MINUTES SENATE FINANCE COMMITTEE May 8, 1994 1:30 p.m. TAPES SFC-94, #91, Side 1 (100-end) SFC-94, #91, Side 2 (end-550) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 1:30 p.m. PRESENT In addition to Co-chairs Pearce and Frank, Senators Kelly, Kerttula, and Sharp were present. Senators Rieger and Jacko arrived after the meeting was in progress. ALSO ATTENDING: Representative Con Bunde, sponsor of HB 334; Dean J. Guaneli, Chief, Assistant Attorney General, Legal Services Section, Criminal Division, Department of Law; Diane Schenker, Special Assistant, Officer of the Commissioner, Department of Corrections; Darrel Rexwinkel, Commissioner, Department of Revenue; Gayle R. Oba, Vice Chair, Alaska State Pension Investment Board; Senator Robin Taylor, sponsor of SB 223; Diane Kaplan, Alaska Public Radio Network; David Harding, aide to Representative MacLean, sponsor of HB 212; Virginia Stonkus, fiscal analyst, and Mike Greany, Director, Legislative Finance Division; representative of the media, and aides to committee members and other members of the legislature. SUMMARY INFORMATION SSSB 223: An Act relating to credits against certain taxes for contributions to certain public educational radio and television networks and stations; and providing for an effective date. Senator Robin Taylor, sponsor of SB 223, testified in support of the bill. Diane Kaplan, Alaska Public Radio Network, testified in support of SB 223 and answered questions from the committee. Senator Kerttula proposed conceptual amendment 1. Amendment 1 was ADOPTED. Co-chair Pearce clarified amendment 1 by stating that the University would remain the same and corporations would be allowed only one $50,000 tax credit. Senator Kelly proposed amendment 2 to include the Iditarod Trail Race. Amendment 2 FAILED. CSSSSB 223(FIN) was REPORTED out of committee with a "do pass," and zero fiscal notes for the Department of Revenue and Administration. SCSCSHB 212(JUD): An Act relating to a factor in aggravation of the presumptive term of a criminal sentence, and prohibiting the referral of a sentence based on application of that factor to a three-judge sentencing panel as an extraordinary circumstance. David Harding, aide to Representative MacLean, sponsor of HB 212, testified in support of HB 212. Diane Schenker, Special Assistant, Officer of the Commissioner, Department of Corrections, spoke to the fiscal note, to the increasing number of prisoners, and the non-funding of crime bills over the past years that effected the Department of Corrections. SCSCSHB 212(JUD) was REPORTED out of committee with individual recommendations, and zero fiscal notes for the Departments of Corrections, Public Safety, Law, Administration and the Alaska Court System (the Department of Correction's fiscal note showed a capital expense of $600.0). CSHB 334(FIN) am: An Act relating to criminal sentencing; relating to the availability for good time credit for offenders convicted of certain first degree murders; relating to definite 30- to 99-year terms of imprisonment for offenders convicted of an unclassified or class A felony that is a homicide, assault, kidnapping, sexual offense, or robbery and who have at least two prior most serious felony convictions; relating to parole, good time credit, pardon, commutation of sentence, modification or reduction of sentence, reprieve, furlough, and service of sentence at a correctional restitution center for offenders with at least three most serious felony convictions; defining `most serious felony' as an unclassified or class A felony offense that is a homicide, assault, kidnapping, sexual offense, or robbery or an attempt or conspiracy to commit, or criminal solicitation of, an unclassified or class A felony that is a homicide, assault, kidnapping, sexual offense, or robbery; and amending Alaska Rule of Criminal Procedure 35. Representative Con Bunde, sponsor of HB 334, testified in support of the bill. Dean J. Guaneli, Chief, Assistant Attorney General, Legal Services Section, Criminal Division, Department of Law, also spoke in support of the bill. Diane Schenker, Special Assistant, Officer of the Commissioner, Department of Corrections, spoke to the zero fiscal note in that the Department of Corrections would not be effected until the 15th or 16th year. CSHB 334(FIN) am was REPORTED out of committee with a "do pass,", a zero fiscal note for the Department