MINUTES SENATE FINANCE COMMITTEE March 15, 1999 9:09 AM TAPES SFC-99 # 55, Side A & Side B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 9:09 AM. PRESENT Senator John Torgerson, Senator Sean Parnell, Senator Randy Phillips, Senator Dave Donley, Senator Loren Leman, Senator Gary Wilken, Senator Al Adams, Senator Pete Kelly and Senator Lyda Green. Also Attending: CAROL CARROLL, Director, Division of Administrative Services, Department of Military and Veterans Affairs; JACK FARGNOLI, Coordinator, Y2K Project Office. Attending via Teleconference: From Anchorage: DAVID LIEBERSBACH, Director, Division of Emergency Services, Department of Military and Veterans Affairs; MARY GILSON, Assistant Attorney General, Governmental Affairs Section, Civil Division, Department of Law. SUMMARY INFORMATION SB 101-DEFINITION OF DISASTER The committee heard testimony from the Division of Emergency Services and the Department of Law. The bill was held in committee. SB 33-TASK FORCE ON PRIVATIZATION Co-Chair John Torgerson handed out a draft committee substitute for member's review. The bill was held in committee. SENATE BILL NO. 101 "An Act amending the definition of 'disaster.'" This was the first hearing for this bill. Senator Randy Phillips explained that his office went through the statutes dealing with disasters and came up with a proposed amendment to include economic disasters. He said he questioned what constituted a disaster and noted the inclusion of typhoons, tornadoes and hurricanes and wondered why they were listed in the bill. He suggested deletion of those terms and inserting "severe storm". Co-Chair John Torgerson pointed out that Alaska has had typhoons. One of which caused the last SouthCentral floods. He knew that the Aleutian Islands received a great deal of wind but didn't know if that qualified as hurricanes. BRUCE CAMPBELL, staff to Senator Randy Phillips explained the bill to the committee. SB 101 contained a couple adjustments in the definition of disaster. First was on line 5: shortage of food, water, fuel and clothing was added so that instead of being types of disaster as earlier listed on line 11, they could become caused by disasters. The second change involved the disasters as listed on line 6 in addition to a natural or manmade caused disaster. That seemed to be all-inclusive, but if there were any question that something was neither manmade nor natural, such as supernatural, the removal of the language would include those. There was no intent to require an event to be defined as either natural or manmade cause. Senator Al Adams referred to lines 8-12, the list of disasters and pointed out that some of the disasters would never happen in Alaska such as typhoon or a hurricane, and suggested focusing on more likely disasters like winter storms, ice storms, blizzards and droughts. Mr. Campbell didn't disagree. Senator Al Adams handed out list of disasters from other states that were qualified for receipt of federal funds and felt that Alaska should include some of these things. He specified some of the particular disasters noted in other states. He asked what would happen if statutes were adopted that were too restrictive, an event not covered on the list occurred, and the state wished to seek FEMA relief funds. He wanted the disaster list to allow the state to capture the maximum amount of needed federal funds. Senator Sean Parnell said he visited the same Internet site where Senator Al Adams's information was obtained and found the same information helpful. He felt that the state statute could be structured to fit FEMA guidelines. He thought the current statutes was not as restrictive as the FEMA guidelines and he wished to see a more narrow focus on the type of event allowed and also the immediacy of the impact. He noted that current law allowed for funding of capital projects a couple years after the event and did not address the immediate problems incurred during the disaster. He thought there was a difference between the immediate disaster relief funds focused on a catastrophic event with and immediate impact on the citizens and the funds for long term economic impact. He felt there could still be funding for the other projects but that they shouldn't be included in the provisions for emergencies. Senator Gary Wilken asked what were the seven allowable disasters. Senator Sean Parnell answered, earthquakes tsmaumis, landslides, winter storms, floods, severe storms and fires were included in a FEMA listing as disasters that occur in Alaska. Senator Dave Donley thought the language should be "severe winter storms." Co-Chair John Torgerson said many other states had adopted language similar to FEMA. He read some information from the Stanford Act into the record, "In the determination of the President, causes damage of the magnitude to warrant major disaster assistance under the Disaster Relief Act of 1974.." That language would ensure that the federal funding could be collected. Also the determination of which event caused the trigger of the Stanford Act was incorporated by reference to the act. It might be broader than the seven events listed by Senator Sean Parnell. He agreed with Senator Al Adams that the statute shouldn't be tightened up too much but by referencing the federal disasters law it could prevent the omission of an event the federal government might fund. Senator Lyda Green commented on Senator Al Adams's point referring to Section 3 a totally separate section on farm disaster that the Governor could declare if a natural disaster caused a crop failure. Co-Chair John Torgerson spoke about a recent crop failure in the Big Delta area due to drought. JACK FARGNOLI, Y2K Coordinator for the State Of Alaska, spoke of concerns of his office about the uncertainty any enumeration scheme would put into place in general about disasters and in particularly with Y2K failures. He said that not to oppose the logic or wisdom of speaking to an enumeration scheme or any attempt to clarify what the state wished to do regarding disasters. Any clarity was always laudable. In general, he felt the comments of the committee so far reflected those of the Y2K office that other events may need to