HOUSE FINANCE COMMITTEE April 7, 2008 2:53 p.m. CALL TO ORDER Co-Chair Meyer called the House Finance Committee meeting to order at 2:53:18 PM. MEMBERS PRESENT Representative Mike Chenault, Co-Chair Representative Kevin Meyer, Co-Chair Representative Bill Stoltze, Vice-Chair Representative Harry Crawford Representative Les Gara Representative Mike Hawker Representative Reggie Joule Representative Mike Kelly Representative Mary Nelson Representative Bill Thomas Jr. MEMBERS ABSENT Representative Richard Foster ALSO PRESENT Senator Johnny Ellis; Max Hensley, Staff, Senator Johnny Ellis; Suzanne Armstrong, Staff, Co-Chair Meyer; Pam Finley, Revisor, Legislative Affairs Agency; Senator Gary Stevens; Tim Lamkin, Staff, Senator Gary Stevens; Eddy Jeans, Director, School Finance, Department of Education and Early Development; Senator Bill Wielechowski; Lauren Rice, Legislative Liaison, Department of Public Safety; Anne Carpeneti, Assistant Attorney General, Legal Services Section-Juneau, Criminal Division, Department of Law. PRESENT VIA TELECONFERENCE None. SUMMARY CS SB 185(STA)(title am) An Act relating to the central registry of sex offenders and child kidnappers and to the registration requirements for sex offenders and child kidnappers; and providing for an effective date. CS SB 185(STA)(title am) was HEARD and HELD in Committee for further consideration. CS SB 221(FIN) am An Act making and amending appropriations, including capital appropriations, supplemental appropriations, and appropriations to capitalize funds; and providing for an effective date. CS SB 221(FIN) was SCHEDULED but not HEARD. CS SS SB 230(FIN) am An Act establishing the film office in the Department of Commerce, Community, and Economic Development; creating a transferable tax credit applicable to certain film production expenditures incurred in the state; and providing for an effective date. HCS CS SS SB 230(FIN) was REPORTED out of Committee with a "do pass" recommendation and with zero fiscal note #3 by the Department of Revenue and fiscal note #4 by the Department of Commerce, Community and Economic Development. CS SB 260(STA) An Act making corrective amendments to the Alaska Statutes as recommended by the revisor of statutes; and providing for an effective date. HCS CS SB 260(FIN) was REPORTED out of Committee with a "do pass" recommendation and with attached zero fiscal note #1 by Legislative Affairs Agency. CS SB 265(FIN) An Act relating to the payment of permanent fund dividends to certain individuals required to register as sex offenders or child kidnappers; relating to execution upon permanent fund dividends by civilian process servers using electronic procedures; amending Rule 89, Alaska Rules of Civil Procedure; and providing for an effective date. CS SB 265(FIN) was SCHEDULED but not HEARD. CS SB 285(FIN) An Act relating to the power and duties of the Department of Education and Early Development for improving instructional practices in school districts; and providing for an effective date. HCS CSSB 285(HES) was REPORTED out of Committee with a "do pass" recommendation and with attached fiscal note #1 by the Department of Education and Early Development and Senate Letter of Intent. SB 304 An Act authorizing an Alaska regional development organization to use the Alaska Commercial Fisheries Entry Commission as an informational resource. SB 304 was POSTPONED. CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 230(FIN) am An Act establishing the film office in the Department of Commerce, Community, and Economic Development; creating a transferable tax credit applicable to certain film production expenditures incurred in the state; and providing for an effective date. Representative Hawker MOVED Amendment #3 (Copy on File): Page 2, line 8, following "exceed" Delete "$150,000,000" Insert "$50,000,000" Page 4, line 19, following "equal to" Delete "30 Insert "20" Page 9, line 11, following "equals" (lines 17, 23 to conform to CS) Delete "$150,000,000" Insert "$50,000,000" Vice-Chair Stoltze OBJECTED for discussion. 2:54:20 PM Representative Hawker described the Amendment as reducing the rate of the authorized state subsidy. There was a discussion regarding the efficacy of putting a cap on the subsidies. SENATOR JOHNNY ELLIS, SPONSOR, reiterated his concerns regarding the Amendment. He thought the limits already built into the legislation, the overall limit of $150 million, the annual review and the five year sunset, were sufficient. The limits were calibrated in consultation with the film industry and he did not think the program would be competitive if adjusted to the numbers proposed the in Amendment, especially taking into account the high cost of doing business in Alaska. 