HOUSE STATE AFFAIRS STANDING COMMITTEE March 31, 1994 8:00 a.m. MEMBERS PRESENT Representative Al Vezey, Chairman Representative Pete Kott, Vice Chairman Representative Gary Davis (arrived at 8:03 a.m.) Representative Jerry Sanders Representative Fran Ulmer (arrived at 8:23 a.m.) MEMBERS ABSENT Representative Bettye Davis Representative Harley Olberg COMMITTEE CALENDAR CONFIRMATION HEARING: State Public Offices Commission James I. Adams MOVED OUT OF COMMITTEE FOR JOINT SESSION CONSIDERATION HB 226: "An Act relating to interest rates and calculation of interest under certain judgments and decrees and on refunds of certain taxes, royalties, or net profit shares; and providing for an effective date." HELD IN COMMITTEE *HB 541: "An Act providing for an advisory vote of the people concerning a preferred alternative for increasing revenue available to support state government; and providing for an effective date." FAILED TO MOVED OUT OF COMMITTEE HB 345: "An Act relating to the preservation of public facilities and to appropriations for annual maintenance and repair, periodic renewal and replacement, and construction of public facilities." MOVED FROM COMMITTEE AS CSHB 345(STA) WITH NO RECOMMENDATIONS HB 430: "An Act requiring certain applicants for a driver's license to take a driver training course." MOVED FROM COMMITTEE AS CSHB 430(STA) WITH NO RECOMMENDATIONS HB 531: "An Act relating to the existence and functions of certain multimember state bodies, including boards, councils, commissions, associations, or authorities; and providing for an effective date." DISCUSSED AMENDMENT HB 420: "An Act relating to limited liability companies; amending Alaska Rules of Civil Procedure 20 and 24; and providing for an effective date." NOT HEARD (* First public hearing) WITNESS REGISTER JAMES I. ADAMS P.O. Box 1048 Nome, AK 99762 Phone: 443-3422 POSITION STATEMENT: Gave background information DEBORAH VOGT, Assistant Attorney General Department of Law P.O. Box 110300 Juneau, AK 99811 Phone: 465-3603 POSITION STATEMENT: Addressed HB 226 REPRESENTATIVE JEANNETTE JAMES Alaska State Legislature Alaska State Capitol, Room 501 Juneau, AK 99811-0460 Phone: 465-3743 POSITION STATEMENT: Prime sponsor of HB 345 NANCY BEAR USERA, Commissioner Department of Administration P.O. Box 110200 Juneau, AK 99811-0200 Phone: 465-2200 POSITION STATEMENT: Commented on HB 345 ROGER PATCH, President Alaska State Facility Administrators P.O. Box 5-549 Ft. Richardson, AK 99505 Phone: 428-6670 POSITION STATEMENT: Supported HB 345 KIT DUKE Alaska State Facility Administrators 303 K St. Anchorage, AK 99501 Phone: 264-8238 POSITION STATEMENT: Supported CSHB 345 REPRESENTATIVE JOE GREEN Alaska State Legislature Alaska State Capitol, Room 114 Juneau, AK 99811-0460 Phone: 465-4931 POSITION STATEMENT: Sponsor of HB 430 JUANITA HENSLEY, Chief of Driver Services Division of Motor Vehicles Department of Public Safety P.O. Box 20020 Juneau, AK 99802 Phone: 465-2650 POSITION STATEMENT: Answered questions on HB 430 PREVIOUS ACTION BILL: HB 226 SHORT TITLE: INTEREST RATES: JUDGMENTS/TAXES/ROYALTIES SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 03/12/93 620 (H) READ THE FIRST TIME/REFERRAL(S) 03/12/93 620 (H) STATE AFFAIRS,JUDICIARY,FINANCE 03/12/93 620 (H) -4 ZERO FNS(ADM, ADM, REV, DOT) 3/12/93 03/12/93 621 (H) GOVERNOR'S TRANSMITTAL LETTER 04/03/93 (H) STA AT 08:00 AM CAPITOL 102 04/03/93 (H) MINUTE(STA) 03/31/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 541 SHORT TITLE: ADVISORY VOTE REGARDING STATE REVENUE SPONSOR(S): FINANCE JRN-DATE JRN-PG ACTION 03/23/94 2937 (H) READ THE FIRST TIME/REFERRAL(S) 03/23/94 2937 (H) STATE AFFAIRS 03/31/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 345 SHORT TITLE: PRESERVATION OF PUBLIC FACILITIES SPONSOR(S): REPRESENTATIVE(S) JAMES JRN-DATE JRN-PG ACTION 01/07/94 2018 (H) PREFILE RELEASED 01/10/94 2018 (H) READ THE FIRST TIME/REFERRAL(S) 01/10/94 2018 (H) STATE AFFAIRS, FINANCE 01/25/94 (H) STA AT 08:00 AM CAPITOL 102 01/25/94 (H) MINUTE(STA) 02/08/94 (H) STA AT 08:00 AM CAPITOL 102 02/08/94 (H) MINUTE(STA) 03/08/94 (H) STA AT 08:00 AM CAPITOL 102 03/08/94 (H) MINUTE(STA) 03/31/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 430 SHORT TITLE: LICENSING REQUIREMENTS FOR DRIVERS SPONSOR(S): REPRESENTATIVE(S) GREEN,Foster JRN-DATE JRN-PG ACTION 02/02/94 2220 (H) READ THE FIRST TIME/REFERRAL(S) 02/02/94 2220 (H) STATE AFFAIRS, FINANCE 03/03/94 (H) STA AT 08:00 AM CAPITOL 102 03/17/94 (H) STA AT 08:00 AM CAPITOL 102 03/17/94 (H) MINUTE(STA) 03/31/94 (H) STA AT 08:00 AM CAPITOL 102 BILL: HB 531 SHORT TITLE: ELIMINATE SOME STATE MULTIMEMBER BODIES SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 03/11/94 2728 (H) READ THE FIRST TIME/REFERRAL(S) 03/11/94 2728 (H) STATE AFFAIRS 03/11/94 2728 (H) -7 ZERO FNS (DCRA, 2-DCED, CORR, 2-DOE 03/11/94 2728 (H) DNR) 3/11/94 03/11/94 2729 (H) GOVERNOR'S TRANSMITTAL LETTER 03/29/94 (H) STA AT 08:00 AM CAPITOL 102 03/29/94 (H) MINUTE(STA) BILL: HB 430 SHORT TITLE: LIMITED LIABILITY COMPANIES SPONSOR(S): REPRESENTATIVE(S) THERRIAULT,Mulder,James JRN-DATE JRN-PG ACTION 01/31/94 2206 (H) READ THE FIRST TIME/REFERRAL(S) 01/31/94 2206 (H) L&C, JUDICIARY, STATE AFFAIRS 02/24/94 2522 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS 02/24/94 2522 (H) L&C, JUDICIARY, STATE AFFAIRS 03/08/94 (H) L&C AT 03:00 PM CAPITOL 17 03/09/94 2676 (H) L&C RPT 1DP 3NR 03/09/94 2676 (H) DP: MULDER 03/09/94 2676 (H) NR: WILLIAMS, SITTON, HUDSON 03/09/94 2676 (H) -ZERO FISCAL NOTE (DCED) 3/9/94 03/09/94 2703 (H) COSPONSOR(S): MULDER 03/18/94 (H) JUD AT 01:15 PM CAPITOL 120 03/21/94 (H) MINUTE(JUD) 03/23/94 (H) JUD AT 01:00 PM CAPITOL 120 03/30/94 (H) JUD AT 01:15 PM CAPITOL 120 03/31/94 3106 (H) COSPONSOR(S): JAMES 03/31/94 (H) STA AT 08:00 AM CAPITOL 102 ACTION NARRATIVE TAPE 94-41, SIDE A Number 000 CHAIRMAN AL VEZEY called the meeting to order at 8:02 a.m. Members present were REPRESENTATIVES KOTT and SANDERS. He announced REPRESENTATIVE OLBERG would be absent. JAMES I. ADAMS - CONFIRMATION TO THE STATE PUBLIC OFFICES COMMISSION CHAIRMAN VEZEY opened the Confirmation of James Adams for discussion. Number 018 JAMES ADAMS joined the committee from an offnet teleconference