MINUTES SENATE FINANCE COMMITTEE April 19, 1994 5:40 p.m. TAPES SFC-94, #66, Side 1 (139-end) SFC=94, #66, Side 2 (575-368) CALL TO ORDER Co-chairman Steve Frank convened the meeting at approximately 5:40 p.m. PRESENT In addition to Co-chairman Frank, Senators Kelly, Kerttula, and Sharp were present. Senator Rieger arrived soon after the meeting began. ALSO ATTENDING: Senator Little; Joe Swanson, Director, Division of Elections, Office of the Governor; Gerald Gallagher, Director, Division of Mining, Dept. of Natural Resources; Larry E. Meyers, Director, Income and Excise Audit Division, Dept. of Revenue; Tom Anderson, aide to Representative Terry Martin; and aides to committee members and other members of the legislature. ALSO PARTICIPATING VIA TELECONFERENCE: Linda Crya-koorsgard, Anchorage, Alaska; Roy Hoyt, Jr., Homer, Alaska. SUMMARY INFORMATION SB 305 - LICENSING OF LANDSCAPE ARCHITECTS Discussion was had with Senator Little, Roy Hoyt, and Linda Cyra-koorsgard. Work draft "O" (4/7/94, Lauterbach) was ADOPTED. CSSB 305 (Fin) was REPORTED OUT of committee with no recommendation, accompanied by a fiscal note from the Dept. of Commerce and Economic Development showing a cost of $9.3 and revenues of $17.3. SB 338 - CROSSROADS DISCOVERY CENTER\SHIP CRK Amendment No. 1, by Senator Frank, was offered and ADOPTED. CSSB 338 (Fin) was REPORTED OUT of committee without recommendation, accompanied by a zero fiscal note from the Dept. of Revenue. SB 373 - "S.A.F.E." COMMISSION Discussion ensued concerning replacing the word "emergency" with "exigency." CSSB 373 (Fin), incorporating the change to "exigency," was REPORTED OUT of committee with individual recommendations and a fiscal note from Legislative Affairs Agency showing reappropriation funding of $300.0. HB 49 - ABSENTEE VOTING & USE OF FAX Discussion was had with Tom Anderson and Joe Swanson. SCS CSHB 49 (STA) was REPORTED OUT of committee with individual recommendations, accompanied by a $23.4 fiscal note from the Office of the Governor, Division of Elections. HB 498 - MINERAL EXPLORATION INCENTIVE CREDITS Amendments 1 through 5 were discussed with Jerry Gallagher of the Division of Mining. Amendments 1 through 3 were ADOPTED, and Amendments 4 and 5 were held pending, per a request by Senator Frank. The bill was also HELD in committee for further consideration. SB 305 LICENSING OF LANDSCAPE ARCHITECTS Upon convening the meeting, Co-chairman Steve Frank directed that SB 305 be brought on for discussion and noted teleconference links to Anchorage, Fairbanks, and Homer. Senator Kerttula advised that he did not wish to offer Amendment No. 1 and asked that it be withdrawn. No objection having been raised, IT WAS SO ORDERED. SENATOR LITTLE, sponsor of the legislation, came before committee. She referenced a draft CSSB 305 (8-LS1617\O, Lauterbach, 4/7/94) and explained that landscape architecture is the profession that provides designs for outdoor spaces. Practitioners must be familiar with building codes, local ordinances, and health and safety regulations. They are accredited and must complete a four to five-year educational process. Presently, anyone in Alaska can call himself or herself a landscape architect without any training and can compete with a professional. The proposed legislation represents an Alaska hire bill. Many contracts require "stamped" professional landscape architects for outdoor work. Because Alaska has no license requirements, residents who are knowledgeable about Arctic conditions, local plant materials, etc., are eliminated from ability to perform these types of tasks. The proposed bill will allow knowledgeable residents to compete on those contracts. Landscape architects are licensed in 44 other states. Lack of a license procedure in Alaska results in this work being performed by out-of-state landscape architects rather than local residents. While the legislation originally requested additional members for the board, the present version retains the board "at the same size and adds an additional non-voting landscape architect on the board for one year to advise the board on establishing regulations for the licensing." The non-voting member is not reimbursed for per diem or travel. Licensing will involve one test per year rather than the standard two. Senator Little next described the differences between the "O" version work draft and CSSB 305 (L&C). She referenced page 9, lines 20 - 24, and explained that subsection (c) was added to ensure that landscape architects do