Legislature(2017 - 2018)ADAMS ROOM 519
04/10/2018 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB385 | |
| HB316 | |
| SB97 | |
| SB107 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 397 | TELECONFERENCED | |
| + | HB 385 | TELECONFERENCED | |
| += | SB 97 | TELECONFERENCED | |
| += | HB 216 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 107 | TELECONFERENCED | |
| += | HB 316 | TELECONFERENCED | |
| += | HB 306 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 10, 2018
1:36 p.m.
1:36:46 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Paul Seaton, Co-Chair
Representative Les Gara, Vice-Chair
Representative Jason Grenn
Representative David Guttenberg
Representative Scott Kawasaki
Representative Dan Ortiz
Representative Lance Pruitt
Representative Steve Thompson
Representative Cathy Tilton
Representative Tammie Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Shea Siegert, Staff, Representative Jason Grenn; Emily
Nauman, Attorney, Legislative Legal Services;
Representative Harriet Drummond, Sponsor; Patrick
Fitzgerald, Staff, Representative Harriet Drummond; Nancy
Meade, General Counsel, Alaska Court System; Kaci
Schroeder, Assistant Attorney General, Criminal Division,
Department of Law; Senator Anna MacKinnon, Sponsor; Deven
Mitchell, Executive Director, Alaska Municipal Bond Bank
Authority; Rob Carpenter, Analyst, Legislative Finance
Division.
PRESENT VIA TELECONFERENCE
David Gibbs, Fairbanks North Star Borough, Director of
Emergency, Fairbanks; Kathryn Monfreda, Chief, Criminal
Records and Identification Bureau, Department of Public
Safety, Anchorage.
SUMMARY
HB 316 RESTRICT ACCESS MARIJUANA CRIME RECORDS
CSHB 316 (FIN) was REPORTED out of committee with
an "amend" recommendation and with one new zero
fiscal note by the Department of Public Safety
and one previously published zero fiscal note:
FN1 (JUD).
HB 385 ENHANCED 911:MULTI-LINE TELEPHONE SYSTEMS
HB 385 was HEARD and HELD in committee for
further consideration.
SB 97 PENSION OBLIGATION BONDS
HCSSB 97 (FIN) was REPORTED out of committee with
a "do pass" recommendation and with a new zero
fiscal note by the Department of Revenue.
SB 107 ALASKA CAPITAL INCOME FUND
SB 107 was REPORTED out of committee with a "do
pass" recommendation and with a new zero fiscal
note by the House Finance Committee.
Co-Chair Foster reviewed the agenda for the day.
HOUSE BILL NO. 385
"An Act relating to multi-line telephone systems."
1:38:03 PM
REPRESENTATIVE JASON GRENN, SPONSOR, proudly served
District 32.
SHEA SIEGERT, STAFF, REPRESENTATIVE JASON GRENN, introduced
himself.
Representative Grenn reviewed the legislation. He read from
a prepared statement:
Alaskan residents have relied on dialing 911 to reach
local emergency services for decades. Enhanced 911
(E911) is a service that automatically displays the
telephone number and physical location of the 911
caller on the emergency operator's screen. This is
unlike Basic 911 service, where the distressed caller
must tell the operator where he or she is calling
from. E911 is crucial in circumstances where the
caller cannot communicate their whereabouts, as it
ensures the operator is still able to send emergency
response services to the correct location. With the
advancement of technology, E911 has significantly
improved the effective delivery of critical public
safety and emergency response services across the
State.
There is a large segment of E911 end-users in Alaska
using Multi-Line Telephone Systems (MLTS). These
systems do not have the same level of E911 safety
protections as small business and residential systems.
MLTS connects dozens, hundreds, or thousands of
"extension" phones to a central, computerized
telephone "switchboard". MLTS are frequently used by
government agencies, banks, hotels, health care
facilities, and schools.
When individuals call 911 from a phone in Multi-Line
Telephone System, that system may only relay the
physical street address of the facility's main
building or the address of the building in which the
MLTS is located. However, it may not provide more
specific information about where the distressed
individual is physically located, such as a building
number, floor number, or room number. When callers are
also unable to provide their specific location,
because they are either unaware of their exact
location or are physically unable to convey the
information, emergency responders face avoidable
delays that can result in tragedies.
House Bill 385 will help ensure 911 dispatchers
receive accurate location information so emergency
responders will not be delayed while trying to find
the emergency caller in need. HB 385 gives
municipalities the option to require MLTS operators in
their region to provide an Automatic Location
Information (ALI) record for every telephone capable
of dialing 911. By automatically providing specific
location information through the 911 system, emergency
operators can immediately dispatch fire, police, or
EMS responders to the caller's location, even when
that person is incapacitated. This requirement would
apply only to new MLTS installations or upgrades to an
existing MLTS.
Alaskans depend on fast and reliable access to public
safety resources when faced with emergency situations.
I urge your support for House Bill 385.
Representative Grenn indicated his staff, Mr. Siegert,
would review the sectional analysis.
1:41:15 PM
Mr. Siegert read the sectional analysis from a prepared
statement:
Section 1:
This section provides a municipality the ability to
opt-in to requiring a multi-line telephone system
operator to comply with the provisions in this bill.
The first section also states that the operators must
comply with the provisions when they install a new
multi-line telephone system or make upgrades to an
existing multi-line telephone system.
Section 2:
• Paragraph (b) Subpoint (1): requires a multiline
telephone system have direct dial access to a
public safety answering point.
• Paragraph (b) Subpoint (2): requires the
multiline telephone system to provide automatic
number and location information for the call
being placed to the public safety access point.
• Paragraph (c): provides that any information in
the location database is owned by the MLTS
operator and may not be shared unless required by
law and may not be used by a public safety
answering point for any purpose except to
facilitate an emergency response to a 911 call.
• Paragraph (d): provides for systems that are
exempt under section one of this bill to have
signage which gives clear and readable directions
on:
• How to dial a public safety answering point
that includes the pertinent location
information of the caller.
• Paragraph (e): defines the pertinent terms
Representative Grenn was available for questions. He
conveyed that Emily Nauman was available from Legislative
Legal Services was available to testify.
