Legislature(2005 - 2006)BELTZ 211
03/22/2005 03:30 PM Senate STATE AFFAIRS
Audio | Topic |
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Start | |
SJR14 | |
SJR8 | |
SJR14 | |
HB90 | |
HB97 | |
SB143 | |
SB24 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
+= | SJR 8 | TELECONFERENCED | |
*+ | SJR 14 | TELECONFERENCED | |
+ | SB 24 | TELECONFERENCED | |
*+ | SB 143 | TELECONFERENCED | |
+ | HB 90 | TELECONFERENCED | |
+ | HB 97 | TELECONFERENCED | |
HB 90-STATE TREASURY WARRANTS 4:14:59 PM CHAIR THERRIAULT announced the next order of business to be HB 90. He noted that the prime sponsor is Representative Paul Seaton, but that Representative Gruenberg would introduce the bill. REPRESENTATIVE MAX GRUENBERG told members similar legislation passed the House last year, but didn't make it through the Senate. HB 90 simply codifies the National Bank of Alaska v. Univentures 1231 decision, which dealt with whether state warrants are negotiable instruments. The Legislature has never adopted the use of checks to pay state debts; it uses warrants. Until that case was decided, the state's position was that it didn't have to consider warrants as negotiable instruments in the technical sense. That means the state could stop payment on a warrant even after a bank had made payment on it. HB 90 specifically states that warrants drawn by the state are negotiable instruments under the Uniform Commercial Code. That makes it clear the state must honor the checks unless requirements and procedures set out in the Uniform Commercial Code are followed. Certainly, the state could dishonor a check if it notifies the bank before it is cashed. CHAIR THERRIAULT asked what a negotiable instrument allows that wasn't allowed on a warrant. REPRESENTATIVE GRUENBERG answered a negotiable instrument is defined in AS 45.03.104(a) as a document drawn on a bank that is to be served as evidence of a debt to be paid. If properly drawn and presented, it must be honored unless proper notice is given to the bank in advance. That allows the bank to rely on the bona fides of that instrument. Although the state pays a lot of its debts electronically rather that with checks, those that it does pay would be honored under the Uniform Commercial Code. 4:20:07 PM KIM GARNERO, Director of Finance, Department of Administration, affirmed that HB 90 simply codifies a 1992 Alaska Supreme Court ruling. Since that decision, the state has administered its warrants as negotiable instruments so no administrative changes are necessary if this legislation passes. SENATOR HUGGINS asked why, if the court ruling was in 1992, there is a rush to do something about it now in 2005. MS. GARNERO responded it's not a bad idea to align the statutory language with the Alaska Supreme Court ruling. CHAIR THERRIAULT recapped this would align statutes with the findings of the court. MS. GARNERO said that is correct. 4:22:02 PM REPRESENTATIVE GRUENBERG maintained that in the area of commercial law, financial institutions and lawyers look to the statutes rather than case law. CHAIR THERRIAULT added HB 90 would reduce confusion because someone could reference the statutes and they would have to know that the court overrode it. REPRESENTATIVE GRUENBERG agreed. CHAIR THERRIAULT noted there was no further testimony. He mentioned the zero fiscal note and asked for a motion. SENATOR WAGONER moved HB 90 out of committee with individual recommendations and attached fiscal note. CHAIR THERRIAULT announced that without objection, the motion carried.
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