MINUTES SENATE FINANCE COMMITTEE March 17, 1993 8:50 a.m. TAPES SFC-93, #37, Side 2 (181-end) SFC-93, #39, Side 1 (000-end) SFC-93, #39, Side 2 (000-end) SFC-93, #41, Side 1 (000-end) SFC-93, #41, Side 2 (575-370) CALL TO ORDER Senator Steve Frank, Co-chair, convened the meeting at approximately 8:50 a.m. PRESENT In addition to Co-chair Frank, Senators Rieger, Kelly, and Sharp were present. Senator Kerttula arrived soon after the meeting began. Co-chair Pearce and Senator Jacko did not attend. ALSO ATTENDING: Representative Larson; Representative Foster; Representative Brice; Representative Martin; Edgar Blatchford, Commissioner, Dept. of Community and Regional Affairs; David Cuddy, First National Bank of Anchorage; Keith Gerken, Deputy Commissioner, Dept. of Transportation and Public Facilities; John Horn, Regional Director, Northern Region, Dept. of Transportation and Public Services; Col. John Murphy, Director, Division of Alaska State Troopers; Darcie Beck, Alaska Environmental Lobby; Juanita Hensley, Chief, Driver Services, Division of Motor Vehicles, Dept. of Public Safety; Chip Thoma; Rick Solie, aide to Senator Frank; Ken Erickson, aide to Senator Pearce; Josh Fink, aide to Senator Kelly; and additional aides to committee members and other members of the legislature. ALSO ATTENDING AND TESTIFYING ON BEHALF OF THE KEY CAMPAIGN: Steve Lesko; Mike Saville; Virginia (Ginny) Sargent; Linda Giani; Cheryl Scott; Brenda Trumble; Elaine Hurley; Joy Davis, Access Alaska; and William Gumlikpuk. SUMMARY INFORMATION SB 82 - Act relating to the Dalton Highway. Testimony was presented by Commissioner Blatchford, DC&RA; Keith Gerken and John Horn, DOTPF; John Murphy, DPS; Darsie Beck, Alaska Environmental Lobby; Chip Thoma; and Rick Solie. The bill was subsequently HELD in committee for additional work on the fiscal notes. SB 84 - Act relating to fees for identification cards and certain motor vehicle licenses and permits; to licenses issued to drivers and to revocation of a license to drive; and providing for an effective date. Testimony was presented by Juanita Hensley, DPS, and Josh Fink. The bill was subsequently HELD in committee for work on the fiscal notes and possible amendments. SB 97 - Act relating to enhanced 911 emergency reporting systems; and providing for an effective date. CSSB 97 (Finance) was REPORTED OUT of committee with a "do pass" recommendation and zero fiscal note from the Dept. of Commerce and Economic Development. KEY CAMPAIGN After convening the meeting, Co-chair Frank welcomed representatives of the Key Campaign and asked that they commence their presentation. STEVE LESKO, President, Alaska State Association on Developmental Disabilities, first came before committee. He noted that this is the sixth year of the Key Campaign--a united coalition of individuals from both rural and urban Alaska. The coalition represents 114 communities. Mr. Lesko next referred to representatives presently before committee and explained that they "and a thousand more who we represent and care about are basically advocates for children, adolescents, and adults who experience developmental disabilities." He stressed that the coalition believes that community is the key. A community is a place for everybody. He further stressed that "No one, not one single human being . . . is in need of, is entitled to be, or must be institutionalized." Community is the place for everybody. With minimal support, families and individuals that experience developmental disabilities can live within community. Community has been proven by state-generated statistics to be decreasing in cost. It is the most cost- effective method of meeting genuine needs. And it is the only method in terms of quality of life. Mr. Lesko said that the campaign has over 400 reasons to come before committee at this time. The 400 individuals all have a name, face, family, friends, and a community. They have a single thing in common: They are statistics on the state waiting list that is growing daily. By the end of the calendar year, it is estimated it will exceed 500. In his concluding remarks, Mr. Lesko voiced need for a new, optimistic vision for Alaska. Success can only be measured in terms of how government, the legislature, the state, the nation, and the world at large respond to the legitimate needs of citizens who cannot assist themselves without help. He requested the committee's help in achieving the vision of a positive future for all Alaskans. Mr. Lesko again stressed that "community is for everyone." MIKE SAVILLE next came before committee. He noted that, last year, his appeal was contained within a request that the legislature share in the responsibility of providing services to Alaskan families. As a result, programs for the developmentally disabled were spared some of cuts sustained by other programs. This year the campaign is asking that the legislature not only spare the Campaign from cuts, but also improve the quality of services and increase the number of services provided. Services for the disabled are approximately 16% behind the 1986 level, in terms of real dollars. Mr. Saville said his program alone is experiencing insurance increases in excess of 16%. Every home that is leased to provide residential services is experiencing an increase of approximately $100 a month. Utilities and the cost of food are also increasing as are other daily essentials. Mr. Saville reiterated that there are 400 people on the waiting list. At this time last year, that number was 150. By the end of this year, it will be 500. Every day another family falls into crisis and is added to the list. Existing programs have stretched every available resource. Community programs are less expensive and more effective. For the last three years, the individual costs of programs have been dropping. That is the only thing that has kept programs even with the cost of living. Mr. Saville requested that for the coming year the committee consider building "some maintenance of effort" into the budget. He asked that members help take responsibility for providing the quality of life that everyone deserves. BRENDA TRUMBLE from Klawock, Prince of Wales Island, next came before committee. She told members that when her son, Logan, was five weeks old and received his DPT vaccination, he sustained neurological damage resulting in cerebral palsy. Ms. Trumble attested to the benefits of state programs such as infant learning, special education services, respite, family support dollars, etc. She said her family had been fortunate in receiving assistance programs when they were needed. She further attested to the difficulties associated with the six months she spent on the state waiting list. Family support services ensure that Logan partakes in swimming, basketball, and other after- school activities. He is doing very well. Mrs. Trumble next spoke to the situation for the remainder of the family. She said her husband is a Vietnam veteran and college graduate who was with the same employer for fifteen years. Three years ago he chose to become self- employed and started a business of his own. After coverage under COBRA for eighteen months, the insurance company chose to drop coverage on Logan. Once dropped from coverage, those with disabilities are unable to get insurance. The only option was to spend down family resources to become