3:00:26 PM Representative Hawker urged judgment as stewards of the treasury. Vice-Chair Stoltze favored the lower amounts in the Amendment, with the ability to extend funding if all went well. Representative Crawford thought jobs were the issue and wanted Alaska to remain competitive. Vice-Chair Stoltze proposed dividing Amendment #3 into two parts. 3:05:26 PM Representative Hawker MOVED to ADOPT new Amendment #3, part 1, lines 5-7. Representative Thomas OBJECTED. Representative Hawker clarified that the proposed new amendment changed the base level of subsidization from 30% of eligible qualified expenditures to 20%. 3:06:51 PM Co-Chair Chenault MOVED to change part one of new Amendment #3 to 25%. Representative Gara OBJECTED. Representative Gara stated that cost is the major reason films are not being made in Alaska. He argued for the higher number to give the proposal a chance to work. Co-Chair Chenault supported starting a new film industry but was concerned with not knowing for five years. He compared the issue with new taxes on oil. He urged caution. 3:12:30 PM Representative Gara reminded the Committee of the expense of transportation. He proposed accepting 25% with 30% for in- state transportation and travel provided by an Alaskan business. 3:14:19 PM Senator Ellis asserted that going from 30% to 20% would take Alaska out of competition for films, and 25% would put the state at the bottom of competitiveness with other states. Representative Gara REMOVED his OBJECTION. There being NO further OBJECTION, Amendment #3, part 1, as amended to 25%, was accepted. Representative Gara OBJECTED. A roll call vote was taken on the motion. IN FAVOR: Thomas, Hawker, Chenault, Meyer OPPOSED: Crawford, Gara, Joule, Nelson, Stoltze Absent from the vote: Foster, Kelly The MOTION FAILED (4/5). 3:18:07 PM Representative Hawker MOVED Amendment #3, part 2, dropping the five-year cap from $150 million to $50 million. Co-Chair Meyer proposed amending part 2 to change the number to $100 million. Representative Crawford OBJECTED for DISCUSSION. Senator Ellis explained that the amounts in the original bill were open-ended in order to encourage major enterprise. He added that no other state has a similar cap. He pointed to other limits already built into the bill such as the time limit. 3:21:11 PM Representative Gara asked about caps in other states. MAX HENSLEY, STAFF, SENATOR JOHNNY ELLIS, explained three types of caps: per production, an annual appropriations cap, and cap on the amount covered for wages. He listed the states that do not have caps. The life-time program cap is not used in other places. Co-Chair Meyer offered that the bill could be re-visited if the cap was reached. Representative Crawford asserted that the $150 million cap was already a significant deterrent and a reasonable compromise. He MAINTAINED his objection. Representative Thomas stated he supported starting with $100 million and coming back in future. Representative Hawker supported the amendment to the Amendment. 3:24:43 PM Representative Gara urged trying to let it work without too many constraints and come back later and analyze. He thought the amendment would hurt the chances of the industry working. Senator Ellis pointed out that the program is speculative. No money is spent until the State gains the benefit. He encouraged planning ahead and making an investment. Co-Chair Meyer reiterated that the cap could be adjusted. Co-Chair Meyer MOVED Amendment #3, part 2 as amended to $100 million. A roll call vote was taken on the motion. IN FAVOR: Hawker, Stoltze, Thomas, Chenault, Meyer OPPOSED: Crawford, Gara, Joule, Nelson Absent from the Vote: Foster, Kelly The MOTION PASSED (5/4). AT EASE 3:30:32 PM RECONVENE 3:32:07 PM Representative Hawker explained that the motion before the Committee was the adoption of Amendment #3, part 2, amended to $100 million. Representative Crawford MAINTAINED his OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Hawker, Stoltze, Thomas, Meyer, Chenault OPPOSED: Gara, Joule, Nelson, Crawford Absent from the Vote: Foster, Kelly The MOTION PASSED (5/4). 