Co-Chair Foster reviewed the list of testifiers online.
1:44:41 PM
Representative Kawasaki mentioned that the bill talked
about the municipalities having to opt-in. He asked about
the conditions in which they wound not have to opt-in.
Representative Grenn deferred to his staff.
Mr. Siegert indicated that municipalities opted in on a
voluntary basis. A municipality would not opt-in if it was
going to incur an extreme cost, did not have access to 911
operations, or if they were an unorganized borough without
access to 911 service. If they found that their private
businesses would incur an abnormally large cost to
implement the system, they might not opt-in. For all other
purposes he did not foresee a municipality turning down an
ordinance to opt-in if they had the capabilities to do so.
Representative Kawasaki asked if a municipality would be
impacted if they wanted to upgrade but not to a multi-line
system. Mr. Siegert responded in the negative. He reminded
members that Carrie's Law, HR 582, was signed into law by
President Trump in February 2018. The law provided that
after 2020 all multi-line telephone systems sold and
manufactured in the United States would be required to have
911 capabilities. He suggested that most multi-line systems
had the capability.
Representative Kawasaki asked about the potential costs for
a multi-line system upgrade. He wondered who would be
responsible. Representative Grenn responded that one of the
best things about the bill was that the costs were minimal.
For some, it would not cost anything - especially if it was
a matter of a software update. For others it could cost $25
per phone.
Representative Wilson asked if the bill was limited to
municipalities. Mr. Siegert responded in the affirmative.
He indicated that most unorganized boroughs did not have
access to 911 or 911 enhanced services and would not opt-
in. If an unorganized borough needed to opt-in, they would
have to go to the state. He deferred to Ms. Nauman to
elaborate.
1:49:49 PM
EMILY NAUMAN, ATTORNEY, LEGISLATIVE LEGAL SERVICES,
understood Representative Wilson's question to be whether
the bill applied or how the bill applied to an unorganized
borough. She informed members that an unorganized borough
was technically governed by the state legislature. The
unorganized borough had no authority by itself to enact
ordinances that required an enhanced multi-line telephone
system. She suggested that if the legislature wished the
requirement to apply to an unorganized borough, it would
have to enact a law.
Representative Wilson asked if the legislature would be
giving boroughs and cities a power they did not have. Ms.
Nauman directed attention to the bill. The bill showed some
of the powers that they already had related to an enhanced
911 system. The bill amended those powers.
Representative Wilson asked if they currently had the
powers. Ms. Nauman thought the sponsor would be able to
better detail the specific changes made in the bill. The
municipalities had the ability to elect an ordinance
related to an enhanced 911 system. She was not as familiar
with all the details of the current law.
Mr. Siegert responded that Representative Hawker introduced
legislation that passed in 2005, HB 249 [Short Title:
Enhanced 911 Surcharges and Systems], that was supposed to
give the Regulatory Commission of Alaska (RCA) the ability
to implement and regulate the 911 system. The problem that
came from the 10-year docket open from 2005 to 2015 was
that (cited in R-05-005 order no. 7) the RCA did not have
the requisite authority to do so. He provided a quote from
the former Attorney General, "Since the specific delegation
in AS 29.035 only authorizes the agency to define generally
accepted industry standards for E911, we lack the requisite
authority to enforce those standards by resolving
disputes." House Bill 249 did not give the RCA the
requisite authority to enforce and implement the generally
accepted standards they agreed upon. Another conflict the
RCA had during the 10-year open docket was finding a waiver
system that would not be overly burdensome on certain
borough versus others. The basis of passing legislation to
provide an opt-in municipal ordinance was to give every
borough local control of the provisions in the bill to
avoid becoming overly burdensome on one borough over
another.
Representative Wilson asked if the legislature was giving a
borough power that they did not currently have. She
wondered if she was correct. Mr. Siegert thought she was
correct.
1:53:38 PM
Representative Wilson figured it was up to the city or
borough to determine the strictness of the ordinance. She
wondered if the municipality would determine the number of
lines in a multi-line system that would be required. She
wondered how far the bill would reach into small
businesses. Representative Grenn thought Ms. Nauman could
respond best to Representative Wilson's question.
Emily Nauman explained that the bill was a take-it or
leave-it bill. The municipality did not have the authority
to adopt something slightly different than what was in the
bill. They had to adopt their ordinance in accordance with
the rules set out in the bill. She suggested that anything
shy of it or anything that directly conflicted with what
was in the bill would likely cause a preemption problem;
the state law would directly conflict with the municipal
ordinance. She noted that the municipal ordinance would
likely be thrown out by a court. In terms of the number of
telephone lines, she referred to the definition of
multi-line systems on page 4 of the bill, starting on line
20. It did not specify a number of telephone lines. she
reported that in the past the Alaska Supreme court upheld a
"narrow, but reasonable" interpretation of this type of
law. There was some room for a municipality to determine
how many lines constituted a multi-line system.
Representative Wilson suggested that if an entity had a
multi-line system like the one she had at her own business,
they would end up bearing the cost depending on how the
ordinance was written. Ms. Nauman did not have a comment
except to reiterate her earlier response that the bill was
silent on how many phones constituted a multi-line phone.
There might be some flexibility for a municipality to flush
it out in its ordinance.
Representative Wilson originally thought the bill was only
for places such as major hotels that would upgrade. She
wondered if an impact study had been conducted for smaller
businesses. She asked the sponsor to distinguish between
large and small businesses. Representative Grenn replied
that he did not have any information regarding a study on
the impacts of the bill. He had previously spoken about the
cost of upgrading a line. There was no difference between
any 911 software in the multi-line telephone system or $15
to $20 per line. He reported that Mr. Gibbs was online and
could comment.
1:58:02 PM
DAVID GIBBS, FAIRBANKS NORTH STAR BOROUGH, DIRECTOR OF
EMERGENCY, FAIRBANKS (via teleconference), introduced
himself.