be considered. There were certain events unique to Alaska. In terms of a more narrow focus with the Y2K disasters, the department felt that Subsection C of the current bill was not changed and probably adequate. This was because most disasters that would emanate as a result of a Y2K event would probably be the result of an equipment failure. However, the language in Section C spoke to "avoidability" due to adequate maintenance. His office had concerns about that because that was a question at the forefront of Y2K liability discussions. There were strong arguments on both sides as to what was avoidable. Unfortunately, the courts had only just begun to speak to that issue and probably not make major determinations until after failures actually occurred. He summarized stressing that their biggest concern was the immeasurable gaps that the current enumeration scheme might leave. Senator Lyda Green asked if the removal of the comma in Section C caused that problem. She thought that what Jack Fargnoli referred to already was in statute. Jack Fargnoli said he was not asking for a change there. Co-Chair John Torgerson commented that this testimony made him want to tighten the language further with the threat of Y2K disaster funding expenditures. Senator Randy Phillips stressed that Section 2 (c) was currently in state statute and the Y2K office should have brought the concerns up several years ago. Jack Fargnoli agreed that it was in the law and that his office had not made an issue of it because Y2K had not been a legal consideration for longer than the past year. They had non- urgent legal concerns about the language in subsection C. However, there was ambiguity to the issue. Senator Randy Phillips said the reason we were here was because of numerous audits regarding misappropriation of dollars for disaster relief. He said the process was not perfect but that was the reason for this bill. He reprimanded Mr. Fargnoli and the Administration for not offering a solution to the problems. Jack Fargnoli repeated that he was not here to testify against the intent of the bill, but it would cause uncertainty in the Y2K areas and he had broader concerns about things that might fall between the cracks. He listed attributes he felt the bill offered. Senator Al Adams referred to lines 6 and 7 that would delete "a natural or manmade cause." He wanted to know what would happen in cases such as the Miller's Reach Fire where it was determined that the fire was caused by firecrackers. Would there be debate about the merits of the manmade cause of the fire while the fire was left to burn property and houses. Or would the definition of "fire" be sufficient? Jack Fargnoli deferred to others who were waiting to testify. DAVID LIEBERSBACK, Director of Emergency Services, Department of Military and Veterans Affairs, testified via teleconference from Anchorage. He began by stating that the division welcomed any opportunity to discuss process under which communities could seek help from state and federal government in times of disasters. In accordance with AK 26.23.050, it had always been the policy of the state that funds to meet disaster emergencies would be available. This policy served the citizens of the state quite well, according to David Liebersback. Under the new definition in SB 101, which would narrow the event under which the Governor could declare a disaster, the state would be constrained to assist Alaskans when an unusual natural event occurred. In addition, the division would be unable to respond to manmade events unless they were the release of oil or hazardous substance or an equipment failure, but only if that failure was predictably frequent, or a reoccurring event, or was not preventable by adequate equipment maintenance or operation. He listed past events from the last twenty years that would not be declarable under the new definition, including the 1979 Mat-Su Borough severe storm and high winds that closed roads and stranded residents. Rescue vehicles were unable to reach those in danger and the state declared a disaster to enable the Department of Transportation and Public Utilities and the National Guard to clear the road. Other events were the 1980 Anchorage windstorm that damaged over 5000 homes and businesses. In 1983 Ketchikan, a ship mishap damaged a dock on Gravina Island that was needed for fuel transport between the city and the airport. The state provided temporary alternate transportation until the dock was repaired. In 1985 the Metlakatla severe drought reduced water levels so the hydroelectric system could not generate sufficient power. In 1989 statewide record-breaking cold saw temperatures down to -85 degrees. The state and the federal government declared a disaster in order to provide for repairs to maintain and prevent damage to water, sewer, electrical systems and emergency re-supply of essential fuels and food. In 1991 severe erosion of the banks of the Mat-Su River destroyed or threatened homes along the bank. In 1991 the Seward sewage treatment lagoon suffered a catastrophic failure from undetermined causes. Finally, in 1998 Western Alaska Fisheries Disaster saw record high water temperatures in the Bering Sea and poor survival of all salmon and changes in migratory pathways, which lead to a collapse of the salmon run. The state requested federal disaster aid and the federal government responded as they did with the Texas drought crop failures due to extreme and unusual weather patterns. He added other events that would not be covered. Any act as the result of terrorism, weapons of mass destruction, train or shipwrecks caused by human error and Y2K failures would also be disasters that the division would be unable to respond to under the new requirements of the bill. Department of Environmental Conservation respectfully cautioned the committee to carefully consider this new definition because it would be extremely difficult to define and list each possible event that may harm the people or property of the state. He added a recent meteor hit in the Mat-Su Valley. Had it been larger or in a populated area, the state would be unable to declare a disaster under the new definition. He summarized