3:34:59 PM SUZANNE ARMSTRONG, STAFF, CO-CHAIR MEYER, explained the status of the Amendment. The base subsidy level was still at 30% but the cap was reduced to $100 million. Vice-Chair Stoltze MOVED to REPORT SB 230 out of Committee with individual recommendations and attached fiscal notes. There being NO OBJECTION, it was so ordered. HCS CS SS SB 230(FIN) was REPORTED out of Committee with a "do pass" recommendation and with zero fiscal note #3 by the Department of Revenue and fiscal note #4 by the Department of Commerce, Community and Economic Development. CS FOR SENATE BILL NO. 260(STA) An Act making corrective amendments to the Alaska Statutes as recommended by the revisor of statutes; and providing for an effective date. PAM FINLEY, REVISOR, LEGISLATIVE AFFAIRS AGENCY, introduced the bill, which makes technical improvements in the statutes. It makes no policy choices. Co-Chair Meyer MOVED to ADOPT Amendment #1 (25-LS1022\C.1, Finley, 4/7/08) (Copy on File): Page 23, following line 15: Insert a new bill section to read: "*Sec.57. The uncodified law of the State of Alaska is amended by adding a new section to read: REVISOR'S INSTRUCTION. In reconciling the repeal of AS 08.01.010(16) in sec. 4 of CSSB 149(L&C), Twenty-Fifth Alaska State Legislature, and the repeal and reenactment of AS 08.01.010(16) in sec. 2 of this Act, the revisor of statutes shall ignore the repeal in CSSB 149(L&C) and give effect to the repeal and reenactment in sec. 2 of this Act." Renumber the following bill section accordingly. Representative Thomas OBJECTED for DISCUSSION. Ms. Finley explained the amendment. 3:41:35 PM Representative Hawker clarified that the Amendment does not change the substantive consequence of the passage of SB 149. PUBLIC TESTIMONY CLOSED. Representative Hawker REMOVED his OBJECTION. There being NO further OBJECTION, Amendment #1 was adopted. Vice-Chair Stoltze MOVED to REPORT HCS CS SB 260(FIN) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CS SB 260(FIN) was REPORTED out of Committee with a "do pass" recommendation and with attached zero fiscal note #1 by Legislative Affairs Agency. AT EASE 3:44:00 PM RECONVENE 3:47:13 PM CS FOR SENATE BILL NO. 285(FIN) An Act relating to the power and duties of the Department of Education and Early Development for improving instructional practices in school districts; and providing for an effective date. 3:47:28 PM SENATOR GARY STEVENS, SPONSOR, explained that the bill was introduced in response to the court case decision of Moore et. al. vs. State of Alaska, which pertains to the Legislature fulfilling its constitutional mandate of overseeing school districts and schools in Alaska. The case concludes in part that the Legislature is failing this duty as regards schools with long-standing poor performance. Senator Stevens said the bill calls for the Department of Education and Early Development (DEED) to provide direction to schools that need to increase student achievement, including making decisions regarding personnel and expenditures to improve instructional practices. Representative Hawker stated his support of the bill and recommended reading Moore vs. State for understanding education issues. Vice-Chair Stoltze asked a question about athletic coaches. Senator Stevens clarified that academic coaches would be hired to help improve scores. TIM LAMKIN, STAFF, SENATOR GARY STEVENS, added that it is not the intent of the bill to have anything to do with sports coaches. 3:52:26 PM Co-Chair Chenault OPENED PUBLIC TESTIMONY. EDDY JEANS, DIRECTOR, SCHOOL FINANCE, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT, stated the Department's support for the legislation. Representative Crawford asked for a description of how the legislation would change things. Mr. Jeans answered that the legislation provides clarification in statute that DEED as the Legislature's agent has the authority to intervene and provide supervision over school districts. One of the judge's criticisms of the State during the lawsuit was that utilizing the No Child Left Behind model, it takes too long for the State to intervene. 