of Corrections, and fiscal notes for the Department of Administration (UPA)- $181.1, PDA-$207.3, Alaska Court System - $78.1, and for the Department of Law - $112.6. SCSCSHB 494(STA): An Act changing the Alaska State Pension Investment Board to the Alaska Pension Investment Authority and relating to the authority; and providing for an effective date. Darrel Rexwinkel, Commissioner, Department of Revenue, and Gayle R. Oba, Vice Chair, Alaska State Pension Investment Board, spoke to HB 494 and to the fiscal notes. Discussion was held regarding fiscal notes and amendment 2 which was ADOPTED in the previous Senate Finance meeting. A motion to rescind amendment 2 FAILED. Amendments 3 and 4 by Senator Rieger were ADOPTED. SCSCSHB 494(STA) was REPORTED out of committee with individual recommendations, a zero fiscal note for the Department of Administration, and fiscal notes for the Department of Revenue for $497.0 and $398.5. CS FOR HOUSE BILL NO. 334(FIN) am: An Act relating to criminal sentencing; relating to the availability for good time credit for offenders convicted of certain first degree murders; relating to definite 30- to 99-year terms of imprisonment for offenders convicted of an unclassified or class A felony that is a homicide, assault, kidnapping, sexual offense, or robbery and who have at least two prior most serious felony convictions; relating to parole, good time credit, pardon, commutation of sentence, modification or reduction of sentence, reprieve, furlough, and service of sentence at a correctional restitution center for offenders with at least three most serious felony convictions; defining `most serious felony' as an unclassified or class A felony offense that is a homicide, assault, kidnapping, sexual offense, or robbery or an attempt or conspiracy to commit, or criminal solicitation of, an unclassified or class A felony that is a homicide, assault, kidnapping, sexual offense, or robbery; and amending Alaska Rule of Criminal Procedure 35. Co-chair Pearce invited Representative Con Bunde, sponsor of HB 334, to speak to the bill. REPRESENTATIVE BUNDE said that HB 334 had been reported on in the media but wanted to point out that the bill was different than the press presented it. The bill was crafted narrowly to address only repeat offenders that commit serious crimes. Accordingly to the Department of Corrections, this bill would impact approximately 3 to 5 individuals a year. If an individual had committed two serious felonies, the prosecutor then could choose to prosecute under the provisions of HB 334. Representative Bunde wanted the committee to know that, at present, an individual convicted of a third serious felony would spend between 12 to 15 years in jail. With this bill, an individual would spend between 30 to 99, with a provision that said after half a sentence was served, the Governor could waive the rest of the sentence if the prisoner was geriatric and no longer a threat to society. He noted that the fiscal notes were a concern but the rationale was that these individuals would be in the system anyway and this bill could serve as a deterrent. He felt money would be saved by not having to arrest and try these individuals for the fourth, fifth, etc. time, and he asked the committee at what cost did the state place personal loss to victims. Representative Bunde asked Dean J. Guaneli, Chief, Assistant Attorney General, Legal Services Section, Criminal Division, Department of Law, to join him at the table. DEAN GUANELI said the department supported HB 334. He agreed that this version of the bill was much more narrow in the number of crimes it covered, the way it considered prior convictions, the way it gave discretion to the prosecutor, and the type of sentence that could be imposed. He felt it was a more narrow bill than any across the country. In answer to Co-chair Frank, Mr. Guaneli described serious crimes as homicides, rape, murder, manslaughter, armed robbery, felony assault, shootings, and serious child abuse. It did not include such crimes as theft, burglary, or drug dealing. Senator Kerttula pointed out this bill was not an attempt at prevention but it just got the bad guys "off the street." Mr. Guaneli said that a sentence could involve a psychiatrist, or a lesser sentence could be imposed for vehicular manslaughter since the prosecution would be given such discretion in the bill. In