Medicaid eligible in order to receive medical services for Logan. That means the family can put nothing aside for retirement, can have no savings or other money in the bank, can have no life insurance, and cannot even have a burial plot. The family is under constant, very unpleasant scrutiny. Mrs. Trumble voiced need for waivers that would allow Medicaid eligibility to be based on the resources of the disabled individual rather than the individual's family. She spoke to continued attempts to maintain health insurance for other members of the family at a cost of $478.00 per month. The family's older son wants to go to college in two years. The family has no resources with which to send him. He is not allowed to work or save money for himself. Mrs. Trumble urged support for Project Choice and funding for the disabled. End, SFC-93, #37, Side 2 Begin, SFC-93, #39, Side 1 CHERYL SCOTT, from Anchorage, next came before committee accompanied by her son, Justin. She said that she and her husband have three children. Her husband works for the FAA. Justin is the youngest child. He was adopted at 2-1/2 years of age. At the time the adoption was finalized, a package of support came with him. It included a monthly subsidy (a monthly check from the state) to cover expenses that Medicaid does not cover. The family has excellent insurance through the federal government. Justin's medical expenses are thus well covered. Justin is also covered by Medicaid. That arrangement was part of the adoption package because of his multiple disabilities and the fact that his mother, when she was alive, qualified for AFDC. Justin comes from a background of alcohol abuse. His mother was third generation. He came from a single parent family. Until he was adopted, he had never been in a family situation. Mrs. Scott advised that the family feels lucky to have Justin as a member. He has made a great change in the family lifestyle. Having Justin as a part of the family has been very expensive, but his care has been provided for by the state. Not every adoptive family receives those types of benefits, even though they may have a child with the same degree of disability as Justin. The adoption worker in Justin's case was willing to negotiate what was needed to keep Justin within the family. Mrs. Scott spoke to the fact that there are other families in Alaska that have given birth to children like Justin. These families cannot access the same services her family was provided when Justin was adopted. The inequality is unbelievable. Families are being forced to put their children on waiting lists for entry into foster care or institutions in order to get the support they need. Families are being torn apart. Parents divorce or turn to drink and/or drugs because they cannot cope with the financial responsibilities associated with having a disabled child. (Co-chair Frank noted the presence of Representatives Larson and Martin.) ELAINE HURLEY, from Anchorage, next came before committee accompanied by her daughter, Brienna. She advised that she represents the family to which the prior speaker referred. She explained that she gave birth to a child with disabilities. She is therefore not entitled to the same financial support as the Scott family which adopted a disabled child. Medicaid eligibility standards force families to either place their child in an institution or spend down, quit their jobs, and become poverty stricken to provide for their child. With a child the parent knows needs medical coverage, there is not much choice. Ms. Hurley advised that she had spoken before committee last year. At that time, she was married. She and her husband had to quit their jobs and become dependent to qualify for medical coverage of their daughter. Ms. Hurley said that due to the emotional, medical, and financial strain, she is now a single parent. She questioned the worth of a system that will pay tens of thousands of dollars for her daughter if she is institutionalized, but will not pay medical benefits if the child remains at home. There is something wrong with a system that, in the name of cost containment, will pay more to institutionalize a child than to allow the child to remain with his or her parents. Because families lack medical waivers and medical options, there is no choice. In other states there are. They have Medicaid options and waivers. SB 5 (MEDICAID FOR CERTAIN DISABLED CHILDREN) would enable parents to go back to work. By not enabling parents to stick by their disabled children, the quality of life for the disabled person, the parents, and the family in general is impacted. Ms. Hurley noted legislative attempts to cut the budget. She then questioned how the state could "justify doing other things but not putting people first." She urged that committee members allow those with disabilities to "have the quality of life as well." JOY DAVIS, Access Alaska, next came before committee. She said she is the mother of three. Two are her biological children and the third is her fourteen-year-old Athabascan daughter. Ms. Davis explained that she works part-time for Access Alaska. She said she could only maintain part-time employment so that her children can obtain medical benefits and she, herself, remains eligible for personal care attendant services. She termed attendant care "vital" to the life of her family. She said she believes in the work ethic and wants her children to also. She expressed concern that, without that care, her fourteen-year-old would become the nurturing element to her younger children. At this point, because of the way state resources are developed, Ms. Davis advised that she does not receive respite care for her children, although she qualifies for that care herself. Inability to provide for the basic physical needs of her children and loss of respite services is devastating for a mother with no finger or hand dexterity. Ms. Davis said she had no problem with paying for personal attendant care services, but she has concern that these services and the number of care hours available are being cut back. She said that in the course of her work, she often has to explain to people in circumstances similar to her own that the services are not available. The state should not be focusing on the status quo when services are not adequate for those already receiving them, and there are 400 to 500 individuals on waiting lists. It is not appropriate to tell them to wait. (Co-chairman Frank noted the presence of Representative Brice.) WILLIAM GUMLIKPUCK of Knewthweluk, Alaska, next came before committee. He told of his nine-year-old son, Willie, and the many surgeries and complications suffered by the boy since the age of two. Following surgery in Seattle, Willie became sick easily and has spent time in all the hospitals in Anchorage and in the Dillingham Hospital as well. He has now been home with the family for approximately three years and is a much happier boy. The bush area needs residential homes. Hope Cottage utilizes the respite program. Mr. Gumlikpuck distributed pictures of Willie for committee viewing. VIRGINIA (Ginny) SARGENT of Kodiak, Alaska, next came before committee. She advised of an effort in Kodiak to take "needy children away from mental health." The community sent a task force out to look for an agency to come in and help take care of these children. At this point, the