SENATE STATE AFFAIRS COMMITTEE  April 11, 1996 3:32 p.m. MEMBERS PRESENT Senator Bert Sharp, Chairman Senator Randy Phillips, Vice-Chairman Senator Loren Leman Senator Dave Donley MEMBERS ABSENT Senator Jim Duncan COMMITTEE CALENDAR HOUSE CONCURRENT RESOLUTION NO. 32 Establishing YUKLA 27 Remembrance Day. CS FOR HOUSE BILL NO. 192(FIN) am "An Act relating to housing assistance provided by the Alaska Housing Finance Corporation and to its rural housing programs, to the corporation's supplemental housing development grants to regional housing authorities, and to housing programs of regional housing authorities; permitting regional housing authorities to make, originate, and service loans for the purchase and development of residential housing; and amending the definitions of `rural' and `small community' as applied in various housing programs." CS FOR HOUSE BILL NO. 211(FIN) "An Act relating to voter registration and to state election administration." SENATE BILL NO. 182 "An Act relating to elections; relating to the division of elections; relating to voter registration procedures; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION HCR 32 - No previous Senate committee action. HB 192 - No previous Senate committee action. HB 211 - No previous Senate committee action. SB 182 - No previous Senate committee action. WITNESS REGISTER Bryce Edgmon, Aide Representative Richard Foster State Capitol, Juneau, AK 99801-1182¶(907)465-3789 POSITION STATEMENT: prime sponsor of HB 192 Bruce Kavarok, Executive Director Bering Straits Regional Housing Authority P.O. Box 995, Nome, AK 99762¶(907)443-5256 POSITION STATEMENT: supports HB 192 John Bitney Alaska Housing Finance Corporation Department of Revenue P.O. Box 101020, Anchorage, AK 99510-1020¶(907)561-1900 POSITION STATEMENT: supports HB 192 Patti Swensen, Aide Representative Con Bunde State Capitol, Juneau, AK 99801-1182¶(907)465-4843 POSITION STATEMENT: prime sponsor of HB 211 Gaye J. Vaughan, Borough Clerk Kenai Peninsula Borough 144 N. Binkley, Soldotna, AK 99669-7599¶(907)262-4441 POSITION STATEMENT: submitted written testimony opposing HB 211 Diane Shriner Division of Elections P.O. Box 110017, Juneau, AK 99811-0017¶(907)465-4611 POSITION STATEMENT: supports HB 211 except for 2 sections POSITION STATEMENT: representing governor-prime sponsor SB 182 Jed Whittaker Anchorage, AK POSITION STATEMENT: testified on HB 211 and SB 182 Mike O'Callaghan 1540 Medfra St., Anchorage, AK ¶(907)277-8889 POSITION STATEMENT: testified on HB 211 Kathleen Strasbaugh, Assistant Attorney General Civil Division (Juneau) Department of Law P.O. Box 110300, Juneau, AK 99811-0300¶(907)465-3600 POSITION STATEMENT: testified on HB 211 and SB 182 Bob Motznik 8301 Briarwood, Anchorage, AK 99516¶(907)344-6254 POSITION STATEMENT: testified on HB 211 ACTION NARRATIVE TAPE 96-28, SIDE A HCR 32 YUKLA 27 REMEMBRANCE DAY Number 001 CHAIRMAN SHARP called the Senate State Affairs Committee to order at 3:32 p.m. and brought up HCR 32 as the first order of business before the committee. Number 025 SENATOR LEMAN made a motion to discharge HCR 32 from the Senate State Affairs Committee with individual recommendations. Number 035 CHAIRMAN SHARP, hearing no objection, stated HCR 32 was discharged from the Senate State Affairs Committee. HB 192 AHFC HOUSING LOANS CHAIRMAN SHARP brought up HB 192 as the next order of business before the Senate State Affairs Committee. He called the sponsor's representative to testify. Number 050 BRYCE EDGMON, Aide to Representative Richard Foster, prime sponsor of HB 192, stated the bill is directed towards helping meet home financing needs in rural Alaska. Mr. Edgmon read the sectional analysis in members' bill packets, which was submitted by AHFC. Section 1 would allow regional housing authorities to originate and service mortgage loans. Section 2 would allow supplemental housing development grant funds to be used for both on-site and off-site water and sewer facilities. Section 3 attempts to clarify the existing statute. It does not make any substantive changes. Section 4 establishes a priority system for the allocation of supplemental housing development grant funds used to pay for off- site water and sewer facilities. Section 5 exempts projects constructed under the Building Material Loan Program from energy standards provided under AS 18.56.096(c). Section 6 exempts projects constructed under the Building Material Loan Program from construction standards provided under AS 18.56.300. Section 7 amends the statute regarding the Rural Assistance Loan Program to allow for the refinancing of rural mortgages in the same manner as AHFC's mortgage programs allow for the refinancing of urban loans. Section 8 would allow AHFC to make loans for rural non-owner occupied housing, to the extent feasible, to someone who already has an AHFC loan for an existing owner-occupied residence. Section 9 expands the existing