HOUSE STATE AFFAIRS STANDING COMMITTEE March 22, 1994 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chairman Representative Pete Kott, Vice Chairman Representative Bettye Davis Representative Gary Davis Representative Harley Olberg Representative Jerry Sanders Representative Fran Ulmer MEMBERS ABSENT None COMMITTEE CALENDAR *HB 482: "An Act making permanent a temporary requirement relating to the provision of employment information to the state." HELD OVER *HB 513: "An Act relating to financial assistance for certain owners or operators of underground petroleum storage tank systems; and providing for an effective date." CSHB 513 PASSED OUT *HB 481: "An Act relating to audits of recipients of grants and of certain other financial assistance from state agencies." NOT HEARD WITNESS REGISTER REPRESENTATIVE MARK HANLEY Alaska State Legislature Alaska State Capitol, Room 515 Juneau, AK 99811-0460 Phone: 465-4939 POSITION STATEMENT: Prime sponsor of HB 482 JOHN MALLONEE, Deputy Director Child Support Enforcement Division Department of Revenue P.O. Box 400100 Juneau, AK 99811 Phone: 465-4880 POSITION STATEMENT: Supported HB 482 JOHN BARNETT, Executive Director Board of Storage Tank Assistance 410 Willoughby Juneau, AK 99801 Phone: 465-5219 POSITION STATEMENT: Addressed HB 513 PREVIOUS ACTION BILL: HB 482 SHORT TITLE: EMPLOYMENT INFO PROVIDED TO THE STATE SPONSOR(S): REPRESENTATIVE(S) HANLEY,Ulmer JRN-DATE JRN-PG ACTION 02/14/94 2377 (H) READ THE FIRST TIME/REFERRAL(S) 02/14/94 2377 (H) STATE AFFAIRS 03/15/94 (H) STA AT 08:00 AM CAPITOL 102 03/22/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 513 SHORT TITLE: GRANTS/LOANS FOR STORAGE TANK OWNERS SPONSOR(S): LABOR & COMMERCE JRN-DATE JRN-PG ACTION 02/28/94 2551 (H) READ THE FIRST TIME/REFERRAL(S) 02/28/94 2551 (H) L&C, STATE AFFAIRS, JUDICIARY 03/02/94 2586 (H) L&C REFERRAL WAIVED 03/15/94 (H) STA AT 08:00 AM CAPITOL 102 03/22/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 481 SHORT TITLE: AUDITS OF STATE GRANT & AID RECIPIENTS SPONSOR(S): REPRESENTATIVE(S) BUNDE JRN-DATE JRN-PG ACTION 02/14/94 2377 (H) READ THE FIRST TIME/REFERRAL(S) 02/14/94 2377 (H) STATE AFFAIRS, FINANCE 03/15/94 (H) STA AT 08:00 AM CAPITOL 102 03/22/94 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 94-36, SIDE A Number 000 CHAIRMAN AL VEZEY called the meeting to order at 8:00 a.m. Members present were REPRESENTATIVES SANDERS, G. DAVIS, OLBERG, B. DAVIS and ULMER. A quorum was present. CHAIRMAN VEZEY announced the sponsor of HB 481, REPRESENTATIVE BUNDE, had requested it be postponed. CHAIR VEZEY had anticipated moving HB 238; however, it was delayed in House Resources so it was postponed. HB 482 - EMPLOYMENT INFORMATION PROVIDED TO THE STATE CHAIRMAN VEZEY opened HB 482 for discussion. Number 032 REPRESENTATIVE MARK HANLEY, prime sponsor, addressed HB 482. He said, in 1991, REPRESENTATIVE FRAN ULMER sponsored a bill which would require employers of 20+ employees to submit monthly reports to the Child Support Enforcement Authority (CSED) to help find those people not paying their child support. The intent of this bill was to collect more child support payments, and it was successful. The actual results of the bill were substantially higher than those estimated in its passage, he stated. He explained a sunset clause, ending January 1, 1995, was included in this bill and the intent of HB 482 is to repeal it. REPRESENTATIVE HANLEY outlined the old law was in one section and the new law was in another; therefore HB 482 would provide two effective dates. One date for the new section, and the old law would go into effect on January 1, 1995, at the same time the new law is repealed from the statute. REPRESENTATIVE HANLEY emphasized he had also been skeptical about the burden of the original bill, but in talking to larger companies they have not felt it to be overly burdensome and the results of the additional collections have been positive. REPRESENTATIVE HANLEY emphasized the more money contributed to child support, means less payments the state has to make in aid to families with many children. When families are receiving child support they usually are receiving enough money, whereby they do not need to utilize state services. Number 099 REPRESENTATIVE HARLEY OLBERG stated 50 percent goes to the general fund. He asked if the rest of the money goes to program receipts. Number 104 REPRESENTATIVE HANLEY deferred the question to the next witness. Number 109 CHAIRMAN VEZEY introduced JOHN MALLONEE as the next individual to testify. Number 119 JOHN MALLONEE, DEPUTY DIRECTOR, CHILD SUPPORT ENFORCEMENT DIVISION, DEPARTMENT OF REVENUE, supported HB 482. He responded to CHAIRMAN VEZEY's previous question stating the CSED collects child support money if it is reimbursement for Aid for Families with Dependent Children (AFDC). He stated 50 percent goes to the general fund and 50 percent goes to reimburse the share that AFDC paid. Number 132 CHAIRMAN VEZEY stated the money was child support money, not AFDC money. Number 136 MR. MALLONEE clarified once a family goes on AFDC, they sign over their rights to their child support to the state, up to the amount which they are given grants by AFDC. Number 140 CHAIRMAN VEZEY responded not everyone involved in the program goes on AFDC. Number 141 MR. MALLONEE agreed, money