SENATE STATE AFFAIRS COMMITTEE  May 2, 1996 9:05 a.m. MEMBERS PRESENT Senator Bert Sharp, Chairman Senator Randy Phillips, Vice-Chairman Senator Loren Leman Senator Jim Duncan Senator Dave Donley COMMITTEE CALENDAR CS FOR HOUSE BILL NO. 198(STA) "An Act relating to absences from the state for purposes of eligibility for permanent fund dividends to care for a terminally ill parent, spouse, sibling, child, or stepchild; to care for a parent, spouse, sibling, child, or stepchild with a critical life-threatening illness whose treatment plan, as recommended by the attending physician, requires travel outside the state for treatment at a medical specialty complex; and to settle the estate of a deceased parent, spouse, sibling, child, or stepchild; and providing for an effective date." HOUSE BILL NO. 490 "An Act relating to grants and other financial assistance authorized or made by the Alaska Science and Technology Foundation for the BIDCO assistance program." SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 63 "An Act relating to special request licenses depicting the sport of dog mushing." HOUSE CONCURRENT RESOLUTION NO. 25 am Declaring May 15, 1996, 381st Intelligence Squadron Logistics Division Day. HOUSE JOINT RESOLUTION NO. 61 Opposing the proposed changes in the functions of the federal Office of Veterans Affairs in Anchorage. SENATE CS FOR CS FOR HOUSE BILL NO. 359(L&C) "An Act relating to the appointment and confirmation process for members of certain boards, commissions, and similar bodies; relating to terms of certain appointees; and providing for an effective date." CS FOR HOUSE BILL NO. 249(L&C) "An Act authorizing the McGrath Ice Classic." CS FOR HOUSE JOINT RESOLUTION NO. 20(STA) Relating to unfunded federal mandates and the Conference of the States. PREVIOUS SENATE COMMITTEE ACTION HB 198 - No previous Senate committee action. HB 490 - No previous Senate committee action. HB 63 - No previous Senate committee action. HCR 25 - No previous Senate committee action. HJR 61 - No previous Senate committee action. HB 359 - See Labor & Commerce minutes dated 4/9/96 and 4/11/96. HB 249 - No previous Senate committee action. HJR 20 - See State Affairs minutes dated 4/6/95. WITNESS REGISTER Representative Kim Elton State Capitol, Juneau, AK 99801-1182¶(907)465-4947 POSITION STATEMENT: prime sponsor of HB 198 Nanci A. Jones, Director Permanent Fund Dividend Division Department of Revenue P.O. Box 110460, Juneau, AK 99811-0460¶(907)465-2323 POSITION STATEMENT: testified on HB 198 Representative Bettye Davis State Capitol, Juneau, AK 99801-1182¶(907)465-3875 POSITION STATEMENT: prime sponsor of HB 490 Jonathon Sperber, Aide Representative Bettye Davis State Capitol, Juneau, AK 99801-1182¶(907)465-3875 POSITION STATEMENT: prime sponsor of HB 490 Jamie Kenworthy, Executive Director Alaska Science & Technology Foundation Department of Commerce & Economic Development 4500 Diplomacy Dr., #515, Anchorage, AK 99508-5918¶(907)272-4333 POSITION STATEMENT: supports HB 490 Representative John Davies State Capitol, Juneau, AK 99801-1182¶(907)465-4457 POSITION STATEMENT: prime sponsor of HB 63 Noelle Brekke, Aide Representative Pete Kott, Co-Chairman House Special Committee on Military & Veterans' Affairs State Capitol, Juneau, AK 99801-1182¶(907)465-3777 POSITION STATEMENT: prime sponsor of HCR 25 Representative Ed Willis State Capitol, Juneau, AK 99801-1182¶(907)465-2199 POSITION STATEMENT: prime sponsor of HJR 61 Representative Brian Porter State Capitol, Juneau, AK 99801-1182¶(907)465-4930 POSITION STATEMENT: prime sponsor of HB 359 Lisa McLaren, Aide Representative Irene Nicholia State Capitol, Juneau, AK 99801-1182¶(907)465-4527 POSITION STATEMENT: prime sponsor of HB 249 Dennis Poshard, Director Charitable Gaming Division Department of Revenue P.O. Box 110400, Juneau, AK 99811-0400¶(907)465-2229 POSITION STATEMENT: testified on HB 249 Eleanor Roser, Aide Representative Ramona Barnes State Capitol, Juneau, AK 99801-1182¶(907)465-3438 POSITION STATEMENT: prime sponsor of HJR 20 ACTION NARRATIVE HB 198 PFD ALLOWABLE ABSENCES TAPE 96-32, SIDE A Number 001 CHAIRMAN SHARP called the Senate State Affairs Committee to order at 9:05 a.m. and brought up HB 198 as the first order of business before the committee. He called the prime sponsor to testify. Number 033 REPRESENTATIVE KIM ELTON, prime sponsor of HB 198, stated the bill would provide an excused absence for receiving a permanent fund dividend under three circumstances: 1) to take care of a terminally ill immediate family member; 2) to settle the estate of an immediate family member; 3) to care for a family member with a life-threatening illness. Number 060 NANCI A. JONES, Director, Permanent Fund Dividend Division, Department of Revenue, stated the division does not oppose HB 198, but