Representative Grenn repeated his question concerning the
cost of upgrading a small business with a smaller
multi-line system. Mr. Gibbs responded that the cost would
likely be nothing. It would simply be the cost of the labor
to provide the information to the 911 authority for
inclusion in the automatic location information database.
Representative Wilson asked about costs associated with new
upgrades. She thought businesses might be forced to
purchase new phones and software. She wondered how many
places would be affected in the North Star Borough. Mr.
Gibbs was unsure how many small businesses would be
affected by the legislation. He clarified that there were a
number of services for small businesses. He thought a cost
of $20 to $25 cost per handset per month might apply when a
business wanted to subscribe to a phone system on the
Cloud. He had done some research on the internet and found
a cost between $10 and $30. The cost included the handsets,
the switching, and the database maintenance. The bill did
not require a business to upgrade their systems.
2:00:21 PM
Co-Chair Foster OPENED public testimony.
2:00:44 PM
Co-Chair Foster CLOSED public testimony.
Representative Wilson asked if the bill included the
military. Mr. Siegert deferred to Ms. Nauman. Ms. Nauman
responded that she would be skeptical if a municipal
ordinance could affect the telephone requirements on
federal property, particularly a military base. However,
she was not certain. Representative Wilson asked Ms. Nauman
to find out the answer to her question.
HB 385 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 316
"An Act relating to the sealing of certain court
records; restricting the publication of certain
records of convictions on a publicly available
website; relating to public records; and amending Rule
37.6, Alaska Rules of Administration."
2:02:30 PM
Co-Chair Foster indicated the committee last heard the bill
on March 30, 2018. At the hearing the committee heard an
introduction of the bill and closed public testimony. The
committee had a committee substitute (CS), version N. There
was also one amendment. He asked the bill sponsor to
address the changes in the CS.
REPRESENTATIVE HARRIET DRUMMOND, SPONSOR, introduced
herself. She deferred to her staff to explain the changes
from the previous version of the bill.
PATRICK FITZGERALD, STAFF, REPRESENTATIVE HARRIET DRUMMOND,
introduced himself and reviewed the changes to the bill.
The first change in Section 1 was to allow an opt-in
program through the Department of Public Safety (DPS). The
reason for the change was because it would reduce the
burden and cost for DPS placing it on the person who wanted
to classify their record. Another change that was made was
the elimination of Sections 4 and 5, the indirect court
rule. It was inserted with the original legislation to
error on the side of caution, but the legislation would not
interfere with the court rule. Section 3 was also
eliminated. It accomplished what other parts of the bill
already accomplished.
Representative Wilson referred to page 1. She asked for
clarification for the cost decreasing. Mr. Fitzgerald
responded that DPS already had the form.
2:05:39 PM
KATHRYN MONFREDA, CHIEF, CRIMINAL RECORDS AND
IDENTIFICATION BUREAU, DEPARTMENT OF PUBLIC SAFETY,
ANCHORAGE (via teleconference), asked Representative Wilson
to repeat her question.
Representative Wilson thought the department was going to
have to look at the cases. She wondered if the person
initiating the change would have to complete a from. Ms.
Monfreda responded that she was correct. Rather than
flagging the records, the department would wait until
someone came to the department. She thought the department
could absorb the work without needing extra people.
Representative Wilson asked if the person would be required
to show that there were no other charges at the time. Ms.
Monfreda believed the information would already be in their
files. The department would know if there were other
charges involved. The department would be asking the person
to prove that the amount was less than an ounce of
marijuana and that there were no other charges in the case.
Co-Chair Seaton MOVED to ADOPT proposed committee
substitute for HB 316, Work Draft (30-LS1017\N).
There being NO OBJECTION, it was so ordered.
Representative Wilson MOVED to ADOPT Conceptual Amendment 1
(30-LS1017\U.3) (copy on file):
Page l, line I 0, following "substance":
Insert "and was not charged with any other crime
in that case"
Page l, line 13:
Delete all material and insert:
"(3) has not been convicted of any other
charges since the conviction under (I) of
this subsection."
Page 2, line 6, following "substance":
Insert "and was not charged with any other crime
in that case"
Page 2, line 9:
Delete all material and insert:
"(3) has not been convicted of any other
charges since the conviction under (I) of
this subsection."
Page 4, lines 22 - 23:
Delete "and was not convicted of any other
charges in that case"
Insert", was not charged with any other crimes in
that case, and has not been convicted of any
other charges since that conviction"
Representative Grenn OBJECTED for discussion.
Representative Wilson read the amendment (copy on file).
The amendment outlined that the charge could be the only
thing on a person's record in order to have it sealed. If a
person had been charged and found guilty of other things,
it would not make a difference whether other things
appeared on someone's record. She was okay with the idea of
a person with only one charge having their record sealed.
However, she opposed the notion of someone with multiple
offenses having a record sealed, as it showed a pattern.
Representative Ortiz asked if the amendment sealed only the
one item having to do with past use of marijuana. He
wondered what was gained.
2:10:11 PM
Representative Wilson suggested that what was brought up by
the representative was that a person would have a black
mark on their record. People having something on their
record made it difficult to find employment at a job
requiring a background check. She wondered why something
would be removed from a person's record if they already had
other things listed. She was fine with having a record
sealed if it was their only offense.
Representative Ortiz asked about the intent of the
amendment. He wondered if the record would be reopened once
any additional records came into play. Representative
Wilson responded that there was no retroactivity of the
bill.
Co-Chair Foster asked the sponsor if she had an opinion on
the amendment. Representative Drummond clarified that
charges were different from convictions. The amendment
appeared to insert, "and was not charged." She believed the
issue was already covered in the bill on line 13, page 1.
The intent of the bill was not to cover for bad actors of
other acts of violence or other whatever other criminal
acts they had on their record. She did not believe the bad
actors would be looking to have their marijuana possession
crime hidden if they had several other things on their
record. If they were to remove their marijuana conviction
they would still be bad actors. They were not the people
the state was seeking to assist in reentering society.
Representative Wilson requested that Ms. Mead come to the
table.