effort has taken twelve people from mental health. Ms. Sargent advised that it is her goal to "take the rest of them away from that place." She advised that residents had no care and no life. They went from one group home to another and merely sat. They did not go out in the community and work, and sometimes were not even given lunch. These individuals deserve a life of their own. The effort now has a home for these young people. It must now renovate and purchase the structure. LINDA GIANI of Wasilla, Alaska, next testified before committee. She noted that she had recently witnessed a motorcycle accident in Anchorage in which a young man was badly injured. No one knows in the course of each day what turn his or her life might take. Services requested by the Key Campaign are not merely for "this small group or even just for a waiting list." Services are needed on behalf of the state as a whole. Services must be in place. It is too late when a crises occurs, and there is nothing out there. Ms. Giani advised that her son is approximately eighteen years old. He is severely mentally and physically disabled. The family has struggled through divorce, remarriage, multiple problems. The two other children in the family "have given up things all of their lives." Ms. Giani explained that when her husband was first stationed in Alaska with the military was the first time in fifteen years any services were provided. The family received respite care at that time. Those services over the last eight years allowed the family to keep Brian at home until his eighteenth birthday this summer. Ms. Giani said that her health and part-time respite services are not good enough to provide him the care he needs. The family is on a waiting list for full-time placement in a residential home. The family will truly be in crises on June 30, 1993, when parti- time services may end and the family may not be able to find another provider to care for Brian. JOY DAVIS of Anchorage again came before committee, attesting to need for assistance on behalf of Key Campaign members and their families. At the conclusion of the Key Campaign presentation, Co- chairman Frank directed that the meeting be briefly recessed. RECESS - 9:30 A.M. RECONVENE - 9:45 A.M. The Alaskan Economy from a Banker's Perspective Upon reconvening the meeting, Co-chair Frank noted the presence of MR. DAVID CUDDY, First National Bank of Anchorage, and asked that Mr. Cuddy speak to committee concerning the state economy. Mr. Cuddy voiced his belief that Alaska's economy will be good in 1993 and "probably 1994." Projections indicating a budget gap have produced a reluctance in terms of investment or expansion. Business people are attempting to determine whether Alaska is headed for another "bust situation." Mr. Cuddy said that he tells his customers that change is certain; they should determine how to take advantage of opportunities and adapt to future changes. Mr. Cuddy quoted John Kenneth Galbraith, noting that "There are two types of economists: Those who don't know, and those that know they don't know." He told committee members that while he did not know what the future might bring, he attempts to remain conversant with factors that will determine the future. One of the major factors is state government. Mr. Cuddy voiced concern over recent comments by the Governor and three of his commissioners that there ts not a great need to cut spending, but what must instead be done is to maximize revenues. Maximizing revenues is likely to mean more taxes. Mr. Cuddy suggested that Alaska study what has happened in California. The Wall Street Journal reports that profiles of those now arriving in California indicate they are under twenty-five years of age, uneducated, and have few job skills. Profiles of those leaving the state show that they are over forty, upper income, and better educated. California had a great economy and active defense and electronics industries. It continued to increase spending and sustained a $7 billion budget deficit three years ago. The state solved the problem by increasing taxes. The following year, the budget showed an $11 billion deficit. Last year the state temporarily issued script in an attempt to balance the budget. Mr. Cuddy cautioned that Alaska should not follow the model set in California. While Alaska has experienced a robust economic decade, with several problem years, the current administration is discussing tax increases as a means of balancing the budget. He voiced concern over the profile for Alaska, if it follows the pattern set in California. Senator Kerttula asked how establishment of Wal-Mart and Costco stores would impact smaller retailers long supported by local banks. Mr. Cuddy told members that the only ones to survive will be those that can focus on service and/or offer unique products not available from larger delivery systems. He further advised that he had talked with representatives of large chain operations, asking what they see in Alaska that causes them to locate here. The answer is that they have a price delivery system with which no one can compete. They buy in such volumes, and their shipping charges are so cheap, there is no way a local business can compete. Mr. Cuddy reiterated his belief that smaller retailers would be forced to close as chain stores move into the state. He added, "Nobody thinks that there's enough new business and enough new buyers out there to support it all." Mr. Cuddy commented on anticipated business from outlying communities, and the fact that chains hope to intercept trade that now benefits Seattle. Senator Kerttula inquired regarding trade with Russia. Mr. Cuddy explained that his father and sister have focused on Russian development, traveling annually to that area. Exchange Russians are working at First National in Anchorage, and numerous Russian contacts have been made. First National is "posturing" itself to become the U.S. banking contact in dealing with the eastern part of Russia. Mr. Cuddy said that he did not foresee anything happening in the immediate future. The situation is extremely unstable. The bank is merely building a contact network for a more stable time. Someday, Russia and Alaska will have a good trade situation, but not tomorrow. Senator Kerttula attested to Alaska's position as an exporter of raw materials and suggested that the state appears to be moving toward heavy minerals. He then asked if Mr. Cuddy was aware of upcoming development. Mr. Cuddy responded negatively. He acknowledged that the bank has many gold miners as customers. He further noted that Engelhard Industries is considering closing its offices in Alaska because of insufficient volume. First National has been approached to serve as Engelhard's agent for receipt of gold and subsequent shipment out of state. Senator Jacko asked if Mr. Cuddy could point to a particular industry as a bright spot for Alaska. Mr. Cuddy told members that he recently chaired the Anchorage mayor's committee on military housing which determined there is a lack of housing for the military. Senator Stevens has indicated that Alaska is the military's first choice for placement of troops returning from Europe and the Pacific Rim. Mr. Cuddy suggested that if problems arise in the Alaskan economy, and the state loses population, there is a ready source of new people to fill empty