site in Nome. CHAIRMAN VEZEY asked if MR. ADAMS knew what he was getting into. MR. ADAMS responded he was new to the operation and he will find out. CHAIRMAN VEZEY, as a former Alaska Public Offices Commission member, stated it will be a very educational experience. (REPRESENTATIVE KOTT left the meeting at 8:03 a.m.) (REPRESENTATIVE G. DAVIS joined the meeting at 8:03 a.m.) CHAIRMAN VEZEY noted REPRESENTATIVE G. DAVIS had joined the meeting. He noted a quorum was not present, therefore the committee would wait a few minutes to take the vote. CSHB 226: "An Act relating to the rate of interest and service charges in the state; relating to interest rates and calculation of interest under certain judgments and decrees and on refunds of certain taxes, royalties, or net profit shares; and providing for an effective date. CHAIRMAN VEZEY opened HB 226 for discussion. He recognized the committee substitute, version E, before the committee and asked if there was a motion to adopt it for consideration. Number 073 REPRESENTATIVE GARY DAVIS so moved. Number 076 CHAIRMAN VEZEY, hearing no objection, adopted CSHB 226, version E. Number 087 DEBORAH VOGT, ASSISTANT ATTORNEY GENERAL, addressed HB 226 requested by the Governor. She had not had access to CSHB 226, therefore she addressed the original HB 226. She stated the Governor requested HB 226 to address two problems. First, the interest rates of both pre and postcivil judgments are a set statutory 10.5 percent. This 10.5 percent does not fluctuate with market, therefore it is sometimes grossly disproportionate to what the state, a corporation, or an individual can earn to represent the time value of money while litigation is pending. The Administration believes interest on judgments should not be an incentive for one party to settle, or for the other party to delay the litigation. The rate should fluctuate with the market and represent the time value of the money. MS. VOGT stated the second purpose of HB 226 is to address the problem with back taxes and royalties. She noted the interest rate for those payments was amended in the 1991 legislative session to be a floating market interest rate, with an 11 percent floor. The interest rate on underpayment is the same as the interest rate on overpayment. Therefore, if a company overpays its taxes or royalties, it will be entitled to the same interest today from the state that the state would have collected, had the party underpaid. She believed the considerations for interest are substantially different for taxes and royalties from civil litigation. She noted concern that the legislation has had the unintended effect of setting up the possibility that an individual or corporation might overpay their taxes or royalties, thereby entitled to an interest payment on a refund disproportionate to what the market would support. MS. VOGT commented the state is interested in these interest rates because it is a common litigant, much more as a defendant than a plaintiff. HB 226 proposes that both pre and postjudgment interests will be a floating market rate tied to the coupon yield equivalent of the sales of treasury bills. This market indicator was chosen because it is used by the federal courts and lawyers are at least partially familiar with it. Their intent was to find an indicator that was reasonably reflective of the true market and adopted into civil litigation. Interest rate simplicity is a concern with civil litigation. There needs to be an indicator that tracks the market and is simple enough that civil litigants understand and apply it. MS. VOGT stated the Administration chose the coupon yield equivalent as of January 1 for the preceding 52 weeks. The indicator would change each year, not each month. MS. VOGT addressed the amendments proposed by the Administration to the original HB 226. Regarding civil litigation, they suggest an amendment to the effective date making those parts of HB 226 effective as of January 1, 1995, rather than immediately. This would ease both the private sector and the state court system. MS. VOGT referred to a sentence regarding the tax and royalty provisions in both the committee substitute and the original HB 226, which reads, "However, if the overpayment is the result of a correction made by the department, the amount overpaid bears interest at the rate, and in the manner provided in (d) of this section." This language was intended to make a distinction between overpayments which are the fault of Department of Natural Resources or the Department of Revenue, versus the fault of the tax or royalty payer. She stated this language would be extremely difficult to apply; therefore, it should be omitted from both the tax and royalty sections. Number 258 CHAIRMAN VEZEY asked MS. VOGT to clarify which version she was referring to. MS. VOGT clarified she was addressing the original HB 226. She stated the Administration would oppose CSHB 226 because it does fulfill the intentions of the Administration. Referring to CSHB 226, the market indicator chosen for civil litigation is five points above the federal reserve discount rate. This would be significantly higher than the rate set out in the original HB 226. She distributed and outlined a comparison chart for the committee. (A copy of the chart is on file.) Number 293 CHAIRMAN VEZEY clarified the federal discount rate has been constant since July 1, 1992 at three percent. He noticed her report showed the rate at 3.5 percent in 1992. Number 297 MS. VOGT responded she received the figures from the Department of Revenue and they had simply conveyed the figures were from "January." Therefore, she assumed they meant "January, 1, 1992." She did not dispute that the rate changed to three percent in July. MS. VOGT redirected to the report and examined the difference between the middle column, portraying the CSHB 226 discount rate plus five percent and the far right column, portraying the HB 226 coupon yield equivalent. She submitted that the coupon yield equivalent numbers were more reflective of the time value of money. MS. VOGT addressed CSHB 226 as it deals with provisions on taxes and royalties. She stated CSHB 226 raises the interest rate the state