stated allowable absences do cause problems. Ms. Jones gave a handout to committee members showing that current allowable absences are selective and exclusionary, they are inequitable, there are millions of dollars leaving the state, allowances are very expensive for the division to administer, and there are constant requests for additional allowable absences. For instance, there is no provision for allowing people in private enterprise to leave the state to work on products that will benefit Alaska. There is no allowable absence for VISTA Volunteers, but Peace Corps Volunteers are allowed absence from the state - what is the difference between those two organizations? There is no allowable absence for organized missionary work. Allowable absences are exclusionary and do not address the big picture. Ms. Jones informed committee members that on the second page of her handout is a breakdown of the dividends which were distributed outside the state, the largest percentage of which were sent to students. Her purpose in testifying this morning is to inform committee members that providing for additional selective and exclusionary allowable absences only addresses the needs of a few of our state's residents, instead of looking at the entire picture. Number 113 SENATOR RANDY PHILLIPS stated he has an amendment that would allow absence for athletes participating in sanctioned sports. CHAIRMAN SHARP asked if athletes are gone for more than 180 days. SENATOR RANDY PHILLIPS replied yes. He offered the amendment. Amendment by Senator Phillips: Page 1, line 6: Delete "and" Page 1, line 7, following "stepchild;": Insert "and to participate on certain amateur athletic teams;" Page 2, line 19: Delete "or" Page 2, following line 23: Insert a new subparagraph to read: "(K) to participate on an amateur athletic team as evidenced by the international federation or national governing body for that sport;" CHAIRMAN SHARP stated he is concerned about the perception that there are more serious things out there that should be exempted. SENATOR DONLEY stated this amendment would require a title change. SENATOR RANDY PHILLIPS replied he didn't think it would. SENATOR DONLEY stated it would require a title change, which would require a resolution which would have to pass by a 2/3 vote. It would also open the bill wide up for any other proposals. CHAIRMAN SHARP stated he is not inclined to open the title up or try to fight a title battle on the floor at this late date. He asked the secretary to call the role. Senator Phillip's amendment failed by a vote of 1 yea, 3 nays, and 1 abstention. Voting in favor of the amendment is Senator Phillips. Voting against the amendment are Senators Leman, Duncan, and Donley. Abstaining from the vote is Senator Sharp. SENATOR DUNCAN made a motion to discharge HB 198 from the Senate State Affairs Committee with individual recommendations. Number 200 CHAIRMAN SHARP, hearing no objection, stated HB 198 was discharged from the Senate State Affairs Committee. HB 490 FINANCIAL ASSISTANCE TO BIDCO CHAIRMAN SHARP brought up HB 490 as the next order of business before the Senate State Affairs Committee. He called the prime sponsor to testify. Number 210 REPRESENTATIVE BETTYE DAVIS, prime sponsor of HB 490, stated her aide would give testimony on the bill. JONATHON SPERBER, Aide to Representative Bettye Davis, prime sponsor of HB 490, stated Jamie Kenworthy, Executive Director of the Alaska Science & Technology Foundation, should be available on teleconference to answer questions. BIDCOs are business investment development companies. They are middle risk private sector financial institutions which provide emerging small and medium sized businesses with financing, management support, and technical assistance. The primary goal of BIDCOs is to establish private sector businesses that create jobs. CHAIRMAN SHARP asked if there is a limit on the amount of the financial assistance. REPRESENTATIVE BETTYE DAVIS stated $3,000,000.00 is needed to fund BIDCO. CHAIRMAN SHARP asked if present statute sets a limit of $3,000,000.00. REPRESENTATIVE BETTYE DAVIS stated there is nothing in statute limiting how much can go into BIDCOs eventually. They need at least $3,000,000.00, but more than that could go into it. CHAIRMAN SHARP stated he will pose that question to Mr. Kenworthy. He does not want to give them a blank check. MR. SPERBER stated that HB 490 would allow ASTF to supplement the originally funded amount of $1,000,000.00 with earnings from that money, or other earnings ASTF would have. So the fiscal note truly is zero for HB 490. HB 490 would simply provide the mechanism for ASTF to provide certain earnings to BIDCOs. CHAIRMAN SHARP asked if that would occur through legislative appropriation. SENATOR DUNCAN noted that the fiscal note