houses in the form of returning troops. The state will probably not face the same "bust" situation as 1986 because of that backup. That is a bright spot, as is tourism. Senator Jacko voiced his understanding that loans and other banking requirements of the fishing industry have not, in the past, been met by Alaska banks. Financing has primarily come from Seattle-based and overseas institutions. He then asked if there was opportunity for improvement. Will Alaskan banks become more involved? Why have they not been involved in the past? Mr. Cuddy responded that the state has a better program for permit loans than do banks. Senator Jacko interjected that this comments related more to processors and larger fishing boats. Mr. Cuddy remarked that most of the processors are based in Seattle. Companies with corporate offices in Seattle tend to have ongoing business relationships with banks in that area. Much Alaska fishing is owned and controlled by forces outside the state. Referring to locally owned vessels, Mr. Cuddy advised that loans involve analysis of risk. First National makes a number of fishing boat and gear loans, particularly in the Cordova, Sitka, and Kodiak offices. Its loans have increased more than any other Alaskan bank in the last three years. Speaking as the president of the Alaska Bankers Association, Mr. Cuddy suggested that local banks "have seen a lot of losses taken in fishing" and are concerned about reports that the bottom fish industry is becoming fished out. Projected salmon prices and increasing competition are also causes for concern. The Cordova office is experiencing "a near high" in delinquencies for fishery loans because of the recent "tough season." Senator Jacko attested to construction projects in Dutch Harbor (hotel, shopping mall, and cold storage facility) and asked if Alaskan banks are involved. Mr. Cuddy said that a customer has approached the bank with a proposal for construction of a floating housing facility at Dutch Harbor. That is the kind of project the bank would be interested in reviewing. Mr. Cuddy noted that sometimes project developers go elsewhere for financing. He advised that, in the 1980s, several other banks became very aggressive in lending. First National thus gained a reputation for being very conservative. End, SFC-93, #39, Side 1 Begin, SFC-93, #39, Side 2 Senator Kelly inquired regarding the impact on Anchorage and Fairbanks of the cutback of 2,800 Alaskan troops. Mr. Cuddy said he could not respond to the inquiry. He advised that the military housing committee he chaired submitted its report to the mayor on February 15. Announcement of troop cutbacks occurred after that time. Senator Frank inquired regarding the bank's current lending posture relative to the past ten to fifteen years. Mr. Cuddy explained that the bank cut back on lending in 1984 because of concerns for the local economy. From 1984 to 1989, First National's loans dropped off substantially. Since 1989, the bank has added 50% to its loan portfolio. There are no alternate investments available since U.S. Treasury bonds are yielding approximately 4%. The bank is paying 3% for certificates of deposit. With reserve requirements and overhead, there is no profit in those transactions. The bank is thus aggressively looking for new loans. One of the areas being expanded is real estate. First National's competition does not generally like to make long-term real estate loans. The bank has thus experienced quite an increase in commercial-income real estate and residential real estate in the last three years. Mr. Cuddy advised that First National would like to become more heavily involved in installment loans, but car and boat dealers intercept many loans that used to be made by banks. The bank is looking at ways to buy "the paper" after dealers have made these loans. Installment loans tend to be only three to five years in term. Mr. Cuddy voiced his belief that if the Alaska economy experiences a problem, it will not occur in the next two years. In response to a question from Senator Sharp, Mr. Cuddy explained that any time the bank can sell a loan to AHFC, AIDEA, or another investor, it does so because the interest rate tends to be better and the term longer. The only real competitor for real estate loans is National Bank of Alaska. Last year NBA took a very conservative posture and cut its term to ten years. During that time, First National picked up a lot of loans. Since then, NBA has extended the term to 15 years and is aggressively competing again. Senator Kerttula posed a general question regarding the national banking community. Mr. Cuddy noted the difference between savings and loans and commercial banking institutions. Savings and loans were not properly examined by the government, and huge losses occurred for which taxpayers have paid the bill. Commercial banks are funded out of their own insurance premiums. Taxpayers have not paid anything for commercial bank failures. Mr. Cuddy noted that First National and National Bank of Alaska have both had to pay higher premiums because of failures at other banks. Headlines indicate that the banking industry made huge profits last year. The reason for that is that bonds and investments made three years ago at high yields continued to earn those yields while the cost of funds dropped off dramatically. Most banks thus made nice profits. That only happens 50% of the time. The other half of the time the reverse is true. In a period of increasing interest rates, loans made at 4% today will be loser transactions when the cost of funds increases. When that happens, more banks are likely to have problems. The federal government has never been competent to analyze banks. Last year, regulators spent five weeks at First National and reviewed less than a dozen loans. They spent the majority of the time checking to see that forms were correctly filled out and regulations were met. Mr. Cuddy concurred that there may be a number of time bombs awaiting a reverse interest rate situation and an accumulation of bad loans. SENATE BILL NO. 71 An Act relating to emergency medical services; and repealing obsolete references to the Statewide Health Coordinating Council and health systems agencies. Co-chair Frank announced that the bill would be held in committee as staff continues to work on fiscal notes. He further advised that Senator Rieger would be proposing amendments for incorporation within the Finance Committee Substitute. SENATE BILL NO. 82 An Act relating to the Dalton Highway. Co-chair Frank directed that SB 82 be brought on for discussion. He remarked that legislation relating to opening the Dalton Highway to public use had been before the legislature for a number of years. At the present time, a portion of the road is theoretically closed to public use although the closure is not enforced. Permits for travel on the road are issued to commercial or industrial users. The proposed bill would open the road to a terminus near the Arctic Ocean. The last few miles are on oil company land leased from the state. It is the intent to have the Dept. of Transportation and Public Facilities work with oil companies to develop an access route through those leases so that the public can travel all the way to the Arctic Ocean. That access route is not mandated, however. It is the intent of the sponsor to have the department