ALASKA STATE LEGISLATURE  HOUSE STATE AFFAIRS STANDING COMMITTEE  April 17, 2003 8:12 a.m. MEMBERS PRESENT Representative Bruce Weyhrauch, Chair Representative Jim Holm, Vice Chair Representative Bob Lynn Representative Paul Seaton Representative Ethan Berkowitz Representative Max Gruenberg MEMBERS ABSENT  Representative Nancy Dahlstrom COMMITTEE CALENDAR HOUSE BILL NO. 248 "An Act relating to the annual salary of the chief procurement officer; and providing for an effective date." - MOVED HB 248 OUT OF COMMITTEE HOUSE BILL NO. 243 "An Act establishing state agency program performance management and audit powers in the Office of the Governor for the evaluation of agency programs; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 134 "An Act authorizing the Department of Corrections to enter into agreements with municipalities for new or expanded public correctional facilities in the Fairbanks North Star Borough, the Matanuska-Susitna Borough, Bethel, and the Municipality of Anchorage." - MOVED CSHB 134(STA) OUT OF COMMITTEE HOUSE BILL NO. 266 "An Act relating to elections, questioned ballots and questioned voters, voter registration, training of election officials, preparation of election materials, voter identification, absentee voting, counting ballots, and the primary election; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 149 "An Act requiring nonprofit corporations under the Alaska Net Income Tax Act to provide prior public notice of lobbying expenditures and an annual report of lobbying expenditures to the Department of Revenue; providing for a civil penalty for failure to provide the notice; and providing for an effective date." - BILL HEARING POSTPONED TO 4/24/03 HOUSE BILL NO. 215 "An Act repealing statutes that relate to art works in public buildings and facilities and that require a set percentage of construction costs to be spent on art." - BILL HEARING POSTPONED TO 4/24/03 PREVIOUS ACTION BILL: HB 248 SHORT TITLE:SALARY OF CHIEF PROCUREMENT OFFICER SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR Jrn-Date Jrn-Page Action 04/04/03 0786 (H) READ THE FIRST TIME - REFERRALS 04/04/03 0786 (H) STA 04/04/03 0786 (H) FN1: ZERO(ADM) 04/04/03 0786 (H) GOVERNOR'S TRANSMITTAL LETTER 04/15/03 (H) STA AT 8:00 AM CAPITOL 102 04/15/03 (H) Heard & Held 04/15/03 (H) MINUTE(STA) 04/17/03 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 243 SHORT TITLE:EVALUATION OF AGENCY PROGRAMS SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR Jrn-Date Jrn-Page Action 04/04/03 0769 (H) READ THE FIRST TIME - REFERRALS 04/04/03 0769 (H) STA, FIN 04/04/03 0770 (H) FN1: ZERO(GOV) 04/04/03 0770 (H) GOVERNOR'S TRANSMITTAL LETTER 04/10/03 (H) FIN AT 1:30 PM HOUSE FINANCE 519 04/10/03 (H) Mtg Postponed Unitl Adjnmt of F/Session 04/15/03 (H) STA AT 8:00 AM CAPITOL 102 04/15/03 (H) Heard & Held MINUTE(STA) 04/17/03 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 134 SHORT TITLE:CORRECTIONAL FACILITY EXPANSION SPONSOR(S): REPRESENTATIVE(S)STOLTZE Jrn-Date Jrn-Page Action 02/26/03 0306 (H) READ THE FIRST TIME - REFERRALS 02/26/03 0306 (H) STA, FIN 03/13/03 (H) STA AT 8:00 AM CAPITOL 102 03/13/03 (H) Scheduled But Not Heard 04/01/03 (H) STA AT 8:00 AM CAPITOL 102 04/01/03 (H) Heard & Held MINUTE(STA) 04/15/03 0996 (H) COSPONSOR(S): SEATON 04/15/03 (H) STA AT 8:00 AM CAPITOL 102 04/15/03 (H) Heard & Held MINUTE(STA) 04/17/03 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 266 SHORT TITLE:ELECTIONS SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR Jrn-Date Jrn-Page Action 04/14/03 0965 (H) READ THE FIRST TIME - REFERRALS 04/14/03 0965 (H) STA, FIN 04/14/03 0965 (H) FN1: ZERO(GOV) 04/14/03 0965 (H) FN2: ZERO(ADM) 04/14/03 0965 (H) GOVERNOR'S TRANSMITTAL LETTER 04/15/03 (H) STA AT 8:00 AM CAPITOL 102 04/15/03 (H) Scheduled But Not Heard 04/17/03 (H) STA AT 8:00 AM CAPITOL 102 WITNESS REGISTER DAN SPENCER, Director Administrative Services Department of Administration (DOA) Juneau, Alaska POSITION STATEMENT: Testified on behalf of DOA during the hearing on HB 248. JAY HOGAN, Deputy Director Office of Management & Budget (OMB) Office of the Governor Juneau, Alaska POSITION STATEMENT: Testified on behalf of the administration to answer questions during the hearing on HB 243. PAT DAVIDSON, Legislative Auditor Division of Legislative Audit Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Testified on behalf of the division during the hearing on HB 243. JERRY BURNETT, Director Division of Administrative Services Department of Corrections (DOC) Juneau, Alaska POSITION STATEMENT: Answered questions regarding a new fiscal note from DOC and a proposed committee substitute (CS), during the hearing on HB 134. REPRESENTATIVE BILL STOLTZE Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Testified as sponsor of HB 134. JAMES BALDWIN, Assistant Attorney General Governmental Affairs Section Civil Division (Juneau) Department of Law (DOL) Juneau, Alaska POSITION STATEMENT: Answered questions during the hearing on HB 243. LAURA GLAISER, Director Division of Elections Office of the Lieutenant Governor Juneau, Alaska POSITION STATEMENT: Testified on behalf of the division during the hearing on HB 266. SARAH FELIX, Assistant Attorney General Civil Division (Juneau) Department of Law (DOL) Juneau, Alaska POSITION STATEMENT: Answered questions during the hearing on HB 266. JUSTIN ROBERTS, Staff to Representative Gruenberg Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Testified on HB 266. ACTION NARRATIVE TAPE 03-41, SIDE A  Number 0001 CHAIR BRUCE WEYHRAUCH called the House State Affairs Standing Committee meeting to order at 8:12 a.m. Representatives Holm, Seaton, Berkowitz, and Weyhrauch were present at the call to order. Representatives Lynn and Gruenberg arrived as the meeting was in progress. [The recording began briefly, was paused, then began again. No minutes were lost.] HB 248-SALARY OF CHIEF PROCUREMENT OFFICER Number 0030 CHAIR WEYHRAUCH announced that the first order of business was HOUSE BILL NO. 248, "An Act relating to the annual salary of the chief procurement officer; and providing for an effective date." Number 0090 DAN SPENCER, Director, Administrative Services, Department of Administration (DOA), referred to the new fiscal note [from DOA, dated 4/16/03, included in the committee packet], which was provided to the committee in response to a request from Chair Weyhrauch [during the House State Affairs Standing Committee meeting on April 15, 2003]. He pointed to the [analysis] portion of the fiscal note, where it shows an annual savings of approximately $8,200 "at the current salary ranges of each of the people involved." REPRESENTATIVE SEATON indicated the range [26] of the director "going to zero." He asked if [the legislature] needs to take some action to "zero that out" of the Budget Review Unit (BRU). MR. SPENCER answered no. He explained, "What we have done is we have re-classed that position to this deputy director position." In response to a follow-up question by Representative Seaton, he confirmed that because of the reclassification, there is no [position] to be filled. Number 0202 REPRESENTATIVE BERKOWITZ moved to amend the fiscal note such that the decrement is indicated in the relevant portion instead of simply in the analysis. MR. SPENCER stated that the reality is that "this particular division is getting the charge to do a lot more" within its existing budget. He mentioned centralizing