not perform architectural, engineering, or land survey work. Definitions commence at page 12, line 17. Senator Little noted addition of "incidental and necessary" to the definition of the "practice of landscape architecture." She told members that language at page 12 provides a clear delineation of "what landscape architects would be able to do under the licensure." Language at page 13, line 31, clarifies when the first test will be given and further defines how long a person may practice landscape architecture without a license until the initial test. Senator Kerttula asked if the legislation contains grandfather provisions. Senator Little responded negatively, but advised that the bill provides that persons who are licensed in other states would continue to be licensed in Alaska. Those who are not licensed anywhere would need to take the national exam. Discussion followed regarding grandfathering based on past performance of work in a given field, regardless of educational background. Senator Little explained that those seeking to become landscape architects would pay an examination fee and an annual registration fee when approved by the board for licensure. Senator Kerttula expressed concern that regulations might prevent those who have actively engaged in the profession up to this time from practicing in the future. Senator Little spoke to clear delineation between landscape construction and landscape architecture, advising that the difference is the same as a construction contractor and an architect. Those involved in landscape construction will not be impacted by the proposed bill. Senator Little described the situation in California where those who do not have licenses are designated landscape designers while licensed individuals are landscape architects. Co-chair Frank voiced his understanding that the proposed bill would not prohibit an individual's ability to continue to practice in the field. It merely restricts what "that person may call themselves." Senator Sharp referenced discussion in Senate Labor and Commerce to the effect that many bids call for landscape architects. Those individuals must be professionally qualified, and that has necessitated use of out-of-state persons. Senator Little concurred. She advised that federal contracts require licensed professionals. Projects often end up employing professionals from out of state who know nothing about permafrost, Arctic plant materials, etc. The public will be better served by utilizing knowledgeable locals to perform this work. In her concluding comments, Senator Little noted that all costs of the legislation will be borne by practitioners. There will be no cost to the state. The April 6, 1994, fiscal note from the Dept. of Commerce and Economic Development, accurately reflects the proposed work draft. TELECONFERENCE ROY HOYT, JR., spoke via teleconference from Homer, Alaska. He inquired concerning the number of landscape architects presently in Alaska. Senator Little responded, "There are approximately 50 who are members of the American Society of Landscape Architects." She noted it is costly to belong to the society and voiced her expectation that additional professionals, who are not members, also reside within the state. LINDA CRYA-KOORSGARD, Landscape Architect, spoke via teleconference from Anchorage and offered to answer questions concerning the bill. No questions were raised. Senator Kelly attested to support for the bill by the Alaska Chapter of the American Society of Landscape Architects. Co-chair Frank queried members regarding disposition of the bill. Senator Kelly MOVED for adoption of CSSB 305 (Fin) ("O" version). No objection having been raised, CSSB 305 (Fin) was ADOPTED. Co-chair Frank next MOVED that CSSB 305 (Fin) pass from committee with individual recommendations. No objection having been raised, CSSB 305 (Fin) was REPORTED OUT of committee with a fiscal note from the Dept. of Commerce and Economic Development showing revenues of $17.3 and costs of $9.3. All members present signed the committee report "no rec." (Senator Jacko was not in attendance and did not sign.) CS FOR HOUSE BILL NO. 49(FIN) am An Act relating to absentee voting, to electronic transmission of absentee ballot applications, to delivery of ballots to absentee ballot applicants by electronic transmission, and enacting a definition of the term `state election' for purposes of absentee voting; and providing for an effective date. Co-chair Pearce directed that CSHB 49(Fin)am be brought on