exercise its authority to close the road during months of the year when it is determined to be unsafe due to cold weather. KEITH GERKEN, Deputy Commissioner, Dept. of Transportation and Public Facilities, came before committee, accompanied by JOHN HORN, Regional Director, Northern Region, Dept. of Transportation and Public Facilities. Mr. Gerken advised that the department has long supported opening the road. Opening it to the public would be consistent with state policy on all other routes. More practical considerations relate to the current insufficient amount of capital improvement on the route. The principal source of capital improvement moneys is federal highway dollars. Those dollars cannot be spent on a road that is not open to the public. Opening the northern half of the Dalton Highway will allow the department an opportunity to use federal moneys to maintain the road so that this extremely expensive asset does not further deteriorate. The department fiscal note is zero. Currently, commercial traffic on the road is what determines the amount of needed maintenance. Increased traffic projections from tourism and recreational use do not indicate that department costs will be impacted. For a number of years, the department has cooperated with the federal Bureau of Land Management on development opportunities along the route. The BLM is very interested and willing to work on a plan to make facilities available for camping, parking, scenic viewing, etc. In response to a question from Senator Kelly concerning availability of restaurants and gas stops along the highway, Mr. Horn said fuel, food, and lodging are available at the Yukon River, Cold Foot, and Deadhorse. While long distances lie between those locations, the distances are not beyond the gas tank capacity of most vehicles traveling the road. The longest stretch is slightly over 200 miles. As people begin to use the road, and commercial need for additional facilities arises, they will be built. But the need must first be developed. Senator Sharp advised that the Senate Transportation Committee was provided information indicating the BLM has a "pretty elaborate plan set up for waysides and campgrounds," once the road is opened and demand justifies development. Further discussion followed between Senator Kelly and Mr. Horn regarding ownership of existing fuel, food, and lodging facilities. Mr. Horn noted Native corporation, service company, and private ownership. Mr. Gerken voiced his understanding that land upon which facilities are located is leased from BLM on a long-term basis. Senator Rieger raised questions concerning state liability for the condition of the road and maintenance responsibilities. Has an action based on lack of maintenance ever been brought against the state? Mr. Gerken acknowledged that such actions had been brought. Courts generally "look at that as whether or not we're doing what we can with what we're given." The majority of the traffic on the road, both today and after it is opened, will continue to be commercial. State liability thus already exists. He acknowledged that a greater number of people traveling the road would increase already existing liability. Mr. Gerken told members that while the condition of the road is often described as primitive, it is not. The road is constructed to federal, secondary standards. While it is not paved, it is quite adequate in terms of width, alignment, and grade. It is acknowledged to have a few problems, and access to federal dollars for the northern end would help correct situations where grades should not be as steep as they currently are. Unless the weather is particularly bad, speed on the Dalton is not a problem. Truckers move quite quickly across it. Tourists will as well. The road is passable and safe. In terms of standards and maintenance, it is perhaps safer than the Taylor or Denali Highways. It is built to better standards. State liability should thus not change significantly. Senator Rieger next asked what the opening of the Dalton would mean in terms of the statewide ISTEA allocation. Mr. Gerken explained that the Dalton falls within the definition of core roads. It will thus have to compete against other major highways for available federal dollars. The state will not receive more federal highway funding because it has more road miles on which to spend it. The department is attempting to establish statewide priorities in terms of which routes need attention most. The Dalton would compete and may take funding from other projects. It will not impact borough allocations. Discussion followed between Senator Kelly and Mr. Horn regarding pipeline construction camps. Mr. Horn explained that most camps have been closed or co-located with the seven pump stations along the pipeline. The department also has six maintenance stations along the route. Further discussion followed between Senator Kelly and Mr. Horn concerning airstrips along the road. Senator Sharp voiced his understanding that the portion of the road presently closed to the public and ineligible for ISTEA money consists of approximately the last 200 miles. Mr. Horn advised that it is technically closed at Disaster Creek. Further discussion relating to past checkpoints followed. Mr. Horn acknowledged that there had been no checkpoint for the last two or three years. DOTPF never had enforcement authority along the road. Due to staffing cuts, enforcement by the Alaska State Troopers was rare. Essentially, anyone wishing to drive the road has done so. Further, commercial permits were easily obtained. In addition, recent statutes opened the area to mining development. Senator Sharp next raised a question about use of federal dollars versus general funds on the portion of the road to be opened. Mr. Horn advised of a recent $5 million project utilizing general funds. He said it was the first funded by general funds since 1984/85. The road requires resurfacing every three years. The $5 million was used to resurface "Deadhorse south about 53 miles." By raising the grade and narrowing the road to 32 feet, that portion of the road "essentially blows itself clean now." In the past, it required two people to control drifting during the winter. A steady, cyclical CIP budget for the road will reduce the cost of everyday maintenance. The road wears out in three years and maintenance costs increase. Mr. Horn attested to other points along the road where drifting is a problem. Mr. Horn commented that the road to slightly north of Cold Foot has been opened since 1983 with no major impact. The forecasted impact on the environment and predicted breakdowns and major accidents have not occurred. Commercial facilities will locate along the highway as need arises. Mr. Horn further attested to the fact that the farther one ventures from civilization, the more individuals help each other. If ISTEA funds are not going to be used on the northern portion of the Dalton, the department needs $100.0 a mile every four years to maintain an adequate, safe surface. That translates to approximately $5 million in general funds annually. Senator Kelly asked what the state is currently paying to maintain the northern portion of the Dalton. Mr. Horn answered that prior to the 35% cut, last year, the department spent approximately $7 million a year. The reduction funded maintenance at $4.3 million. That