procurement. For example, he indicated that the budget reflects that there are $1.5 million-worth of savings that [the division] has to find in leasing, as well as probably "another couple million dollars" that the division will have for all the procurement officers. He stated that although virtually all of the Department of Administration has taken reductions, it has "tried not to do that in this particular division because, in fact, their work load is going to go up here over the next couple of years, and that wouldn't help us very much in that regard." REPRESENTATIVE BERKOWITZ stated that it seems to him that if there's a decrement based on the actions [the administration] takes, it ought to be recognized. He added, "If, subsequently, the agency, or any agency, seeks additional funds, that ought to go under the budget hopper, along with everything else." MR. SPENCER explained that when "we" did the budget, the governor had already decided that "we were going to go this route," which he said is one of the reasons that the budget is the way it is today, is [because] we anticipated this savings in there already." REPRESENTATIVE BERKOWITZ asked if there are any other areas where Mr. Spencer is aware of where [Governor Murkowski] incorporated cuts, prior to legislative approval. MR. SPENCER clarified that no legislative approval was needed to make the adjustment that resulted in the salary savings. In response to a follow-up comment by Representative Berkowitz, he stated the following: We need legislative approval on this particular one to change the salary range of the chief procurement officer; but in terms of the administrative assignment of positions and the salary ranges of other positions, [it] is an administrative action, and the savings that result from those - we do these every day. These are not situations where an appropriation's required for us to adjust the salary ranges, realize some savings, and apply that savings to other areas of our operations. This is [a] normal course of business. REPRESENTATIVE BERKOWITZ stated that the savings has to be within the BRU, and if it's not, and there's a change in what the BRU is, that savings ought to be returned to the general fund, where it's subject to appropriation by the legislature. MR. SPENCER noted: "This is a savings in this particular salary area, but we're going to be doing other things within this. This is part of our normal course of administering these programs, where we can take this savings and apply it to those other areas, without asking for additional money." CHAIR WEYHRAUCH said he thinks that the general discussion comes up in a lot of fiscal notes and is an issue to be sensitive to when addressing fiscal notes. [The motion to amend the fiscal note was not addressed further.] Number 0532 REPRESENTATIVE SEATON moved to report HB 248 out of committee with individual recommendations and the accompanying fiscal notes. REPRESENTATIVE BERKOWITZ objected for purposes of making a comment. He continued as follows: This is another example of special interests, or very specific legislation, that I think is somewhat onerous in the legislative process, and I would encourage the administration to seek consolidation of these kind of job-related bills, so we don't get them piece-meal. REPRESENTATIVE BERKOWITZ withdrew his objection. There being no further objection, HB 248 was reported out of the House State Affairs Standing Committee. HB 243-EVALUATION OF AGENCY PROGRAMS Number 0610 CHAIR WEYHRAUCH announced that the next order of business was HOUSE BILL NO. 243, "An Act establishing state agency program performance management and audit powers in the Office of the Governor for the evaluation of agency programs; and providing for an effective date." Number 0722 REPRESENTATIVE SEATON moved to adopt the proposed committee substitute (CS) for HB 243, Version 23-GH1138\D, Lauterbach, 4/16/03, as a work draft. There being no objection, Version D was before the committee. Number 0768 JAY HOGAN, Deputy Director, Office of Management & Budget (OMB), Office of the Governor, in response to a question by Chair Weyhrauch, said he had not received a letter from Jim Baldwin, but he added that he thought it had come directly to the committee. [The committee took an at-ease from 8:22 a.m. to 8:23 a.m.] CHAIR WEYHRAUCH noted that the committee discussion during the previous hearing on HB 243, [April 15, 2003], had to do with concerns over Section 3 of [the original bill version, beginning on page 1, line 14, which read as follows]: *Sec.3. AS 44.19 is amended by adding a new section to read: Sec.44.19.147. Internal audit records. The office shall keep a complete file of internal audit reports resulting from audits conducted under AS 44.19.145(a), and a complete file of the internal audit work papers and other related supportive material. Internal audit work papers and other related supportive material are confidential, and internal audit reports are confidential until released by the governor. CHAIR WEYHRAUCH said that the concern was in regard to whether the new provision would in any way impede the legislature from obtaining records, through its own audit function, that were prepared by the executive branch. Number 0820 PAT DAVIDSON, Legislative Auditor, Division of Legislative Audit, Alaska State Legislature, testifying on behalf of the division, noted that she had read the additional language [added to Section 3 of Version D, on page 2, beginning on line 5, which read as follows]: However, the legislative audit division has the right to access these confidential reports, papers, and other material in the same manner and to the same extent as provided in AS 24.20.271(6) for access by the division to confidential material of state agencies. The legislative audit division shall maintain the confidentiality of any reports, papers, or other materials obtained from the office in the same manner as the legislative audit division maintains the confidentiality of other confidential material to which the legislative audit division has access under AS 24.20.271(6). MS. DAVIDSON stated that her concern as a practitioner, rather than as an attorney, is in regard to adding specificity of language, which could potentially raise questions or concerns about all the other confidential information that [the division] is allowed to see "by that statute." She clarified as follows: While I think that, ultimately, we would be able to get to all the confidential information that we already can [get to], I'm concerned ... [that] adding this type of language to this specific issue might cause us difficulties or delays, by other agencies saying, "Well, you don't have this language and my stuff is confidential, so I can't let you look at it." And that would be my concern about adding that type of language. CHAIR WEYHRAUCH asked if Ms. Davidson's first concern was in regard to the first sentence of the added language, beginning with the word "However" [on page 2, line 5, of Version D]. MS. DAVIDSON concurred. She added that also of concern is the language in the following sentence, [beginning on page 2, line 9, of Version D]. She continued: We are covered by legislative ethics Act, and that is what covers the penalties for disclosing any confidential information; so, we're already bound by not revealing any confidential information, and we've had the procedures in place to protect that. So, again, I don't think the