2:14:47 PM
NANCY MEADE, GENERAL COUNSEL, ALASKA COURT SYSTEM, thought
the amendment narrowed the number of people that the bill
would apply to in two different ways. First, the person
could not have been charged with any other crimes. She
thought this addressed the question Representative Wilson
brought up at the previous hearing. For example, a person
might be charged with possession of meth and possession of
marijuana but only convicted of possession of marijuana. As
she read the amendment, it would exclude the people with
other charges in the case. The only people that would have
their names taken off CourtView would be the ones that were
not charged with anything else but possession of marijuana
and then convicted. Second, a person could not have been
convicted of any other crime since the conviction.
Ms. Mead noted that with respect to the numbers, there were
about 700 cases in CourtView since 2007. Prior to 2007 it
was difficult to obtain data. Marijuana possession became
legal in 2015. Most of the cases stopped at that time. Of
the 700 cases, 568 had no other charges when they ended up
with a conviction for simple possession of marijuana.
However, of those 568 about 72 percent had other crimes in
the database, about 400 cases. She concluded that about 160
people since 2007 would be excluded from CourtView under
the wording of the amendment.
Ms. Mead wanted to make sure everyone knew what the court
would do with Section 2 of the bill. It was different from
a prior version in that it no longer made the cases
confidential. The cases would no longer appear in
CourtView. The prior version had confidentiality, meaning
the court would not also hand out the paper file. In the
current version the record would not be available on the
court website, but the file would still be public under
Section 2 of the bill. She wanted to make sure there was no
misunderstanding when and if the court implemented the
wording.
Vice-Chair Gara understood that a person would not benefit
from the amendment if a person was 21 years or older and
was expunging their record because marijuana was legal. He
indicated he had been interrupted and was told he was
incorrect. He asked for clarification from Ms. Mead.
Ms. Mead relayed that the amendment was not expungement.
Rather, the amendment would take the record off of
CourtView automatically on the effective date. The file
would still be available at the court house. Secondly, if a
person actively walked into DPS and asked that their record
not be released in a general background check, then DPS
would not release the information if the person fit into
the categories that had been discussed.
Vice-Chair Gara suggested that the way the bill was written
a person's record would not be on CourtView if they had a
prior conviction for just possessing marijuana because it
was currently legal. The bill also indicated that if a
person was convicted of something else at the time, the
record would be available on CourtView. The conceptual
amendment included that if a person was charged with
something and the charge was dropped, the information would
remain available on CourtView. He asked if he was correct
about what was being proposed in the conceptual amendment.
2:19:20 PM
Representative Wilson relayed that the amendment did 2
things. First, if a person was charged with another crime
but not convicted, they would not fall under the bill.
Second, if a person had been convicted since the time of
conviction, the person would not be able to have their
record removed from CourtView.
Vice-Chair Gara opposed the conceptual amendment. Sometimes
people were charged with something they did not do.
Although his experience in criminal law was limited, he had
had a client charged with kidnapping, but later the charges
were dropped. He was very uncomfortable with the amendment
and felt it gutted the bill. A later conviction would show
up on CourtView. He did not see the benefit of the
amendment unless people were seen as guilty until proven
innocent. In his world people were innocent until proven
guilty. He furthered that when a charge was dropped, it was
dropped. He continued that when a person was convicted,
they were convicted.
Representative Wilson clarified that the charge part only
had to do with the first case. She provided an example. She
offered the amendment to provide a way for someone who had
only been charged with something that was now legal, to
remove it from their records. She continued that other
convictions would establish a pattern. She did not think a
person should get rewarded if they could not stay out of
trouble since the initial conviction. Mr. Fitzgerald
deferred to Ms. Monfreda.
Ms. Monfreda did not believe the amendment would have a
huge effect on public safety in terms of redacting the
information. She thought it would make programming more
complicated.
Co-Chair Seaton asked if it would count as another charge
if someone had a possession charge and a speeding violation
at the same time. He relayed a hypothetical scenario. He
asked if there would be an additional charge for a traffic
violation. He wondered about a marijuana charge being
removed from someone's record. Representative Wilson
replied that if there was an additional charge at the same
time the marijuana was found, then the marijuana charge
could not be removed. She thought it would make it more
complicated to try to distinguish between the charges.
2:24:42 PM
Ms. Mead explained that when a law included the verbiage
"any other crime" the court interprets that not to include
minor offenses. In the case of the example, the violation
would not be considered a crime. Along similar lines, if a
person was charged with speeding, a minor offense, as well
as the crime of possession of marijuana, it would not
disqualify the case. On the other hand, if a person had not
been convicted of any charges since the conviction, if the
intent to mean criminal charges, it might be something that
could be clarified in the conceptual amendment being
discussed. She thought it might make the amendment clearer
to specify "not convicted of any other crimes or criminal
charges." It would help to clarify that the amendment was
not intended to include minor offences such as traffic
infractions.
Co-Chair Seaton was uncertain how many people had been
charged with simple possession more than once. He asked if
a person was charged with simple possession more than once,
would it mean that their record could not be hidden from
CourtView. Ms. Mead had not anticipated his question and
did not have the data of the 700 cases of just marijuana
possession. She could look into it and provide data. She
did not believe the number would be particularly high.
Co-Chair Seaton thought it could be something like people
using alcohol.
Representative Guttenberg provided a hypothetical scenario.
He wondered at what point a violation was written up. Ms.
Mead was not qualified to answer the question. She deferred
to the Department of Law.
2:28:51 PM
KACI SCHROEDER, ASSISTANT ATTORNEY GENERAL, CRIMINAL
DIVISION, DEPARTMENT OF LAW, replied that once charges were
filed in court, the person was viewed as being charged from
the court's perspective. The prosecutor might get the case
and make different charging decisions. Therefore, the
charges could change. However, once the charges were filed
in court by either the officer or the prosecutor the
individual was viewed as being charged.
Representative Wilson MOVED to ADOPT Conceptual Amendment 1
to Conceptual Amendment 1. She proposed to delete the word
"Charges" on line 20 and insert the word "Crimes."
Representative Pruitt OBJECTED for discussion.
Representative Pruitt asked for clarification.
