04/07/2005 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB86 | |
| HB144 | |
| HB201 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 86 | TELECONFERENCED | |
| += | HB 144 | TELECONFERENCED | |
| += | HB 177 | TELECONFERENCED | |
| += | HB 191 | TELECONFERENCED | |
| += | HB 238 | TELECONFERENCED | |
| = | HB 201 | ||
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
April 7, 2005
8:05 a.m.
MEMBERS PRESENT
Representative Paul Seaton, Chair
Representative Carl Gatto, Vice Chair
Representative Jim Elkins
Representative Bob Lynn
Representative Jay Ramras
Representative Berta Gardner
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 86
"An Act establishing in the office of the ombudsman a state
executive branch employee fraud, waste, and abuse report hotline
program."
- HEARD AND HELD
HOUSE BILL NO. 144
"An Act authorizing an advisory vote on whether income of the
Alaska permanent fund in the earnings reserve account should be
used for a community dividend program."
- MOVED CSHB 144(STA) OUT OF COMMITTEE
HOUSE BILL NO. 201
"An Act relating to an application for a permanent fund dividend
for a member of the armed forces of the United States serving on
active duty outside of the state; and providing for an effective
date."
- MOVED CSHB 201(STA) OUT OF COMMITTEE
HOUSE BILL NO. 177
"An Act relating to employee and employer contributions to the
teachers' retirement system and the public employees' retirement
system; and providing for an effective date."
- MOVED HB 177 OUT OF COMMITTEE
HOUSE BILL NO. 191
"An Act relating to defined contribution systems for members of
the teachers' retirement system and the public employees'
retirement system; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
HOUSE BILL NO. 238
"An Act relating to contribution rates for employers and members
in the defined benefit plans of the teachers' retirement system
and the public employees' retirement system and to the ad-hoc
post-retirement pension adjustment in the teachers' retirement
system; requiring insurance plans provided to members of the
teachers' retirement system, the judicial retirement system, the
public employees' retirement system, and the former elected
public officials retirement system to provide a list of
preferred drugs; relating to defined contribution plans for
members of the teachers' retirement system and the public
employees' retirement system; and providing for an effective
date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 86
SHORT TITLE: OMBUDSMAN HOTLINE
SPONSOR(S): REPRESENTATIVE(S) MEYER
01/19/05 (H) READ THE FIRST TIME - REFERRALS
01/19/05 (H) STA, JUD
04/07/05 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 144
SHORT TITLE: ADVISORY VOTE ON COMMUNITY DIVIDEND
SPONSOR(S): REPRESENTATIVE(S) THOMAS
02/14/05 (H) READ THE FIRST TIME - REFERRALS
02/14/05 (H) STA, FIN
03/08/05 (H) STA AT 8:00 AM CAPITOL 106
03/08/05 (H) Heard & Held
03/08/05 (H) MINUTE(STA)
04/07/05 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 201
SHORT TITLE: PERM. FUND DIVIDEND APPS OF MILITARY
SPONSOR(S): REPRESENTATIVE(S) CHENAULT
03/04/05 (H) READ THE FIRST TIME - REFERRALS
03/04/05 (H) MLV, STA
03/17/05 (H) MLV AT 1:00 PM CAPITOL 124
03/17/05 (H) Moved Out of Committee
03/17/05 (H) MINUTE(MLV)
03/18/05 (H) MLV RPT 6DP
03/18/05 (H) DP: THOMAS, GRUENBERG, CISSNA, ELKINS,
MCGUIRE, LYNN
03/29/05 (H) STA AT 8:00 AM CAPITOL 106
03/29/05 (H) Heard & Held
03/29/05 (H) MINUTE(STA)
04/05/05 (H) FIN AT 1:30 PM HOUSE FINANCE 519
04/05/05 (H) <Pending Referral><Bill Postponed>
04/07/05 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 177
SHORT TITLE: STATE EMPLOYEE RETIREMENT CONTRIBUTIONS
SPONSOR(S): REPRESENTATIVE(S) KELLY
02/25/05 (H) READ THE FIRST TIME - REFERRALS
02/25/05 (H) STA, FIN
03/22/05 (H) STA AT 8:00 AM CAPITOL 106
03/22/05 (H) Heard & Held
03/22/05 (H) MINUTE(STA)
03/29/05 (H) STA AT 8:00 AM CAPITOL 106
03/29/05 (H) Scheduled But Not Heard
03/31/05 (H) STA AT 8:00 AM CAPITOL 106
03/31/05 (H) Heard & Held
03/31/05 (H) MINUTE(STA)
04/02/05 (H) STA AT 10:00 AM CAPITOL 106
04/02/05 (H) Scheduled But Not Heard
04/05/05 (H) STA AT 8:00 AM CAPITOL 106
04/05/05 (H) Scheduled But Not Heard
04/07/05 (H) STA AT 8:00 AM CAPITOL 106
WITNESS REGISTER
REPRESENTATIVE KEVIN MEYER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified as sponsor of HB 86.
LINDA LORD-JENKINS, Ombudsman
Anchorage Office
Office of the Ombudsman
Alaska State Legislature
Anchorage, Alaska
POSITION STATEMENT: Answered questions on behalf of the Office
of the Ombudsman during the hearing on HB 86.
MIKE PAWLOWSKI, Staff
to Representative Kevin Meyer
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions on behalf of
Representative Meyer, sponsor of HB 86.
REPRESENTATIVE BILL THOMAS
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As sponsor of HB 144, noted the changes
incorporated into Version F.
BILL ROLFZEN, Local Government Specialist
Municipal Assistance, National Forest Receipts, Fish Tax, PILT -
Juneau Office
Division of Community Advocacy
Department of Commerce, Community, & Economic Development
Juneau, Alaska
POSITION STATEMENT: Answered questions on behalf of the
department during the hearing on HB 144.