Building Materials Loan Program to allow for small ($20,000.00 or less), unsecured loans for borrowers who have either restrictive deed lands or have no title to their HUD Mutual Help home. [Mr. Edgmon informed the committee that federal law prohibits people who own homes on native allotments from using the land as collateral in securing a loan.] Section 10 is a conforming change to coordinate this statute with the change made in the first part of Section 12. Section 11 is a conforming change to coordinate this statute with with the change made in the first part of Section 12. Section 12 clarifies the definition of non-owner occupied housing as rental housing. In addition, the definition of multi-family rental house is changed from an 8 to a 16 unit dwelling. Section 13 would bring the term "housing" into compliance with industry standards that view the term as owner-occupied housing of up to 4 units. Number 185 BRUCE KAVAROK, Executive Director, Bering Straits Regional Housing Authority, testifying from Nome, stated the authority serves Nome and sixteen other communities in the Nome area. Mr. Kavarok stated the Bering Straits Regional Housing Authority and the Association of Alaska Housing Authorities, which represents Alaska's fourteen regional housing authorities and AHFC, support HB 192. The bill has significant importance for Alaska's regional housing authorities in their mission to provide decent, safe, sanitary, and affordable housing to families throughout Alaska. Several of the housing programs now available from AHFC and other sources like the Farmers' Home Administration and the Veterans' Administration are severely under-utilized in rural Alaska. Part of the reason is village economics, but another part is the lack of rural access to information and the basic mechanics of loan programs. There are low and moderate-income families in his region and throughout the state who could benefit from one or more of these programs and achieve their goals of home ownership. MR. KAVAROK stated that there is virtually no tradition for conventional mortgage lending in housing development in rural Alaska. Expanding access to AHFC loans, as HB 192 would do, coordinating with lending institutions, and the recent willingness of the secondary mortgage market (FHA, Fannie Mae, Freddie Mac, for example) to participate in rural housing programs appear as a few bright spots on the horizon. Mr. Kavarok also gave a run-down of the sections of HB 192. Number 245 SENATOR RANDY PHILLIPS asked Mr. Kavarok if he could explain the language on page 6, lines 4-7 regarding the restricted deed issued by the Secretary of the Interior. MR. KAVAROK replied there are two types of deeds that he runs into. The Native Allotment act of 1909 specified that native allotments above 260 acres could be selected. The deed is held in trust by the Secretary of the Interior on behalf of the allottee. SENATOR RANDY PHILLIPS asked if it is held in trust forever. MR. KAVAROK responded, yes. A development that HB 192 doesn't address is the Federal Housing Development Act of 1992. That act established a home-loan guarantee program which provides for a federal subsidized loan guarantee for financial institutions, including AHFC, to protect them when they make mortgage loans on these types of restricted deeds. The drive behind that legislation was Indian reservations in the lower forty-eight, where reservations are all trust land held by the federal government. He believes AHFC has either participated or is looking at participating in one of the first loans of this kind in Alaska that would take advantage of that federal home loan guarantee. Number 290 JOHN BITNEY, Alaska Housing Finance Corporation, stated AHFC supports HB 192. Number 295 SENATOR RANDY PHILLIPS asked if refinancing is not allowed right now. MR. BITNEY responded that currently, refinancing is not an option under state statutes relating to AHFC. If a person were to refinance their mortgage right now, they would have to do substantial improvements to their home in order to get a new loan. SENATOR RANDY PHILLIPS asked if that is an oversight in the laws dealing with AHFC. MR. BITNEY stated he is not familiar with the history, but he would say it's definitely an oversight, since it's a very common mortgage option nation-wide. CHAIRMAN SHARP asked Mr. Bitney if he's received copies of the amendments, and if so, how does AHFC feel about the amendments? MR. BITNEY responded he has seen 3 1/2 amendments. He stated he would like to address the amendment applying to Section 1. That amendment would attempt to limit regional housing authorities to making loans only in rural areas of the state. Apparently there was some concern expressed that, by bringing regional housing authorities into urban Alaska, they might compete with traditional mortgage lenders. AHFC worked with the Mortgage Bankers Association to come up with compromise