Representative Wilson responded that she wanted to use the
word "crimes" rather than "charges" on line 20. She was not
talking about things like speeding violations. She was
talking about actual crimes.
Co-Chair Foster asked her to repeat Conceptual Amendment 1
to Conceptual Amendment 1. Representative Wilson repeated
the conceptual amendment. The amendment would read: "and
had not been convicted of any other crimes since that
conviction." She clarified that conviction was about a
conviction of marijuana.
Representative Drummond was confused. She believed the CS
that was adopted was only 2 pages long. Representative
Wilson's amendment referred to the previous version which
was no longer in front of the body. Representative Wilson
responded that that was the reason for her conceptual
amendment.
Co-Chair Foster asked Representative Wilson to repeat her
amendment to Conceptual Amendment 1 again. Representative
Wilson relayed that Amendment 1 to Conceptual Amendment 1
on line 20 of Conceptual Amendment 1. The word "charges"
would be changed to "crimes." She was not talking about
speeding tickets or infractions.
Ms. Mead responded that by changing the word "charges" to
"crimes" at the bottom of Representative Wilson's
amendment, it would address what Co-Chair Seaton brought up
about a violation. She suggested, as a measure of
housekeeping, line 6 should probably reflect the same
language.
Representative Wilson clarified her Conceptual Amendment 1
to Conceptual Amendment 1. The word "charges" would be
changed to "crimes" on line 6 and line 20.
Representative Guttenberg asked if the conceptual amendment
was relative to the CS.
2:33:26 PM
AT EASE
2:34:47 PM
RECONVENED
Ms. Schroeder conveyed that the conceptual amendment was
adding language that stated, "was not charged with any
other crimes in that case and has not been convicted of any
other crimes since that conviction. She indicated that the
language needed to be added in Section 1 on line 13 under
4. It would replace number 4. In Section 2 of the CS on
page 2, on line 9 would replace 3.
Representative Pruitt WITHDREW his OBJECTION
Representative Ortiz OBJECTED.
Representative Ortiz WITHDREW his OBJECTION.
Conceptual Amendment 1 to Conceptual Amendment 1 was
Adopted.
Vice-Chair Gara relayed that in his experience, the most
frequent times where a charge was later dropped was when
law enforcement thought one person was responsible, when
another person was really responsible. He provided a
hypothetical scenario. He concluded that a person should
not be penalized from taking advantage of the benefit
provided in Representative Drummond's bill when a mistaken
charge was later removed.
Representative Wilson was not comfortable because plea
bargains happened frequently. She asked for member support.
Representative Grenn MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Thompson, Tilton, Wilson, Pruitt.
OPPOSED: Gara, Grenn, Guttenberg, Kawasaki, Ortiz, Foster,
Seaton.
The MOTION to ADOPT Conceptual Amendment 1 as amended
FAILED (4/7).
Co-Chair Foster relayed that there were no other amendments
for HB 316. He asked Vice-Chair Gara to review the fiscal
notes.
Vice-Chair Gara reviewed two fiscal notes for HB 316. The
first fiscal note had a zero impact and was from Judiciary.
The appropriation was the Alaska Court System and the
allocation was Trial Courts. The Office of Management and
Budget (OMB) component number was 768. The second fiscal
note by the Department of Public Safety had an
appropriation of Statewide Support and an allocation of
Criminal Justice Information Systems Program. The OMB
component number was 3200. The note reflected the previous
version of the bill. He indicated someone from DPS could
speak to the accuracy of the fiscal note for the current
version of the bill. Ms. Monfreda replied that the
department would be submitting a revised fiscal note for
the new version of the bill. Co-Chair Foster reiterated
that there would be a forthcoming fiscal note.
2:41:48 PM
Co-Chair Seaton MOVED to report CSHB 316 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal notes.
Representative Wilson OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Gara, Guttenberg, Kawasaki, Ortiz, Thompson,
Seaton, Foster
OPPOSED: Tilton, Wilson, Pruitt
The MOTION PASSED (8/3).
CSHB 316 (FIN) was REPORTED out of committee with an
"amend" recommendation and with one new zero fiscal note by
the Department of Public Safety and one previously
published zero fiscal note: FN1 (JUD).
2:42:59 PM
AT EASE
2:43:42 PM
RECONVENED
SENATE BILL NO. 97
"An Act relating to pension obligation bonds."
2:43:49 PM
Co-Chair Foster relayed that the last time SB 97 was heard
was April 19, 2017. At that hearing the committee heard
public testimony and called for amendments. There was one
amendment the committee would be addressing. He invited the
bill sponsor to refresh the committee about the bill.
SENATOR ANNA MACKINNON, SPONSOR, relayed that the bill
before the committee addressed a reduction of pension bond
authority. The bill proposed to move the pension obligation
authority from $5 billion to $2.5 billion. It required
those entities that had the authority to issue pension
obligation bonds (POB) to submit a proposal to the
Legislative Budget and Audit Committee outlining their
proposal. She recalled that the administration proposed use
and started shopping to sell pension obligation bonds.
There was some consternation in Alaska communities and
among legislators in both houses to know whether the sale
would affect the state's credit rating, how it would work
in the market, and what it would do to Alaska's pension
plans. She continued that included in the legislation was a
process that gave the legislature the time necessary to
actually respond and interact with the general public.
Hence, taking the acquisition or proposal that might come
to the Legislative Budget and Audit Committee. The
administration supported the bill before the committee, as
it still left the tool available to the administration to
address pension shortfalls but reduced the authority by
$2.5 billion.
Representative Wilson asked why the bill sponsor settled on
the amount of $2.5 billion. Senator MacKinnon responded
that the number was a compromise. There were some
legislators that thought the possibility of borrowing
should be eliminated altogether. She continued that when
the Senate Finance Committee started looking at the
proposal and the actions of the administration, she went to
the governor asking for his thoughts about available
authority. In conversations with the senate, she had been
talking about what could be done with an in significant
amount available to the legislature to bolster Alaska's
credit standing with outside national credit rating
agencies. Some of the conversations were around reducing
outstanding bonds that Alaska could put out. The idea was
to show the market that the state was going to handle its
debt very responsibly. She indicated that she and the
governor had discussed a number. She chose the number
rather than the governor. The number was close to the
number the administration sought in the market in the
previous year. She believed that they were acquiring around
$2.1 billion to $2.2 billion. She conveyed that $2.5
billion was within the initial figure considered to meet an
unfunded liability.