for discussion and referenced file materials. TOM ANDERSON, aide to Representative Martin, and JOE SWANSON, Director of Elections, Office of the Governor, came before committee. Mr. Anderson explained that the legislation results from numerous constituent requests from out-of-state peace corps workers, traveling residents, disabled individuals, and members of the military who are disenfranchised by postal service in that their election ballots are not timely. The conceptual intent of the original bill was to allow everyone to vote by electronic transmission if a time crunch was involved. There was heavy opposition from the former head of the division of elections. The bill was then limited to those voting outside of the United States. It has since reverted back to the original target to allow all individuals voting absentee to use electronic transmission if they desire. The approach is not to replace the mail but to alleviate time consumption. The legislation is supported by the Division of Elections as well as the Alaska Federation of Natives and the Dept. of Defense Federal Voting Assistance Program. Under HB 49, the individual desiring to utilize electronic transmission or fax could request, receive, and return an application by fax. Application would have to be made within four days of the election. The voter may then return a marked ballot by fax. The ballot must be accompanied by a signed waiver stating the voter recognizes that an election official will be reviewing the ballot and recording it. The absentee voter must also take an oath before a member of the armed services or two U.S. citizens eighteen years or older or an individual in any of the fifty states who can administer an oath. Senate State Affairs amended the bill to provide that the voter receive faxed confirmation of Division of Election's receipt of the ballot. The proposed bill does not cover municipal or borough elections, REAA, coastal zone management board elections, or local option elections. It would not go into effect until the 1994 general election. Senator Rieger directed attention to page 3, lines 5, 6, and 7 and asked for an explanation. Mr. Anderson explained that an individual could not register to vote by fax. Mr. Swanson noted that the division currently allows those who request an absentee ballot by mail to register at the same time. The sentence in question prohibits that by fax. Senator Rieger inquired regarding the potential for fraud. Mr. Anderson referenced House Judiciary testimony by the Dept. of Law indicating that the choice may be either voting electronically with the understanding that an election official will be privy to your ballot or being unable to timely vote at all. The number of voters utilizing this process is expected to be relatively small. Senator Kelly pointed to language within the bill requiring that the Division of Elections adopt regulations to ensure the integrity of the ballot box. Responding to concerns relating to potential for fraud, Mr. Swanson said that the proposed bill opens no new avenues for fraud that do not already exist through the normal voting process. Processing of faxed ballots will be even more stringent than current absentee ballots which are individually numbered and traced. The individual's voter registration will be checked and two identifiers (birth date, social security number, voter identification number) will have to be provided for cross-check before the ballot will be accepted. The process is almost identical to that for absentee balloting by mail. Discussion followed regarding ballot secrecy under the proposed process. Mr. Swanson explained that only one person would be privy to the ballot to ensure that fax transmission is readable. Senator Kerttula voiced skepticism concerning the proposal. Co-chair Pearce called for additional testimony. None was forthcoming. She then queried members regarding disposition. Senator Kelly MOVED that SCS CSHB 49 (STA) pass from committee with individual recommendations. Senator Kerttula voiced his OPPOSITION. SCS CSHB 49 (STA) was REPORTED OUT of committee with a $23.4 fiscal note from the Division of Elections, Office of the Governor. Senators Kelly and Sharp signed the committee report with a "do pass" recommendation. Co-chairs Pearce and Frank and Senator Rieger signed "no recommendation." Senator Kerttula signed "Do not pass." CS FOR HOUSE BILL NO. 498(FIN) An Act providing for exploration incentive credits for activities involving locatable and leasable