language adds anything to ... either our operations or our access, and I would only be concerned about any potential barriers it might create for us. CHAIR WEYHRAUCH commented that the idea had been to remove barriers, not to create them. Number 1065 MR. HOGAN, in response to a question by Chair Weyhrauch, confirmed that he had been present for the prior meeting on HB 243, but only during the discussion of the fiscal note. He continued as follows: When we responded to the Department of Law's suggestion that if we were resurrecting the audit function, we might want to consider making the working papers confidential along the lines of legislative audit, in the process of actually drafting the legislation, we discovered that although the state had had an ... active internal audit function for a number of years - perhaps going back to statehood - there never was any statutory authority to do that. As a result, Section 1 would put in the executive budget Act a responsibility on OMB to become involved in performance budgeting, performance auditing, [and] performance measurement - an authority we do not specifically have, but have used anyway. Then, in ... Section 2, we specifically included the authority to perform internal audits. And then ... [Section 3], the one that's been most under discussion, the provision that mirrors the legislature's grant of authority to legislative audit, ... that is [intended] to keep the working papers confidential - not the reports, per se, but the working papers. The reason being that sometimes, some matters are discussed that are resolved in the audit process, and the public discussion of them after ... might in fact hinder the accomplishment of what goes on, particularly when it relates to personnel matters. All of the records [relating to] personnel matters, the state chooses to keep in confidence. Number 1217 REPRESENTATIVE SEATON referred to a [two-page letter from the Office of the Attorney General, prepared by James Baldwin, Assistant Attorney General, Department of Law, included in the committee packet]. He suggested that the discussion is basically about executive privilege, and he asked, "Are we stepping further into an area where this information would not be available to [the Division of] Legislative Audit?" MR. HOGAN explained [the administration's] concerns regarding going back into the audit business as follows: There are things that are in the nature of personnel complaints that come up, that we might be asked by the governor to look into. Personnel matters, records, and files are, by state law, confidential. The discussion of those - the decisions made, based on a personnel case - are perhaps better left undisclosed, publicly, because the solution may be that a person or persons cease to be employees of the state. So, that's really our interest in this, and it is not to keep matters from the public, it is to realize that we're going to get into sticky situations that involve other matters that are held in confidence by state law. REPRESENTATIVE SEATON responded that he has no problem with the issue of confidentiality. He referred to the middle of the second paragraph in Mr. Baldwin's letter, which read [original punctuation provided]: It is likely that the preliminary reports of the auditors are privileged because the auditors will be advising the governor on matters of policy which would be part of the executive decision-making process. REPRESENTATIVE SEATON clarified that he wants to know if that means that the legislative auditors will be excluded from "this material by this legal opinion," because it's a matter of privilege and not a matter of confidentiality, which they would be adhering to. MR. HOGAN pointed out that Mr. Baldwin goes on [in the letter] to say that a court case will be required to determine the limits of that. He stated that he honestly does not know what the outcome of that would be. He opined that, as a matter of sensitivity on the part of the governor's office, the governor might like some time to "contemplate something" before he or she decides to take action, much as the legislative auditor prepares a confidential preliminary report, which is distributed to the agencies, and then to the committee for a full discussion before it is released. He said that the administration tried [in HB 243] to copy the system that exists in the legislature. Number 1475 REPRESENTATIVE SEATON stated that he doesn't have a problem with what [the administration] is attempting in the bill. He again mentioned the [letter from the Office of the Attorney General] and continued as follows: I'm wondering whether that interpretation is that this would be a ... matter of privilege between the governor and policy makers, and whether that's going to be excluded from the ... [Division of] Legislative Audit's ability to access that material, even though they will hold it all in confidence. MR. HOGAN responded, "That's obviously what they're concerned about, but I don't know whether that circumstance would really come up." REPRESENTATIVE SEATON asked, "Does [the Division of] Legislative Audit have a problem with this?" MS. DAVIDSON said she noted a couple of things while reading the letter from [the Office of the Attorney General]: First, Mr. Baldwin writes about the preliminary report being privileged; he doesn't have anything to say about the working papers. Typically, she said, if [the division] is trying to utilize work done by other auditors, it is more interested in what is in the working papers, rather than "their judgments on how to report that information." She clarified that it is less of an issue for her that "it doesn't so much speak to the working papers as to the report." Second, "in terms of it being privileged," Ms. Davidson said that it probably would be an issue that would have to be taken up by the court. Regarding the language in [Version D] addressing confidentiality, she stated that she doesn't know how that would weigh against an assertion of privilege. She added, "I don't know that they're necessarily linked together. But as I say, I'm more concerned about having access to the working papers ...." MS. DAVIDSON, in response to a question by Representative Seaton, confirmed that she is more comfortable with the language in the original bill than that in the proposed Version D. Number 1639 REPRESENTATIVE SEATON [made a motion to rescind the committee's action in adopting] the proposed committee substitute (CS), Version 23-GH1138\D, Lauterbach, 4/16/03, as a work draft. CHAIR WEYHRAUCH asked if there was any objection. REPRESENTATIVE BERKOWITZ remarked that the whole notion of keeping things confidential in government gives him a lot of pause. He stated that it smacks of secrecy. He opined that there needs to be a better way of insuring that the public has access to information that's gathered. He stated that when the executive or legislative branch makes decisions, it should be a transparent process. He said that he understands the need to protect the confidentiality that's related to personnel, or security issues, or other reasons enumerated regarding going into executive session; however, absent those kinds of compelling reasons, "it all should be out there." Representative Berkowitz said, "The confidentiality in the version that we're reverting to seems far beyond that kind of transparency." CHAIR WEYHRAUCH posited that the proposed Version D provides more restrictions