Senator McKinnon furthered that the second reason was
because currently the state had about a $6.6 billion
unfunded liability in the Public Employees' Retirement
System (PERS) and Techers' Retirement System (TRS)
combined. That was with a criteria of an 8 percent rate of
return and a mortality rate that needed to be changed. If
the percentage currently being used to amortize the state's
debt over a period of time adopted in state statute, $2.5
billion represented almost 50 percent. If the state owed
$6.6 billion then $3.3 billion would be 50 percent of the
unfunded liability handled through debt. In working with
the House Finance co-chairs as well as having conversations
with the administration and the debt service manager, she
recommended to Senate Finance that a $2.5 billion reduction
be sent to the House side. She concluded that there were
multiple reasons for the amount of $2.5 billion.
2:48:46 PM
Co-Chair Seaton MOVED to ADOPT Amendment 1 (copy on file):
Page 3, line 17 following "2,500,000,000":
Insert "or a funding ratio of actuarial assets to
accrued liability greater than 85 percent,
whichever is less"
Representative Wilson OBJECTED for discussion.
Co-Chair Seaton reviewed the amendment. He indicated the
purpose was to make sure the bonds did not take the state's
assets to the 100 percent or 105 percent. There was a
provision in statute that if the state reached 105 percent
of value, the state would have to pay out additional money
into the post-retirement pension adjustment to retirees. He
relayed that it made sense in a situation where retirees
had put their money in and the period that would have
earned money over time. If it earned more than 8 percent,
the funding ratio would be greater. In such an instance, he
suggested it would make sense to bump up retirement by
giving a post-retirement pension adjustment in addition to
the cost of living adjustment (COLA) increase retirees
received. In the case of doing bonds, the state would be
taking general fund monies and putting them into the
retirement system. However, if the state reached the 105
percent funding, it would be required to give the money to
the retiree. The amendment made sure the state kept the
funding ration in a range that was very stable and useful
without passing general fund money for bonds that would be
sold and deposited. He had tried a number of different ways
to insert language so that there would be a waterfall. It
would ensure that the fund grew on its own investments
instead of taking general funds.
2:51:29 PM
Representative Guttenberg wondered if there was an
alternative to increasing the payout once the state reached
105 percent. Once the amount was increased it could not be
reversed. He wondered if the state had the flexibility to
do something different. Co-Chair MacKinnon believed the
retirement pension board had the authority to look at
benefits if the funding went beyond 105 percent. She
referred to the amendment on page 3, line 17 following the
$2.5 billion. She suggested inserting the words "or a
funding ratio of actuarial assets to accrued liability
greater than 85 percent, whichever is less." She asked if
she was looking at the correct amendment copy. She
explained that $2.5 billion would be the maximum allowable
debt to service the unfunded liability. She and Co-Chair
Seaton had talked about the issue that was in state statute
where the state had been paying for a number of years,
specifically on the PERS and TRS side, additional
contributions above 22 percent or the 12.56 or 12.58
percent for TRS. The state had invested heavily in
additional funding of state support for these systems with
the recognition that the state's liability was to about 60
percent of the overall system in its entirety (100 percent
on the TRS side and a percent on the PERS side). The
amendment was a safeguard for all in the scenario that the
outside markets would look at. She continued that for that
reason she would support the amendment and ask for support.
She hoped Mr. Mitchell could speak to confirm whichever
number was lower to avoid decreasing the state's liability
enough to overfund the system.
2:55:12 PM
DEVEN MITCHELL, EXECUTIVE DIRECTOR, ALASKA MUNICIPAL BOND
BANK AUTHORITY, agreed that the amendment was in line with
the goals of the transaction envisioned by the
corporation's board and the Department of Revenue (DOR)
throughout the various administrations that had considered
POBs. The target he had was a maximum not to exceed amount
of 90 percent. He thought 85 percent was a reasonable
alternative to 90 percent. It was probably slightly more
conservative in the event there were strong returns in the
years following a pension obligation bond issuance. There
could be an outcome of an overfunding situation. He was not
as confident as Senator McKinnon that the ARM Board had the
ability to diminish benefits to past employees. He thought
those benefits were strongly protected. Unfortunately, even
though it made sense if there was extra money put in, it
was his personal belief, that those employees could demand
a post retirement payment if the funding went up 105
percent or greater. He suspected that the court would side
with the retirees.
Co-Chair Seaton thought there was a misunderstanding. He
had heard Senator McKinnon saying the same thing he had
said. They had looked at all of the ramifications but found
that once the amount was there it could only flow to
pensions. A pension plan could not be diminished. The
federal restrictions were tight so that no one could
diminish benefits. Co-Chair MacKinnon clarified that
retired Alaskans were guaranteed their benefits. Her
response was to the 105 percent funding liability that if
the state went above, it could add additional benefits in
response to Representative Guttenberg's question. She
relayed that the retirement board had the ability to add
but not to diminish benefits under existing state law and
supreme court rulings. A vote of the people of Alaska would
be required.
Representative Wilson WITHDREW her OBJECTION.
There being NO OBJECTION, Amendment 1 was ADOPTED.
2:58:53 PM
Co-Chair Seaton MOVED to ADOPT Conceptual Amendment 2.
Page 3, line 17
Delete: "$2,500,000,000"
Insert "$1,500,000,000"
Representative Wilson OBJECTED for discussion.
Co-Chair Seaton had talked with the bill sponsor and with
Mr. Mitchell. He wanted to have them come to the table.
There was general agreement that $1.5 billion was an
acceptable amount and remained a powerful tool that could
be used and also lowered the amount of debt the state had.