was inadequate, hence the $1.2 million supplemental and moneys from the Commissioner's "non-routine emergency maintenance fund." Since January, approximately half of the $2.5 cut has been added back. That maintains the road and the facilities needed to maintain the road. It does not include maintenance of airports along the route. COL. JOHN MURPHY, Director, Division of Alaska State Troopers, Dept. of Public Safety, next came before committee. Co-chair Frank voiced his understanding that the Dept. of Public Safety could meet increased demand for fish and wildlife and highway enforcement with the fiscal notes that accompanied the bill. The Co-chair then said that he did not totally agree with the level of the notes and asked that Col. Murphy speak to increases in the trooper component as well as fish and wildlife protection. Col. Murphy explained that funding anticipates a full-time trooper at seven mile and two troopers out of Fairbanks who would travel the highway on a rotation basis. Troopers do not currently conduct roving patrols along the Dalton, but a supervisor travels it. DOTPF has housing at seven mile. The department proposes to locate a trooper there as well. End, SFC-93, #39, Side 2 Begin, SFC-93, #41, Side 1 With increased traffic, there would be need for a trooper on the road twelve to sixteen hours a day. The department bases projected need on past haul road experience with commercial traffic. Addressing fish and wildlife protection needs, Col. Murphy advised that an enforcement officer would be based at Cold Foot. Enforcement personnel is currently stationed there, but the department intended to transfer the position this summer. If the road is opened, resulting hunting and fishing pressure would necessitate that the position remain at Cold Foot. A part-time position would also be needed to assist during the busy season, and an aircraft would be required for search and rescue as problem situations arise. First-year costs are substantial due to need for the aircraft and other equipment (a snow machine and four, four- wheel-drive vehicles). Costs drop dramatically the second year. Senator Sharp acknowledged the department's desire to reach adequate staffing levels but questioned whether SB 82 is the proper vehicle. He voiced his understanding that there are presently no troopers on the road, and he took exception to the proposal to go from "zero to four on the back of this legislation." The Senator questioned whether opening of the road would initially justify other than merely emergency response capability. The Department of Fish and Game has indicated no greater incidence of violation along the Dalton than other locations statewide. In fact there may be less because of the five-mile no hunting zones on either side of the road which permit only bow and arrow hunting. Senator Sharp suggested that the Department of Public Safety fiscal note reflects "overkill" in terms of funding. Senator Kelly asked if other highways in Alaska are unpatrolled. Col. Murphy answered that the Elliott Highway and some others are not patrolled "very often." The troopers do not patrol those areas unless called, or they patrol on a monthly cycle. Col. Murphy added that the department is not enforcing commercial vehicle regulations along the Dalton. If the road is open to the public and more private vehicles travel the Dalton, the department will need to work with commercial truckers to ensure that their equipment is safe. There is much more commercial traffic along the Dalton than on other infrequently patrolled highways. Senator Kelly and Co-chair Frank suggested that costs of commercial vehicle inspections should be covered by program receipts. Senator Sharp noted that the weigh station at Fox would be the proper site for vehicle safety inspections. Co-chair Frank acknowledged questions raised by Senator Lincoln when the bill was before the Senate Transportation Committee. He then directed attention to a packet of information (March 17, 1993, memo from Rick Solie to Senator Frank--copy on file in the SFC SB 82 file) which he explained attempts to address those concerns. RICK SOLIE, aide to Senator Frank, next came before committee. He enumerated seven questions raised by Senator Lincoln, read the brief response set forth in the memo, and pointed to attached, in-depth backup materials. Speaking to the oil industry's position on proposed opening of the road, Mr. Solie voiced his understanding that as long as the road is not opened "all the way to the Arctic Ocean," the position would be neutral. Language in the bill thus speaks to "a terminus near the Arctic Ocean." Oil company concern is that opening the road to the Ocean might jeopardize operational security. Mr. Solie next directed attention to correspondence from the Department of Fish and Game (included within the packet) indicating that there might be a positive impact from opening the road "because some of the caribou herds actually could use a little more harvest." It does not appear there will be an adverse effect from additional hunting. EDGAR BLATCHFORD, Commissioner, Department of Community and Regional Affairs, next came before committee. Co-chairman Frank voiced his understanding that the administration has requested the Commissioner to negotiate a settlement between the state and the Tanana Chiefs. The Commissioner explained that, last summer, several commissioners and the Attorney General met with representatives of TCC and the law firm representing the North Slope Borough. The state immediately dismissed the suggested creation of a federal/state commission to regulate ingress and egress out of the North Slope. Since that time, there have been additional discussions with TCC. The Commissioner explained that travel by both himself and TCC representatives to Washington, D.C., was unproductive because senior officials at the Bureau of Land Management were reluctant to recommend any action until after the November election. Exchange of correspondence with TCC is ongoing. The administration's understanding is that TCC will try to bring the other parties together, i.e. the North Slope Borough and villages, etc. Discussion continued regarding "how we can open the road." DARSIE BECK, Alaska Environmental Lobby, next came before committee. He voiced opposition to opening the highway, advising that it would substantially impact wildlife and the fragile eco-system of areas north of the Brooks Range. Hunting pressures, both legal and illegal, will increase, and off-road vehicular traffic will lead to serious erosion problems. There will also be increasing pressure to build new roads from the Dalton to distant points. The BLM's ambitious recreation plan will attract additional traffic and magnify negative impacts on the land and wildlife. Mr. Beck noted the following intent accompanying legislation that authorized construction of the Dalton Highway: It is the sense of the legislature that the construction of the highway will not impair natural wilderness adjacent to the highway, will not unreasonably interfere with subsistence hunting, fishing, trapping, and gathering. Opening of the highway to public use would violate that intent. Senator Rieger pointed to earlier-mentioned correspondence from the Department of Fish and Game indicating that increased harvest would be good for the long-term health of the