is collected and directly given to those families who do not go on AFDC in the attempt to keep them off AFDC. Number 144 CHAIRMAN VEZEY commented the program is experimental and is set up to affect employers who employ more than 20 people by giving them a monthly reporting requirement. In practice, the program has been implemented on selected employers of 50 or more. He felt if HB 481 were to pass, the base of employers would expand. Number 152 MR. MALLONEE replied HB 482 can be expanded down to include all employers who employ at least 20 individuals. Number 155 CHAIRMAN VEZEY stated all the employers he had talked to indicated the report takes three or more hours to complete every month. Number 158 MR. MALLONEE responded he found that estimation hard to believe. As an accountant, he did not feel information that was readily available on a W-4 or an I-9 would take three or more hours to access on a monthly basis. The whole requirement of actually withholding, which employers are already required to do whether or not the current law sunsets, may take three or more hours depending upon the size of the company. Number 171 CHAIRMAN VEZEY stated the biggest problem employers have is knowing who to withhold from. Statute holds the employer in perpetuity for an employee's withholding order. Records must by kept on all past employees. Number 182 MR. MALLONEE assumed CHAIRMAN VEZEY was referring to the requirement, whereby once a withholding order is delivered to an employer, if that employee leaves and later returns, that withholding order has not been satisfied. Number 186 CHAIRMAN VEZEY felt this requirement would cost the employer the most time to search through the records. Number 189 REPRESENTATIVE OLBERG asked if previous legislation had been heard dealing with that requirement. CHAIRMAN VEZEY answered similar legislation was before the Health, Education & Social Services Committee recently; however, it dealt with a different statute and only had similar language. CHAIRMAN VEZEY felt there were problems with the current child support statutes. He stated, after talking with employers, the aspect of working with CSED that bothers them the most is the unknown liability of having to keep track of every employee they have ever had. He asked if a more reasonable process could be found for the employers. Number 205 MR. MALLONEE replied the process was not unreasonable, because an employer is already required to keep employee records for several years after their employment, e.g., IRS, employee reporting records, tax records, etc.. He noted if there is some question to the records, they may never be subject to a statute of limitations. Number 214 CHAIRMAN VEZEY commented he was not aware of that as an employer. Number 217 MR. MALLONEE stated the CSED did not want to put an unfair burden on employers. Employers argue the CSED has the records available through Department of Labor reporting. This is true, but the CSED cannot access the records until four months after the fact. He emphasized that an individual working in Alaska over the summer, is already gone four months after the fact. Number 230 CHAIRMAN VEZEY inquired if the broadest scope of information would come from hiring dispatch halls. MR. MALLONEE answered information has also been obtained from those sources. Number 237 CHAIRMAN VEZEY asked if statute required the dispatch halls to give the CSED information. Number 238 MR. MALLONEE said he would have to check the statutes for its location, but the CSED had, in fact, issued items to union halls. Number 243 REPRESENTATIVE FRAN ULMER assumed the Department of Revenue would like to continue the program. Number 244 MR. MALLONEE affirmed REPRESENTATIVE ULMER, and reinforced that the program had brought in a large amount of collections in the previous year. The last report by an outside firm he had received about the program, indicated the difference between the control group and the target group was $621,000 last year. Estimates in 1991 stated if the program was expanded to all employers, it could bring in as much as $7.5 million in addition to current collections. Number 258 CHAIRMAN VEZEY stated he would like hear back from MR. MALLONEE on some of the questions he had raised. HB 482 in was held in committee pending more information. HB 513 - GRANTS/LOANS FOR STORAGE TANK OWNERS CHAIRMAN VEZEY opened HB 513, sponsored by the House Labor & Commerce Committee, for discussion. Number 272 JOHN BARNETT, EXECUTIVE DIRECTOR, BOARD OF STORAGE TANK ASSISTANTS, supported HB 513. He stated the Board of Storage Tank Assistants is an appeal board that works with the Department of Environmental Conservation (DEC) to administer the storage tank assistance fund. This program issues grants and loans to regulated underground storage tank owners throughout the state to help them offset the high cost of environmental compliance. MR. BARNETT outlined the sections of HB 513. Section 1 clarifies the authority of the board to hear all eligibility appeals. Existing statute allows the board to hear appeals on eligible costs, but the board has about 150 applicants that have been determined completely ineligible. He noted several of these applicants feel they were determined ineligible based on an interpretive decision by DEC, based on a policy which may be