than the original bill. REPRESENTATIVE BERKOWITZ asked, "Are there any other provision of law ... that would keep ... the work product confidential, without specifying it here?" MR. HOGAN answered that he has never looked into that question personally, but he would suspect that [the Division of] Legislative Audit is the only agency that has that particular language on the statutes, "and this would be the second occurrence of it." REPRESENTATIVE BERKOWITZ stated the following: It seems to me though - and ... I haven't read the cases based on Mr. Baldwin's opinion, and his reference to the budget report case - that ... the work of the auditors just on its own would be subject to the deliberative process if the secrecy need or the confidentiality need arose. And we wouldn't need to specify it in statute again. MR. HOGAN responded that he wouldn't assume that it would apply to the budget. He stated that he thinks "audit" is a "significant term of art that will have its own format and own composition"; therefore, he said he could not see how it would relate to budget papers. REPRESENTATIVE BERKOWITZ asked, "Aside from personnel issues, what ... in auditing would require confidentiality?" Number 1855 CHAIR WEYHRAUCH suggested, "Things like ... proprietary information on contracts?" REPRESENTATIVE BERKOWITZ replied: "That can be redacted. ... Again, the proprietary information is protected [by] other provision in law." CHAIR WEYHRAUCH said that the auditors would know best what kind of things should be confidential. He asked Ms. Davidson to comment. MS. DAVIDSON gave an example of auditing the Division of Family and Youth Services (DFYS), which she said the Division of Legislative Audit has been involved with quite a bit. Most of that information is confidential, she noted. REPRESENTATIVE BERKOWITZ interjected that it is protected by court records, though. MS. DAVIDSON said that the division would typically be looking at [DFYS's] files, and those are confidential by law. She explained: When the Division of Legislative Audit prepares the report for the [Joint Committee on Legislative Budget and Audit] to review, we have to write a report so that it is available for public release. We don't put that information in. We have to write it very carefully. It's a process of making sure that the agency has a look at it and makes sure that there's nothing in there that we're not supposed to be saying. MS. DAVIDSON related experiences where agencies have wanted certain information not to be disclosed, and she said that there has "just generally been discussions about it." She told the committee that she has been with the division for a number of years, has worked as legislative auditor for approximately the last five years, and has been privy to information for longer than that, and she doesn't know of a case where the [Joint Committee on Legislative Budget and Audit] has not released a report [to the] public. She noted that [that committee] has a long history of allowing the reports produced by [the Division of Legislative Audit] to go forward. MS. DAVIDSON, in response to a question by Chair Weyhrauch, said that [the division] also does analysis of individuals who may participate in drug testing programs. She indicated a most recent audit on Medicaid to evaluate how well the controls are working, which she said requires getting down to individual files. She said, "We need the details to do the work, but those are not the issues that we're reporting on; we're reporting on the systems and whether the state agency is functioning properly." She explained that [the division] needs to be able to look at the underlying transactions in order to be able to do that evaluation. Number 2030 REPRESENTATIVE BERKOWITZ summarized that Ms. Davidson was saying that [the division] deals with confidential areas when the issue is in regard to personnel or medical records, or when it's proprietary - all of which he said seem to him to have other protections elsewhere in the law - and when the agency asks that the information not be released, which he said raises a flag. He explained that he does not know when an agency can protect its internal workings just by saying, "Please don't tell people this is what we're doing." MS. DAVIDSON responded as follows: Without trying to disclose anything that I had privy to in executive session, there are issues that come up and whether or not disclosure of certain information would be detrimental to the financial condition of the state. REPRESENTATIVE BERKOWITZ asked if that would be things like pending court cases and investment decisions, for example. MS. DAVIDSON replied, "In that general topic area." She reiterated that the [Joint Committee on Legislative Budget and Audit] has the history [of allowing the reports produced by the Division of Legislative Audit to go forward] since, she guessed, statehood. She emphasized that the division writes the reports so that they are available for public disclosure - it doesn't put any legally confidential material in the reports. Number 2133 REPRESENTATIVE SEATON said, "I'd just like to move HB 243, Version A, back before us." CHAIR WEYHRAUCH said: "Version A is before us. Are there any amendments, or any further discussion of Version A?" Number 2157 REPRESENTATIVE BERKOWITZ suggested the following conceptual amendment: Page 2, line 4, after "confidential" Insert "only to the extent permitted by other provisions of law" MR. HOGAN, in response to Chair Weyhrauch's invitation to comment, stated that he would prefer to reserve his comments to "see what Mr. Baldwin might think of that." REPRESENTATIVE BERKOWITZ stated for the record - and in case Mr. Baldwin is brought into the conversation - that he does not want HB 243 to become the basis for new assertions of confidentiality. He said that he is not sure that the language he suggested is the appropriate language, and he added that "it certainly doesn't go to the next line, which raises another set of issues." REPRESENTATIVE SEATON asked if work papers and related supportive materials in the administration are confidential at this point in time. MR. HOGAN responded that he doesn't know. CHAIR WEYHRAUCH announced that HB 243 would he held until later in the meeting, at which time Mr. Baldwin may be available by phone to offer comments. HB 134-CORRECTIONAL FACILITY EXPANSION Number 2309 CHAIR WEYHRAUCH announced that the next order of business was HOUSE BILL NO. 134, "An Act authorizing the Department of Corrections to enter into agreements with municipalities for new or expanded public correctional facilities in the Fairbanks North Star Borough, the Matanuska-Susitna Borough, Bethel, and the Municipality of Anchorage." CHAIR WEYHRAUCH noted that [in committee packets] was a new fiscal note from the Department of Corrections, dated 4/16/03, 3:36 p.m., as well as a proposed committee substitute (CS), Version 23-LS0563\H, Luckhaupt, 4/15/03. Number 2365 JERRY BURNETT, Director, Division of Administrative Services, Department of Corrections (DOC), clarified that Chair Weyhrauch had read the revision date of the fiscal note in the committee packet. The date at the bottom right read "4/17/03 7:07 AM", he noted. MR. BURNETT referred to a portion of the sectional analysis of the new fiscal note, regarding the Seward 400-bed expansion, and noted that it shows a fully allocated cost estimated at $16,317,200 if [the facility is fully operational