KEVIN RITCHIE
Alaska Municipal League (AML)
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of AML in support of
HB 144.
ERICH DeLAND, Staff
to Representative Mike Chenault
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of Representative
Chenault, sponsor of HB 201.
ACTION NARRATIVE
CHAIR PAUL SEATON called the House State Affairs Standing
Committee meeting to order at 8:05:46 AM. Representatives
Gatto, Elkins, Lynn, Ramras, Gardner, and Seaton were present at
the call to order. Representative Gruenberg arrived as the
meeting was in progress.
HB 86-OMBUDSMAN HOTLINE
8:06:19 AM
CHAIR SEATON announced that the first order of business was
HOUSE BILL NO. 86, "An Act establishing in the office of the
ombudsman a state executive branch employee fraud, waste, and
abuse report hotline program."
8:07:15 AM
REPRESENTATIVE KEVIN MEYER, Alaska State Legislature, testifying
as sponsor of HB 86, told the committee that a constituent who
works for the federal government indicated that that entity has
a fraud, waste, and abuse program, in which employees can
anonymously report and fraud, waste, or abuse, in order that it
may be investigated and appropriate action may be taken. He
said HB 86 would establish a similar method for state employees.
REPRESENTATIVE MEYER said currently, under the state's whistle
blower laws, a state employee who wants to raise a concern must
first speak to his/her supervisor. The proposed bill would
allow that employee to call a hotline. He indicated that the
state ombudsman would receive that information and report it to
"us" through the normal reporting process. He commented, "We're
constantly trying to reduce [state] spending where we can, and I
think a program like this can give us some ideas that we may not
have ever thought of." He noted that Oregon saved $4.3 million
by introducing a similar program. He said he believes there are
a lot of good state employees who want to do what's right, but
don't want to jeopardize their jobs.
8:10:26 AM
REPRESENTATIVE LYNN said the military has a "suggestion
program," which is similar. He pondered whether some kind of
award could be offered. For example, if a person's reporting
fraud saves the state a certain amount of money, that person
could be given a percentage of the money.
8:10:55 AM
REPRESENTATIVE MEYER responded that he thinks that is an
excellent idea, and he said he would need more time to explore
how that money would be measured.
8:11:36 AM
LINDA LORD-JENKINS, Ombudsman, Anchorage Office, Office of the
Ombudsman, Alaska State Legislature, in response to a question
from Representative Gatto, said the office has a total staff of
seven: the ombudsman, an administrative staff person, four
investigators, and one intake officer. She added that she has
requested additional staff "in this funding cycle."
8:12:05 AM
REPRESENTATIVE RAMRAS asked for an estimate of savings to the
state.
8:12:23 AM
MIKE PAWLOWSKI, Staff to Representative Kevin Meyer, Alaska
State Legislature, testifying on behalf of Representative Meyer,
sponsor of HB 86, responded that he is not certain he would [be
able to make that estimate], because it is difficult to surmise
where savings would be made. He said he thinks Oregon is a good
example. He said he is not sure the money is as important as
the confidence the bill could give back to people.
8:13:14 AM
REPRESENTATIVE RAMRAS asked Mr. Pawlowski if he would describe
HB 86 as an empowerment bill.
8:13:22 AM
PAWLOWSKI said he would.
8:13:52 AM
MS. LORD-JENKINS said the legislation is compatible with the
Office of the Ombudsman.
8:14:59 AM
MS. LORD-JENKINS, in response to Chair Seaton, reviewed her
recommendations for the bill. First, she suggested that the
proposed legislation be amended so that the hotline include the
legislative and judicial branches of government. Second, she
recommended that the municipalities be removed from the hotline
jurisdiction, because the ombudsman can contract with them to
provide services.
8:16:24 AM
MS. LORD-JENKINS, in response to Chair Seaton, detailed where
these suggested changes can be found in a memorandum she sent to
Chair Seaton [included in the committee packet].
8:17:23 AM
MS. LORD-JENKINS said her third recommendation relates to a
timeframe. She stated that currently, the ombudsman takes into
account the timelines of a complaint; under regulations, a
complaint is considered to be timely if it has been filed within
a year of the complainant's last action to try to rectify the
complaint. The proposed legislation would eliminate that time
frame. She said:
I've recommended that, at the very least, ... if it is
the intent of the legislature to extend timeframes,
that ... [they] only be extended for the fraud aspect
of the hotline reporting. And I recommended that
(indisc. -- coughing) possibly consider the timeframes
to be equal to those of the statute of limitations in
Alaska, which is five years. However, when
considering general issues of ... waste and abuse, [I
recommended] that we stick to the existing ombudsman
timeframes of one year.
8:19:14 AM
MS. LORD-JENKINS, in response to a question from Chair Seaton,
confirmed that she is saying it is good to have timeframes so
that somebody doesn't call the ombudsman to complain about
something that happened eight years ago, for example. She said
that does happen and it's impractical for the ombudsman's office
"to even think about investigating." She offered further
details. She added, "I think that if you want to extend the
timeframe regarding fraud - which generally ... would be
considered a criminal matter - ... you [would] match the
timeframes to the criminal statute of limitations."
8:20:32 AM
MS. LORD-JENKINS directed attention to page 2, beginning on line
24, which is language that would exempt the existing provision
in [AS] 24.55 regarding judicial appeal. The existing statute
says that ombudsman action does not extend any judicial appeal
process available to a complainant. She recommended, "If the
legislation intends to extend any relevant judicial appeal, then
HB 86 should specifically be amended to reflect that intention."
8:21:50 AM
CHAIR SEATON asked, "If this did extend judicial appeal, and yet
it's totally anonymous, ... how would you handle that?"