minerals and coal deposits on certain land in the state; and providing for an effective date. Co-chair Pearce directed that CSHB 498 (Fin) be brought on for discussion and referenced the following amendments: Amendment No. 1, by Senator Kerttula Amendment No. 2, by Co-chair Frank Amendment No. 3, by Senator Kelly Amendment No. 4, by Senator Kelly Amendment No. 5, by Senator Kelly Senator Kerttula noted that Amendment No. 1 contains language that would "amend into" a subsequent amendment by Senator Kelly. He then MOVED for adoption of Amendment No. 1. In response to a question from Co-chair Frank, Senator Kerttula explained that the amendment responds to his belief that all hire should be local, and the tax credit should not apply to hire that is not local. No objection having been raised, Amendment No. 1 was ADOPTED. Co-chair Frank said that Amendment No. 2 involves technical amendments to the bill. He then asked that department staff speak to the change. JERRY GALLAGHER, Director, Division of Mining, Dept. of Natural Resources, advised of concern that the granting of tax credits on trust land would create legal complications. Insertion of "unless otherwise provided by law" allows the commissioner to withhold tax credits from such lands. Co-chair Pearce called for objections to adoption of Amendment No. 2. No objection having been raised, Amendment No. 2 was ADOPTED. Senator Kelly explained that Amendment No. 3 removes retroactive application of the credit to January 1, 1994. He said that supporters of the legislation have no objection to removal since the January date was arbitrarily selected. He then MOVED for adoption of Amendment No. 3. Senator Kerttula concurred in support. No objection having been raised, Amendment No. 3 was ADOPTED. Speaking to Amendment No. 4, Senator Kelly explained that research into legislation dealing with oil and gas exploration credits indicates a $5 million limit per site and a limit of $50 million total. In order to ensure that limitations are in place, he proposed addition of the following language: The amount of an exploration incentive credit extended under this chapter may not exceed an amount per parcel or site, as determined by the commissioner by regulation. The Senator reiterated need for oversight of totals associated with these types of credits. Co-chair Pearce referenced fiscal note information indicating that the maximum amount of credits that could have been claimed in 1993 totals approximately $17 million. End: SFC-94, #66, Side 1 Begin: SFC-94, #66, Side 2 Senator Kelly stressed that, in light of ongoing budget cuts, the legislature must protect existing revenues from erosion. Co-chair Frank inquired concerning the types of taxes to which credits would be applied. Mr. Gallagher said that the bill applies to three separate payments: 1. Royalty on state land. 2. The mining license tax that applies to all lands-- a form of severance tax. 3. Corporate income tax. Senator Kelly explained that the oil and gas lease credit bill contains the above-mentioned cap to fix a figure in statute. Rather than try to do that, he said he was proposing the language within Amendment No. 4. Co-chair Frank requested that he be allowed a day to review implications of the proposed amendment. Co-chair Pearce directed that Amendment No. 4 be held for subsequent consideration. Speaking to Amendment No. 5, Senator Kelly noted that the oil and gas tax credit bill was limited to 50% on state lands and 25% on lands not owned by the state. The proposed amendment attempts to duplicate that requirement in CSHB 498 (Fin). He said that he saw no reason for the Alaska public to subsidize the exploration tax credit on private property. Senator Kerttula concurred, saying that there should be no subsidy on non-state-owned properties. Co-chair Frank requested that Amendment No. 5 also be held for subsequent discussion. Senator Kelly referenced language within the amendment relating to "eligible costs." He explained that the language was added by the drafter to delineate costs that are eligible for tax from those that are not. It is intended to prevent an organization from padding the actual cost of exploration at the site with overhead and other types of costs that are not directly related. Amendment No. 1, by Senator Kerttula, relating to labor costs dovetails with these provisions. Senator Sharp voiced his understanding that the credit was limited to labor only. Senator Kelly advised that it covers other eligible costs. Co-chair