in] fiscal year (FY) 2010. He told the committee that the face of the fiscal note remains unchanged, with a total operating cost of $47 million. MR. BURNETT said, "I'd point out in the analysis that that $47 million is just a little over $5 million greater than our cost to send the equivalent number of prisoners to Arizona." Number 2426 REPRESENTATIVE BILL STOLTZE, Alaska State Legislature, testifying as sponsor, stated that he thinks that the major changes discussed by the committee [in the previous hearing on HB 134, April 15, 2003] are reflected in Version H and in the fiscal note. He said that he appreciates Representative Seaton's efforts in working with DOC to address the projected needs of Seward [through an amendment adopted at the previous hearing and incorporated into Version H], which he opined has resulted in an improvement to the bill. Number 2451 REPRESENTATIVE HOLM moved [to adopt] the proposed committee substitute (CS), Version 23-LS0563\H, [as a work draft]. There being no objection, Version H was before the committee. REPRESENTATIVE HOLM made the following comment: You showed the Arizona component, you don't do it in the fiscal note, but I appreciate the idea that there is an inclusion of the two. When they meld together, it's going to be only a $5 million deficit, eight years out, or whatever year that is. MR. BURNETT clarified, "It's four years out, and that number is shown in the analysis." REPRESENTATIVE HOLM said, "Yeah, I just wanted to point that out; that's a very good thing." He said that someone wrote him a letter recalling that Fairbanks wanted to have 200 beds; however, he noted that there are only 80 beds proposed in the bill. He asked what the reason for that is. MR. BURNETT explained that 80 beds is the number that the department has determined is appropriate in order to meet the overcrowded, pretrial needs of the Fairbanks area. By expanding at a larger facility in another location, he said, the department will be able to take more people [in those other areas] and avoid having longer-term prisoners in the Fairbanks area. REPRESENTATIVE HOLM asked if that would also be because of the fact that the facility in Bethel is closely entwined with the facility in Fairbanks. MR. BURNETT answered, "Not directly, but it's the same type of problem in Bethel." Both places, he explained, are regional areas that gather pretrial prisoners, and, he reiterated, by having in-state facilities sufficient to keep longer-term prisoners, the department is able to reduce the number of longer-term prisoners in those facilities. In response to a follow-up question by Representative Holm, he confirmed that it is the department's position that 80 beds [added to the facility in Fairbanks] would be sufficient. CHAIR WEYHRAUCH stated for the record that he had called almost every community that [has] a correctional facility to find out if more beds should possibly be added, because, he opined, it seemed like [HB 134] [would be] "the vehicle to do it in." REPRESENTATIVE STOLTZE noted that there is an $80 million hospital being built at the intersection of the communities of Palmer and Wasilla. He said that there are already discussions going on about adding security provisions in that hospital. He also said, "There's already discussions with the utilities. They're stepping forward and trying to find ways to reduce the operational cost of providing more efficient energy." He indicated that efforts are being made, not only to fuel the economies in the communities involved, but also to make [the proposals] work in the most efficient manner possible. REPRESENTATIVE SEATON expressed his appreciation for the work done by Representative Stoltze and DOC, for the synergy and efforts of DOC and the City [of Seward], and for [the department's] incorporating the intent language to ensure that "all these pieces come together." Number 2700 REPRESENTATIVE SEATON moved to report the committee substitute (CS) for HB 134, Version 23-LS0563\H, Luckhaupt, 4/15/03, out of committee with individual recommendations and the accompanying fiscal note. There being no objection, CSHB 134(STA) was reported out of the House State Affairs Standing Committee. HB 243-EVALUATION OF AGENCY PROGRAMS Number 2729 CHAIR WEYHRAUCH returned the committee's attention to HOUSE BILL NO. 243, "An Act establishing state agency program performance management and audit powers in the Office of the Governor for the evaluation of agency programs; and providing for an effective date." CHAIR WEYHRAUCH brought attention back to [Representative Berkowitz's] proposed conceptual amendment: Page 2, line 4, after "confidential" Insert "only to the extent permitted by other provisions of law" CHAIR WEYHRAUCH noted that if the conceptual amendment is added, [page 2, beginning on line 4 of the original bill, would read as follows: Internal audit work papers and other related supportive material are confidential only to the extent permitted by other provisions of law, and internal audit reports are confidential until released by the governor. Number 2814 REPRESENTATIVE BERKOWITZ, for the benefit of Mr. Baldwin, stated that he does not want [HB 243] to create an additional area of confidentiality. He said that based on previous testimony, it seemed to him that the major areas of where confidential issues arose - for example, personnel issues, proprietary information, and court and medical records - were covered in other provisions of law. JAMES BALDWIN, Assistant Attorney General, Governmental Affairs Section, Civil Division (Juneau), Department of Law (DOL), responded as follows: The reason that we drafted the bill the way we did was ... to try to approximate the kind of powers that your auditors have, so that they could be as effective as your auditors are in what they do for you. The problem with what I think Representative Berkowitz is proposing - the problem for us - is that it gets us into this qualified nature of the privilege. In other words, you're in this balancing approach. I'm not sure that all the areas that are covered by confidentiality provisions now would be broad enough to cover what we proposed these auditors to be doing, which ... basically would be not the typical type of post-audit function - which your auditors now do [an] extremely good job of - but the performance-type audits that the governor wants to institute for determining how programs are operating, advising him on policy directives, and providing him with an ability to reach in to the departments and exercise the kind of control that he believes he wants to exercise. And so, we wanted this broad area of confidentiality, because it's really the governor [who's] going to be ... using these people as a tool, and so it'll be part of his executive privilege-type confidentiality that we would like to attach to this. So, that's why we had it in the bill as being sort of an absolute area of confidentiality in that context. REPRESENTATIVE BERKOWITZ said that he understands the governor's desire to expand his powers as much as possible, but he said that [the legislature's] responsibility is to constrict [those powers] as much as it can. Regarding performance audits, he asked if they take place at the federal level in other states and, if so, what kind of confidentiality provisions "attach in those jurisdictions." MR. BALDWIN answered that he has not done the type of research that would enable him to answer