MS. LORD-JENKINS said, "Practically speaking, if it was
anonymous, it ... wouldn't be relevant; but we have also
recommended that the language of HB 86 be softened at proposed
Section 24.55.222(c)," [on page 2, beginning on line 10]. She
stated that the proposed legislation prevents the ombudsman from
attempting to identify anyone contacting the hotline. She said
her recommendation is that the language be changed so that the
ombudsman is allowed to inquire about the identity of someone
"coming to the hotline" and explain that the ombudsman statute,
as it exists currently, keeps confidential the identities of any
complainant coming to the ombudsman for action. She added, "We
would not decline to act on a complaint if the complainant ...
desired anonymity."
8:24:08 AM
MS. LORD-JENKINS, in response to a question from Chair Seaton,
said, based on her experience, that if a complainant presents
his/her name to the manager of a hotline program, that name is
kept confidential and is not presented to other agencies. She
added, "We can only divulge a complainant's name if they
specifically authorize us to."
8:25:17 AM
REPRESENTATIVE GARDNER asked for clarification regarding
"extending judicial appeal."
MS. LORD-JENKINS explained, "We don't want our office to be used
as a conduit to extend judicial timeframes if it's not
appropriate."
CHAIR SEATON said a number of the recommendations are good and
he thinks that the bill sponsor would like to talk to the
ombudsman in detail and possibly incorporate those
recommendations into a committee substitute. He asked Ms. Lord-
Jenkins to work with the sponsor to that end.
8:27:59 AM
REPRESENTATIVE GATTO offered a scenario in which an employee is
not productive, but when that employee is let go, he/she
complains to the ombudsman of being a victim of discrimination.
He offered further details.
8:29:20 AM
CHAIR SEATON responded that that relates to the Human Rights
Commission and not the Office of the Ombudsman, and he said he
wants to ensure the focus is on a fraud, waste, and abuse
hotline.
8:30:11 AM
MS. LORD-JENKINS noted that [the Office of the Ombudsman] does
have a provision in statute and regulation that allows for the
office to decline complaints that are made in "bad faith." She
said the office realizes the potential of someone to abuse the
program, but she said she thinks "we're pretty good at detecting
that."
8:31:28 AM
CHAIR SEATON closed public testimony.
[HB 86 was heard and held.]
HB 144-ADVISORY VOTE ON COMMUNITY DIVIDEND
8:31:52 AM
CHAIR SEATON announced that the next order of business was HOUSE
BILL NO. 144, "An Act authorizing an advisory vote on whether
income of the Alaska permanent fund in the earnings reserve
account should be used for a community dividend program."
REPRESENTATIVE GATTO moved to adopt the committee substitute
(CS) for HB 144, Version 24-LS0517\F, Cook, 4/6/05, as a work
draft. There being no objection, Version F was before the
committee.
REPRESENTATIVE BILL THOMAS, Alaska State Legislature, as sponsor
of HB 144, noted the changes incorporated into Version F, as
follows: On page 1, line 13, the words "up to" were inserted
before "$150,000,000"; and language was added to define an
unorganized borough as a borough "where 25 or more people reside
as a social unit." He referred to an amendment [that had been
moved by Representative Lynn at the previous hearing of HB 144
on March 8 and was left pending], and said that he would support
that amendment today.
8:34:36 AM
CHAIR SEATON asked if a change had been incorporated regarding
local tax relief.
8:34:46 AM
REPRESENTATIVE THOMAS indicated that that would be covered by
Representative Lynn's "conceptual amendment."
8:34:59 AM
CHAIR SEATON asked, "But do we have that on page 2, line 4?"
REPRESENTATIVE THOMAS replied, "Part of it, yeah." He clarified
that "Representative Lynn wanted it a little more firm."
8:35:17 AM
REPRESENTATIVE GATTO, regarding the issue of a social unit, said
any group of 25 people could get together and call themselves a
social unit to get money.
REPRESENTATIVE THOMAS offered his belief that the terminology is
the same as was used before, "during revenue sharing."
REPRESENTATIVE GATTO reiterated his concern regarding the
potential for fraud.
REPRESENTATIVE THOMAS said he does not know if fraud "happened
last time."
8:37:16 AM
REPRESENTATIVE LYNN recollected that his amendment had addressed
sales tax as well as property tax.
REPRESENTATIVE THOMAS offered his belief that "the main thing
was tax relief."
8:38:30 AM
REPRESENTATIVE ELKINS, [regarding the issue of social units],
noted that outside his own district there are service districts
that have already banded together and have their own water
system. He said, "When I first read this, I thought that that's
what Representative Thomas was talking about." He suggested
that perhaps the language should be spelled out to specify that
the group must be organized and recognized by the state in order
to apply for money.
REPRESENTATIVE THOMAS pointed out that if an area has water, it
is probably within a borough or municipality, and the borough
would receive the funds for the service area. In response to a
clarification from Representative Elkins that he had been
referring to Hollis, Representative Thomas offered his belief
that "we'd have them on the unorganized municipality."
CHAIR SEATON said someone from the Department of Commerce,
Community, & Economic Development (DCCED) would be available to
address the concerns and statements made thus far.
REPRESENTATIVE THOMAS, in response to a question from
Representative Gruenberg, reiterated the changes incorporated
into Version F, and confirmed that the language regarding "local
tax relief" on page 2, line 4 is also a change.
8:41:48 AM
BILL ROLFZEN, Local Government Specialist; Municipal Assistance,
National Forest Receipts, Fish Tax, PILT - Juneau Office;
Division of Community Advocacy; Department of Commerce,
Community, & Economic Development (DCCED), said "social unit" is
defined in the regulations that govern the state revenue sharing
program, and those regulations have been used for approximately
25 years. He said, "My recollection is we look at: business
establishments; density of the population; [and] the ability of
residents to move in and out of the community freely, which
eliminates communities that might be like religious communes or
military bases, and so on." He continued as follows:
Through the years ... we have had new communities ...
apply. They have to have either a Native village
council or an incorporated nonprofit community
association incorporated under state law, in order to
receive that money; and that money funnels through
those two organizations for the benefit of the
community.