would pay on overpayments back up to five points above the federal discount rate. Except for the 11 percent floor, it would be the same rate the state charges for royalty and taxpayers for underpayment. The point of the original HB 226 was to make a difference between underpayment and overpayments; similar to federal procedure. The 11 percent floor is also removed from the interest on overpayments in CSHB 226. MS. VOGT pointed out the tort reform legislation which has been proceeding through the legislature, also has interest on judgments provisions in it. She noted those provisions were more similar to CSHB 226, except that they are three percent, instead of five percent above the federal discount rate. The legislature would have to choose which type of legislation it would like to follow since there are two similar pieces flowing through the process. Number 345 CHAIRMAN VEZEY asked her to clarify which two pieces of legislation. MS. VOGT clarified the tort reform legislation with interest on pre and postcivil judgment provisions. Number 351 CHAIRMAN VEZEY commented "the Governor's proposal to tell people that their money is worth 3.49 percent, or slightly above that discount rate, is license of steel." Therefore, he held CSHB 226 in committee for further consideration. HB 541 - ADVISORY VOTE REGARDING STATE REVENUE CHAIRMAN VEZEY opened HB 541, proposed by the House Finance Committee, for discussion. Seeing no one present from the House Finance Committee, he asked for questions from the committee. Number 369 REPRESENTATIVE JERRY SANDERS asked why the statement "none of the above" was not on the bill, and if it was possible to add it. (REPRESENTATIVE KOTT returned to the meeting at 8:22 a.m.) Number 372 CHAIRMAN VEZEY replied it could be added. If "none of the above" was added, he believed the title would have to be changed. HB 541 was not intended to propose a total solution to the state's fiscal problems. The intent of HB 541 is to ask, if revenues are going to be increased, how should it be done. He noted if "cut spending" was included in the title it would probably be the largest vote getter. (REPRESENTATIVE ULMER entered the meeting at 8:23 a.m.) Number 392 REPRESENTATIVE SANDERS stated he felt if "none of the above" or "cut spending" was put on HB 541 and there was a strong vote, it would give the legislature a lot of credibility in its attempt to cut spending. He added the legislature had not done very much to cut spending in the last few years. Number 397 CHAIRMAN VEZEY stated, from polls he had seen, the public indicates they are very strongly in favor of cutting spending. He recognized the budget cannot be balanced simply by cuts nor strictly by tax increases. The intent of HB 541 is to determine which vehicle, either tax increases or permanent fund dividend reductions, would be preferred to help balance the budget. Number 407 REPRESENTATIVE G. DAVIS expressed the fact that HB 541 is an advisory vote; it leaves open all options. HB 541 does state a tax will be imposed. He related to the difficulty in making cuts and the fluctuations in revenue in the past. He noted the differences in the legislature after each election. He did not believe the "none of the above" section was necessary. He believed people were more concerned about which option the state should take. The question is "when" and "if." He explained, with the dividends the state has been giving money, yet taxing through different fee schedules. Number 433 CHAIRMAN VEZEY stated HB 541 was up to the committee and they could propose amendments. He interpreted REPRESENTATIVE G. DAVIS's remarks as HB 541 being a referendum, recognizing at some time state revenues would have to be increased, noticing the balance of the budget cannot be reached solely by cuts. Number 440 REPRESENTATIVE FRAN ULMER questioned if there had been any thought about indicating in HB 541 as to what levels the changes would have to be at to raise equivalent amounts of money. The public might think of a sales tax being between two-four percent; however, they would not know how high it would have to be to generate the same level of revenues as the permanent fund dividend reductions would. She suggested not putting the information on the ballot itself, but perhaps presenting it in the discussion part included with the ballot. (REPRESENTATIVE KOTT left the meeting at 8:26 a.m.) REPRESENTATIVE G. DAVIS agreed with REPRESENTATIVE ULMER. He believed a key factor of a ballot measure is simplicity; therefore a "findings section" could be included to indicate projected levels over the next ten years. He reflected on what he had seen, in relation to the constitutional budget reserve, in the packet on HB 58 which showed pros and cons. A large feedback response from different groups was likely. A "findings section" to be transmitted publicly, but not on the ballot, would be optimum. Number 487 REPRESENTATIVE ULMER added at local elections usually long descriptions are put on the ballot for either sales tax proposals or bond proposals. She attributed this to the theory that a lot of people who attend the polls may not have had the opportunity to read through the information before hand. She referred to HB 541 as "spare" and felt it may not elicit an appropriate response. Number 498 CHAIRMAN VEZEY pointed out in the late 20s when putting federal income tax in statute was being considered, it was considered that it never exceed 10 percent. At the time, the politicians felt this would scare people from voting on a constitutional amendment to ratify an income tax. Therefore, it was left blank with no ceiling. He noted the present rate of nearly 40 percent. He believed it began at three percent. Number 510 REPRESENTATIVE G. DAVIS questioned if HB 541 did pass, would the Lt. Governor's office put the wording together, or does it read as stated in the bill. CHAIRMAN VEZEY clarified the Lt. Governor's office is supposed to word a ballot proposition in keeping with the statute. He noted HB 541 states the question shall appear substantially in the following form, which he believed would preclude extraneous information. Number 521 REPRESENTATIVE ULMER explained they usually seek