03/05/2013 08:00 AM House LABOR & COMMERCE

         HB 71-AK REGIONAL ECONOMIC ASSISTANCE PROGRAM                                                                      
                                                                                                                                
8:12:02 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON announced  that the first order of  business would be                                                               
HOUSE BILL NO.  71 "An Act extending the termination  date of the                                                               
Alaska regional  economic assistance  program; and  providing for                                                               
an effective date."                                                                                                             
                                                                                                                                
8:12:44 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  REINBOLD moved  to adopt  the proposed  committee                                                               
substitute (CS)  for HB 71, labeled  28-LS0288\U, Martin, 2/22/13                                                               
as the working document.                                                                                                        
                                                                                                                                
CHAIR OLSON objected for the purpose of discussion.                                                                             
                                                                                                                                
8:13:09 AM                                                                                                                    
                                                                                                                                
GINGER  BLAISDELL, Staff,  Representative Shelley  Hughes, Alaska                                                               
State  Legislature, stated  the bill  for reauthorization  of the                                                               
Alaska Regional Development  Organizations (ARDORs) was requested                                                               
by several chairs  of individual ARDORs.  She  explained that the                                                               
ARDORs do not sunset but will  simply end.  Currently, the ARDORs                                                               
are scheduled to  end on June 30,  2013.  She related  that HB 71                                                               
would  extend the  end date  until 2018.   During  review of  the                                                               
program  it  was   discovered  that  an  audit   has  never  been                                                               
conducted,   which  should   be   done   for  performance   sake.                                                               
Additionally, the  committee substitute, Version U,  would change                                                               
the  end  date  until  2016, which  would  follow  the  projected                                                               
completion date of the proposed audit.                                                                                          
                                                                                                                                
8:14:23 AM                                                                                                                    
                                                                                                                                
KRIS  CURTIS, Legislative  Auditor,  Legislative Audit  Division,                                                               
Legislative Affairs  Agency (LAA), stated that  she believes 2016                                                               
is  appropriate date,  which  would allow  the  division time  to                                                               
complete  an audit.    She  suggested the  audit  would start  in                                                               
January or possibly earlier.                                                                                                    
                                                                                                                                
REPRESENTATIVE  HERRON  agreed  an  audit  is  needed  since  the                                                               
program hasn't  been audited  in 25 years,  but also  because the                                                               
ARDOR  program should  be  reviewed  for possible  consolidation.                                                               
Currently, 12 ARDORs exist, but  he suggested that several ARDORs                                                               
are  under performers.    Therefore, he  concluded  that a  fewer                                                               
number of ARDORs  may be beneficial to the overall  health of the                                                               
organization.                                                                                                                   
                                                                                                                                
8:15:58 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT  echoed Representative  Herron's comments.                                                               
She informed  members that  she has served  on the  Department of                                                               
Commerce,  Community  &  Economic Development's  (DCCED)  finance                                                               
subcommittee  this legislative  session.   She reported  that the                                                               
state spends  $807,000 per year  for 12 ARDORs, which  amounts to                                                               
$62,000  per  ARDOR.    Some  ARDORs  are  prolific  and  operate                                                               
effectively,   including  the   Anchorage  Economic   Development                                                               
Corporation   (AEDC),  Southwest   Alaska  Municipal   Conference                                                               
(SWAMC),  and   Southeast  Conference   ARDORS.     However,  she                                                               
questioned  what  other  ARDORS,  such  as  Dillingham,  Cordova,                                                               
Juneau,  Bethel,  and  Nome,  are doing  with  the  $62,000  they                                                               
receive.   The aforementioned makes her  frustrated, she related.                                                               
Upon reviewing  the aforementioned  successful ARDORs,  she found                                                               
them to  be structured with  significant engagement  with private                                                               
sector  economic development  groups.   She opined  that at  some                                                               
point the  state should not  continue to  fund - at  $800,000 per                                                               
year  -  functions  that  can  be done  by  the  private  sector.                                                               
Furthermore,  there  is duplication  of  effort  since the  state                                                               
already  has the  Department of  Commerce,  Community &  Economic                                                               
Development (DCCED).   Representative Millett relayed  that while                                                               
she understands the reasons to  develop the ARDORs, she is unsure                                                               
the current program is effective.                                                                                               
                                                                                                                                