And for a new community, when they apply we ... send
out a survey, they have to answer our questions, [and]
we do an investigation. A lot of times we have them
do a population head count census, where they have to
document every resident in the community. So, we do
have procedures in place.
MR. ROLFZEN, in response to a question from Chair Seaton,
confirmed that "this is the same standard that has been used
through past revenue sharing programs."
8:43:27 AM
REPRESENTATIVE GATTO asked how the department would address a
situation where 5 families live on a remote lake, each not
involved in any way with the others, but all united in calling
themselves a social unit in order to collect money.
8:43:46 AM
MR. ROLFZEN answered as follows:
Again, we'd look at: How are they dispersed around
the lake; what's the density; are there any business
establishments there; [and] do they look like a
community [and] act like a community? They'd have to
form a nonprofit community association, although
that's a fairly simple process.
MR. ROLFZEN spoke of areas that grow over time.
8:44:50 AM
REPRESENTATIVE GRUENBERG requested a copy of the regulation
being discussed.
8:45:17 AM
REPRESENTATIVE GARDNER asked if there would be anything wrong
with 25 individuals coming together and deciding to form a
community. She suggested that as long as they met the
requirements, it would not necessarily be fraudulent.
MR. ROLFZEN said that's correct. He added for the record that
the definition of a social unit is very similar, if not
identical, to the definition that the local boundary commission
uses when it determines "whether or not there's a community."
8:46:20 AM
MR. ROLFZEN, in response to a question from Representative
Gruenberg, said he would provide a copy of the local boundary
commission's definition of social unit, which is defined in
another regulation.
REPRESENTATIVE GRUENBERG said he would like to be certain that
the legislative history is clear as to which definition the
committee may decide to use.
8:47:57 AM
MR. ROLFZEN, in response to Representative Gatto's reiterated
concern about fraud, said there is a public purpose provision in
the [Alaska State] Constitution and in statute. When money is
received, it has to be for the good of the community as a whole.
He indicated that the department would frown on providing a
community dividend with that money. He added that that
basically would not be allowed. He noted that the 25-person
threshold has been in law since 1980, and he said the
legislature has the right to increase that number.
8:48:57 AM
REPRESENTATIVE RAMRAS said, "I'm warm to your bill." He noted
that former Governor Walter Hickel has written about community
dividends. He stated his concern that if the bill is passed,
the communities would absorb the money distributed and still
come back and ask the legislature to solve the problem regarding
the Public Employees' Retirement System (PERS) and the Teachers'
Retirement System (TRS). He asked the sponsor if he would be
support amending the bill to require that communities use the
money that would be distributed to solve their PERS/TRS problems
first.
8:51:11 AM
REPRESENTATIVE THOMAS directed attention to [the sentence on
page 2, lines 4-5, which read]: "The community dividend may be
used for local tax relief or for any other public purpose by the
municipality or community." He suggested, "Maybe somewhere in
the intent language we could put that in there."
REPRESENTATIVE RAMRAS asked Representative Thomas and the
committee to "consider ... [looking] at this as a tool that
would be used as a primary tool to cure each individual
community's PERS/TRS problem." As a result, he continued, those
communities that have a lesser problem would only use a fraction
of the community dividend to solve their problems, while those
with larger problems, such as the City of Fairbanks, would have
to use almost all their dividend money.
REPRESENTATIVE THOMAS responded that he thinks [Representative
Ramras' suggestion] would be fine, as long as it is not put into
or complicates the actual ballot question. He revealed that he
has been speaking with former Governor Walter Hickel about this
issue. He said it will be at least two years before the
communities can get well.
8:54:29 AM
CHAIR SEATON indicated that he thinks it's correct to say that
the money may be used for tax relief or other public purposes,
including fixing "holes" in the retirement system; however, he
stated that he doesn't want to leave the impression that the
intent is to tell citizens they can no longer come to the
legislature and ask for help with problems.
8:55:54 AM
REPRESENTATIVE RAMRAS indicated that he concurs with Chair
Seaton, who, he added, knows better than anyone at the table
that the PERS/TRS issue represents a unique problem for the
State of Alaska for "the foreseeable horizon." He said he is
just considering [HB 144] as a vehicle "to perhaps cure this
proportionally." He observed that some communities have handled
their PERS problem more responsibly [than others]. He said his
own community of Fairbanks has handled the problem less
responsibly.
8:56:31 AM
REPRESENTATIVE ELKINS stated that he thinks the legislature
would be wrong to take the ability of the local governing bodies
away from "saying how to spend this money." He said, "You want
the local governments to be in favor of this issue." Having
served on a local municipality, he said it's important to give
the municipalities flexibility, or "this may not be sellable."
He added, "And I for one want to see this sell."
8:57:34 AM
CHAIR SEATON said he thinks it's good to get on record that the
contributions related to PERS/TRS would be considered "other
public purpose".
8:57:52 AM
REPRESENTATIVE GRUENBERG stated his hope that the bill be kept
clean, to allow the local government to make the decision. To
Mr. Rolfzen, he said the definitions provided are technical and
the two regulations look different. He opined that the
committee should hear more testimony on the issue, to get some
specific legislative history before deciding which definition to
use. He noted that in some Native villages there may be "some
access that is restricted." He emphasized the importance of
being careful before possibly denying some small Native villages
access to "these funds."