for a supporter and an opponent to prepare the pro and con statement. She noted HB 541 was a little different because it listed options. REPRESENTATIVE ULMER suggested a letter of intent from the committee to the Lt. Governor's office asking for a layout of numbers in the background material of the voter's pamphlet. Number 530 CHAIRMAN VEZEY stated he believed the committee was confusing the issue, because HB 541 was not addressing a level of taxation or how much revenues the state is short over its current spending pattern. HB 541 asks which vehicle the public feels is more appropriate for increasing moneys available to the general fund. REPRESENTATIVE ULMER responded she understood. She brought up a situation, whereby a sales tax of 15 percent was necessary to equal revenue generated by a state income tax of two percent, as an example. She believed data regarding the choice of limiting permanent fund earnings should be available to state what kind of limit would equal what percentage of sales tax. REPRESENTATIVE ULMER stated she did not have an amendment to propose. Number 546 CHAIRMAN VEZEY asked the pleasure of the committee. Number 549 REPRESENTATIVE G. DAVIS moved to move HB 541 from committee with individual recommendations. Number 550 CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, ULMER, G. DAVIS. OPPOSED: REPRESENTATIVE SANDERS. ABSENT: REPRESENTATIVES KOTT, B. DAVIS, OLBERG. MOTION FAILED (REPRESENTATIVE KOTT returned to the meeting at 8:39 a.m.) CHAIRMAN VEZEY brought up the Confirmation of James Adams to take the vote. He moved the committee forward the nomination of James Adams to the Alaska Public Offices Commission without any specific recommendations, for the consideration of the Joint Session. He asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, KOTT, ULMER, G. DAVIS, SANDERS. ABSENT: REPRESENTATIVES B. DAVIS, OLBERG. CSHB 345: "An Act relating to the maintenance of and art requirements for certain public buildings and facilities and to the art in public places fund; and providing for an effective date." CHAIRMAN VEZEY opened HB 345 for discussion. He asked if there was a motion to adopt CSHB 345, version E. Number 588 REPRESENTATIVE PETE KOTT so moved. Number 589 CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, KOTT, G. DAVIS, SANDERS. OPPOSED: REPRESENTATIVE ULMER. ABSENT: REPRESENTATIVES B. DAVIS, OLBERG. MOTION PASSED Number 595 REPRESENTATIVE JEANNETTE JAMES, prime sponsor of CSHB 345, gave a brief statement. She commented the committee had heard HB 345 two other times. She expressed there really is a problem with the deferred maintenance of public facilities, therefore it was her intent to gain awareness for the problem. She noted 1,717 buildings with a value of $2.3 billion, excluding the University of Alaska, will estimate $251 million in deferred maintenance. She believed this number was conservative. The problem is critical. REPRESENTATIVE JAMES explained CSHB 345 is simple, easy to digest, and workable, as compared to her original HB 345. She stated CSHB 345 would set up a fund for deferred maintenance, whereby one percent of construction costs, on a one time basis, would be put into it. A committee is then set up to determine life costs and criteria to make up a six year plan. CSHB 345 would determine an amount, per foot, of assessment on those agencies who are in state facilities owned by the state. That allocation would then go to take care of the deferred maintenance. CSHB 345 would repeal the statutes affecting the one percent for art program. She stated this is because buildings are falling down around us and the luxury of art cannot be afforded when the roof is leaking. The proceeds of the general obligation and revenue bonds would also go into the fund. Any federal funds, additional appropriations and interest on the fund would remain in the fund. She noted the appropriations into the fund would be continuing; therefore, they would not lapse. She proposed in the future, enough money would be in the fund so as not only regular maintenance could be taken care of, but also a portion would be set aside for components. She offered to review the sectional analysis for the committee. Number 636 CHAIRMAN VEZEY noticed the committee did not have the sectional analysis in their packets. He clarified HB 345 had a zero fiscal note because it is all subject to appropriation. Number 638 REPRESENTATIVE JAMES corrected there was a small fiscal note of $151,300 from the Department of Administration (DOA) because they would be assigned the task of putting together the criteria to establish the six year plan and the administrative duties of the committee. She noted the DOA fiscal note would not be for the current year. Number 650 CHAIRMAN VEZEY asked where the duties of the committee were spelled out. Number 653 REPRESENTATIVE JAMES replied it is defined that the committee will establish the criteria on the life costs system. Number 657 CHAIRMAN VEZEY asked under which duty of the committee would the establishment of a maintenance fund fee formula be. The per square foot formula. Number 660 REPRESENTATIVE JAMES answered under establishing the criteria for the major maintenance needs of the state buildings. She noted number 7 in the list of duties is to review the life cycle costs. Number 662 CHAIRMAN VEZEY recognized the sectional analysis was distributed and stated REPRESENTATIVE JAMES could go through it. Number 663 REPRESENTATIVE JAMES outlined the sectional analysis. She began with Section 1. Section 1 creates the state building major maintenance fund consisting of appropriations and bond proceeds. This fund operates separately and parallels the system set up for the university, as stated in AS 35.50.020. Nonlapsing appropriations are addressed so the appropriations are not for one year. One percent of construction costs of a state building are put into the fund. The review committee is created consisting of the Commissioners of Administration, Transportation and Public Facilities, and three other departments selected by the Governor on a two-year rotating basis. The Commissioner of Administration would serve as the chair, reviewing all covered entities