only one of the options. Representative Phillips clarified that the amendment did not come from Senator Mike Miller. Ms. Clarke acknowledged that the discussion did come up with Senator Miller. It was not acted upon. In response to Vice Chair Bunde, Ms. Clarke explained that discussions in the Senate Finance Committee indicated that the long-term care task force could address the issue. Vice Chair Bunde asked if there was a letter of intent. Representative Phillips MOVED to adopt Amendment #1. Amendment 1 would remove language relating to the Long-term Care Ombudsman from the legislation. The legislation would be returned to its original language, with an effective date of June 30, 2000. The sunset date would be the year 2004. There being NO OBJECTION, Amendment 1 was adopted. Vice Chair Bunde MOVED a Letter of Intent that would ask that the Long-term Care Task Force address the placement of the ombudsman. There being NO OBJECTION, it was so ordered. MIKE TIBBLES, STAFF, CO-CHAIR THERRIAULT observed that with the adoption of Amendment 1 the title change resolution was not needed. Representative G. Davis asked the impact of the amendment on the fiscal note. Mr. Tibbles replied that the long-term care ombudsman portion of the fiscal note was $138.0 thousand dollars. The RSA or interagency receipt to the legislation would not be needed with the adoption of the amendment. Representative J. Davies recommended that there should be a revised fiscal note. Mr. Tibbles reported that there would be a new analysis. Representative Williams MOVED to report HCS CS SB 204 (FIN) out of Committee with individual recommendations and with the new fiscal note. There being NO OBJECTION, it was so ordered. HCS CSSB 204 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a new fiscal impact note by the Department of Administration. SENATE BILL NO. 207 "An Act relating to the establishment and enforcement of medical support orders for children; and providing for an effective date." BARBARA MIKLOS, CHILD SUPPORT ENFORCEMENT DIVISION testified via teleconference in support of SB 207. Senate Bill 207 helps both parents by providing more flexibility in child support cases. It gives the parents a choice by allowing the Child Support Enforcement Division to establish a medical support order without also establishing a financial support order at the same time. The child support agency is currently required to establish a medical support order whenever a child starts receiving medical assistance benefits. This is to ensure that the non-custodial parent provides health care coverage if available at a reasonable cost from his or her employer. Under existing statute, the agency must also establish a financial order at the same time -- even though the parents may not want or need a financial order. This creates problems if the financial order for monthly child support payments is not needed, and it also creates problems if the custodial parent later receives public assistance benefits and the child support agency has to go back and collect financial support. This legislation would solve both problems by allowing the agency to set up a medical support order only -- if that is what both parents want. This bill also amends the medical support statutes to provide that either parent, not simply the non- custodial parent, may be required to provide health care coverage. This allows the court or the child support agency to consider which parent has the better or more cost-effective health care coverage available for the child. The bill also amends state law to clarify that a medical support order shall be issued regardless whether CSED knows at the time if health care coverage is available to either parent. That provision, however, would not take effect unless one or both of the parents has health insurance available at a reasonable cost. This allows more efficient enforcement of medical support for children. In a survey of other states, most have separate provisions for medical and financial orders as proposed in SB 207. This change in Alaska statutes is allowed under federal law and regulations. Representative J. Davies questioned if the legislation allows for the possibility that both parents be required to provide medical insurance. DIANE WENDLANDT, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW testified via teleconference. She affirmed that the legislation allows for the possibility that both parents be required to provide medical insurance. She noted that courts could require both parents to provide coverage. One parent's coverage may not cover everything that the other parent has. Representative Foster MOVED to report SB 207 out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. SB 207 was REPORTED out of Committee with a "do pass" recommendation and with a zero fiscal note by the Department of Revenue, published 1/20/00. RECESSED The meeting was recessed at 4:10 p.m. RECONVENED