prepared by Mr. Kenworthy indicates that there is no fiscal impact. He thinks the chairman's concern is addressed by the fiscal note and the sponsor's statement. CHAIRMAN SHARP stated he was under the impression that Section 8, extending the financial assistance, was the most important part. REPRESENTATIVE BETTYE DAVIS stated if HB 490 is not passed, the authority to do that will sunset at the end of this year. CHAIRMAN SHARP just wants to ensure that HB 490 will not allow ASTF to give money to BIDCO without legislative appropriation. REPRESENTATIVE BETTYE DAVIS thought the legislature did not want to appropriate any money to it. CHAIRMAN SHARP clarified that they did not want to appropriate money to any specific BIDCO projects. But he has a problem with adding money to the foundation without legislative appropriation. REPRESENTATIVE BETTYE DAVIS stated she thought as long as ASTF could come up with funds from interest-earning money that they have, that would be acceptable to the legislature, because they don't have any money to appropriate. If she thought they had money to appropriate to BIDCOs, she would have gone that route. She thinks this in an important economic development issue. CHAIRMAN SHARP asked Representative Davis how many applications have been approved. REPRESENTATIVE BETTYE DAVIS stated none have been approved, because the program is not funded. Number 305 CHAIRMAN SHARP asked if a 50/50 match is still required from the private sector. REPRESENTATIVE BETTYE DAVIS responded yes. CHAIRMAN SHARP stated he doesn't mind giving ASTF the authority to replace the $2,000,000.00 that was vetoed. REPRESENTATIVE BETTYE DAVIS replied that's all they want to do. We wouldn't be authorizing anything more than that, because they don't need it. Once that money is in the private sector, we would not appropriate any more money to the BIDCOs. Number 230 CHAIRMAN SHARP stated he is hesitant to not restrict the amount of money ASTF could put into the BIDCO foundation. REPRESENTATIVE BETTYE DAVIS stated the legislature does not restrict ASTF in any other uses of their money. CHAIRMAN SHARP stated he does not want to give ASTF a blank check. You can only stretch $11,000,000.00 so far (the amount of money ASTF has). The appropriation by ASTF into BIDCOs should be made by legislative approval. REPRESENTATIVE BETTYE DAVIS understands the chairman's concern, but she cannot imagine ASTF would do that. ASTF has made a commitment to all of the programs they're involved with. She doesn't think ASTF would give any more preference to the BIDCOs than it does to any of the other proposals they get. CHAIRMAN SHARP asked Representative Davis if she would object to the addition of language to HB 490 that would limit ASTF to contributing $2,000,000.00 to the BIDCOs. Number 370 REPRESENTATIVE BETTYE DAVIS stated the only problem she would have with that is the late date at which that amendment would be added might keep HB 490 from passing due to time constraints. She suggested passing legislation addressing the chairman's concern during the next legislature. SENATOR DONLEY suggested adding a provision stating ASTF has to get legislative approval if they want to give more than a certain amount of money to BIDCOs. REPRESENTATIVE BETTYE DAVIS asked if that could be done in a letter of intent. CHAIRMAN SHARP stated he does not believe in legislative intent when it comes to millions of dollars. SENATOR DUNCAN thinks it's important to keep HB 490 moving. He asked the chairman to clarify that he is concerned ASTF might give more than $2,000,000.00 to BIDCOs. CHAIRMAN SHARP replied that is correct. He is concerned there are no limits set out in HB 490. SENATOR DUNCAN asked Representative Davis if she thought language limiting the amount of money ASTF could give to BIDCOs would cause a problem in the House. REPRESENTATIVE BETTYE DAVIS did not think that provision would cause a problem, but she is worried that since there are only seven days before adjournment there might not be enough time for the House to concur in Senate amendments to the bill. SENATOR DUNCAN and SENATOR RANDY PHILLIPS think there should be enough time for a concurrence vote. Number 420 CHAIRMAN SHARP stated there is strong support for HB 490 in the Rules Committee. REPRESENTATIVE BETTYE DAVIS does not think the committee needs to be concerned about the ASTF appropriating more than $2,000,000.00 to the BIDCOs, because that would throw all their other obligations off. Number 460 JAMIE KENWORTHY, Executive Director, Alaska Science & Technology Foundation, Department of Commerce & Economic Development, testifying from Anchorage, stated ASTF has grant authority, but there is nothing in statute, without HB 490, that would give authority for establishment of this kind of risk-capital capability