except the university. The committee of the Board of Regents may employ or contract for the expertise needed to accomplish the required duties. The committee's duties are established, which the Board of Regents' duties will parallel. The Board of Regents however will apply to university buildings. By January 15 each year, the Commissioner of Administration will give the legislature the committee's list of all current major maintenance needs, a report of the committee's activities for the previous fiscal year, and a prioritized list of projects recommended for the next fiscal year. Parallel requirements exist for the Board of Regents. The major maintenance fee is addressed, existing parallel for the Boards of Regents. The rate per square foot is used by the Governor to prepare the annual budget. Section 1 includes definitions for Board of Regents, building, committee, department, state agency, state building, state fund, university, university building, and university fund. The definition for construction costs is included in AS 35.50.030(c). TAPE 94-41, SIDE B Number 000 REPRESENTATIVE JAMES continued. REPRESENTATIVE JAMES stated Section 2 states the Alaska State Council on the Arts remains in effect. However, the council's authority over the art in public places fund is deleted. REPRESENTATIVE JAMES stated Section 3 states memorials constructed under AS 44.35.030 are no longer subject to the artworks in public buildings and facilities statute. REPRESENTATIVE JAMES stated Section 4 repeals statutes relating to Art Works in Public Buildings and Facilities, the responsibility of the Alaska State Council on the Arts to manage the art in public places fund, and the fund itself. REPRESENTATIVE JAMES stated Section 5 states Art Works in Public Buildings and Facilities continues in effect for works under contract if the contract is entered into before the effective date of Section 4. REPRESENTATIVE JAMES stated in Section 6 all provisions are effective immediately except for the payment of the major maintenance assessment fee, which becomes effective July 1, 1995. Number 030 CHAIRMAN VEZEY noted REPRESENTATIVE JAMES's office had done a lot of work on CSHB 345. Number 032 REPRESENTATIVE JAMES stated she believed CSHB 345 was very important, and deferred maintenance must be addressed. Number 044 NANCY BEAR USERA, COMMISSIONER OF ADMINISTRATION, commented on CSHB 345. She noted CSHB 345 calls for the DOA to be the lead agency for implementation. The DOA believes the maintenance and protection of the state's assets have been grossly neglected, therefore a mechanism needs to be found. She stated they have been trying to find a method for several years and of all of the approaches, CSHB 345 makes the most sense. MS. USERA explained at the first sight of CSHB 345, she did not like the emphasis on the DOA as the source of implementation. She stated she now feels it makes sense. The DOA would be most suitable because of its responsibilities in providing overhead services to all state agencies. The DOA would have the most "global" view of the needs of the departments. The balance of the committee would be very representative. MS. USERA pointed out the six year plan and a funding source that transcends from year to year would aid in the long term approach. They have had difficulty with deferred maintenance projects because when the funds lapse every year, there is no carry forward. She noted with the constraint of operating budgets, people use money which otherwise might go for daily operational maintenance issues. She recollected deferred maintenance on 2,500 buildings, so an estimation of 1,700 might be low. She explained the state has buildings as small as mobile homes in Bethel that serve as the employment service office that need to be maintained. MS. USERA stated DUGAN PETTY, Director of the Division of General Services, would be the key person for developing the project work on CSHB 345. She explained their fiscal note depicted a professional project approach to assessing the needs of state buildings and devising the criteria. The DOA would be able to prioritize the $251 million worth of deferred maintenance projects. Number 113 CHAIRMAN VEZEY asked the rate of how much the list of deferred maintenance was growing each year. Number 116 MS. USERA stated she did not know specifically. Number 119 REPRESENTATIVE JAMES responded the fiscal note from the original HB 345 was $61 million a year required to just meet the life costs formula for existing maintenance of the state's buildings. Number 126 CHAIRMAN VEZEY stated he thought $61 million had included operations. Number 127 REPRESENTATIVE JAMES clarified the $61 million did include utilities. She noted utilities are a very important part of the process because as less maintenance is done, utilities increase. She estimated a third, to a half of the $61 million might have been for utilities. She noted at least a $30 million a year deficit in deferred maintenance. Number 136 CHAIRMAN VEZEY asked if the fund CSHB 345 was creating would not pay utilities. REPRESENTATIVE JAMES answered the fund would not. Number 146 CHAIRMAN VEZEY moved to the Anchorage teleconference site. Number 150 ROGER PATCH, PRESIDENT, ALASKA STATE FACILITY ADMINISTRATORS (ASFA), commented on CSHB 345. He stated ASFA is a voluntary organization composed of facility representatives from each of the agencies, the court system and the university system. They have been studying the backlog of deferred maintenance for the past five years. Deferred maintenance is their largest common problem and biggest concern. He expressed if the backlog was not addressed in the immediate future, Alaska will be faced with rebuilding facilities, as opposed to trying to preserve them. ASFA supports CSHB 345. He stated ASFA is currently refining all of its statistics to give the committee some updates on the current value of the backlog. Number 180 KIT DUKE supported CSHB 345. She testified that she agreed with the testimony of MS. USERA and MR. PATCH. She worked on the issue of deferred maintenance in 1993 and had testified for the committee on Executive Order 89. She expressed she was disappointed EO 89 was