inconsistent with the original intent of the program. He stated these owners would like a sort of forum, where their concerns could be heard. MR. BARNETT stated Section 2 of HB 513, corrects an oversight in the original bill. The upgrade in closure program under current law does not have a sunset date. Section 2 would provide a sunset clause to the storage tank assistance fund closure and upgrade application period. The sunset would be consistent with the cleanup application deadline. MR. BARNETT stated Section 3 of HB 513, allows upgrade in closure applicants still waiting to be funded, to continue to be eligible for financial assistance for cleanup, after the cleanup deadline passes. He noted they had expected to fund all of the closure and upgrades several years ago; however, at this time over 400 applicants exist that will not discover petroleum contamination until after the cleanup application sunsets. Applicants will be eligible for cleanup as long as they are already on the list. Number 347 CHAIRMAN VEZEY asked what would happen if HB 513 did not take effect until October 1, 1994. MR. BARNETT answered the date was originally proposed to be consistent with current law, July 1, 1994. He stated the board would support any amendments to allow for the applicants to be notified. Number 355 CHAIRMAN VEZEY noted a two-thirds vote would be necessary to establish an effective date. Number 358 MR. BARNETT clarified he was referring to Section 2, where the application for assistance must be submitted before July 1, 1994. Number 362 CHAIRMAN VEZEY asked how HB 513 clarifies the relationship between the board and the DEC. MR. BARNETT answered the board has applicants who have been denied any financial assistance whatsoever. For example, failure to report a release when, in fact, they had already bought a facility that was already contaminated. Existing statute includes language which refers to being in compliance with existing laws. There is also language which provides for amnesty over a six month period once the applicant has registered their facility. He emphasized DEC sometimes takes a very strict interpretive view of the statutes and regulations. He gave an example of an applicant who, after noncompliance, came into compliance prior to the effective date of the original bill, but was still termed ineligible forever by the DEC. He termed the DEC interpretation as "once a criminal, always a criminal." He felt the board should be able to help mediate the dispute so the objective of cleaning up the sights can be met. The new section clarifies the requirements for a forum would be eligibility in general, not just costs. Number 414 CHAIRMAN VEZEY clarified there was currently no appeal for a DEC decision and the new section would provide for one. MR. BARNETT affirmed CHAIRMAN VEZEY. Number 419 CHAIRMAN VEZEY asked if a committee member would move to amend HB 513 whereas the date in Section 2 be amended from "July 1, 1994" to "December 31, 1994." Number 428 REPRESENTATIVE OLBERG so moved. Number 433 REPRESENTATIVE ULMER questioned if the change would significantly impact the number of people who have filed applications or impact the business of the board. MR. BARNETT answered the applicants were originally considered when the program began. They had expected to have already funded them, but with the limitations in funding over the past three years they had fallen behind. The change would not provide impact that was not already considered from the original legislation. Number 442 CHAIRMAN VEZEY asked the committee secretary to call the roll the amendment to HB 513. IN FAVOR: REPRESENTATIVES VEZEY, KOTT, ULMER, B. DAVIS, G. DAVIS, SANDERS, OLBERG CHAIRMAN VEZEY announced the amendment to HB 513 was adopted. CHAIRMAN VEZEY asked if the dates would have to be adjusted in Section 3. Number 450 MR. BARNETT replied Section 3(a)(1) would have to be adjusted. Number 453 CHAIRMAN VEZEY inquired about the date in Section 3, subsection 2. Number 454 MR. BARNETT responded Section 3, subsection 2, refers to a date currently in statute and is also consistent with the federal Environmental Protection Agency requirement. He stated it should not be changed. Number 457 CHAIRMAN VEZEY asked if REPRESENTATIVE OLBERG had a motion to change Section 3, line 9, from "July 1, 1994" to "December 31, 1994." Number 458 REPRESENTATIVE OLBERG so moved. Number 463 CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, KOTT, ULMER, B. DAVIS, G. DAVIS, SANDERS, OLBERG CHAIRMAN VEZEY announced the second amendment to HB 513 had been adopted. Number 466 REPRESENTATIVE G. DAVIS moved to adopt the committee substitute for HB 513 reflecting the amendments made by the committee. CHAIRMAN VEZEY announced, hearing no opposition, the committee substitute for HB 513 had been adopted. Number 485 REPRESENTATIVE G. DAVIS moved to pass CSHB 513 out of committee with individual recommendations and accompanying fiscal notes. Number 490 CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, KOTT, ULMER, B. DAVIS, G. DAVIS, SANDERS, OLBERG. CHAIRMAN VEZEY announced CSHB 513 had passed from the House State Affairs Committee. ADJOURNMENT CHAIRMAN VEZEY, having no more business before the committee, adjourned the meeting at 8:30 a.m. BILLS NOT HEARD HB 481 - AUDITS OF STATE GRANT & AID RECIPIENTS