8:17:49 AM                                                                                                                    
                                                                                                                                
CHAIR OLSON asked whether the audit would address these issues.                                                                 
                                                                                                                                
MS. CURTIS  answered yes;  the auditors  would take  the concerns                                                               
expressed today  under consideration when requesting  the special                                                               
audit.   She  related that  the request  would be  put forth  and                                                               
audited -  typically on a first  come, first audited basis.   She                                                               
said  the auditors  would review  the legislative  intent of  the                                                               
program and review  the committee's concerns when  the request is                                                               
drafted.                                                                                                                        
                                                                                                                                
REPRESENTATIVE JOSEPHSON noted  that he also sits  on the DCCED's                                                               
finance subcommittee and reported that  the ARDOR budget has been                                                               
cut.  Thus, the program will have to fight for its survival.                                                                    
                                                                                                                                
8:18:58 AM                                                                                                                    
                                                                                                                                
CHAIR  OLSON  removed his  objection.    There being  no  further                                                               
objection,  the proposed  committee  substitute (CS)  for HB  71,                                                               
labeled 28-LS0288\U, Martin, 2/22/13, was adopted.                                                                              
                                                                                                                                
CHAIR  OLSON,  after first  determining  no  one else  wished  to                                                               
testify, closed public testimony on HB 71.                                                                                      
                                                                                                                                
8:19:41 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE MILLETT  reiterated her concern  regarding whether                                                               
the  program is  effective and  if these  organizations need  the                                                               
$62,000  per year  for each  ARDOR to  survive.   With regard  to                                                               
spending  the  funds to  maintain  the  program while  the  audit                                                               
occurs,  she suggested  that  each ARDOR  could  come before  the                                                               
committee - one  by one - to articulate any  accomplishments.  In                                                               
fact, she  related that  she has  attempted this  assessment with                                                               
some ARDORs during  which she has heard each ARDOR  echo its role                                                               
as  essentially   what  she  has  viewed   as  DCCED's  function.                                                               
Therefore,  the   ARDORs  seem   like  a  large   duplication  in                                                               
government, she  reiterated.  Representative Millett  stated that                                                               
although she does  not object to moving the  bill from committee,                                                               
she would recommend the program sunset.                                                                                         
                                                                                                                                
CHAIR OLSON asked if she would like to hold the bill further.                                                                   
                                                                                                                                
REPRESENTATIVE  MILLETT  answered  no;  that she  can  voice  her                                                               
opinion  on the  House floor  and will  discuss the  bill further                                                               
with others.                                                                                                                    
                                                                                                                                
8:22:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   JOSEPHSON  related   that   while  the   finance                                                               
subcommittee  decided  to cut  the  ARDOR  program funding  -  as                                                               
mentioned earlier  - there was  not any testimony  or inclination                                                               
by the chair, Representative Costello,  to end the ARDOR program.                                                               
He   agreed  with   Representative   Millett  that   this  is   a                                                               
conversation for the House floor.                                                                                               
                                                                                                                                
REPRESENTATIVE HERRON offered that the  ARDOR program - given the                                                               
right circumstances  - is very  important to  the state.   He did                                                               
not think  the department has the  boots on the ground  to really                                                               
generate localized efforts  that do contribute.  He  said he will                                                               
defend the  ARDOR program, except for  the underperformers, which                                                               
clearly exist.   Thus the  consolidation and better use  of state                                                               
funding is probably appropriate.                                                                                                
                                                                                                                                
CHAIR OLSON related the bill has  a further referral to the House                                                               
Finance Committee.                                                                                                              
                                                                                                                                
8:23:38 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE REINBOLD  moved to  report the  proposed committee                                                               
substitute (CS) for HB 71,  labeled 28-LS0288\U, Martin, 2/22/13,                                                               
out  of   committee  with  individual  recommendations   and  the                                                               
accompanying   fiscal  notes.      There   being  no   objection,                                                               
CSHB 71(L&C)  was  reported from  the  House  Labor and  Commerce                                                               
Standing Committee.                                                                                                             
                                                                                                                                
8:24:07 AM                                                                                                                    
                                                                                                                                
The committee took an at-ease from 8:24 a.m. to 8:26 a.m.