that question. He said, "I believe they do have normal-type confidentiality requirements." TAPE 03-41, SIDE B  Number 2969 REPRESENTATIVE BERKOWITZ stated that if there was a conclusion that came from an audit, it would be helpful, as a legislator, to know how that decision was arrived at, in order to look at the steps that led to the conclusion and determine whether to agree or disagree. He indicated it would involve things like methodology and input. He added, "Unless we have access to the predicate work that led to the conclusion, it's sometimes difficult to agree or disagree with an audit." Number 2912 JAY HOGAN, Deputy Director, Office of Management & Budget (OMB), Office of the Governor, stated that his feeling is that the end product would be very similar to what the legislative auditor currently delivers to the committee, provided [the administration] was doing an audit, as opposed to a budget preparation. He added, "In fact, we have over in our office a set of the internal audit reports that were done by the function when it existed previously, and they look very much similar in layout and so on, and they're all released documents and filed accordingly." CHAIR WEYHRAUCH referred to "the new Section 3," and asked if it would restrict the legislative auditors from performing their audit function, by not having access to executive branch papers or documents. MR. BALDWIN answered as follows: I think to a certain extent it would. And let me just say this is a delicate area. I know that [I'm] here as a lawyer for the executive branch talking to the legislative branch, but please understand that just as there are certain areas that the governor can't intrude upon, as far as your legislative powers go, I think you have to acknowledge that there are certain areas in the governor's powers that legislators can't intrude upon. And so, to the extent that an auditor is your representative, your employee ... in carrying out your functions, there would be certain things that I think ... one of our internal auditors might do for the governor that it would not be appropriate for the legislative auditor to have access to. And so, to a certain extent, yes, I would have to answer that question yes to be open with you about it. CHAIR WEYHRAUCH asked how the public would have complete trust in the integrity of a process, whatever branch of government it may be in, if somebody else can't come in and scrutinize it from the outside to determine whether there's corruption. REPRESENTATIVE BERKOWITZ echoed, "Who audits the auditors?" MR. BALDWIN said that he thinks that public officials have to answer to the voters every two or four years regarding what they do; however, he opined that in carrying out their powers, there has to be some protection for the advice that's given to decision makers, "so that it's candid and operates appropriately, which is exactly why we have the privileges that we have." He continued as follows: This would set it out in law so people understand what it is. It's only provided up until the point that the governor decides to release the audit report, which is very similar to the powers and the way [the] process works on the legislative side of the exercise of the audit function. If there is something going on that is of public interest, usually it's hard to keep it from the public once there's some understanding of it being in existence. And I think it would function, in essence, the way it functions on the legislative side of things. ... Audits ultimately are made public; it's just that, during the process of the development of the audit and the advice that the auditors are giving to the governor until the policy decision is made, it's considered the best practice to keep that shielded from inquiry until the decision is made. After that point, there's not much of an interest in keeping it confidential. Number 2709 CHAIR WEYHRAUCH indicated that the proposed committee substitute was worked on with some desire to alleviate tension between the executive and legislative branch during an audit, and prevent a lawsuit between those two branches. He stated that he understood from Ms. Davidson's previous testimony that the committee substitute language would actually interfere with the auditing process and, therefore, it was not recommended to the committee. He added that it sounds like what Mr. Baldwin is saying is that there will still be inherent tensions that will need a mediator/third body to resolve them. He said he doesn't know what sort of language will prevent this, but perhaps it will be Representative Berkowitz's conceptual amendment. REPRESENTATIVE HOLM said he thinks the committee is getting "far a field" from what it is trying to do. He stated his understanding that the bill is an attempt to provide the management function of audit to improve the ability of the administration to administer. It's not about trying to keep something from the legislature; rather, it's about trying to allow the administration to function in a manner similar to a business, for example. He explained that in his business, the books are audited to ensure that things are not done inappropriately. Furthermore, that information is kept internally; it is opened up to a bank only after it has been prepared, and is not opened up to the public. Referring again to his own business, Representative Holm said, "So we don't just go out and ... [throw] everything out on the table and ... say, 'Well, you go figure out some way to say that we're not doing it appropriately.' REPRESENTATIVE HOLM said he thinks Mr. Baldwin made a good point regarding the administration and the legislature having different functions to fulfill. Notwithstanding that, he added that the legislature still has oversight; it still has the ability to appropriate funds to the administration. He said that, personally, he wants to give the administration the opportunity to function in the best manner that it can, and he doesn't see [HB 243] as trying to create some kind of insidious confidential situation; rather, "it's something where you can work within your departments to really work with them appropriately." Number 2553 REPRESENTATIVE SEATON referred to page 2, line 4, which read, "Internal audit work papers and other related supportive material", and asked if those are confidential now. MR. BALDWIN answered that in the legislative audit context they are. In response to a follow-up question by Representative Seaton, Mr. Baldwin stated his understanding that upon the request of a legislator or the [Joint Committee on Legislative Budget and Audit], a performance audit can be done. REPRESENTATIVE SEATON said: "I think that what I heard you say was if we establish this within the governor's office, that may restrict the ability of legislative audit to access these materials that they now have the ability to access to do a performance audit for us. Is that correct?" MR. BALDWIN responded as follows: I think we're getting two things crossed here. The legislative auditors are going to still have the same access to whatever materials they have now, but there might be audit materials that our auditors have collected for their own specific audits .... But, the basic material from which all that is drawn would be as equally available to the legislative auditors as to our auditors. This would not interfere with that. REPRESENTATIVE SEATON asked Ms. Davidson if she shares that same