the list of events not allowed under the new provisions. Senator Lyda Green requested a written copy of the testimony given by David Liebersback. Co-Chair John Torgerson asked if any of the aforementioned disasters were federally declared. David Liebersback replied that the 1989 cold spell was federally declared. He explained that in order to become a federal disaster, an event first had to be declared a state disaster. Co-Chair John Torgerson clarified that the high winds experienced in Anchorage was not declared. David Liebersback said it was a state declared disaster but it did receive federal Small Business Administration assistance due to the state declaration. The Small Business Administration was able to declare an agency disaster, which was different than a full presidential declared disaster. Co-Chair John Torgerson stated his desire to tighten the language and requested David Liebersback submit suggestions. Senator Loren Leman referred to the current language relating to oil or hazardous substance as, ".if the release required prompt action to avert environmental danger or damage.." He wondered if that was the same definition that was used under federal law or was it a broad definition of Title 26. David Liebersback answered that the definition of hazardous substance referred to AK 46.03.826, which governed the Department of Environmental Conservation and was a fairly broad definition. Senator Loren Leman was trying to determine if that statute would help the division with potential major sewer treatment failures. He said he would research the matter. Senator Lyda Green spoke to her concerns with the immediacy of response. She wanted clarification of that language stipulating the difference between an emergency and an emergency disaster and to make it the focus. That was the area where a tremendous amount of funds were expended. David Liebersback responded that there were some options. He spoke about the recovery stage after an event saying it was a long-term process. The division relied on FEMA for funding of recovery. FEMA was not equipped to assist in the immediate response needed for some of the disasters in Alaska. Senator Lyda Green referred to language in Section 26 saying that emergency had a meaning given in US code. She suggested the committee could research that area. Senator Loren Leman pointed out that the definition in Title 46 for hazardous substance was broader than he expected and read the language into the record. "An element or compound, which when it enters in the atmosphere or in or upon the water or surface or subsurface land or the sea, presents an eminent and substantial danger to public health or welfare including but not limited to fish, animal or vegetation or any part of the natural habitat in which they are found." He believed that would cover the failure of a sewage treatment plant as well as a chlorine leak or similar event. MARY GILSON, Assistant Attorney General, Governmental Affairs Section, Civil Division, Department of Law testified via teleconference from Anchorage. She gave a historical perspective on the definition of disasters. The current definition of disaster was modeled after the Model State Disaster Act, written in 1972. Many states had similar definitions. She had done research of other states and their definitions and found none with a finite list of disasters, and they were much broader. Co-Chair John Torgerson countered that his research found several states with tighter definitions. Mary Gilson pointed out that Idaho used language, "included but not limited to." There was further debate between Co-Chair John Torgerson and Mary Gilson on this point. Senator Randy Phillips had a proposed Amendment #1 that he chose to not offer at the time. Senator Al Adams wanted to see a list of federal programs and funding available and what would happen if the statute were tightened. He wanted to know what federal funding would be lost. Co-Chair John Torgerson said his intent was to incorporate language that would allow for all available federal funding. Senator Dave Donley wanted to consider modifications to AS 26.23.025, specifically subsection C (1) where the language discussed the requirement of a special session or authorization of the presiding officers to spend more than $1 million. He wanted to add a $5 million cap on that figure. Secondly, for expenditures over $5 million, he felt the presiding officers should poll the members of the Legislature to obtain written approval by the majority of the Legislature for additional expenditures. He felt the original language was adopted before the advent of fax machines, e-mail and cellular phones, when it was more difficult for people to reach one another. Now technology provided plenty of opportunity to consult the members of the Legislature. He felt a $5 million cap was reasonable. Co-Chair John Torgerson did not approve of the idea of polling members of the Legislature on substantial binding issues, suggesting this would open up another issue involving open meeting violations and other problems. Senator Dave Donley said he would rather there was more than the two presiding officers involved in the expenditure decision making. His proposal would not be in conflict of the Open Meetings Act if the current practice of obtaining approval from the presiding officers was not in conflict. This method would allow a majority to make the decision to authorize funds for disasters. Co-Chair John Torgerson countered that he didn't believe the Speaker of the House and the President of the Senate were currently approving any expenditure of funds. They were just deciding whether or not to call the Legislature into a special session. He admitted that this decision would in fact affect whether or not funds would be expended, but they still would not be approved without the approval of the body of the Legislature. Senator Dave Donley said the poll could therefore be held to determine whether or not there would be a special session. Co-Chair John Torgerson conceded. Co-Chair John Torgerson ordered the bill held in committee. The committee took a short recess. SENATE BILL NO. 33 "An Act relating to the Task Force on