caribou herd. Mr. Beck disputed that statement. Co-chairman Frank noted references by Mr. Beck to off-road vehicular traffic. The Senator then voiced his understanding that the Dalton has protection against off- road use that no other state highway enjoys. The five-mile corridor on each side of the highway is a substantial prohibition. Co-chairman Frank voiced surprise that the environmental community would object to "just letting people drive a road." Mr. Beck acknowledged statutory protection. He further noted testimony that there is little or no enforcement along the road. Co-chairman Frank concurred that there may be violations by a small number of people. He voiced concern, however, that the stand taken by the environmental lobby indicates that "The people of Alaska won't follow the law." Law enforcement in any state is based upon voluntary compliance. Mr. Beck advised that the environmental community is opposed to the opening on the philosophical grounds that it "increases use of resources that don't need to be used right now." The environmental community supports tourism, but this appears to be irresponsible tourism. Senator Rieger posed questions regarding penalties associated with off-road violations along the road, and suggested that if the fine is minor, perhaps the committee should review the penalties. Co-chairman Frank predicted that most tourists would either fly to the North Slope or travel via tour bus. He then voiced his belief that it was philosophically wrong for a portion of the road, constructed with public funds, to be closed to the public. CHIP THOMA next came before committee, advising of his experience as a truck driver on the Dalton during the winters of 1974, 75, and 76. He said that wind-driven drifts and white-out conditions prevail much of the time. He voiced his belief that the state should not have agreed to take over the road. It should have remained a private road maintained by the oil companies. Mr. Thoma suggested that opening the road would provide "a whole new moose highway" for residents of Fairbanks. He then voiced support for efforts by the Tanana Chiefs and North Slope Borough to close the road. Co-chairman Frank took exception to Mr. Thoma's comment that the purpose of the proposed bill was to expand access for Fairbanks moose hunters. He reiterated that the impetus behind the bill is philosophical: A public road maintained with public dollars should be opened to the public. There is no policy reason for keeping the Dalton closed "half way up." No overriding problems have arisen as a result of having it open as far as it is now. The people of Alaska should have the opportunity to drive a road that was paid for and is maintained by public dollars. The Co-chairman further advised that he had worked with the departments of Fish and Game, Public Safety, and Transportation and Public Facilities to address legitimate concerns. Mr. Thoma said that he was not asserting that ulterior motives were involved. He stressed that from October 1 to April 1 there is no tourist value to the road. The issue of concern is safety. The reason for the road is to drive goods and services to Prudhoe Bay. Co-chairman Frank commented that departments charged with responsibility along the road do not feel there is undue risk. The commissioner has authority to close the road if conditions are unsafe. The Department of Transportation and Public Facilities has general authority to open and close any road for safety reasons. KEITH GERKEN, Deputy Commissioner, Department of Transportation and Public Facilities, again came before committee. He concurred in comments by the Co-chairman regarding authority to open and close roads. The department has, in the past, issued notices of closure to commercial traffic. In response to a question from Senator Kelly regarding inclusion of specific language to that effect within the bill, Co-chairman Frank said that he did not want the legislature to arbitrarily set times for openings and closing. The Co-chairman announced that SB 82 would be HELD in committee for additional work on the fiscal notes. Discussion followed between Senator Kelly and Co-chairman Frank regarding the approach to fiscal note work. The Co- chairman advised that he did not intend to zero the notes. SENATE BILL NO. 84 An Act relating to fees for identification cards and certain motor vehicle licenses and permits; to licenses issued to drivers and to revocation of a license to drive; and providing for an effective date. Co-chairman Frank directed that SB 84 be brought on for discussion. Senator Kelly acknowledged a problem with the $215.7 fiscal note from the Department of Public Safety but noted projected revenue of $815.0, resulting in a net gain to the state. JOSH FINK, aide to Senator Kelly, came before committee. He explained that similar legislation passed the House last session. It is supported by the Dept. of Public Safety, Dept. of Health and Social Services, the health and human services commission of the Municipality of Anchorage, Mothers Against Drunk Driving, Bristol Bay Area Health Corporation, and the Alcoholic Beverage Control Board. The bill is intended to have a preventative and deterrent impact on use of fraudulent licenses for the purchase of alcohol by minors. A hologram would be placed on licenses to prevent tampering. The phrase "under twenty-one" would be inscribed across the face of licenses for minors to make it easier for alcohol providers to identify those who are underage. Those who are caught using fraudulent identification to purchase alcohol would be subject to revocation of driving privileges for 60 days. JUANITA HENSLEY, Chief, Driver Services, Dept. of Public Safety, next came before committee. She voiced support for the bill as well as "anything that we can do to save lives and prevent alcohol deaths." Directing attention to the department fiscal note, Co- chairman Frank asked why three additional people would be needed to administer the program. Mrs. Hensley explained that the department estimates an additional 1,500 license revocations a year. One bar in Anchorage annually confiscates approximately 400 licenses from minors attempting to purchase alcohol. The department estimate is extremely conservative. There is no way of knowing how many licenses will actually be involved. Approximately 500 to 700 per year are turned over to the ABC Board and subsequently forwarded to the department. Senator Kelly suggested that licenses for minors bearing a hologram and the above noted inscription would reduce the number of young people attempting to enter bars or purchase alcohol. Mrs. Hensley explained that young people will sometimes use the birth certificate of an older brother or sister to obtain a fraudulent duplicate license. A license inscription identifying a minor as being "under twenty-one" is not going to stop that behavior. Last year's budget contained funding for technical upgrades within the department. That funding will purchase an imaging system for the Anchorage field office. This pilot project for driver license photos will allow the department to retrieve the photo of the driver for comparison with the applicant. In response to a question from Senator Rieger, Mrs. Hensley concurred that while there was no problem with the proposed bill, it would not close some already identified loopholes. End, SFC-93, #41, Side 1 Begin, SFC-93, #41, Side 2 Discussion followed between Co-chairman Frank and Mrs. Hensley regarding existing penalties associated with use of false identification. The normal penalty is ten days with ten days suspended and a $100 fine. Unless the false identification is used to defraud someone of money, the lesser misdemeanor violation rather than felony forgery is most often utilized because prosecutors simply do not have the time to pursue a felony conviction. Co-chairman Frank asked if the three positions requested by the department relate to revocation hearings. Mrs. Hensley answered that one would be an administrative hearing officer. The request is based on the fact that 25% of those arrested for DWI request an administrative hearing. The other two are entry-level document processor II positions to process the other 75% of the paper work, etc. Further discussion followed between the Co-chairman and Mrs. Hensley regarding issues in dispute when an administrative hearing is requested. Mrs. Hensley noted: 1. Did the individual obtain false identification? 