The meeting reconvened at 4:50 p.m. HOUSE BILL NO. 281 "An Act providing for the issuance of general obligation bonds in the amount of $665,000,000 for the purposes of paying the cost of design, construction, and renovation of public elementary and secondary schools, renovation of state buildings, capital improvements at the University of Alaska, and capital improvements to state harbors; and providing for an effective date." Co-Chair Mulder provided members with a proposed committee substitute 1-LS1201\T, 4/19/00 (copy on file). Vice Chair Bunde MOVED to ADOPT 1-LS1201\T, 4/19/00. There being NO OBJECTION, it was so ordered. Co-Chair Mulder noted that there was a questioned concerning dedicated revenue in relation to the securitization of the tobacco bonds. JOHN BITNEY, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE CORPORATION, DEPARTMENT OF REVENUE provided members with a letter from the AHFC's bond counsel (copy on file). He concluded that the bond counsel had no concerns regarding the dedication of the revenue. The bill is an authorization of the tobacco settlement, as a sale of an asset of the state to the Alaska Housing Finance Corporation (AHFC) or a subsidiary. Co-Chair Mulder observed that the bond counsel stated that they do not believe that the legislation would create a dedicated fund problem under Article IX, section 7 of the Alaska Constitution. Co-Chair Mulder reviewed the committee substitute. He noted that the first change was in title, lines 5 and 6. The new language clarifies that the legislation relates "to the deposit of certain anticipated revenue from a certain tobacco litigation settlement". Page 2, lines 6 - 9 and clarifies what happens if there is excess revenues: It is also the intent of the legislature that tobacco settlement revenues that are determined by the commissioner of revenue to be in excess of those needed to pay planned debt service on tobacco bonds be deposited into the general fund. "Annually" and a definition of "investment grade rates" were added in section 3: In this subsection, "investment grade rates" means a Moody's Investor Service rating of Baa3 or better or a Standard and Poors and Fitch IBCA rating of BBB- or better. Deferred maintenance, renewal and replacement, and code compliance projects for the University of Alaska were added on page 5. Co-Chair Mulder observed that exemptions from certain school construction requirements were deleted (sections 5, 6 and 7). Co-Chair Mulder explained that language was included on page 7, stipulating that funds be received by the Department of Transportation and Public Facilities. (1) the port or harbor facility is located in a municipality in which the port or harbor facility is owned and operated by the municipality; (2) ownership of the port or harbor facility that is being funded has been transferred from the state to the municipality by a transfer agreement under AS 35.10.120; and (3) the state completes a bill of sale transferring the port or harbor facility from the state to the municipality. In response to a question by Representative Williams, Co- Chair Mulder noted that the Department of Transportation and Public Facilities desired flexibility. Allocations for each project were based on estimates by the department. Representative Grussendorf noted that the proposal runs on the Department of Education and Early Development priority list. The first five projects are included. He questioned the process of including projects that were not in sequence on the list. Co-Chair Mulder responded that the top five schools were taken first. Other projects were included in an attempt to provide a balance of statewide projects. Representative Grussendorf suggested that the top ten schools on the Department of Education and Early Development's list be included with deferred maintenance projects. Other funding sources could be considered for ports, harbors, and university capital projects. He added that if the legislation were to be the vehicle to fund harbors and the money was to be given to the Department of Transportation and Public Facilities that Sitka should be on the list. Co-Chair Mulder explained that the reason that they did not go straight down the list was due to the question of some district's ability to participate on the list. He noted that Anchorage only participates on the school construction list in a minor fashion. There are a number of school districts in the railbelt that do not participate on the department's list. (TAPE CHANGE, HFC 00 - 128, SIDE 2) Representative Grussendorf questioned why the Sitka harbor was not on the list. Co-Chair Mulder responded that the scarcity of dollars did not allow the inclusion of Sitka harbor project. Representative Grussendorf stated his intent to included Sitka to be worked within the money that is allocated for harbors. ANNALEE MCCONNELL, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR provided