in Alaska. If ASTF misuses its' authority, it will have to answer to the legislature during the next session. CHAIRMAN SHARP asked Mr. Kenworthy if he believes that under HB 490, the ASTF would still have to come back to the legislature with their capital budget to appropriate additional money to the BIDCO, over and above what ASTF has right now. MR. KENWORTHY replied no. CHAIRMAN SHARP asked how much authority ASTF currently has. MR. KENWORTHY stated if HB 490 passes, ASTF will have the authority. They would take funds out of their interest earnings, and if the funds were leveraged by the private sector, they would establish a BIDCO. They would not need additional funds appropriated. It is unusual to have an agency director, himself, asking that funds be taken out of his direct authority and put into the private sector where it will be leveraged. CHAIRMAN SHARP asked if BIDCO will have a separate boards. MR. KENWORTHY replied BIDCO will have its' own board. There will be a loan agreement between ASTF and the BIDCO, but the BIDCO will make the decisions on where to invest the money and the terms of those investments. CHAIRMAN SHARP asked Mr. Kenworthy if ASTF feels it has the authority to add money up to $3,000,000.00, or unlimited. Number 490 MR. KENWORTHY responded if HB 490 passes, ASTF would have the authority to add unlimited funds. But he is trying to be very clear to the legislature regarding the size of the commitment ASTF would make, so there is no misunderstanding about what ASTF is doing. A BIDCO needs about $6,000,000.00 to be viable. CHAIRMAN SHARP asked if all the other projects ASTF is involved in were approved by the legislature. MR. KENWORTHY replied the appropriation for the agriculture project for the last two years is a direct earmark by the legislature of ASTF earnings. ASTF is authorized to fund other projects through grants, however they need the legislative exemption because of the statutory provision that they cannot spend more than half their funds in grants of over $100,000.00 a year. HB 490 is needed to give ASTF the authority to fund BIDCOs. CHAIRMAN SHARP asked if there were dollar limits placed on all other ASTF projects. MR. KENWORTHY responded the language in the legislation relating to the Kodiak Launch Facility was "up to $5,000,000.00". Number 515 CHAIRMAN SHARP thinks HB 490 will have difficulty passing the Senate without a limit on the amount ASTF is allowed to appropriate to BIDCOs. MR. KENWORTHY would not have a problem with the legislature limiting the amount ASTF would be allowed to contribute to BIDCOs. Number 533 SENATOR LEMAN made a motion to adopt a conceptual amendment that would limit ASTF to contributing no more than a total of $3,000,000.00 to BIDCO. CHAIRMAN SHARP, hearing no objection, stated the amendment was adopted. SENATOR RANDY PHILLIPS made a motion to discharge HB 490 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated HB 490 was discharged from the Senate State Affairs Committee. HB 63 DOG MUSHING VANITY PLATES  CHAIRMAN SHARP brought up HB 63 as the next order of business before the Senate State Affairs Committee. Number 555 REPRESENTATIVE JOHN DAVIES, prime sponsor of HB 63, stated he introduced the bill at the request at some people in the Fairbanks area who are involved in dog mushing. It arose out of concern over some of the attacks against the sport from out of state. There would be a $50.00 fee for these plates, with any excess revenue authorized to be appropriated to statewide dog mushing programs. HB 63 would allow Alaskans to show support for the state sport, and give non-mushers an opportunity to bolster the mushing community. He asked for support of HB 63. SENATOR LEMAN noted that 155 sets of license plates will have to be purchased to break even on the cost of producing them. He assumed there would be at least that many people interested in purchasing those plates. REPRESENTATIVE DAVIES hopes closer to 1000 sets of license plates will be sold. Number 587 SENATOR RANDY PHILLIPS made a motion to discharge HB 63 from the Senate State Affairs Committee with individual recommendations. TAPE 96-32, SIDE B CHAIRMAN SHARP, hearing no objection, stated HB 63 was discharged from the Senate State Affairs Committee. HCR 25 381ST INTELL.SQUADRON DIVISION DAY CHAIRMAN SHARP brought up HCR 25 as the next order of business before the Senate State Affairs Committee.  