answer to Co-chair Frank regarding fiscal notes, Representative Bunde said that public defenders felt more cases would be heard because of HB 334. He felt that was erroneous. Mr. Guaneli believed the potential of going to jail for a longer period of time made the tendency for individuals to fight harder, and the department estimated at least work for one more attorney in their fiscal note. Senator Sharp observed that if an individual was facing life imprisonment that they may leave the state. Representative Bunde said that in some instances individuals could be counseled out of a life of crime because of the long sentence they would face. Mr. Guaneli said that individuals that commit such felonies were out of control and unable to conform to what society wanted regardless of the penalty, and those were the ones that were better off behind bars. Senator Sharp said that some money must be saved by the absence of the "revolving door." Senator Kerttula asked if offenders may become more violent, for example, in a sexual assault, if they knew their sentence would be more severe or the same as murder. Mr. Guaneli said it was hard to assess that sort of thing. A third time rape offense brought a 25 year sentence now and with this bill it would range from 30 to 99 years. He did not feel that those offenders were thinking about sentences when they were being violent. Senator Kerttula commented that the state did not do much for prevention. DIANE SCHENKER, Special Assistant, Officer of the Commissioner, Department of Corrections, said that the effect of HB 334 would not be felt for 10 to 15 years and there was no way to reflect that in a fiscal note. Senator Kelly MOVED for passage of CSHB 334(FIN) am from committee with individual recommendations. No objection being heard, CSHB 334(FIN) was REPORTED out of committee with a "do pass," a zero fiscal note for the Department of Corrections, and fiscal notes for the following departments: Department of Administration (OPA) -$181.1; Department of Administration (PDA) - $207.3; Alaska Court System - $78.1; and the Department of Law - $112.6. Co-chairs Pearce and Frank, Senator Kerttula, Kelly, Sharp and Jacko signed a "do pass." SENATE CS FOR CS FOR HOUSE BILL NO. 494(FIN): An Act changing the Alaska State Pension Investment Board to the Alaska Pension Investment Authority and relating to the authority; and providing for an effective date. Co-chair Pearce announced that HB 494 was before the committee. She reviewed the fact that amendment 1 had FAILED and amendment 2 was ADOPTED in a prior meeting. In answer to Senator Kerttula regarding amendment 2, Co- chair Pearce pointed out that Senator Rieger's view was that there was not a sufficient labor pool in Juneau of skilled people who were not already either working for the Permanent Fund or other funds from which to choose a new executive director. Senator Kelly said the same argument could be used for moving the Permanent Fund. Co-chair Frank said he did not support amendment 2 and opposed putting that constraint on the Pension Investment Authority. He then asked why the fiscal note contained general fund money and not all pension fund money. DARREL REXWINKEL, Commissioner, Department of Revenue, spoke on behalf of the board and as Commissioner of Revenue, and explained the complicated fiscal notes regarding the reorganization of the Treasury Division and creation of the Pension Investment Authority. Co-chair Frank asked the department to redo the existing fiscal notes so they could be easily understood. In returning to discussion over amendment 2, Senator Rieger recalled a problem in 1989 or so when the Department of Revenue was sorely lacking in staff. There was no one unemployed in Juneau that could fill those vacancies. The solution was that the department robbed two top employees of the Permanent Fund. He did not want that scenario to be repeated with this new organization. Senator Kerttula opposed moving the Authority because of information he had received regarding the inter-relationships of the trusts and in-house, multiple units involving both organizations. Senator Rieger reiterated his feelings that, with the addition of eight more employees which included an executive director, and drawing on the same talent pool, it could not offer improved management to the Authority. He would also like to restrict the area to Alaska in amendment 