information. She observed that the changes made in section 3 are agreeable to the Administration. She hoped to have intent language clarifying that if the revenue stream exceeds projections that at least 1.6 percent of the excess would be considered for increasing tobacco cessation efforts. She observed that the suspension of the Department of Education and Early Development priority list needs to be removed since it is not a three-year plan. The Administration still has concerns about the projects. There are more school construction and major maintenance projects that should be funded now. Co-Chair Mulder questioned what would happen if the money were not received as projected. Ms. McConnell responded that the debt service would be longer than projected. DEVON MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND BANK AUTHORITY, DEPARTMENT OF REVENUE provided information on the legislation. He explained that the debt service would be a percentage of the expected revenue projected for the tobacco settlement monies overtime that would allow investor confidence. A threshold would be established to reach a revenue stream projection. There would be a residual above this line, which would be available for other purposes if the revenue stream were beyond the projection. Mr. Mitchell explained that AHFC is confident that they could reach the proceeds as being structured. JOE DUBLER, SENIOR FINANCE OFFICER, ALASKA HOUSING FINANCE CORPORATION (AHFC), DEPARTMENT OF REVENUE provided information on the issuance. He observed that if there were not $269 million dollars at issuance that the rest of the state's GO could be utilized to make up the deficit. Other financing methods could be employed. The residual after the planned debt service could impact the amount of bonds issued. He noted that some underwriters feel that bondholders are getting skittish. Co-Chair Mulder questioned if lines 7 - 9 should be deleted from the legislation Mr. Mitchell clarified that the sale will do what is required to achieve the target. The language provides flexibility. Mr. Dubler added that the language is needed in the case of a windfall. Co-Chair Mulder noted that the anticipated yield is $269 million dollars. The legislation allocates $269,795,987 dollars. Mr. Dubler stated that the allocation amount is not a concern. Mr. McConnell suggested the numbers should be the same. In response to a question by Representative G. Davis, Mr. Bitney explained that they would set up an administrative process for the projects. The appropriation would be the mechanism to receive funds. Funds would be available as the projects come on line. Representative G. Davis questioned if the project was delayed and not ready in 5 years, would the money be available. Mr. Bitney explained that the appropriation is the mechanism that transfers the funds and that the same rules apply as for other state capital projects. They would have to receive a reappropriation or lapse extension if the money is not spent. Co-Chair Therriault observed that the structure doesn't allow as much flexibility as before. Co-Chair Mulder asked how much elasticity is in the amount. Mr. Mitchell stated that he would not know how much elasticity would be in the bond amount until they go out into the market. HB 281 was heard and HELD in Committee for further consideration. RECESSED The meeting was recessed at 5:25 p.m. RECONVENED The meeting reconvened at 7:40 p.m. HOUSE BILL NO. 287 "An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date." Co-Chair Mulder pointed out that HB 287 only takes effect if HB 281 or something similar is passed. Co-Chair Therriault questioned if there is language that restricts authorization of projects if HB 281 passes but the bonds are not sold. Mr. Bitney explained that the authorizations are in the same manner as authorization for federal appropriations. They would be based on receipt of the proceeds of the sale. Co-Chair Therriault questioned if the language would require that bonds be issued by AHFC. Mr. Dubler suggested the language be clarified by adding "bonds issued under HB 281". Representative J. Davies pointed out that section 3 identifies bonds. Mr. Bitney noted that the legislation refers to bonds authorized under the act in section 3. Representative J. Davies noted that clarification would be needed on page 1, line 7 and page 3, line 13 and 31. Co-Chair Mulder questioned if the language should be added to the effect that the "proceeds of the bonds issued by AFHC are those bonds authorized under section 3", so that AHFC would not be required to issue bonds if the tobacco bond issuance failed. GEORGE UTERMOHLE, LEGAL COUNSEL, LEGISLATIVE AFFAIRS AGENCY pointed out that section 3 does not authorize the issuance of any bonds. Co-Chair Therriault suggested that the "bonds referenced in section 3" be added. Mr. Utermohle agreed with Co-Chair Therriault's suggestion. Mr. Utemohle explained