language. Committee members have that amendment, which is labeled amendment #2. Amendment #2 would limit the regional housing authorities to making loans in rural areas. There would be an exception for making loans in urban areas to under-served borrowers. SENATOR RANDY PHILLIPS asked what the mortgage bankers think about amendment #2. MR. BITNEY replied he did not speak to them directly, but it is his understanding that the "under-served borrowers" term was their suggestion for a compromise. CHAIRMAN SHARP stated that is his understanding also. Number 335 MR. BITNEY stated that AHFC does not have a position on the other amendments. SENATOR DONLEY made a motion to adopt amendment #1 for purposes of discussion. CHAIRMAN SHARP stated that amendment #1 would allow regional housing authorities to originate and service loans in rural areas, as defined in HB 192. It would also allow them to originate and service loans to "under-served urban borrowers". This amendment seemed to be satisfactory to all concerned parties. SENATOR LEMAN asked if amendment #1 would be a new Section 1. MR. BITNEY responded amendment #1 would be a revision to Section 1. Number 355 SENATOR RANDY PHILLIPS asked if this would prohibit a mortgage lending institution from serving a small community. MR. BITNEY replied it would not. Section 1 only applies to the ability of a regional housing authority to get into the loans business. SENATOR RANDY PHILLIPS asked if this would be in competition with mortgage lending institutions. MR. BITNEY responded that was a concern that the banks had. This language was compromise language worked up with the Mortgage Bankers Association. They were concerned with regional housing authorities getting into making loans in urban areas, in competition with them. This would limit urban activities to just serving under-served borrowers. CHAIRMAN SHARP asked if there were objections to amendment #1. SENATOR RANDY PHILLIPS objected. He stated he wanted to check it out. How many bankers have looked at this? SENATOR LEMAN stated the amendment would limit the agency a little bit more. CHAIRMAN SHARP asked that the roll be called on amendment #1. Amendment #1 passed by a vote of 3 yeas, 1 nay, and 1 absent. Voting for the amendment were Senators Sharp, Leman, and Donley. Voting against the amendment was Senator Phillips. Senator Duncan was absent. Number 385 SENATOR LEMAN made a motion to adopt amendment #2. CHAIRMAN SHARP stated the purpose of amendment #2, of which language was contained in the original bill but was removed on the House floor, is to establish age 55. SENATOR LEMAN stated that "age 55" is the definition under federal law. SENATOR DONLEY asked who took the language out. CHAIRMAN SHARP responded it was Representative Martin. SENATOR LEMAN thought that Representative Martin thought "age 55" was broadening it. But it was actually hurting seniors that the state definition didn't match the federal definition. "Age 55" was taken out on the floor of the House, and he probably didn't realize the ramifications. CHAIRMAN SHARP asked if there was any objection to amendment #2. Hearing no objection, he stated the amendment was adopted. SENATOR DONLEY made a motion to adopt amendment #3 for purposes of discussion. CHAIRMAN SHARP stated that amendment #3 would assure that any funds coming from AHFC to the regional corporations would be used in accordance with the Equal Housing Opportunity laws. Number 405 CHAIRMAN SHARP asked if there was objection to amendment #3. Hearing no objection, he stated the amendment was adopted. SENATOR DONLEY made a motion to discharge HB 192 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated HB 192 was discharged from the Senate State Affairs Committee. SENATOR RANDY PHILLIPS asked who in the Mortgage Bankers Association approved the language in amendment #1. MR. BITNEY responded it was the president of the Mortgage Bankers Association. HB 211 VOTER REGISTRATION & ELECTIONS CHAIRMAN SHARP brought up HB 211 as the next order of business before the Senate State Affairs Committee. He called the sponsor's representative to testify. PATTI SWENSEN, Aide to Representative Con Bunde, prime sponsor of HB 211, stated HB 211 would do five things: 1) Require the names of inactive voters to be maintained on the official voter registration list; 2) Authorizes the preparation and distribution of the voter registration list; 3) Requires the Division of Elections to purge deceased voters monthly, and convicted felons promptly; 4) Increase communications from the Division of Elections to absentee voters and to questioned ballot voters after the primary regarding the status of their vote; 5) Prohibits the appointment of any state employees to the data processing review board. Number 445 SENATOR LEMAN asked what type of information people who purchase voter lists will receive. MS. SWENSEN responded they can receive active and inactive