2. GAYLE R. OBA, Vice Chair, Alaska State Pension Investment Board, asked to speak on amendment 2. Senator Kerttula MOVED to rescind the adoption of amendment 2. Ms. Oba agreed that it did not make sense to move the Pension Fund operation to Anchorage. It was her understanding that it would be easier to move the Permanent Fund to Anchorage. Because of the degree of coordination between the Department of Revenue regarding SBS and deferred compensation, it would not be an efficient move. She suggested that during 1989, the situation was much different. Since then, Wall Street alone had lost about 50,000 white collar positions. Now, if the State recruited for new positions, she believed well qualified candidates would be willing to move even to Juneau. End SFC-93 #91, Side 1 Begin SFC-93 #91, Side 2 Senator Rieger agreed to consider a delayed effective date on the bill but would not support the bill unless there was a way to access better management for the Pension Fund. Co-chair Pearce called for a show of hands and the motion to rescind the adoption of amendment 2 FAILED (Senator Kerttula was in support of the motion, Co-chair Pearce, Senators Kelly, Sharp, Rieger and Jacko were opposed). Senator Rieger MOVED amendment 3 that added the words "Alaskan" before the words "metropolitan area" in amendment 2. Co-chair Pearce called for a show of hands and amendment 3 was ADOPTED on a vote of 5 to 1 (Co-chairs Pearce, and Frank, Senators Kelly, Sharp, Rieger and Jacko were in support. Senator Kerttula was opposed.). Senator Rieger then MOVED amendment 4 making the effective date for Section 3, July 1, 1995. No objection being heard, amendment 4 was ADOPTED. Senator Jacko MOVED for passage of SCSCSHB 494(FIN) from committee with individual recommendations. Senator Kelly OBJECTED. Co-chair Pearce called for a show of hands and the motion to MOVE the bill from committee carried on a vote of 4 to 3 (Co-chairs Pearce, and Frank, Senators Rieger and Jacko were in support, Senators Kerttula, Kelly, and Sharp were opposed). SCSCSHB 494(FIN) was REPORTED out of committee with individual recommendations, a zero fiscal note for the Department of Administration, and fiscal notes for the Department of Revenue for $497.0 and $398.5. Co- chairs Pearce and Frank signed "no recommendation." Senators Rieger and Jacko signed "do pass." Senators Kerttula, Kelly and Sharp signed "do not pass." SENATE CS FOR CS FOR HOUSE BILL NO. 212(JUD): An Act relating to a factor in aggravation of the presumptive term of a criminal sentence, and prohibiting the referral of a sentence based on application of that factor to a three-judge sentencing panel as an extraordinary circumstance. Co-chair Pearce invited David Harding, aide to Representative MacLean, sponsor of HB 212, to the table. DAVID HARDING said the intent of the bill was to insure that the serious sentences for the crime of sexual abuse against a minor were levied when the offender was in a position of authority over the minor. The bill accomplished this by adding sexual abuse of a minor crime to a list of aggravators considered at sentencing. Section 2 also added this to a list of crimes that could not be referred to a three-judge panel. The reasoning was that an offender that was in an established trust relationship with a minor and then breached that trust, deserved stronger penalties than a stranger that sexually abused a child. It was much harder for a child to defend him/herself physically and verbally from someone in a position of authority than it was with someone that the child did not know. It was the vulnerable nature of the relationship that warranted more severe punishment. He said that the Department of Law did support HB 212 but Margo Knuth was not available to speak to the bill. He went on to say that it would effect a small number of cases. He gave child care workers or coaches as examples of persons in authority. Discussion followed by Co-chair Frank, Senators Kerttula and Rieger regarding fiscal notes, and the continuing practice of passing legislation without funding it. Diane Schenker, Special Assistant, Officer of the Commissioner, Department of Corrections, reported that in the past the department had published zero fiscal notes on all crime legislation because it was difficult to estimate the impact of the legislation. According to a legislative research 10-year study, prison