2. Was false identification used to purchase alcohol? 3. Should the license be revoked? Additional discussion followed concerning processes involved in conducting administrative hearings. The proposed bill specifies that the hearing will be held telephonically. The hearing officer will be based in Anchorage. The department would like to see this provision applied to DWI law as well. Co-chairman Frank concurred in that approach. Senator Kelly suggested that forfeiture of an individual's permanent fund dividend be added as a penalty in addition to the proposed 60-day revocation of license under the proposed bill. Mrs. Hensley noted that the cost of a duplicate driver's license is presently $3. The proposed bill increases it to $5. From the department's standpoint, it takes more time to issue a duplicate license than to renew a license. If the fee was raised to $10, it would generate an additional $312.0. Senator Rieger inquired regarding the revenue fund source set forth on the department fiscal note. Mrs. Hensley explained that reinstatement fees contribute to the program receipts. Further discussion of incoming program receipts followed. Senator Kelly requested that staff prepare an amendment requiring that someone caught using false identification to purchase alcohol would forfeit his or her permanent fund check. Mrs. Hensley noted that the number of licenses suspended or revoked each year is extremely high. Approximately 5,700 are suspended for DWI, 8,300 for court revocation, 6,200 for accident involvement with no insurance, and 400 to 600 for fraudulent driver licenses. Co-chairman Frank next inquired concerning Court System and Dept. of Correction costs associated with the proposed bill. Senator Kelly suggested that only a small percentage would continue to drive once the license was revoked. Mrs. Hensley noted that a driver's license is extremely important to minors. It is hoped that the threat of revocation will prevent them from using false identification. While the potential is there for them to continue to drive following revocation, studies indicate that they drive more carefully for fear of getting caught. In the course of discussion relating to charges for driving licenses and duplicate licenses, Mrs. Hensley advised that the proposed hologram would add approximately $0.25 to the cost of the license. Senator Kelly noted that the fee charged for an Alaska driver's license is much less than that paid in other states. Mrs. Hensley noted that the fee in Alaska equates to $2 a year ($10 for a five year period). She referenced a list of states and the fees charged thereby, and concurred that Alaska's is among the lowest in the nation. Costs range from $1.75 to $6.25 per year. Co-chairman Frank asked if the department had considered increasing the five-year license period to relieve the workload on the department. Mrs. Hensley said that the department had looked at renewal by mail. Problems associated with a longer term, ten-year, license are age, changes in vision, health, etc. Senator Rieger suggested that two-year vehicle registration rather than the current annual renewal would save costs. Co-chairman Frank concurred, advising that exploration of that possibility ran into difficulty in terms of vehicle emission testing in Anchorage and Fairbanks. Mrs. Hensley acknowledged that the department presently has authority for registration every two years. It has encountered problems with both ion testing and yearly property taxes the department collects on behalf of some municipalities. Co-chairman Frank directed that the bill be HELD in committee while cost features of the fiscal note and possible amendments are reviewed. SENATE BILL NO. 97 An Act relating to enhanced 911 emergency reporting systems; and providing for an effective date. Co-chairman Frank directed that SB 97 be brought on for discussion. KEN ERICKSON, aide to Senator Pearce, came before committee. He directed attention to a work draft committee substitute for the bill (8-LS0293\O, Cramer, 3/16/93), and explained that it would allow emergency dispatchers to better assist people who call 911. Victims of crime, the young, and the elderly are often unable to give adequate directions when they dial the emergency number. If enacted, SB 97 would create a mechanism to fund enhanced 911 reporting systems. The bill is permissive. Enhanced systems provide an expansion of benefits of existing 911 services. New benefits include: 1. Immediate visual display of the location and telephone number of the caller. 2. Automatic routing to the appropriate emergency response unit. 3. Faster response time. 4. Curtailment of abuses of the emergency system by documentation of callers. The legislation provides immunity from liability (except for intentional acts of misconduct or gross negligence) to municipalities and suppliers of 911 services. For the purposes of a dispatcher furnishing name and address information to emergency response units, the bill waives telephone customer privacy rights afforded by an unlisted number. The difference between the proposed draft and the Senate Labor and Commerce version rests in removal of section two which exempted from public record, transcriptions and recordings of 911 phone calls. Emergency systems currently work well without that extra protection. There is thus no reason to change the status quo. The section was originally requested by the Anchorage telephone utility. The utility has since decided the section is unnecessary. Senator Rieger inquired regarding what kind of information might be divulged as a result of removal of section two. Senator Kelly noted that 911 information has been public up until this time. Senator Kelly MOVED for adoption of the draft committee substitute dated 3-16-93. No objection having been raised, CSSB 97 (Finance) was ADOPTED. Senator Kelly subsequently MOVED that CSSB 97 (Finance) pass from committee with individual recommendations and the accompanying zero fiscal note from the Dept. of Commerce and Economic Development. No objection having been raised, IT WAS SO ORDERED. All members signing the committee report (Co-chairs Frank and Pearce and Senators Kelly, Rieger, and Sharp) signed "do pass." ADJOURNMENT The meeting was adjourned at approximately 11:55 a.m.