that section 3 provides that the bill does not take effect if the contingency is not met. Section 4 provides that if the contingency is met that the legislation takes effects July 1, 2000. If the contingency were met after July 1, 2000 then the effective date would be immediate. Co-Chair Therriault reiterated his concerns. He suggested the addition of "proceeds of the bonds referenced in section 3 of this act." Mr. Utemohle agreed that the suggested language would tie the appropriations to the bonds issued by AHFC and described in section 3. Co-Chair Mulder provided members with a proposed committee substitute 1-GH2043|G, 4/19/00 (copy on file). Co-Chair Therriault MOVED to ADOPT 1-GH2043|G, 4/19/00. There being NO OBJECTION, it was so ordered. Co-Chair Therriault MOVED to ADOPT Amendment 1 add "referenced by section 3 of this act" after "proceeds of the bonds." There being NO OBJECTION, it was so ordered. HB 287 was heard and HELD in Committee for further consideration. HOUSE BILL NO. 281 "An Act providing for the issuance of general obligation bonds in the amount of $665,000,000 for the purposes of paying the cost of design, construction, and renovation of public elementary and secondary schools, renovation of state buildings, capital improvements at the University of Alaska, and capital improvements to state harbors; and providing for an effective date." Representative J. Davies MOVED to ADOPT Amendment 1. Amendment 1 would authorize the first 10 projects on the Department of Education and Early Development list for $153,914.5 million dollars and major maintenance of $64,881.3 million dollars. This would cover the entire major maintenance list except for projects covered under school debt reimbursement for a 70/30 bond authorization. The amendment would also fund $50.9 million dollars for the University of Alaska. Co-Chair Mulder OBJECTED. He pointed out that it is necessary to balance the capital program. He maintained that Amendment 1 would shift the balance in favor of rural Alaska. Representative J. Davies acknowledged that the amendment would not provide a balance in relation to legislative districts but argued that it would be fair. The amendment would take the top priorities as determined by the department and major maintenance projects. He pointed out that major maintenance would become construction projects if it were not addressed. Representative J. Davies suggested that there are other vehicles to achieve balance and fund ports, harbors and school debt reimbursement. He stressed that important projects fall by the wayside. Co-Chair Mulder noted his appreciation for the amendment, but stressed that he is bound by constraints of balance. He pointed out that Fairbanks would only receive $8 million dollars under the amendment. Representative Grussendorf stated that he would prefer that the money be in one category: education. He spoke in support of the amendment and the importance of funding the top 10 schools for construction on the department's list and as much maintenance as possible. Co-Chair Therriault spoke in opposition to the amendment. Fairbanks has projects that are not on the list because they discontinued submitting the paper work for inclusion. Vice Chair Bunde spoke in opposition. Representative J. Davies agreed that Fairbanks has a need for new schools and school maintenance projects. (TAPE CHANGE, HFC 00 - 129, SIDE 1) Representative J. Davies noted that there are a huge number of urban schools that are on the list that have to go for voter approval. He suggested that these projects stick with the 70/30 plan. Representative Grussendorf noted that he has statewide concerns. He pointed out that the courts have recognized that there is problem with how money is being spent. Representative G. Davis opposed the amendment. He stressed that it is better to have something instead of nothing. Representative Williams spoke against the amendment. Representative J. Davies observed that this was the first chance for amendments. A roll call vote was taken on the motion to adopt Amendment 1. IN FAVOR: Davies, Grussendorf, Moses OPPOSED: Austerman, Bunde, Davis, Foster, Kohring, Williams, Therriault, Mulder The MOTION FAILED (4-8). Representative Foster MOVED to report CSHB 281 (FIN) out of Committee with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 281 (FIN) was REPORTED out of Committee with a "do pass" recommendation and with a "do pass" recommendation and with a new fiscal impact note by the Department of Revenue. HOUSE BILL NO. 287 "An Act making and amending capital appropriations and reappropriations and capitalizing funds; and providing for an effective date." Representative Foster MOVED to report CSHB 287 (FIN) out of Committee. There being NO OBJECTION, it was so ordered. CSHB 287 (FIN) was REPORTED out of Committee with a "do pass" recommendation. ADJOURNMENT The meeting was adjourned at 7:20 p.m. House Finance Committee 25