withdrawn; however, she was pleased CSHB 345 was chosen to be addressed by the legislature. MS. DUKE stated she believed CSHB 345 was an important step towards resolving the deferred maintenance issue. Therefore, she urged the passage of CSHB 345 from committee with do pass recommendations. MS. DUKE explained CSHB 345 contains two elements address how to eliminate the backlog, and how not to continue to create it. She noted the nonlapsing fund and creating a committee to take action by developing a six year plan. She volunteered her time to ensure the six plan would be prepared, if CSHB 345 were to pass. Number 210 REPRESENTATIVE G. DAVIS inquired about AS 35.50.060, committee duties as referred to in CSHB 345. He asked how the function was performed now. Does each building have a building maintenance supervisor that submits a list of problems and cost estimates to his supervisor, or is it done on an individual basis. Number 226 MS. DUKE replied the process was not well organized. Major institutions (e.g., correctional facilities, hospitals) usually have a maintenance superintendent. A major combined office facility will have a Department of Transportation person, not responsible for only that building, that will put together information about what work needs to be done. The information will then proceed up through the chain of command, whereby it may or may not get addressed by the Governor's office or the legislature. She stated presently, there is no comprehensive plan for buildings to be evaluated by. Number 243 REPRESENTATIVE G. DAVIS questioned if current procurement policies and procedures get in the way of small repair items. MS. DUKE stated she did not believe that they need to. She felt they can work within procurement regulations to accomplish what needs to be done. Most importantly, there needs to be a single point of focus and a plan for action. She supported CSHB 345 in this effort. Number 266 REPRESENTATIVE ULMER moved an amendment to delete Section 4 from CSHB 345. Number 277 CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES ULMER, G. DAVIS. OPPOSED: REPRESENTATIVES VEZEY, KOTT, SANDERS. ABSENT: REPRESENTATIVES B. DAVIS, OLBERG. MOTION FAILED Number 280 REPRESENTATIVE G. DAVIS commented a lot of work had been done on CSHB 345, and there was no question that something needed to be set up. He noted the similar process he has experienced from the municipal level. CSHB 345 would save the state money in the future. REPRESENTATIVE G. DAVIS moved to pass CSHB 345 from committee with individual recommendations. Number 307 CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, KOTT, ULMER, G. DAVIS, SANDERS. ABSENT: REPRESENTATIVES B. DAVIS, OLBERG. MOTION PASSED HB 430 - LICENSING REQUIREMENTS FOR DRIVERS CHAIRMAN VEZEY opened HB 430, sponsored by REPRESENTATIVE JOE GREEN, for discussion. He recognized a new committee substitute was before the committee. He asked if there was a motion to adopt CSHB 430, version E. Number 332 REPRESENTATIVE G. DAVIS so moved. Number 335 CHAIRMAN VEZEY, hearing no objection, adopted CSHB 430. Number 337 REPRESENTATIVE JOE GREEN, sponsor, addressed CSHB 430. He stated at the previous hearing regarding HB 430 there had been a question about young persons who might be employed after the one o'clock curfew. He directed the committee to page 2, beginning line 25, which addresses this question. So long as the person who may have been driving is driving to or from, on the most direct route, his place of work to his place of living, he/she would be excluded. Number 357 JUANITA HENSLEY, CHIEF OF DRIVER SERVICES, DIVISION OF MOTOR VEHICLES, DEPARTMENT OF PUBLIC SAFETY (DPS), answered questions on CSHB 430. She directed the committee to a letter of March 18, 1994, which was written to her by the Trauma Registry Coordinator, Emergency Medical Services Section, Department of Health & Social Services. The letter stated the average cost of hospitalization for a person under the age of 21 involved in a serious accident is $25,984. This cost does not include rehabilitation costs or costs to the physicians themselves. MS. HENSLEY reviewed a second table entitled, 1992 ALASKA DRIVERS IN TRAFFIC CRASHES, prepared by the roadway and accident file from DPS. This table states the number of licensed drivers in Alaska, their ages, and the percentages of those drivers. She pointed out the age group that CSHB 430 addresses only comprises 6.2 percent of all licensed drivers in the state of Alaska. MS. HENSLEY compared that percentage to the next chart entitled, ALASKA YOUTH CRASH STATISTICS - 1979 THRU 1992. The 16-20 age group is over-represented in the number of crashes, and the number of injury and fatal crashes, they have. She noted in 1992, Alaska had a total of 89 fatality crashes including all ages. Of these 89 crashes, 21 involved youth. Therefore, they represented 23.6 percent of the total fatal crashes in Alaska. In 1992, Alaska had a total of 50 alcohol crashes, of which nine involved youth. Therefore, 42.9 percent of youth crashes involved alcohol. MS. HENSLEY examined the third chart entitled, ALASKA YOUTH CRASH DEATH STATISTICS - 1979 THRU 1992. This chart stated of the 89 total crashes in 1992, there was a total of 108 deaths. Of the 108 deaths, 25 or 23.1 percent were youth. Of the 89 total crashes, there were 61 alcohol fatalities, 10 of which involved youth. Number 417 CHAIRMAN VEZEY clarified 41 percent of alcohol related accidents involved people under 21. MS. HENSLEY corrected 40 percent. MS. HENSLEY referred to another pie chart entitled, 1992 INJURY AND FATAL CRASH DRIVERS, which breaks down two hour segments of time in a day. She pointed out in 1992, 32 percent of injury and fatal youth crashes were between 8 p.m. and 6 a.m. She repeated the 16-20 age group is only 6.2 percent of the licensed drivers, as opposed to the other 92 percent which are over the age of 21. In comparison of the two age groups, the 1992 injury and fatal crashes between 8 p.m. and 6 a.m. involve 32 percent of youth, whereas only 23 percent involve those 21 or older. Number 446 CHAIRMAN VEZEY inquired if he could assume all of the fatalities involving youth occurred between the hours