3:55:05 PM Representative Hawker asked if DEED would intervene at the individual school level or at the district level when a school is identified as needing intervention,. Mr. Jeans answered that the legislation covers both district and school levels, but all interventions would be through the district administration, working with the local school board. The Department would not go directly into a school. PUBLIC TESTIMONY CLOSED. Co-Chair Meyer referred to the fiscal note. Vice-Chair Stoltze MOVED to REPORT HCS CSSB 285(HES) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. HCS CSSB 285(HES) was REPORTED out of Committee with a "do pass" recommendation and with attached fiscal note #1 by the Department of Education and Early Development and Senate Letter of Intent. AT EASE 3:57:45 PM RECONVENE 7:57:13 PM CS FOR SENATE BILL NO. 185(STA)(title am) An Act relating to the central registry of sex offenders and child kidnappers and to the registration requirements for sex offenders and child kidnappers; and providing for an effective date. Representative Hawker MOVED to ADOPT Amendment #1 (Copy on File): Page 3, line 26 Delete "belongs to" Insert "has been registered by" Vice-Chair Stoltze OBJECTED for DISCUSSION. 7:59:42 PM Representative Hawker explained that the Amendment provides for the Department to confirm whether an address belongs to a person on the sex offender/child kidnapper register. SENATOR BILL WIELECHOWSKI, SPONSOR, voiced his support for the Amendment. Vice-Chair Stoltze REMOVED his OBJECTION. There being NO further OBJECTION, Amendment #1 was adopted. 8:02:28 PM Representative Hawker MOVED to ADOPT Amendment #2 (Copy on File): Page 3, line 27 through page 4, line 1 Delete all material Vice-Chair Stoltze OBJECTED for DISCUSSION. Representative Hawker explained Amendment #2. The section being deleted from the bill in its entirely is the provision that allows the Department of Public Safety (DPS) to provide the list of the registered email/chat addresses to commercial internet providers and security firms. The original purpose of the section was to warn the public. However, DPS has expressed concerns about publishing the list. Once the list is out, it cannot be controlled. The intent of the Amendment is not to weaken the bill, but to protect the innocent public in situations with similar addresses. 8:07:23 PM Senator Wielechowski said he would not object to the Amendment. Vice-Chair Stoltze wondered what DPS thought. LAUREN RICE, LEGISLATIVE LIAISON, DEPARTMENT OF PUBLIC SAFETY, stated that the Department was not opposed to the Amendment. Vice-Chair Stoltze WITHDREW his OBJECTION. There being NO OBJECTION, Amendment #2 was ADOPTED. Representative Gara clarified that it was more accurate to say "the internets" than "the internet." 8:10:00 PM Co-Chair Chenault MOVED to ADOPT Amendment #3 (25- LS0985\KA.1, Luckhaupt, 3/29/08, Copy on File): Page 1, line 1, following "kidnappers": Insert ", to penalties for certain sex offenders," Page 2, following line 4: Insert a new bill section to read: "*Sec. 2. AS 12.55.015 is amended by adding a new subsection to read: (j) In addition to penalties authorized by this section, the court shall order a defendant convicted of a violation of AS 11.41.410 - 11.41.440 where the victim of the offense was under 13 years of age to be subject to electronic monitoring for the remainder of the person's life on the person's release from a correctional facility." Renumber the following bill sections accordingly. Page 4, line 4: Delete "This Act applies" Insert "Sections 1 and 3 - 5 of this Act apply" Page 4, following line 7: Insert a new subsection to read: "(b) Section 2 of this Act applies to persons convicted of offenses committed on or after the effective date of this Act." Reletter the following subsection accordingly. Page 4, line 9: Delete "sec. 3" Insert "sec. 4" Representative Gara OBJECTED. Co-Chair Chenault explained that the Amendment would require offenders to wear electronic monitoring for the remainder of their lives if convicted of certain crimes involving children under the age of 13. He stated his strong feelings about protecting youth from predators. AT EASE 8:12:57 PM RECONVENE 8:13:35 PM There was a discussion clarifying the details of the Amendment regarding the ages of the offender and the victim. Representative Gara questioned whether the State should pay for electronic monitoring. Co-Chair Chenault stated that studies show that there is no reform for the offenders. They tend to re-offend. He thought the cost was not the issue. 