under HB 211. SENATOR DONLEY thinks one of the biggest problems relating to elections right now is allowing ballots that come in after the election date to be counted. He does not think that other states allow ballots that arrive after the date of an election to be counted. MS. SWENSEN stated she hasn't heard of a problem with that. Number 480 DIANE SHRINER, Division of Elections, stated the division supports HB 211, with the exception of two sections. She stated a letter was submitted to the committee outlining the concerns of the Division of Elections. The division has no problem with expanding the voter registration lists available to candidates. But in some precincts, adding inactive voters to the official register available at the precincts could add as many as 2,000 voters. Until we bring the state law into compliance with the National Voter Registration Act, we are not presently purging or clearing any voters from the roles, and haven't done so in several years. It's been approximately four years since any voters have been removed from the roles. The division thinks it would be confusing to never remove voters from the roles. The Division of Elections has just processed over 26,000 registrations through the permanent fund dividend applications. Approximately 13,000 of those did contain address changes. Number 515 MS. SHRINER stated the other section the division is concerned with is Section 9. If we were to send a written summary of the reason for the challenge of all partially counted ballots, which occurs when someone votes outside their precinct or district, that could be very discouraging. The division does take Representative Bunde's concerns seriously. SENATOR LEMAN thinks that at any given time, the information on the voter list for his district has a 20% inaccuracy rate. SENATOR DONLEY suggested limiting sending permanent fund dividends to addresses where people were registered to vote; you would probably get really accurate information. MS. SHRINER noted the Division of Elections thinks that it probably has attracted a lot of people who think they aren't going to get their permanent fund dividend if they don't update voter registration information. CHAIRMAN SHARP stated one of the most frustrating things for people is having to vote a challenged ballot because they're not on the voter registration lists. He thinks it would be beneficial to have an inactive list to accommodate a voter in that situation. Number 562 SENATOR DONLEY asked if the division has a position on modifying the absentee voting process, as far as a cutoff date for counting ballots. MS. SHRINER responded the history of that is that Alaska is remote and we have a great number of overseas voters and the mail is not very reliable. Part of the reason for extending the deadline for receiving absentee ballots is to ensure that ballots mailed by the deadline are actually received. Ballots must be mailed by the date of the election, but are counted if they are received within fifteen days after the election. SENATOR DONLEY asked if the division has a position on whether they like those rules or not. MS. SHRINER replied that has not been addressed this year. Number 585 SENATOR LEMAN asked if voters would be purged after two election cycles or two years. MS. SHRINER responded that SB 182 and HB 349 would change that from two years. But two years is not in compliance with federal law, and we are moving to comply by making it four calendar years, or two general election cycles. TAPE 96-28, SIDE B MS. SHRINER stated people's names are not purged from voter registration lists after four years if they simply haven't voted, but only if the division has had no contact at all with them in four years. Number 580 JED WHITTAKER stated he has a problem with Section 1 of HB 211. He thinks that most citizens like to complain about politicians, but they don't accept responsibility for informing themselves. He doesn't think it's too much to ask that a citizen register to vote and occasionally vote. He thinks having inactivated voters on the list could create the potential for fraud. Mr. Whittaker also has a problem with Section 10. He thinks the language is broad. The Data Processing Review Board should have a representative from every political party, not just two political parties. He commended Representative Bunde for addressing the inadequacies in Title 15. He also suggested conducting elections by mail. Mr. Whittaker thinks ballots should be counted at the precinct and at the computer tabulation level. Number 530 MIKE O'CALLAGHAN stated there is a fundamental problem with elections in the State of Alaska. The court recently declared that the 1992 and 1994 primaries and subsequent elections were conducted illegally. According to information from Bob Motznik, Joe Swanson allowed 1,543 people to vote illegally in the last election. Those names were purged from the voters roles