of 8 p.m. and 6 a.m. MS. HENSLEY answered of the 32 percent, yes. REPRESENTATIVE GREEN clarified not all teenage deaths occur during those hours, just a propensity. Number 451 CHAIRMAN VEZEY asked if was correct in assuming that all of the alcohol related teenage fatalities occurred between 8 p.m. and 6 a.m. MS. HENSLEY replied she had not done that chart; however, she could get that information transmitted from Department of Transportation. MS. HENSLEY commented the injuries and fatalities are basically the same for youths and those over 21, even during mid-day for the same amount of drivers. She emphasized the youth only make up 6.2 percent of drivers, therefore they are over-represented in the statistics. CHAIRMAN VEZEY clarified 6.2 percent. Number 462 MS. HENSLEY stated 12.9 percent of the overall crashes in Alaska involved youth under the age of 21. She noted 12.9 percent was quite high for only comprising 6.2 percent of the licensed drivers. MS. HENSLEY referred to an article entitled, STATUS REPORT, March 19, 1994, by the Insurance Institute For Highway Safety. This report addresses the intent of CSHB 430 and how it proposes to reduce crash rates and fatalities. MS. HENSLEY referred back to the letter sent to her by the EMS which showed the average hospitalization cost is $25,984 for each individual, per accident. She did not know what percentage did not involve insurance or what the societal cost to the state was. She believed, however, it would be quite substantial. She stated 184 patients were in this category where the average cost of hospitalization was $25,984 per patient. The physician fees and rehabilitation costs were not included in this average. She noted 21 patients, or 11.4 percent, were discharged with disabilities, and 11 patients were discharged to a rehabilitation center. Number 497 CHAIRMAN VEZEY clarified the group of drivers under the age of 21 represented 6.2 percent of the driving population. He stated 32 percent of the total injury and fatal crashes, between the hours of 8 p.m. and 6 a.m. involved youth. He inquired if the statistic meant injury and fatality, or injury and/or fatality. MS. HENSLEY answered injury and/or fatality. She compared that number to individuals over 21 who are involved in 23 percent of the crashes. Number 530 CHAIRMAN VEZEY asked what percentage of fatalities youth were involved in. MS. HENSLEY replied 42.9 percent were involved in fatal crashes. Youth deaths were 40 percent of the 108 fatalities in 1992. She emphasized they only represent 6.2 percent of all the licensed drivers. She pointed out this trend is nationwide. She hoped to be able to present a chart examining the statistics based on the days of the week. For example, were Friday and Saturday nights higher than Monday through Thursday. Number 547 REPRESENTATIVE ULMER stated she believed the numbers were very convincing and she moved to pass CSHB 430 out of committee. She complimented MS. HENSLEY on the charts. Number 552 REPRESENTATIVE KOTT asked where the charts came from. MS. HENSLEY responded they were developed from information received from the Highway Safety Planning (HSP) agency. The Governor's representative for HSP put together the pie chart. The information for the pie charts was received from DOT's roadway and accident files. She noted DOT has a complete database of all the accidents occurring in Alaska. Number 559 REPRESENTATIVE KOTT inquired about the non-pie charts. MS. HENSLEY answered the non-pie charts were also put together by HSP. Number 561 REPRESENTATIVE KOTT commented the numbers represented for the total fatalities for those drivers under 21 did not explicitly prove to him that youths were behind the wheel driving. They could have only been in the vehicle. MS. HENSLEY replied REPRESENTATIVE KOTT was correct; however, statistics broken down by the age of the driver, show teenage drivers are usually behind the wheel. Number 572 REPRESENTATIVE KOTT gave the example of a 17 year old fatality involved in an accident where the parents were driving. He noted this type of fatality would be included in the chart. He questioned the statistics given. Number 576 REPRESENTATIVE GREEN believed the debate was going from "statistics to fantasy..." He suggested, by the same example, that a mature driver could be driving whereby a teenager was killed, or the reverse. He believed the question was not germane to CSHB 430. He reminded the committee of the rates insurance companies charge for drivers in the under 21 category, versus the mature driver. He noted there is a reason the cost for young drivers was more than twice as much. REPRESENTATIVE KOTT stated he was trying to draw some correlation between a youthful driver and their action. He stated this was the key to CSHB 430. If 80 percent of the statistics before the committee dealt with fatalities of those under 21 who were passengers, then the data is skewed and disproportionate. He questioned if the 40 percent of youth involved in fatalities actually reflected their driving habits. Number 600 MS. HENSLEY directed REPRESENTATIVE KOTT to the ALASKA YOUTH CRASH DEATH STATISTICS and pointed out of the 108 deaths, 10 involved alcohol. She emphasized 40 percent of youth accident deaths involved alcohol. She believed this was an awful high percentage. Number 606 CHAIRMAN VEZEY questioned what the 10 alcohol youth deaths represented 40 percent of. Number 616 MS. HENSLEY corrected she had meant 40 percent of the total number of teenagers killed involved alcohol deaths. There was a total of 61 alcohol related accident deaths in 1992. She clarified 10 alcohol youth accident deaths out of 61 total would be 16.4 percent. There were a total of 25 youth crashes. Number 619 REPRESENTATIVE KOTT questioned if the alcohol related fatalities were taken out, would there still be a disproportionate number of crashes involving those under 21. Number 622 MS. HENSLEY believed the statistics would still be as high. She referred to the pie chart which states during the daytime, 32 percent of youth are involved in injury and fatal crashes. She compared this to the adult evening statistic of 23 percent. She estimated about 36 percent of adults were