8:17:55 PM Representative Gara proposed that the Amendment might be appropriate for rape, which is sexual assault in the first degree. He questioned having lifetime monitoring for other situations covered by the statutes listed. He thought although it was a crime for a 16 year old to touch a 12 year old through their clothing, that deserved a different punishment. Co-Chair Chenault clarified that the Amendment was directed at pedophiles that prey on young children. 8:20:47 PM Representative Nelson asked for an amendment to the Amendment to exclude non-intercourse consensual touching. Representative Gara said there was a dividing line in the statutes between the most serious and least serious offenses. Sexual assault in the first degree involves forced, non-consensual penetration. He thought the Amendment should apply to sexual assault in the first degree with someone under 13 years old. Vice-Chair Stoltze stated concerns with putting the word "consensual" with "12 and under" in the same sentence. 8:23:21 PM Representative Crawford relayed a personal story of a relative who got married at age 13. He pointed out that those possibilities have to be considered. He was uncomfortable with lifetime monitoring. Representative Nelson talked about a relative who was married very young. She was nervous about making a 16-year- old wear a monitor for life in cases where a mature-seeming 12 year old girl was the aggressor. She wanted the judge to be able to exercise discretion. She thought sexual predators of young girls should be monitored. Representative Gara passed out copies of the statute on first degree sexual assault. Representative Kelly asked if there was a clinical definition of the kind of predators the bill should target. Co-Chair Chenault suggested child predators convicted of assault of a certain number of children. 8:28:39 PM Senator Wielechowski felt the crime described was horrific. He acknowledged it was an important policy call. He questioned the fiscal impact and whether the Amendment addressed the problem of offenders who were committing the crime in their home. He thought the subject needed a full discussion in both bodies in another bill. Representative Hawker spoke to relative values regarding spending. Representative Gara referred to the handout on first degree assault. The sentence for the crime is now a minimum of 20 years and probation for life. 8:32:35 PM Representative Gara MOVED amendment #1 to Amendment #3, to have the Amendment apply to violations of AS 11.41.410. There being NO OBJECTION, it was so ordered. Representative Hawker was concerned about the cost of monitoring for life. Representative Hawker MOVED a conceptual amendment to change "the person's life" to a period of ten years following their release from a correctional facility. Co-Chair Meyer OBJECTED for DISCUSSION. 8:35:49 PM Senator Wielechowski suggested giving the authority to a judge. Representative Hawker thought "mandatory 10 and up to" would allow for flexibility. Co-Chair Chenault reiterated that the crime is serious enough to warrant monitoring for the remainder of a person's life, but he would not object to amending it to ten years. Representative Hawker suggested a minimum mandatory of 10 years with judge's discretion up to the remainder of a person's life. Representative Gara questioned how that would affect a very young offender. Co-Chair Chenault reiterated his concerns. He told a personal story about child kidnapping. 8:41:17 PM Representative Hawker WITHDREW the second conceptual amendment to Amendment #3. Representative Hawker MOVED conceptual amendment 3 to Amendment #3: Monitoring period should be mandatory ten years following release from correctional facility, and beyond that up to the remainder of person's life at discretion of the courts. Co-Chair Meyer OBJECTED for DISCUSSION. Representative Gara stated his discomfort with the lack of information. Representative Crawford agreed. He wanted more input from the public and more investigation. Co-Chair Chenault suggested adding Sec. 11.41.434, sexual abuse of a minor in the first degree. AT EASE 8:45:16 PM RECONVENE 9:05:22 PM Representative Hawker WITHDREW amendment 3 to Amendment #3. Representative Gara asked for clarification regarding probation and electronic monitoring. ANNE CARPENETI, ASSISTANT ATTORNEY GENERAL, LEGAL SERVICES SECTION-JUNEAU, CRIMINAL DIVISION, DEPARTMENT OF LAW, explained that sex offenses have high sentencing ranges, up to 99 years in prison, along with a 25 year maximum period of probation. The court currently has a great deal of discretion for sentencing in these crimes. She said it would be difficult to have electronic monitoring past the period of probation. 