as inactive. State law specifies that the Division of Elections purge inactive voters after two years, and the division has no authority to do anything other than what the law dictates. The law also specifies that if a person's name has been purged, they must re-register 30 days prior to the next election in order to be eligible. The director allowed these votes to be cast as contested ballots, and they were counted. As we all know, Knowles won by 500 votes. He has a problem with that. MR. O'CALLAGHAN stated it is important that with the National Voter Registration Act there is no purging. Under that law, no names can be purged from any voter list. He thinks that is a fundamental violation of state's rights in conducting elections. He encouraged a more restrictive application, which is allowable under law. He thinks names should be purged from voter registration lists. Certainly they could be kept on a separate list. Regarding Section 10, there were significant problems with the Data Processing Review Board during the last election. Three days prior to the election, the top three people on the state-wide board were Division of Elections employees. He sees a conflict of interest in having division employees overseeing the data processing. So he is glad to see that a state employee may not serve on the board. But he was discouraged to see that none of the Data Processing Review Boards across the state were constructed according to law. The boards don't have any information; the test decks that they run through the systems are designed by the contractor. He stated there were significant problems with voter elections in the valley [Matsu Valley]. When the test deck was run through the system seven days before the election, they found an error: that error would have allowed votes cast for one candidate to be counted for another candidate. Another problem in the valley was the computer program was checked 24 hours before the election, and they said there wasn't a problem. However, during the counting of votes, a problem was found. He stated he knows of other problems, but they pertain mostly to SB 182, so he will hold that testimony. He thinks it's extremely important that the purging law be followed. Number 465 SENATOR DONLEY asked if there is a court case or some other basis for counting the votes of people who aren't properly registered to vote. KATHLEEN STRASBAUGH, Assistant Attorney General, Civil Division (Juneau), Department of Law, replied she doesn't know to which incident Mr. O'Callaghan is referring. She assumes he was referring to challenged ballots that were counted with which he disagreed. The doctrine is that the voter receives the benefit of the doubt, and the law is interpreted to allow a voter to cast their ballot. SENATOR DONLEY asked what the current policy of the division is regarding purging. MS. STRASBAUGH responded there is a difference between "inactive" and "purged". If they're on the inactive list, they would be permitted to vote. The inactive list is growing increasingly larger because of a problem with enforcing the current purge law. It is not true that you cannot purge at all. The federal act is euphemistic in its' reference to purging, but there is a purging process, it's just much more involved. SENATOR DONLEY asked if a person is purged, then their vote isn't counted, but if they're on the inactive list, then their vote is counted. MS. STRASBAUGH stated if they are in the right place and can show their residency; it isn't just carte blanche. Number 430 SENATOR RANDY PHILLIPS asked how people registered to vote in his district could have residence addresses in Palmer, Wasilla, Nome, and other areas outside his district. He stated that about 10% of the people registered to vote in his district actually reside outside the district. MS. SHRINER replied that the division is not even inactivating anyone anymore. They are not doing anything until they get some clarification on the federal law. The division supports having the voter lists as clean and true as possible. Number 390 BOB MOTZNIK, testifying from Anchorage, stated that the election in 1994 turned into a royal mess. He repeated some of the problems related to the committee in writing. The Division of Elections failed to change the voter registration of many voters who filed changes long before the deadline for doing so. The Data Processing Review Board is an oversight board; it's purpose is to determine whether the Division of Elections did their job correctly. There should not be any elections staff on that board. It is his understanding that the test decks that were run were made by the vendor. In his experience, it is the Data Processing Review Board's job to test the program, which would mean they would make the test decks to verify the accuracy, not the vendor. A lot of these problems were brought out in the court case against the governor's race. The