Co-Chair MacKinnon responded that she was not opposed to
the change. The only issue she wanted consideration for was
the number she brought before the committee. She had run
the number by the administration and had support for $2.5
billion. She reported that there were members in the Senate
that thought the number should be zero. She agreed that
$1.5 billion was a more conservative number. The bond
rating agencies would see the action favorably because it
was taking another $1 billion away from the state to indebt
itself. She thought it would remain a functioning tool
available to the administration. She also believed it would
bring more comfort to Alaskans in placing the state's
unfunded liability into a bond market.
Representative Pruitt referred to the actuarial worksheet
in members packets (copy on file). He believed the $1.5
billion amount would restrict the state from being able to
use the pension obligation bonds. He highlighted that the
state would cross the 85 percent mark before the $1.5
billion was available. He asked Mr. Mitchell to explain how
the change would affect the state's ability to use the
bonds. He wondered if the state should get rid of them
altogether. Mr. Mitchell responded that he had not recently
reviewed the actuarial worksheets. He explained that it was
based on total liability rather than just the state's
portion. If the total liability was $6.5 billion, he
thought the state would still have the ability to use the
$1.5 billion. He would have to review the numbers. He
thought the system's funding levels were considerably less
than 85 percent even with the infusion in 2015 and the
positive market in the previous year.
Representative Pruitt was having to process and do the math
as the meeting was occurring.
3:04:10 PM
Co-Chair MacKinnon added that in looking at the amendment
the word "or" was included. The amount of $1.5 billion
would remain available.
Representative Guttenberg asked how the bill would affect
the state's other pension bonds, capacity, or ratings. Mr.
Mitchell suggested that there were several factors that
played into the answer to Representative Guttenberg's
question. One of the variables was the concept of going
from a soft liability to a hard liability. Another factor
had to do with payments on behalf of other employers. The
state was locking in the relationship that was a statutory
relationship that theoretically could be modified. Also,
there had been an evolution within the pension obligation
fund corporation to move forward on a transaction since its
inception to the present. The corporation no longer had the
ability to to move forward without the firm support of the
legislature. Firm support meant that an appropriation of
debt service was necessary for market participants to take
the state seriously based on its failed efforts in the
past. He was unsure how the reduction would impact the
state's debt capacity or credit rating. He reported that
when the state was looking at the transaction in 2016 one
of the three rating agencies, Standard and Poors, had a
contingent downgrade for the State of Alaska in the event
the $2.5 billion was borrowed. He indicated that it was
based on sheer magnitude. It was easiest to think of the
situation as a refinancing. The state owed the money and
had a constitutional obligation to repay it. There was a
statutory framework for the payment on behalf of structure.
The least responsible way to refinance would be to avoid
the following year's payment. This was Illinois' method. He
provided a more detailed example. He continued that
reducing the authorization to $1.5 billion would limit the
state's ability to impact the state's credit rating.
Vice-Chair Gara agreed with the amendment.
3:08:51 PM
Representative Pruitt was fine with $1.5 billion. It was a
policy call. He suggested that there might be 3 years where
the 85 percent/$1.5 billion threshold would cross before
the state reached a funding ratio of 85 percent based on
the actuarial. He concluded that $1.5 billion was
substantially more conservative than the 85 percent funding
ratio. He was fine with the amendment.
Co-Chair MacKinnon relayed that, at an 8 percent rate of
return, it had to do with best practice standards for a
pension plan. While the committee was considering $1.5
billion of potential debt against a $6.6 billion unfunded
liability and seeing the state's 85 percent funding ratio
in sight, she cautioned members in thinking that in 3 years
the state would be out of the woods. She continued that a
.25 percent reduction in earnings estimated over the life
of the state's debt would have huge implications on the
unfunded liability number. She highlighted that Alaska's
local communities were carrying that debt on their
financials as well. While the state was at $6.6 billion
presently, she expected (even with positive returns) that
if the ARM Board made a decision to reduce earnings or
accept the new mortality rate (people were living longer),
she did not believe the state would be at 85 percent
funding in 3 years. She was working with the ARM Board to
see if there was another way to adjust the assumed interest
earning down. She would be happy to share that information
at a later time.
Representative Wilson WITHDREW her OBJECTION.
There being NO OBJECTION, it was so ordered. Conceptual
Amendment 2 was ADOPTED.
Representative Guttenberg relayed that on the previous day
the committee had heard a bill on PERS and TRS and the
package options. He thought the bill might correlate with
the senator's bill.
Vice-Chair Gara reviewed the zero fiscal note for SB 97 by
the Department of Revenue. The appropriation was Taxation
and Treasury and the allocation was the Treasury Division.
The OMB component number was 121.
3:13:02 PM
Co-Chair Seaton MOVED to report HCSSB 97 (FIN) out of
Committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
HCSSB97 (FIN) was REPORTED out of committee with a "do
pass" recommendation and with a new zero fiscal note by the
Department of Revenue.
3:13:32 PM
AT EASE
3:14:22 PM
RECONVENED
SENATE BILL NO. 107
"An Act relating to the Alaska capital income fund."
3:14:35 PM
Co-Chair Foster indicated the committee heard SB 107 by the
Senate Finance Committee on May 2, 2017. He invited Senator
McKinnon to speak to the bill.
SENATOR ANNA MACKINNON, SPONSOR, had discussed with the
House co-chairmen the use of the capital income fund. The
fund did not sweep into the general fund. Typically,
capital budget chairmen swept projects that had already
been utilized for other capital projects around the state.
It was money that remained after the allotted time and was
still sitting unused. The legislature had two choices for
those funds. First, the legislature could place it back
into the general fund and spend it like GF dollars.
Instead, what SB 107 proposed to do was dedicate the Alaska
capital income fund to deferred maintenance. In other
words, the money that was being rolled into the fund from
lapsing projects would be designated for a higher use and
prioritized deferred maintenance spending to extend the
life of state assets. She read from the prepared sponsor
statement:
The State of Alaska maintains over 2,200 facilities
which span over 14 entities, including the University
of Alaska and the Court system. These facilities total
19 million square feet of space and have a combined
replacement value of $8.6 billion.