Pearce directed that CSHB 498(Fin) be HELD in committee for additional review. SENATE BILL NO. 338 An Act relating to the issuance of revenue bonds for acquisition and construction of the Alaska Discovery Center for the Ship Creek Project in Anchorage; relating to a study of the feasibility and financial viability of the Alaska Discovery Center; relating to construction of the Alaska Discovery Center; and providing for an effective date. Co-chair Pearce directed that SB 338 be brought on for discussion and referenced a proposed amendment by Co-chair Frank. Co-chair Frank explained that the amendment is intended to make clear that no railroad funds are "to go into this project" nor are railroad assets to be used to support the financing. Senator Kelly said he had no objection to the amendment since it embodies his intent as well. Co-chair Frank MOVED for adoption of Amendment No. 1. No objection having been raised, Amendment No. 1 was ADOPTED. Senator Kelly MOVED for passage of CSSB 338 (Finance) with individual recommendations. No objection having been raised, CSSB 338 (Fin) was REPORTED OUT of committee with a zero fiscal note from the Dept. of Revenue. Senators Kelly and Rieger signed the committee report with a "do pass" recommendation. Co-chairs Pearce and Frank and Senator Sharp signed "no recommendation." Senators Kerttula and Jacko did not sign the report. SENATE BILL NO. 373 An Act relating to a comprehensive state financial plan and to the Solving Alaska's Fiscal Emergency (S.A.F.E.) Commission; and providing for an effective date. Co-chair Pearce directed that SB 373 be brought on for discussion and referenced a draft CSSB 373 (8-LS1876\J, Cook, 4/19/94). Senator Kelly explained that the draft contains a major departure from the original bill in that it removes the earlier Section 2 which mandated action by the legislature as an alternative to binding implementation of the S.A.F.E. commission financial plan. The draft establishes a nine-member advisory commission to work during the interim to develop a six-year plan and return a report to the next legislature. At that point the commission would terminate. Senator Kelly acknowledged that the original bill envisioned a long-term commission with revolving members. There was not sufficient support for that approach. Senator Kelly MOVED for adoption of CSSB 373 ("J" version). Co-chair Frank MOVED to remove the word "emergency" from the name of the commission and insert the word "gap" in place thereof. He voiced his belief that use of "emergency" is inappropriate. Senator Kelly advised that he did not disagree with the concept but suggested substitution of a word commencing with the letter "e" to retain the acronym, S.A.F.E., for designation of the commission. Senator Rieger attested to real dollar gaps in state revenues necessitating a $200 million reduction next year and a like amount the year thereafter. He said he disagreed with the S.A.F.E. Commission approach but does not disagree with the contention that an emergency exists. He suggested that the Governor should be undertaking the tasks contemplated by the commission. Co-chair Pearce called for action on the motion for adoption of CSSB 373 ("J" version). No objection having been raised, CSSB 373 (Fin) was ADOPTED. Co-chair Frank then MOVED to remove the word "emergency" and replace it with "exigency." No objection having been raised, the motion CARRIED, and the replacement was SO ORDERED. Discussion followed regarding staffing for the Commission. Senator Kelly spoke to utilization of legislative staff for support work. Senator Kelly MOVED that CSSB 373 (Finance) pass from committee. CSSB 373 (Finance) was REPORTED OUT of committee with a fiscal note from the Legislative Affairs Agency showing reappropriation funding of $300.0. Co-chair Pearce and Senator Kelly signed the committee report with a "do pass" recommendation. Co-chair Frank and Senators Rieger and Sharp signed "no recommendation." CS FOR SENATE BILL NO. 67(FIN) An Act amending provisions of ch. 66, SLA 1991, that relate to reconstitution of the corpus of the mental health trust and to the manner of enforcement of the obligation to compensate the trust; and providing for an effective date. Co-chair Pearce announced that a draft CSSB 67 2d(Fin) as well as a copy of a proposed amendment requested by Representative James would be distributed to members' offices for review prior to hearing at the next meeting. ADJOURNMENT The meeting was adjourned at approximately 6:45 p.m.