9:08:19 PM Representative Gara MOVED conceptual amendment 4 to Amendment #3: 1. Make the new section apply to victims 14 years or younger; and 2. Give the judge the discretion to impose electronic monitoring for up to the full length of probation. Co-Chair Meyer OBJECTED for DISCUSSION. Co-Chair Chenault agreed that the conceptual amendment addressed the problem. Senator Wielechowski supported the conceptual amendment. Co-Chair Meyer REMOVED his OBJECTION. There being NO OBJECTION, Amendment #3 as amended was adopted. Vice-Chair Stoltze MAINTAINED his OBJECTION to Amendment #3. 9:10:43 PM Representative Joule asked if the earlier decision to have section (j) apply only to AS 11.41.410 violations still applied. Ms. Carpeneti said that was a policy decision. The section left in referred to the most serious of the sexual assault prohibitions. She pointed to another unclassified felony in state sex offenses, sexual abuse of a minor in the first degree, but that is different type of crime. Co-Chair Chenault confirmed that AS 11.41.410s addresses his largest concerns. 9:13:56 PM Representative Gara reiterated that he did not want to change the law as it relates to older perpetrators. Vice-Chair Stoltze REMOVED his OBJECTION to Amendment #3. There being NO OBJECTION, Amendment #3 was adopted. Co-Chair Chenault MOVED to ADOPT Amendment #4 (25- LS0985\KA.2, Luckhaupt, 4/5/08, Copy on File). Vice-Chair Stoltze wanted to be co-sponsor of the Amendment. Co-Chair Meyer OBJECTED for DISCUSSION. Co-Chair Chenault explained Amendment #4 as authorizing capital punishment for certain crimes committed against children. He said the Amendment reflected the strength of his feelings about people who prey upon the weak. It also authorizes capital punishment for murder in the first degree and other crimes in the first degree. He told a personal story of a kidnapping in his family. He did not feel child molesters could be fixed and he wanted to see them executed. 9:20:15 PM Senator Wielechowski suggested putting the Amendment in another crime bill. Vice-Chair Stoltze related a story of a person who victimized many children. Representative Gara acknowledged the seriousness of the subject and the strength of the amendment sponsor's convictions. He thought the debate regarding capital punishment had to be lengthy. He told the story of the murder of his father when he was six. He thought there were circumstances where the death penalty applied, but he was concerned with executing an innocent person who is erroneously convicted. He wanted to have the dispute at a different time. 9:25:12 PM Representative Nelson stated her belief that people who commit heinous crimes should be punished accordingly. But people have been accused erroneously, especially poor and minority people without adequate representation. She pointed to 120 people who have been exonerated from death row. The reality of the death penalty poses many other problems and high costs. The money could be redirected to rehabilitation programs. Co-Chair Chenault reiterated his strong belief in the death penalty. He did not want to put innocent people to death. He WITHDREW Amendment #4. There being NO OBJECTION, it was so ordered. 9:30:30 PM Co-Chair Meyer referred to the fiscal notes, some of which could change with Amendment #3. SB 185 was HEARD and HELD in Committee for further consideration. CS FOR SENATE BILL NO. 221(FIN) am An Act making and amending appropriations, including capital appropriations, supplemental appropriations, and appropriations to capitalize funds; and providing for an effective date. SB 221 was SCHEDULED but not HEARD. CS FOR SENATE BILL NO. 265(FIN) An Act relating to the payment of permanent fund dividends to certain individuals required to register as sex offenders or child kidnappers; relating to execution upon permanent fund dividends by civilian process servers using electronic procedures; amending Rule 89, Alaska Rules of Civil Procedure; and providing for an effective date. CS SB 265(FIN) was SCHEDULED but not HEARD. SENATE BILL NO. 304 An Act authorizing an Alaska regional development organization to use the Alaska Commercial Fisheries Entry Commission as an informational resource. SB 304 was POSTPONED. ADJOURNMENT The meeting was adjourned at 9:32 PM.