The State's current outstanding deferred maintenance
backlog totals over $1.84 billion, which peaked in
FY2012 at $2.3 billion. With current funding levels
and no consistent funding source, the deferred
maintenance backlog is expected to trend up, causing
our facilities to fall into disrepair.
The Alaska capital income fund was created in 2006 and
receives an annual deposit of the earnings from the
Amerada Hess Settlement invested by the Permanent
Fund.
Senate Bill 107 envisions using these funds, which
cannot be used for dividends, to provide reliable
annual funding for preventative and deferred
maintenance. It is important we set up this mechanism
to continue to preserve our investment in these
facilities as the infrastructure ages and cost for
repairs and replacement increases.
Co-Chair Seaton commented that part of the capital income
fund money came from the Amerada Hess fund. He asked if the
money had already been appropriated. He was trying to
determine whether the swept money would be designated
general funds. He asked about keeping track of
reappropriated funds. He was concerned with the duplication
of funds. Co-Chair MacKinnon did not know the answer and
deferred to Mr. Carpenter.
3:18:29 PM
ROB CARPENTER, ANALYST, LEGISLATIVE FINANCE DIVISION,
replied that the bill was structured to take the revenue
stream from the Amerada Hess Settlement, about $28 million
per year, to the Alaska capital income fund for deferred
maintenance projects. Historically, the funds were used in
the budget for deferred maintenance and all capital
projects. However, when the legislature started to consider
using the earnings reserve account as general fund revenue,
it was discovered that the Alaska capital income fund was
not a designated fund source. The money went to the
unrestricted general fund. The amendment would make it a
designated fund source. Furthermore, to the question of
about putting reapropriations inside the fund, there would
not be a problem with funds being mixed because the
reappropriations had been counted in prior sessions in
prior fiscal years.
Co-Chair Seaton indicated that the legislature received
reports on duplicated funds and regular undesignated
general funds. He was trying to figure out how to account
for spending each of the funds that were mixed. He asked if
it would be difficult to tract how duplicated and non-
duplicated funds were spent from an accounting aspect.
Mr. Carpenter responded that to-date the state had not
reappropriated funding to the capital income fund.
Currently, the state would operate with the Amerada Hess
funds. Conceptually, if the state were to send
reappropriations into the capital income fund and then
spend from it, he did not think there would be a problem
with duplication only in regard to how the state counted
the general fund revenue. The state always equated
designated general fund revenues to the designated general
fund expenditures. They were always equal, therefore, there
would not be a duplication.
Co-Chair Seaton suggested that if the legislature put
reapporpriations into the capital income fund, they had
already been appropriated. Mr. Carpenter responded,
"Correct." Co-Chair Seaton wondered, if they were spent,
whether the state would be reappropriating them again. He
wanted to make sure things were accounted for if the state
mixed duplicated and non-duplicated funds. He was fine with
the bill but wanted to make the committee aware of mixing
two types of fund sources. He wanted to raise the issue.
Representative Guttenberg understood that part of the
Amerada Hess Settlement was the agreement that the funds
could not be used for dividends. The projected lapse of
time for that specification to change was 15 to 20 years.
He believed that theoretically the funds could be used for
dividends in the future.
Mr. Carpenter thought Representative Guttenberg was correct
that the settlement timeline had passed and that the funds
could be redirected for any use. He noted that in prior
versions of Percent of Market Value (POMV) bills there was
a provision getting rid of the capital income fund and
rolling the funds into the Permanent Fund. However, there
was nothing precluding the legislature from keeping the
capital income fund and the Amerada Hess Settlement monies
set aside.
3:24:20 PM
Vice-Chair Gara understood the Amerada Hess portion of the
capital income fund. He wondered if the legislature had
placed funds in the capital income fund in addition to the
Amerada Hess funds. He wondered if the bill being discussed
would govern whatever other funds were in the capital
income fund.
Mr. Carpenter believed in the past the legislature had put
other money in the capital income fund. He could not recall
the time or amount. The bill specifically spoke to the
revenue shrink from the Amerada Hess going into the capital
income fund. It did not indicate that the legislature could
not appropriate additional money in the fund. It could
create a burden in terms of counting the funds.
Vice-Chair Gara thought it governed the whole capital
income fund. He did not see anything in the bill talking
about only the Amerada Hess income stream. Mr. Carpenter
responded that unless the legislature appropriated money
into the fund it would only be the amount flowing into the
fund which was about $28 million.
Vice-Chair Gara did not need to know if there was
additional money in the fund. He forgot his question.
3:26:20 PM
Co-Chair Foster OPENED public testimony.
3:26:44 PM
Co-Chair Foster CLOSED public testimony.
Co-Chair Foster directed Vice-Chair Gara to review the
fiscal note.
Vice-Chair Gara read the zero fiscal note for SB 107. The
fiscal note assumed that there were no additional funds
inside the capital income fund. It stated that the funds
from the Amerada Hess settlement would now become
designated general funds as opposed to undesignated general
funds. It relabeled the $28 million income stream.
Co-Chair Seaton MOVED to report SB 107 out of Committee
with individual recommendations and the accompanying fiscal
note.
There being NO OBJECTION, it was so ordered.
SB 107 was REPORTED out of committee with a "do pass"
recommendation and with a new zero fiscal note by the House
Finance Committee.
Co-Chair Foster reviewed the agenda for the meeting at 5:00
PM.
Representative Wilson had heard from a superintendent
earlier in the day who was also a principal and an
elementary teacher. He was short a special needs teacher.
She wondered where the retired teacher bill was in the
legislative process. Co-Chair Foster indicated that both
bills were in the House Finance Committee and he would
determine when the bills would be heard. Representative
Pruitt clarified that the Senate had its version in Senate
Finance and the House version was in House Finance.
Representative Wilson relayed she had heard there were
teacher openings because of positions being difficult to
fill and that some of those positions could be filled with
retirees. She thanked Co-Chair Foster for the update.
Co-Chair Foster indicated there were no further comments
from members.
ADJOURNMENT
3:30:19 PM
The meeting was adjourned at 3:30 p.m.