population was on the increase and continually had not been funded. At present, there were about 200+ more prisoners in the system that housing had not been funded for either in the capital or the operating budget. The overcrowding was in severe crisis this year and the department had decided to reflect true fiscal impact on all fiscal notes. She had been informed that those fiscal notes would not be funded but she knew no other way to reflect on-going costs. Mr. Harding pointed out that HB 212 would only add to the end of the individual's sentence. Ms. Schenker agreed that it would not effect FY95 but for the record, the department wanted to request the capital expense in FY95. Co-chair Frank agreed that the department was not inappropriate in their presentation of the fiscal note. He urged that the fiscal note be sent with the bill with the understanding it would probably not be funded in conference committee. Co-chair Frank MOVED for passage of SCSCSHB 212(JUD) from committee with individual recommendation. No objection being heard, SCSCSHB 212(JUD) was REPORTED out of committee with individual recommendations, zero fiscal notes for the Departments of Administration, Law, Public Safety, and the Alaska Court System, and a zero fiscal note for the Department of Corrections with a capital expense of $600.0. Co-chair Pearce, Senators Jacko, and Kelly signed "do pass." Co-chair Frank, Senators Rieger, Kerttula and Sharp signed "no recommendation." SPONSOR SUBSTITUTE FOR SENATE BILL NO. 223: An Act relating to credits against certain taxes for contributions to certain public educational radio and television networks and stations; and providing for an effective date. Co-chair Pearce invited Senator Robin Taylor to the table to speak to SB 223. SENATOR ROBIN TAYLOR, sponsor of SB 223, said that in a public survey, 65.4 percent of the people surveyed said they would support a tax credit for corporations who contribute to public radio. The same credit was used by the University. He felt this was a way to wean public broadcasting from the state budget and for them to raise money on their own. He observed their budget had already been reduced 35 percent. Co-chair Pearce asked how he differentiated public broadcasting from all the other non-profit programs that received state grants money. She felt that this bill put Public Radio on a different level than, for example, domestic violence shelters. DIANE KAPLAN, Alaska Public Radio Network, spoke to this amendment. She anticipated 12 to 15 corporations in the state would take advantage of this tax credit. She felt the effect on the general fund would be quite minimal. The Department of Revenue had provided a zero fiscal note for two years. She listed the total effect of the existing University tax credit to be about $600,000. The goal for Public Radio for the first year was $100,000 for the endowment trust fund. In answer to Co-chair Pearce, Ms. Kaplan said that about half of the contributors targeted were not contributing currently. Senator Kerttula MOVED conceptual amendment 1 that removed "(2) 100 percent of the next $100,000 of contributions" from each section but not from the University. No objection being heard, amendment 1 was ADOPTED. Senator Kelly voiced his opinion that public television was no longer of value to the state of Alaska. He felt public radio still served the state, especially in the rural areas. He called the fiscal notes following this bill "bogus" pointing out that every dime that the public network received came directly out of the state general fund. Senator Kelly MOVED amendment 2 to include the Iditarod Trail Race in SB 223. Senator Jacko OBJECTED. Co-chair Pearce called for a show of hands and Amendment 2 FAILED on a vote of 4 to 3 (Senators Kerttula, Rieger, and Kelly were in support, Co-chairs Pearce and Frank, Senators Sharp and Jacko were opposed). After comments by Senator Sharp, Co-chair Pearce made it clear that an organization could receive only one $50,000 tax credit. Senator Jacko MOVED for passage of CSSSSB 223(FIN) from committee with individual recommendations. CSSSSB 223(FIN) was REPORTED out of committee with a "do pass," and zero fiscal notes for the Departments of Administration and Revenue. Co-chairs Pearce, Frank, Senators Kerttula, Kelly, Rieger, Sharp and Jacko signed "do pass." ADJOURNMENT The meeting was recessed at approximately 2:45 p.m.