Attorney General just said, "Oh, everything's okay." Of course, he was defending the state, so he has to say that everything is okay. Mr. Motznik thinks that people who took the time to vote should know if their ballots aren't counted. Number 330 SENATOR RANDY PHILLIPS made a motion to discharge HB 211 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated HB 211 was discharged from the Senate State Affairs Committee. SB 182 ELECTIONS ADMINISTRATION & VOTER REG'N Number 325 CHAIRMAN SHARP brought up SB 182 as the next order of business before the Senate State Affairs Committee. DIANE SHRINER, Division of Elections, representing the governor, prime sponsor of SB 182, stated that the primary sections if this bill are housekeeping sections. Those sections would bring the Division of Elections into compliance with the National Voter Registration Act. Two substantive sections are Sections 21 and 41. The division would entertain removing Section 41, which is a pilot program for voting by mail. The division feels that it is getting too late in the election cycle. The house thinks we should move in the direction of by-mail voting, but that the subject needs more study. We would like to see a bill that addresses just the by-mail voting subject, but after it's had more study. Number 260 KATHLEEN STRASBAUGH, Assistant Attorney General, Civil Division (Juneau), Department of Law, stated the Justice Department had concerns with HB 303 (from several years ago), which would have adapted Alaska's laws to the National Voter Registration Act. The concerns were well-taken, so we withdrew our request for pre- clearance to avoid the interposing of objections. We are now back before you to ask for some changes. It really isn't the Justice Department's job to enforce the voter registration act. However, they are entitled to address things which, in their view, deter voters in protected classes. For that reason, we have removed some remaining references to oaths, and changed that to an attestation procedure. Section 7 is directed at having two election cycles, instead of two years. In the house, that was changed to four years, instead of two election cycles. On page 5, line 5, she thinks it should say absentee and mail ballots, instead of just absentee, because there are some elections that occur by mail, such as REAA elections. MS. STRASBAUGH stated it's true that their inactivation process is not really a purging. The National Voter Registration Act doesn't use the word purge. It does have a process for finding out if someone can still vote or not. There is a way to clean up the list even under this law. Number 185 SENATOR RANDY PHILLIPS made a motion to adopt the State Affairs Committee substitute for SB 182. CHAIRMAN SHARP, hearing no objection, stated the committee substitute was adopted. SENATOR RANDY PHILLIPS made a motion to adopt an amendment to page 5, line 5: add "or a ballot by mail" after "absentee ballot". CHAIRMAN SHARP, hearing no objection, stated the amendment was adopted. SENATOR RANDY PHILLIPS offered an amendment to page 14, line 24: delete Section 41. Number 160 CHAIRMAN SHARP asked if there was any objection. Hearing none, he stated the amendment was adopted. CHAIRMAN SHARP is concerned that not purging names from the voter registration lists will increase the opportunity for fraud. Number 110 JED WHITTAKER stated there should be a bonified signature on a voter registration form. He doesn't think it's sufficient to register to vote by fax machine. SENATOR RANDY PHILLIPS asked what kind of safeguard there is on that. MS. SHRINER stated she will look for an answer to that question. MR. WHITTAKER stated that a lot of people don't vote anymore, and there's something wrong with that. Democracy is falling down. He thinks Section 30 would make it more expensive for candidates to share information with citizens. He thinks that should be free to candidates, because they are performing a public service and trying to uplift this flailing democracy that we have now. Section 30 would raise the price for putting your position in the official election pamphlet. SENATOR RANDY PHILLIPS asked why the price is being raised. MS. SHRINER responded that the cost of that pamphlet is several times the amount in the bill. There hasn't been an increase to that since the mid-1980's. MR. WHITTAKER thinks that infringes on the freedom of speech. Given the role that money plays in today's campaigns, he thinks raising the price might be prohibitive to some candidates. CHAIRMAN SHARP announced that the meeting needed to come to a close. He asked the pleasure of the committee regarding SB 182. Number 025 SENATOR RANDY PHILLIPS made a motion to discharge SB 182 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated SB 182 was discharged from the Senate State Affairs Committee. Number 006 CHAIRMAN SHARP adjourned the Senate State Affairs Committee meeting at 5:05 p.m.