9:01:00 AM
KEVIN RITCHIE, Alaska Municipal League (AML), said AML urges the
committee to move the bill out of committee. He thanked the
sponsor of the bill and reiterated that the original concept of
this issue belonged to former Governor Walter Hickel. Mr.
Ritchie opined that Governor Hickel is a community advocate who
reflects the spirit of the [Alaska State] Constitution. Much of
the focus of the constitution is on strong communities and
making decisions. In that regard, he said, the sharing of funds
that belong to everybody in the state really is one of the
higher purposes of state government. He said one of the basic
principals of the constitution is allowing people in communities
to make their own decisions regarding how to provide the best
services and meet situations as they arise.
MR. RITCHIE said, "This doesn't say, 'Here's some free money to
go do something with'; this is part of the overall structure of
state government, which would allow municipalities to ...
communicate with the state about needs and issues." He said the
state would rightly decide, "We think you can get by with this;
we're not going to deal with a particular issue." He said the
issue of PERS/TRS might be one of the negotiation discussions
with local government. He continued as follows:
Obviously we've not been totally successful in getting
state government to do everything we've ever asked. I
think there's a very strong bargaining tool there, and
that in the future what happens with communities and
the community dividend will depend still on that
relationship between the state and its communities.
However, communities will be more ... active in
solving their own problems, and I think that can only
be a good thing for the state of Alaska.
MR. RITCHIE said one of the reasons that AML has supported the
community dividend concept for so long is because of its belief
in strong communities and moving some more of the decision-
making ability back down to the community level.
MR. RITCHIE recognized Representative Carl Moses for having
introduced a similar bill for many years and being a strong
advocate "for this concept." He said one of the reasons this
year or next may be an opportune time to bring this issue before
the public is that local taxes are becoming a significant issue.
At this point, he noted, because there are no state taxes, there
are low overall taxes in Alaska, but in many cases there are
some of the highest property taxes in the U.S. He added, "In
some cases [Alaska ranks] seventeenth in the U.S. in our larger
communities." He said he thinks the public is probably willing
to consider a plan that could, for the long term, make it
possible to provide good schools and local services, [without]
increasing property or sales tax. Mr. Ritchie noted that
although Alaska is competitive with the rest of the world, the
state's cost are higher.
MR. RITCHIE advocated for HB 49 to create a small revenue
sharing program. He revealed, "This year you've lost 10 percent
of the cities in rural Alaska; they just don't work any more -
they don't have meetings [and] they don't provide services." In
some cases, he continued, those services are being picked up by
tribal organizations or nonprofit groups, but in some cases they
don't exist any more. He said public safety has taken a nose
dive. During medical emergencies, sometimes people can't get to
the airport because of bad roads, or the airport isn't open. He
added, "So, we're really seeing suffering in rural Alaska." Mr.
Ritchie surmised that by this time next year, if a revenue
sharing bill doesn't pass, half of the cities in rural Alaska
will be lost. He reported that 10 percent have been lost so
far. The Department of Commerce, Community & Economic
Development has a list of 17 communities so far in debt that
it's unlikely they'll be able to survive, and another 39
communities that have made serious cuts in their local services
that affect the public.
MR. RITCHIE reminded the committee that "this is an election,"
and he asked them to consider what the public would want. He
noted that in 1999 an election was held regarding the permanent
fund, and that election was a disaster. He said, "If that were
to happen to this issue, of course, that would be a disaster for
communities." However, he mentioned an election held in 2002
regarding the tax cap. He said, "The tax cap election sort of
gets at some of the heart of what we're really talking about in
a community dividend." He said it was about being able to build
schools, provide good education and good roads, and to keep
taxes as low as possible. When that election initiative was
originally put on the ballot, polling was conducted, and 70
percent of the people polled thought that limiting taxes through
a statewide tax cap was a pretty good idea. After a yearlong
campaign, the final election showed a flip in numbers - 70
percent of Alaskans thought it was a bad idea - and [the tax
cap] failed in every precinct in the state. He said, "What that
required was a huge effort, and we have yet to bring that
nucleus together for our communities."
MR. RITCHIE emphasized that that work must be done. He
clarified, "If we can't get the communities to buy into that,
including schools, business organizations, and so on, then this
may not be the right time to bring this forward. And so, we're
going to continue working on that and get back to you."
Notwithstanding that, he reiterated his recommendation that HB
144 be moved out of committee. Mr. Ritchie reminded the
committee that, in a campaign, the public will look to the
legislature and the governor for some guidance; therefore, he
said he hopes that if the bill passes, it will be with "general
support, or at least not active advocacy against it."
9:10:35 AM
CHAIR SEATON said he thinks the language regarding adjusting for
inflation may "raise a huge target for opposition," because some
people may say that all the earnings of the fund may be
consumed. He asked Mr. Ritchie to comment.
9:11:47 AM
MR. RITCHIE responded that at this point he doesn't have an
opinion to share [from AML], because the organization has not
"run the language." He added, "We will be, hopefully, giving
that kind of testimony in the future if it continues forward."
9:12:17 AM
REPRESENTATIVE GRUENBERG said he would like to see the bill
move; however, he wants to ensure "this thing is done right."
He stated his concern about how the money will really be used
and who decides how it will be used. He said he hopes that the
committee will keep the bill clean.
9:14:19 AM
REPRESENTATIVE GATTO said Mr. Ritchie hit a nerve when he
brought up the statewide tax cap. He said he thinks what
defeated the tax cap was that the people in Anchorage, who
comprise the largest section of the population, were going to
determine how much any other community would be able to tax. He
said the issue before the committee is about wanting to give
[communities] money and telling them what to do with it, which
he said is the same issue [as the tax cap]. He said he is
hesitant to put something out to the general population where
everyone gets a vote, "even though it determines how any
individual community might want to use something that was part
of their resources."