Number 585 NOELLE BREKKE, Aide to Representative Pete Kott, Co-Chairman of the House Special Committee on Military & Veterans' Affairs, prime sponsor of HCR 25, stated the resolution would allow May 15, 1996 to be designated as the 381st Intelligence Squadron Logistics Day. This unit is based at Elmendorf Air Force Base, and has earned many merit awards. She asked for support of HCR 25. Number 574 SENATOR LEMAN made a motion to discharge HCR 25 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated HCR 25 was discharged from the Senate State Affairs Committee. HJR 61 ANCHORAGE VETERANS AFFAIRS OFFICE CHAIRMAN SHARP brought up HJR 61 as the next order of business before the Senate State Affairs Committee. Number 570 REPRESENTATIVE ED WILLIS, prime sponsor of HJR 61, stated the resolution would oppose changes in the functions of the federal Veterans' Administration Office in Anchorage. The federal VA is proposing downsizing the Anchorage office by transferring several major functions to Reno, Nevada and Phoenix, Arizona. The resolution gives our congressional delegation another tool with which to fight this downsizing. He urged the committee to support HJR 61. SENATOR RANDY PHILLIPS made a motion to discharge HJR 61 from the Senate State Affairs Committee with individual recommendations. Number 545 CHAIRMAN SHARP, hearing no objection, stated HJR 61 was discharged from the Senate State Affairs Committee. HB 359 APPOINTMENT PROCESS FOR BDS & COMM'NS CHAIRMAN SHARP brought up HB 359 as the next order of business before the Senate State Affairs Committee. Number 540 REPRESENTATIVE BRIAN PORTER, prime sponsor of HB 359, stated the bill was crafted in conjunction with the Governor's Office, so their needs have been met. The bill would provide a way to avoid the problem that occurred two years ago with an appointment to APUC by a departing governor. This bill is not intended to give an advantage or disadvantage to any particular governor, it will just set the standard for appointments in the future. SENATOR DONLEY made a motion to discharge HB 359 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated HB 359 was discharged from the Senate State Affairs Committee. HB 249 MCGRATH KUSKOKWIM RIVER ICE CLASSIC CHAIRMAN SHARP brought up HB 249 as the next order of business before the Senate State Affairs Committee. Number 465 LISA MCLAREN, Aide to Representative Irene Nicholia, prime sponsor of HB 249, stated the bill would authorize the Kuskokwim Broadcasting Corporation to hold an annual ice classic. The McGrath Volunteer Fire Department and Kuskokwim Valley Rescue Squad would also benefit from the ice classic. SENATOR DONLEY asked if they would be allowed to sell these tickets over the air. DENNIS POSHARD, Director, Charitable Gaming Division, Department of Revenue, replied that up to twelve hours a year of on-air time is allowed for public broadcast stations to sell charitable gaming tickets. SENATOR DUNCAN made a motion to discharge HB 249 from the Senate State Affairs Committee with individual recommendations. Number 445 CHAIRMAN SHARP, hearing no objection, stated HB 249 was discharged from the Senate State Affairs Committee. HJR 20 SUPPORT 10TH AMENDMENT ENFORCEMENT ACT CHAIRMAN SHARP brought up HJR 20 as the next order of business before the Senate State Affairs Committee. Number 435 ELEANOR ROSER, Aide to Representative Ramona Barnes, prime sponsor of HJR 20, stated the resolution would request support for the 10th amendment, which would eliminate further federal mandates and other types of federalism. SENATOR DONLEY asked if they could add the title change to the title change resolution, so as not to inadvertently open up HJR 20. SENATOR LEMAN stated if the House changes HJR 20, it would come back to the Senate anyway, so the Senate would have the last say on any changes the House makes. He suggested passing HJR 20, and then passing the title change resolution. SENATOR DONLEY asked if they couldn't just remove the concern by adding the new title of HJR 20 to the title change resolution. Number 400 CHAIRMAN SHARP asked Ms. Roser if she would have objection to that. MS. ROSER responded she would have no objection to that. CHAIRMAN SHARP asked if there was any objection to stating the new title of HJR 20 in the title change resolution. [None was voiced.] SENATOR LEMAN made a motion to adopt the Senate State Affairs Committee substitute for HJR 20. Number 380 CHAIRMAN SHARP, hearing no objection, stated the committee substitute was adopted. SENATOR DONLEY made a motion to discharge HJR 20 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated HJR 20 was discharged from the Senate State Affairs Committee. SENATOR RANDY PHILLIPS stated for the record that HJR 20 is a complete rewrite from the original legislation. Number 365 MS. ROSER stated she will talk to Representative Barnes about a press release regarding the change of subject of HJR 20. CHAIRMAN SHARP stated the resolution for the title change will have to be adopted in the Rules Committee. The title of the title change resolution will include the new title of HJR 20. Number 335 CHAIRMAN SHARP adjourned the Senate State Affairs Committee meeting at 10:16 a.m.