Privatization; and providing for an effective date." This was the third hearing for this bill. Co-Chair John Torgerson noted the committee had just been handed out a proposed CS Version ". He detailed the changes. On page 2 language was inserted beginning with line 16 after, "Items not subject to bargaining.." A new subsection (5) was added that stated, "the unrestricted authority of the employer to enter into contracts with an entity of the private sector of the economy to perform a function previously performed by state employees." He explained that this would allow the state to privatize some sections of government without any prohibitions from the employee bargaining contracts. This was because, under this provision, the Administration was prohibited from using any privatization restrictions in the bargaining process. Also changed was language from Section 3, line 29, which would now read, ".The labor or employee organization representing those employees may prepare and submit on behalf of the employees to demonstrate that the state will not reduce costs by contracting the performance of that function. A response prepared or submitted by the labor employee union is not entitled to a preference over bids submitted to perform the function, but the state shall consider the response before making its decisions." This again directed the Administration not to bargain the privatization option away. He asked that committee members review the Workdraft and come back to the committee with comments and suggestions. Senator Loren Leman asked if this version incorporated any amendments adopted at its earlier hearing. Co-Chair John Torgerson was unsure if any of the earlier amendments were actually adopted. Senator Loren Leman said he would offer other amendments at the next meeting to address the mandate to the advisory council. Co-Chair John Torgerson ordered the bill held in committee. Senator Dave Donley shared with the committee that he had met with the Attorney General to discuss the current forms the Legislature received regarding information on judgements and claims. Senator Dave Donley had a handout for the committee. Tape: SFC - 99 #55, Side B 9:58 AM He had proposed to the Attorney General there were some items for which the Legislature would like additional information and handed out to the committee a copy of the suggested changes. The Attorney General was receptive to the suggestions, according to Senator Dave Donley, and in fact said he would move forward within the department to incorporate those ideas into future forms. There were however a couple items the Attorney General had concerns about. Senator Dave Donley compared the current forms to his proposed replacements noting the information the committee felt was missing during the appropriation hearings. The distinction between the two versions of the Department of Law Judgement and Claims Payment Information was the addition of items eight and nine. They asked the questions of what was the hourly rate charged by the attorneys involved, and what was the amount the court approved, that the Legislature was being asked to reimburse. He felt that was important because there were some cases were the court was ordering the state to pay some attorneys $275 an hour, which was vastly beyond what would be available under Rule 82 in any other case, and also beyond the industry norm. The second form was the Judgement Award Questionnaire. He added several questions. First was number five, which asked, "Who was responsible for the state incurring this cost?" That was an effort to bring accountability to the process and determine what individual made the decision or committed the act that incurred the cost to the state for the judgement amount. Question six asked, "What corrective action had been taken to prevent future problems?" Question seven asked, "What action has been taken to hold any responsible party accountable?" Examples of actions could be the placement of a letter into the employee's personnel file for violation of state personnel rules. Senator Dave Donley felt that would be appropriate. Question eight asked existed on the current form. Question nine asked for ".any recommendations for changes in statutes, regulations or policy and cite any applicable statutes or regulations." He felt that would be helpful information for the finance committees as they reviewed the requests for judgements and claims. The Attorney General had expressed concerns about question five. Senator Dave Donley could understand those concerns and offered that separate statutes be adopted to immunize the state from challenges by affected employees. He argued that this would be an appropriate exception to the general rule of confidentiality when the state was required to pay large amounts of money because an employee violated someone else's civil rights. Senator Dave Donley shared a suggestion made to him by Co- Chair Sean Parnell to possibly request a duplicate of the Judgement Award Questionnaire form from the department that incurred the cost. Senator Dave Donley added that he would like future appropriation hearings to have a representative from the affected department join the Department of Law in testifying to the committee. Currently, he felt bad for the Department of Law representative who had to make the request and defend the actions of another department, who was not present to answer questions. He felt that the affected departments bore no responsibility and was not held accountable because they did not have to face the Legislature and explain their actions. He suggested members work with him on finalizing these new questions and that the committee adopt these as SFC committee forms. Senator Loren Leman liked question 8 on the first form and wanted to include the total attorney fee along with the hourly rate. Co-Chair John Torgerson said Co-Chair Sean Parnell would bring the matter up again to allow the committee to adopt the forms and require their use for reporting purposes. Co-Chair John Torgerson announced the next day's agenda. The committee would hear SB 5, SB 27, SB 51 and HB 77. ADJOURNED Senator Torgerson adjourned the meeting at 10:06 AM SFC-99 (1) 3/15/99