9:16:24 AM
MR. RITCHIE concurred with Representative Gatto that the issue
during the 2000 tax cap election was one of local control. He
said there really is a strong local control feeling in Alaska
communities, called independence and pioneer spirit. That
spirit is what killed the tax cap election. He agreed that the
way to kill an idea is to make it too complex.
9:17:38 AM
REPRESENTATIVE GATTO said, "It stems from this concept of the
permanent fund dividend. He asked everyone to imagine
distributing the permanent fund dividend (PFD) and then
specifying on what people can and cannot spend it.
9:18:00 AM
CHAIR SEATON pointed out that the only place in the bill that
specifies how the money can be spent occurs on page 2, lines 4-
5. He asked Representative Gatto, "Is your interpretation that
it may be used for any public purpose?" He also asked, "You're
not saying that you would want these to be used for private
purposes, are you?"
9:18:22 AM
REPRESENTATIVE GATTO explained that his concern is that that
language can be used by individuals who are good at defining
what a public purpose is.
9:20:28 AM
REPRESENTATIVE GATTO voiced a concern that the 25 people could
all belong to one family, and he suggested that it is possible
that the state may be handing out $25,000 a year to a family of
25 living in a remote location.
MR. ROLFZEN concurred that that scenario could take place; there
is nothing in the bill saying that group of 25 people has to be
comprised of separate families.
9:22:30 AM
REPRESENTATIVE GRUENBERG reiterated his concern regarding the
definitions of phrases in the bill. In response to a question
from Chair Seaton, he emphasized that he has no desire to change
a word of the related regulations.
CHAIR SEATON suggested including a letter of intent, which would
state the committee's intent to maintain the definition of
revenue sharing currently used [by DCCED].
9:24:29 AM
REPRESENTATIVE GRUENBERG clarified that he wants to determine
what the committee means in the bill by the phrase "social
unit". He said he wants Mr. Ralston to "walk us through these
two regulations and point up any differences." He said the
committee must determine "which one we want to reference," which
will take time.
CHAIR SEATON responded that the committee could do that after it
considers amendments.
REPRESENTATIVE GRUENBERG asked Mr. Ralston to provide the
committee with a "side by side" analysis.
CHAIR SEATON said that a committee vote may be necessary to see
"if we want to go there." He said currently there are a number
of programs that are administered by the state addressing
revenue sharing, community dividends, and fish taxes, and he
does not want to get into revamping what a social unit is in the
state. He stated his preference is for the committee to use the
definition that has been used for years for the revenue sharing
program.
REPRESENTATIVE GRUENBERG said the people voting on this issue
will need to know what it means.
CHAIR SEATON indicated that simplifying the regulation beyond
what's adopted in regulation is beyond the scope of the bill.
He said he would accept a motion from the committee to "either
look at changing that or adopting those."
9:28:41 AM
MR. ROLFZEN, in response to Chair Seaton, confirmed that the
regulation found in 3AC.130.093 is used for the funding
programs, including revenue sharing, capital-matching grants,
and financial aide programs. He said the Local Boundary
Commission (LBC)] regulation is used infrequently, almost
exclusively in conjunction with forming a borough, where it is
necessary to have two bonafide communities within an area.
CHAIR SEATON closed public testimony.
9:29:44 AM
REPRESENTATIVE GATTO moved Conceptual Amendment 1 as follows:
On page 1, line 13:
Delete "adjusted for inflation"
On page 2, lines 12-13:
Delete "adjusted for inflation"
CHAIR SEATON asked if there was any objection to Conceptual
Amendment 1. There being none, Conceptual Amendment 1 was
adopted.
9:30:39 AM
REPRESENTATIVE LYNN moved to adopt Conceptual Amendment 2 as
follows [original punctuation provided, including some
handwritten changes]:
Page 2, Line 4 [sic] at the end of sentence ad [sic]
the sentence:
"however a municipality that levies property taxes
shall use no less than 20% of the Community Dividend
proceeds to lower property taxes or for sales tax
relief.
TEXT TO READ:
The community dividend may be used for local tax
relief or for any other public purpose by the
municipality or community, however a municipality that
levies property taxes shall use no less than 20% of
the Community Dividend proceeds to lower property
taxes and or for sales tax relief.
REPRESENTATIVE ELKINS objected to Conceptual Amendment 2. He
said he likes the overall amendment, but he has problems
"telling the local unit how to spend this money." He said he
thinks the 20 percent ties the hand of the local municipality to
use its judgment.
REPRESENTATIVE LYNN responded that he thinks "it" serves the
public purpose of not taxing homeowners out of their homes. He
said the earnings from the permanent fund belong to everyone in
Alaska, not just to the municipalities. He said he thinks there
ought to be sideboards that would ensure that at least 20
percent of the fund would go into helping Alaskans keep their
homes. He said people can understand property and sales taxes.
CHAIR SEATON noted that there are a number of communities that
get property tax from the pipeline or a pump station. He asked,
"Does this mean that 20 percent of this money would have to go
back to reimbursing the oil company for the property tax on the
pipeline, since the pipeline is the predominate piece of
property that flows through those communities?"
REPRESENTATIVE LYNN said he doesn't have an answer to that
question.
REPRESENTATIVE GRUENBERG said: "This would get money to only
some people in the state: those people who dwell in
municipalities that have local taxes. It doesn't get any money
to the people in the bush who don't have local taxes and
probably need the money even more than a lot of people in our
districts ...."
REPRESENTATIVE GATTO remarked that if a property tax is zero and
20 percent is applied to that, "then you can't do what's
required in the amendment."
REPRESENTATIVE LYNN moved an amendment to Conceptual Amendment
2, so that if there is no property or sales tax in place, then
the entire amount would go to the municipality.