interpretation. MS. DAVIDSON replied that the base information would be available to the division. She continued as follows: Typically, it's more efficient. If somebody's gone in, done the work, conducted the interviews, it's more efficient to go in [and] review their work, to decide, "Where do we want to go from here.?" So, it's more a matter of efficiency, as opposed to not having access to the base information or the base transaction. REPRESENTATIVE HOLM asked Ms. Davidson if she would feel any restriction in being able to continue the division's function due to the power [that HB 243 proposes to give to] the administration. Number 2402 MS. DAVIDSON answered, "Generally, no." She continued as follows: Actually, [when] the internal audit function ... operated in the past, ... there was a report released by that organization, and we were asked by the [Joint Committee on Legislative Budget and Audit] to go audit that report. And we had access to the work papers and we were able to carry out that audit. REPRESENTATIVE HOLM asked if Ms. Davidson thinks the division will still have its oversight function and would not be impeded in its functions by "this audit in place." MS. DAVIDSON responded: I don't know if it was a matter of accommodation that we were offered to take a look at these work papers, or they didn't have a statutory basis for carrying out that mission. I don't know the legal basis for that. And again, ... if I understood correctly, the matter isn't really one of confidentiality or not; we've moved on to the powers between the executive and the legislative branches. And in the past, we have been accommodated, and been able to look into their work papers. REPRESENTATIVE BERKOWITZ asked if there are statutes which were repealed that need to be resurrected and, if there were, he asked what those statutes said about confidentiality. Number 2286 MR. BALDWIN replied that there was no provision about confidentiality. The audit function, he said, was more or less an implied power "when we did it." According to his research, Mr. Baldwin said, there are still some vestiges of the statutes that exist in the Department of Administration; however, they are not exercised "in the way of an audit function." REPRESENTATIVE BERKOWITZ suggested that an implied power that has gone unexercised for a number of years is still an implied power. He asked if that is correct. MR. BALDWIN reiterated that it has not been exercised, but may be implied. He added, "It was our judgment it would ... be better that it be expressed, and that we get it out on the table, and we have this kind of protection; it's [a] kind of confidentiality protection provided for in the statute as a matter of statutory (indisc)." REPRESENTATIVE BERKOWITZ asked, "When it was exercised in the implied context, how were the confidentiality issues handled?" MR. BALDWIN said, as written in his letter, it would be a qualified privilege or immunity, if anything would apply to it - not an absolute-type immunity or privilege that the legislature enjoys. REPRESENTATIVE BERKOWITZ said, "So, under the implied condition it was qualified; under this statute here it's expressed? So there's an increase in confidentiality here?" MR. BALDWIN answered, "To a certain extent, yes." He stated that the intention is to make it the same kind of protection and effectiveness that the legislative auditors have. He clarified, "So the statute approximates the kind of confidentiality coverage that your audit reports - your work papers - would have." REPRESENTATIVE BERKOWITZ asked, "When the audits were done under the implied powers, ... were they somehow deficient in their quality because it was done through an implied, rather than an express provision?" MR. BALDWIN said he really doesn't know. Number 2203 CHAIR WEYHRAUCH announced that HB 243 was heard and held. HB 266-ELECTIONS [Contains discussion of SB 24, which was incorporated into HB 266, and brief mention of HB 221.] Number 2160 CHAIR WEYHRAUCH announced that the last order of business was HOUSE BILL NO. 266, "An Act relating to elections, questioned ballots and questioned voters, voter registration, training of election officials, preparation of election materials, voter identification, absentee voting, counting ballots, and the primary election; and providing for an effective date." Number 2126 LAURA GLAISER, Director, Division of Elections, Office of the Lieutenant Governor, read from "the sponsor statement" [included in the committee packet], which read as follows [original punctuation provided]: In October, 2002, President Bush signed the "Help America Vote Act," (H.R. 3295) into law (P.L. 107- 252). HAVA is the result of a bipartisan effort in Congress to make sweeping changes to federal election laws to improve the overall administration of elections, increase accessibility to those with disabilities, and also to prevent voter fraud. Many changes required under HAVA do not require amending Alaska statute, but HB 266 includes those necessary to meet federal mandates. Changes recommended in the bill before you follow the intent of the federal law and do not place unnecessary burdens on the voter. It is imperative that these changes mandated by federal law are passed by the Legislature this year. HB 266 also includes changes the Division recommends. The Division supports the language recommended in Senator Lincoln's SB 24, and it has been included in this bill with her permission. Other changes regarding returning identification/voter cards to other jurisdictions, reference to a "master list," and adding types of information that can be provided by the voter when registering in person are requested by the Division in this bill. Perhaps the most significant change NOT mandated by the federal act, but recommended in this bill is replacing the terms "non partisan" and "undeclared" with the term "unaffiliated." Many voters do not know the difference between the two classifications and make numerous party affiliation changes between the "non partisan" and "undeclared." This would eliminate confusion on the part of the voter, while not affecting their access to the ballot. The Division of Elections asks for your support of House Bill 266. Number 2025 CHAIR WEYHRAUCH asked what the difference currently is between "non partisan" and "undeclared". MS. GLAISER said that the answer varies from individual to individual. She added, "That's the whole point of the change." She noted that there's no legal definition in "the definition section" of statutes. In response to a question by Representative Lynn, she replied that she does not know the history [of the two terms]. CHAIR WEYHRAUCH asked if the Department of Justice requires review and approval of [HB 266] after it has been adopted, or if [the bill] had already been approved. Number 1930 SARAH FELIX, Assistant Attorney General, Civil Division (Juneau), Department of Law (DOL), said, "We would submit this for pre-clearance to the Department of Justice after it's adopted." CHAIR WEYHRAUCH asked Ms. Felix what her confidence level is that [HB 266], in its present form, would be approved by the Department of Justice. MS. FELIX responded that she is very confident that it would be approved. She said, "We really [have] just gone according to the letter of HAVA. The Department of Justice has sent us a letter saying they are ready and waiting for the states to begin sending these sorts of bills in for