involved in crashes during the daytime. Number 635 CHAIRMAN VEZEY stated there was a motion before the committee, however, he would hold the motion until next week because a fiscal note was not provided with the committee substitute. Number 638 REPRESENTATIVE ULMER withdrew her motion. Number 640 REPRESENTATIVE GREEN stated they do not get fiscal notes until there is a reason for them. He asked if CSHB 430 would be killed. Number 645 CHAIRMAN VEZEY replied he did not believe there would be amendments to CSHB 430. Number 646 REPRESENTATIVE KOTT said he might want to offer an amendment to page 2, line 3, which raises the age of those that can accompany a permit driver from 19. He stated he would be more inclined to make the accompaniment a parent or legal guardian. Number 654 MS. HENSLEY addressed REPRESENTATIVE KOTT's proposed amendment. If the provision was made a parent or legal guardian, then those individuals would be excluded from being able to take professional driver training. Number 656 REPRESENTATIVE KOTT felt an allowance could be made. Number 659 REPRESENTATIVE ULMER remembered there was a deadline for personal sponsored bills in House Rules, and noted CSHB 430 was also referred to Finance. She wanted to move it out of committee. Number 663 MS. HENSLEY stated she believed CSHB 430 would have a zero fiscal note. She mentioned the High Risk Drivers Act presently in Congress which has passed one house and is in the other, would give the states $1.2 million to implement the CSHB 430 program. She said it was their intention to apply for Section 402 grants for any costs of implementation. Number 670 CHAIRMAN VEZEY clarified CSHB 430 would have a zero fiscal note. With the assurance of a zero fiscal note and REPRESENTATIVE ULMER's annotation that CSHB 430 be moved from committee, he stated there was no reason CSHB 430 could not be moved from committee. CHAIRMAN VEZEY asked the committee secretary to call the roll. IN FAVOR: REPRESENTATIVES VEZEY, KOTT, ULMER, G. DAVIS, SANDERS. ABSENT: REPRESENTATIVES B. DAVIS, OLBERG. MOTION PASSED (REPRESENTATIVE KOTT left the meeting at 9:36 a.m.) HB 531 - ELIMINATE SOME STATE MULTIMEMBER BODIES CHAIRMAN VEZEY, under bills previously heard, opened HB 531 to discuss an amendment REPRESENTATIVE ULMER proposeD. REPRESENTATIVE ULMER stated the amendment allows the committee meetings to be held by teleconference to avoid travel costs, it raises the jurisdiction of the committee from $1,000 to $5,000, and adds language in Section 6 to clarify the Museum Collections Advisory Committee (MCAC) general duties pertain to acquisition and disposition, which was recommended by the Karen Crane, Department of Education, for clarity. The last line on page 1 deletes those sections of HB 531 which had deleted the MCAC. Number 692 CHAIRMAN VEZEY referred to Section 6 which states, "the committee shall act in an advisory capacity to the board." He could not remember what the board was. Number 696 REPRESENTATIVE ULMER stated she guessed the Board of Education. TAPE 94-42, SIDE A Number 000 CHAIRMAN VEZEY asked what Section 6 was doing. REPRESENTATIVE ULMER clarified "acquisition and disposition" is the language being added. The statute presently reads,"the committee shall act in an advisory capacity to the board as the general policies and programs of the state museum." She stated Karen Crane suggested the change. She reminded the committee most of the testimony received pertained to MCAC's role in overseeing how money was spent to either acquire or disposition of assets. The scope of the MCAC's jurisdiction is narrowed by this additional language. She stated she was imparticular about the change, but it made DOE more at ease with HB 531. Number 028 CHAIRMAN VEZEY clarified the amendment would narrow the scope of the MCAC. He commented they used the word "deaccession," and asked if "disposition" would be the correct word to use. REPRESENTATIVE ULMER responded "disposition" was recommended by Karen Crane and Terri Lauterbach. Number 047 CHAIRMAN VEZEY stated REPRESENTATIVE ULMER was clarifying in Section 4 that a meeting could be held by teleconference. In Section 5, the limit would be raised from $1,000 to $5,000. He asked about raising the limit to $10,000. REPRESENTATIVE ULMER replied she did not have any information about how many acquisitions were within various categories. She referred to previous testimony which stated there are a number of small acquisitions under $5,000 which would be freed up. She had no preference for $5,000 or $10,000. Number 069 CHAIRMAN VEZEY stated he remembered the testimony to state they have a $50,000 acquisition budget, which they make 10- 11 acquisitions per year with. The average was about $5,000. REPRESENTATIVE ULMER said she just did not know. Number 080 REPRESENTATIVE G. DAVIS commented he tended to support the amendment even though he had concerns about the number of boards and commissions. He felt the $5,000 level as compared to $10,000, was questionable. He pointed out how valuable a piece is to a collection might be more of a question. Number 101 CHAIRMAN VEZEY stated he believed the impetus for the change was to remove fairly minor acquisitions from the purview of the MCAC. He questioned the dollar value of a major acquisition. Number 113 REPRESENTATIVE ULMER offered to get a list from the museum as to the costs of acquisitions. Number 117 CHAIRMAN VEZEY stated a list would not be as important as determining value. What is a major acquisition versus a relatively minor acquisition made probably more out of opportunity. Something to fulfill a collection would have a lot a value, thereby costing a lot of money. CHAIRMAN VEZEY, hearing no further questions, stated a committee substitute would be drafted that adopts REPRESENTATIVE ULMER's proposed amendment. He felt the $5,000 could still be adjusted, if necessary. Number 134 REPRESENTATIVE ULMER asked if HB 531 would be rescheduled for Thursday or Tuesday of next week. Number 136 CHAIRMAN VEZEY believed Tuesday. ADJOURNMENT CHAIRMAN VEZEY, having no more business before the committee, adjourned the meeting at 9:45 a.m. BILLS CANCELLED FROM THE SCHEDULE HB 420 - LIMITED LIABILITY COMPANIES