CHAIR SEATON objected to the amendment to Conceptual Amendment
2. He said Conceptual Amendment 2 seems to read that it would
only be for those communities that have a sales tax or municipal
tax already.
9:36:57 AM
REPRESENTATIVE ELKINS said he thinks the local municipalities
know when they need to fix the potholes that affect everybody in
the community, or give property tax relief. The sideboards, he
said, will limit [the municipality's] ability to function as a
free unit.
9:38:03 AM
REPRESENTATIVE LYNN withdrew the amendment to Conceptual
Amendment 2.
9:38:31 AM
REPRESENTATIVE GRUENBERG said Version F would require that
community dividends go to two types of locations: municipalities
that are incorporated in some manner, and social units that are
not. Under Conceptual Amendment 2, the only people who would
get cash back or relief are those in incorporated areas. He
observed that [Conceptual Amendment 2] is saying, "We're not
giving you cash, but we're reducing your taxes so you'll have
more cash in your pockets." The individuals would get the money
if they live in a municipality; however, there is no similar
mechanism for people who live in a social unit.
9:40:50 AM
A roll call vote was taken. Representative Lynn voted in favor
of Conceptual Amendment 2. Representatives Gardner, Gruenberg,
Elkins, and Seaton voted against it. [Representatives Gatto and
Ramras said "pass" and were not asked to vote again.]
Therefore, Conceptual Amendment 2 failed.
CHAIR SEATON offered his understanding that there was a question
before the committee regarding [his previously suggested] letter
of intent, which he said would specify that the legislature
intends for the definitions that have been used for municipal
revenue sharing and other tax sharing purposes to be the
definitions that will be used for "this dividend." He clarified
that that language would not be put into the proposition to the
voters, but it would be a clear indication of which definition
the legislature is using.
9:41:57 AM
REPRESENTATIVE GRUENBERG reiterated that he would like Mr.
Rolfzen to briefly discuss the difference in regulations.
9:42:24 AM
CHAIR SEATON, as a matter of procedure, moved to send the letter
of intent as previously outlined.
9:42:58 AM
CHAIR SEATON, in response to a question from Representative
Gruenberg, clarified that the letter of intent would note that
the definition to be used would be that of DCCED, which is 3 AAC
130.093, rather than LBC's definition from 3 AAC 110.920.
GRUENBERG objected [to the motion to include the letter of
intent], for purposes of discussion.
9:43:25 AM
MR. ROLFZEN said he does not deal with the LBC definition.
Regarding the revenue-sharing distribution, he listed
considerations as follows: density of population, school
enrollment, voter enrollment, and issues to indicate that
families are acting on a community level versus on an individual
level. He indicated that another section of the regulation
addresses whether an area is accessible by the public and for
what purpose the area is used. For example, it would be
determined if the people are there strictly for purposes of
their employment, such as in a cannery or logging camp. Another
question would be whether the community is exclusive and only
admits those of a certain religion. Mr. Rolfzen concluded, "So,
these are all factors we look at very carefully in determining
whether or not they're eligible."
CHAIR SEATON illustrated an example whereby a piece of property
is owned by someone and used as a ranch, and no one else could
buy property there. He surmised that that ranch "wouldn't
qualify under these definitions," because it is entirely private
property.
MR. ROLFZEN answered that's correct.
REPRESENTATIVE GRUENBERG said he can foresee public access being
restricted for at least two reasons: One, because legally
nobody had the right to get on the property; or two, because the
property is physically isolated, surrounded by a refuge, or has
"an unworkable air field." He offered examples whereby access
would be restricted at least part of the year. He asked, "Would
that be restricted within the meaning of this regulation?"
9:47:28 AM
MR. ROLFZEN answered, "I would say, 'Absolutely not,' if it's a
temporary restriction based on natural circumstances and so on."
In response to a question from Representative Gruenberg, he
confirmed he is talking about a legal restriction.
9:47:39 AM
REPRESENTATIVE GRUENBERG asked questions pertaining to the
difference in language between the LBC and DCCED definitions and
made a suggestion to consider a change in phrasing.
9:48:28 AM
CHAIR SEATON interjected that Mr. Rolfzen does not represent the
LBC, and he stated his intent to "go to the question" regarding
the motion to include the letter of intent.
9:48:55 AM
REPRESENTATIVE GARDNER, regarding the [DCCED] definition of a
social unit, noted that it does not address the number of
people. She said, "So, our bill that says '25 or more people'
would be '25 or more people' in a community as defined in this."
MR. ROLFZEN answered that's correct. He said the population
threshold is set in statute, so "they would absolutely have to
have at least 25 year-round residents in order to get to the
point where we would actually even look at the social unit
definition."
9:49:37 AM
REPRESENTATIVE GRUENBERG clarified that he wanted to know which
of the two regulations the committee would "look at."
CHAIR SEATON stated that what the committee has before it is the
[DCCED] regulations that are used for all tax and municipal
revenue sharing. He said the letter of intent that he has
proposed would go forward and say: "Those are the regulations
we are going to use." He said Representative Gruenberg could
[uphold his objection].
REPRESENTATIVE GRUENBERG responded, "No, I'm not."
CHAIR SEATON asked if there was any further objection to the
letter of intent. [No further objections were stated and the
letter of intent was treated as adopted.]
9:50:20 AM
REPRESENTATIVE GATTO moved Amendment 3 as follows:
On page 2, line 1:
Delete "25"
Insert "50"
REPRESENTATIVE GATTO explained that he wanted the number to be
higher in order to avoid "some amount of abuse" that he said he
suspects would occur.
REPRESENTATIVE GRUENBERG objected. He asked the sponsor if
there were any groups that would be excluded as a result of
[Amendment 3].