pre-clearance. So, I think we're all set to go." CHAIR WEYHRAUCH asked if the state also has a plan of implementation ready. MS. FELIX deferred the question to Ms. Glaiser. MS. GLAISER stated that [the division] is also required "under this federal law" to prepare a state plan. She mentioned a state planning committee meeting and a draft form, [which] will go out for public notice from April 28 to May 28 [2003]. She indicated there would be a public hearing, and she said that the state plan would be submitted to the Federal Election and Administration Commission. MS. GLAISER, in response to a question by Chair Weyhrauch, acknowledged that SB 24 was introduced this year. In response to a follow-up question from Chair Weyhrauch, she confirmed that SB 24 has been incorporated, in full, into HB 266; therefore, it is not necessary [to remain] as a stand-alone bill. She mentioned that Senator Georgianna Lincoln met with Lieutenant Governor Loren Leman [regarding the issue]. REPRESENTATIVE HOLM noted that there are two other bills regarding voter fraud. He mentioned that one of them is HB 221. He said he was wondering if those bills should be incorporated into [HB 266]. MS. GLAISER responded that she would prefer to keep [HB 266] lean. She noted that federal mandates are involved and said that she doesn't want to do anything to slow the bill down. REPRESENTATIVE GRUENBERG indicated not wanting to "screw this bill up, because this is a federal requirement." Number 1643 MS. GLAISER, in response to a request by Representative Gruenberg, told the committee that she had spoken with him [outside of the meeting], at which time he had noted that the federal law requires that [the division] "identify voters through a free access system if their question ballot was not counted, or [only a] portion of their question ballot was counted. Same for an absentee ballot." She stated that the current division policy is to send the voter a letter. She continued as follows: Since the federal law required either a website or a toll free number, ... this bill repeals the section where it requires that we send a letter in addition. Representative Gruenberg's amendment would require us to send a letter as well as have the free access system. It's something we already do; it will not cause an additional cost, but it is an extra process. REPRESENTATIVE GRUENBERG mentioned that Jack Chenoweth [Legislative Legal and Research Services] had just cited a legal opinion on [an amendment Representative Gruenberg wants to offer]. He deferred further explanation to his staff. Number 1572 JUSTIN ROBERTS, Staff to Representative Gruenberg, Alaska State Legislature, explained that the amendment would require the division of "send out the mailer and have the Internet system." He referred to the second page of a letter [from Jack Chenoweth, included in the committee packet], which is regarding partially counted votes. He continued as follows: Right now, what the bill does is it takes out all requirements to notify the people if you partially counted their votes. And so what we weren't sure about was whether or not we are going to insert both the requirement that this be on the electronic system and the requirement to hand out the mailer, or just the requirement that it be on the electronic system. Right now, there's no requirement to notify. REPRESENTATIVE GRUENBERG noted that [HB 266] must be passed and into law by July [2003]. He stated his belief that if a person's ballot is not counted, that person should be notified. He asked Chair Weyhrauch if he would grant him time until the bill's next committee meeting to discuss the issue of an amendment with his staff, Ms. Glaiser, and Jack Chenoweth. CHAIR WEYHRAUCH asked Ms. Glaiser when the House Finance Standing Committee would hear the bill. MS. GLAISER replied that she could "put her request, 'Pending Referral'." REPRESENTATIVE GRUENBERG stated that he thinks that if a person's ballot is not going to be counted, that person ought to be sent a letter [informing him/her of that]. CHAIR WEYHRAUCH said that he needs to know what the policy implications of that are and wants the benefit of the division's views on it. REPRESENTATIVE LYNN remarked that not everyone knows how to use the Internet or has access to it. Number 1290 MS. GLAISER noted that Representative Mary Kapsner had served on the state planning committee and requested that there be a toll- free number, in addition, for those who do not have Internet access. She said that the division thought that it would be more lean and do away with the letters, but she expressed willingness to send out the letters if the committee wants the division to do so. She said there will be more time and expense involved. CHAIR WEYHRAUCH commented that there is a fiscal impact, as well. He asked, "You do a letter now, don't you?" MS. GLAISER said that her understanding of the fiscal note is that it's an additional cost. "We currently do a letter, so I don't think we would increase the fiscal note if we (indisc.), but again, I would defer to you," she added. REPRESENTATIVE BERKOWITZ said, "I like those question ballots. I like having the term 'questions' instead of 'provisional', and I was wondering how critical it is for you all to shift that term." MS. GLAISER stated that it is conforming language that is used in federal law, as well as the language that will be used by other states, but is not mandated by the federal government; therefore, if the committee members all decided that they like the term "question ballots", the division will call them that. Number 1176 REPRESENTATIVE BERKOWITZ moved to adopt Conceptual [Amendment 1], to "restore the term, 'question' where 'provisional' has been inserted." REPRESENTATIVE GRUENBERG asked if that relates to his own amendment, or is separate. REPRESENTATIVE BERKOWITZ indicated that [Conceptual Amendment 1] strictly pertains to "which term we'll want to use for the ballots." REPRESENTATIVE GRUENBERG said he would work on his own amendment over the weekend. CHAIR WEYHRAUCH, in response to Ms. Glaiser, confirmed that the bill would be heard again by the committee at its next meeting. MS. GLAISER confirmed that she would be happy to work with Representative Gruenberg. CHAIR WEYHRAUCH indicated that the bill would be heard and held. REPRESENTATIVE BERKOWITZ reminded the committee that his motion to adopt [Conceptual Amendment 1] is pending. CHAIR WEYHRAUCH asked Representative Berkowitz if he wanted to address it now. He restated Representative Berkowitz's motion to adopt [Conceptual Amendment 1]. [No objection was stated.] REPRESENTATIVE GRUENBERG requested that Conceptual Amendment 1 be included in a committee substitute to be available to the committee by the bill's next hearing. Number 0905 CHAIR WEYHRAUCH clarified that [Conceptual Amendment 1] was adopted. REPRESENTATIVE GRUENBERG suggested that the title of the bill be tight before it leaves the committee. REPRESENTATIVE BERKOWITZ concurred with Representative Gruenberg. He said, "You have an act relating to elections. We're talking campaign finance reform, we're talking everything here." REPRESENTATIVE LYNN requested that the previously stated issue regarding the terms "undeclared" and "non partisan" be addressed. [HB 266 was heard and held.] ADJOURNMENT  Number 0777 There being no further business before the committee, the House State Affairs Standing Committee meeting was adjourned at 9:40 a.m.