9:51:30 AM
REPRESENTATIVE THOMAS said there is a list of population
included in the committee packet. He stated that he does not
know of any families with 25 people in them. He indicated that
he could trust [DCCED] to implement the regulations. He said,
"In fear of losing ... some of the smaller villages, I guess I
would oppose the amendment."
9:51:50 AM
REPRESENTATIVE THOMAS, in response to a question from Chair
Seaton, clarified that he does not have a list of population
bases for the unorganized [communities].
9:53:00 AM
REPRESENTATIVE THOMAS, in response to comments by
Representatives Gardner and Gruenberg, reiterated that he
opposes [Amendment 3].
9:53:57 AM
A roll call vote was taken. Representatives Gatto and Lynn
voted in favor of Amendment 3. Representatives Gruenberg,
Elkins, Ramras, and Seaton voted against it. [Representative
Gardner said, "pass" and was not asked to vote again.]
Therefore, Amendment 3 failed by a vote of 2-4.
9:54:05 AM
REPRESENTATIVE GRUENBERG moved to report CSHB 144, Version 24-
LS0517\F, Cook, 4/6/05, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 144(STA) was reported out of the
House State Affairs Standing Committee.
HB 201-PERM. FUND DIVIDEND APPS OF MILITARY
9:55:22 AM
CHAIR SEATON announced that the next order of business was HOUSE
BILL NO. 201, "An Act relating to an application for a permanent
fund dividend for a member of the armed forces of the United
States serving on active duty outside of the state; and
providing for an effective date."
REPRESENTATIVE LYNN moved to adopt the committee substitute (CS)
for HB 201, Version 24-LS0674\G, Cook, 4/5/05, as a work draft.
REPRESENTATIVE GRUENBERG objected for discussion purposes.
9:56:07 AM
CHAIR SEATON noted that the sponsor of the bill had objected "to
the amendment."
9:56:22 AM
ERICH DeLAND, Staff to Representative Mike Chenault, Alaska
State Legislature, testifying on behalf of Representative
Chenault, sponsor, stated, "We will accept this amendment at
this point."
9:56:37 AM
REPRESENTATIVE GRUENBERG offered Conceptual Amendment 1, which
would require the applicant to file an affidavit with the
division, "stating that they meet the requirements for that
year's PFD, which would be the intent to return." He clarified
that it could be filed anytime, including before the person
"left the states."
CHAIR SEATON asked if there was any objection to Conceptual
Amendment 1.
9:57:28 AM
MR. DeLAND, in response to Chair Seaton, indicated that the
sponsor would support [Conceptual Amendment 1].
9:57:36 AM
REPRESENTATIVE RAMRAS stated for the record that, if there were
more time, he would object to [Conceptual Amendment 1]; however,
he emphasized that he is "anxious to get [HB] 201 out of here to
protect our troops."
REPRESENTATIVE ELKINS responded, "Amen."
9:57:54 AM
CHAIR SEATON noted that [there being no objections, Conceptual
Amendment 1] was adopted.
CHAIR SEATON moved to adopt [Conceptual] Amendment 2, to add
language on page 1, line 12, after the word "eligible", to
indicate that the member of the armed forces can be eligible at
any time during the application period, not necessarily for the
whole period.
MR. DeLAND said the sponsor would support [Conceptual Amendment
2].
CHAIR SEATON announced that there being no objection,
[Conceptual Amendment 2] was adopted.
9:59:05 AM
REPRESENTATIVE GATTO directed attention to language on [page 1],
line 3, that read, "eligible for hostile fire or imminent danger
pay". He asked if that phrase is defined in military
regulations, "so that it's not someone else's decision, but
clearly a military decision."
REPRESENTATIVE GRUENBERG responded, "The answer is 'yes'."
9:59:19 AM
REPRESENTATIVE LYNN stated that he would like to see the bill
broadened, but would also like to see it moved from committee.
REPRESENTATIVE LYNN moved to report CSHB 201, Version 24-
LS0674\G, Cook, 4/5/05, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, CSHB 201(STA) was reported out of the
House State Affairs Standing Committee.
HB 177-STATE EMPLOYEE RETIREMENT CONTRIBUTIONS
10:00:14 AM
CHAIR SEATON announced that the last order of business was HOUSE
BILL NO. 177, "An Act relating to employee and employer
contributions to the teachers' retirement system and the public
employees' retirement system; and providing for an effective
date."
CHAIR SEATON said the bill looks at the distribution of past
service costs between employers and employees. He said he knows
the full committee is not in agreement over the bill, but
nevertheless would like to see the committee move the bill out
of the House State Affairs Standing Committee and let the House
Finance Committee work on it.
CHAIR SEATON [moved to report HB 177] out of committee with
individual recommendations and the accompanying fiscal notes.
REPRESENTATIVE GRUENBERG objected. He explained, "I don't think
we're ready to move these pension bills yet."
CHAIR SEATON said the committee would have the "full range of
pension elements" before it. He said there are questions about
the constitutionality of HB 177 and he would like to see the
House Finance Committee work on the bill. In response to a
suggestion by Representative Gruenberg that the bill should be
heard by the House Judiciary Standing Committee if it has
questionable legality, he said that committee's chair could
request to hear the bill.
REPRESENTATIVE GRUENBERG said he would remove his objection to
moving the bill if the committee clearly states that it wants
the bill heard by the House Judiciary Standing Committee prior
to its being heard by the House Finance Committee.
REPRESENTATIVE GARDNER concurred.
CHAIR SEATON said, "That will be fine with me."
REPRESENTATIVE GRUENBERG removed his objection.
CHAIR SEATON announced that, there being no further objections,
HB 177 was moved out of the House State Affairs Standing
Committee with individual recommendations, the accompanying
fiscal notes, and a letter to the Speaker of the House
requesting a House Judiciary Standing Committee referral.
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 10:04
a.m.
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