Legislature(2007 - 2008)BELTZ 211
02/01/2007 09:00 AM Senate STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB19 | |
| SB20 | |
| SB45 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| += | SB 36 | TELECONFERENCED | |
| += | SB 45 | TELECONFERENCED | |
| += | SB 19 | TELECONFERENCED | |
| += | SB 20 | TELECONFERENCED | |
SB 19-EXEC. BRANCH ETHICS:INTERESTS & ACTIONS
CHAIR MCGUIRE announced SB 19 to be up for consideration. The
committee was working from CSSB 19(JUD).
9:07:14 AM
DAVE JONES, Senior Assistant Attorney General, Civil Division,
Opinions, Appeals, and Ethics, Department of Law, said everyone
is after the same goal of improving the executive branch ethics
act and other disclosure and ethics requirements. He said
Governor Palin has introduced a bill, HB 109, which addresses
the same issue in Section 8. He said the governor's bill deals
strictly with a $5,000 standard and doesn't have the percentage
requirement for interest in a business as does the amended
version of SB19. He said the issue came up in the Senate
Judiciary Standing Committee.
9:08:37 AM
SENATOR FRENCH asked what lines he is referring to.
CHAIR MCGUIRE passed around the governor's bill, SB 64.
MR. JONES said he is referring to SB 19, pages 1 and 2, lines 12
to 20.
CHAIR MCGUIRE surmised that Mr. Jones wants a simple dollar
figure rather than a percentage limit.
9:09:54 AM
MR. JONES said the lines in SB 19 that refer to percentages are
lines 8, 11, and 12 on page 2.
CHAIR MCGUIRE said members of the judiciary committee expressed
concern about having only a dollar amount, and she asked why the
administration prefers not to use a percentage standard.
MR. JONES said a dollar amount is enough to consider whether a
public officer's interest is significant. Using a percentage
standard, "we could have one percent of a $1,000 venture, which
would be a $10 interest, and I'm not sure that's going to help
us in getting toward the ultimate goal." One of the consequences
of the amendment is that on lines 5 and 6 of page 2, a
controlling interest in a business is disqualifying if the
controlling interest has a fair market value of $5,000 or more,
he said. But on lines 8, 9, 11, and 12, a one percent interest
in a business, whether the value is $1 or $1 million, would be
disqualified. He said a person could be disqualified under those
lines, but under lines 5 and 6, a person would be disqualified
by only a controlling interest of $5,000 or more.
9:12:42 AM
SENATOR FRENCH said the point is well taken and asked for the
historical reason for the percentage standard in the bill.
MR. JONES said he can only speculate. Some folks may believe
that a one percent interest is easier to measure because there
may be times when it is difficult to assess the dollar value of
an interest. But, Mr. Jones said, it may be even more difficult
to determine the percentage value, especially for various values
and types of stock and stock options.
9:14:29 AM
CHAIR MCGUIRE recalled Representative Gara's point that in a
high value stock, like Exxon Mobile, a one percent interest
would be worth well more than $5,000. She noted that an
either/or provision works because sometimes the percentage value
gives more information than the dollar figure.
SENATOR STEVENS asked if the value is the current value or the
value at the time of purchase.
MR. JONES said current value is used because that is relevant,
and that is how the public would perceive it.
9:15:50 AM
SENATOR STEVENS said it would be easier to figure the dollar
value.
SENATOR BUNDE said he is supportive of the public being informed
and aware of potential conflicts. He suggested that the vagaries
of the stock market can make a person could go in and out of
compliance as the value of the stock changes.
9:16:42 AM
MR. JONES said that is certainly possible, and it is also true
for a percentage of ownership when shares are sold or issued.
SENATOR BUNDE asked about dealing in futures, which could vary
more than $5000 over a period of 24 hours. He said he is not
dealing in those and doubts that it would apply to him, but he
expressed concern for people who fall into inadvertent ethics
violations.
SENATOR FRENCH said owning one percent of an insignificant
company may not be realist. How many small companies issue
stock, "and how many executive branch employees actually own
shares in a company that is basically valueless and then take
action respecting that business?" Conversely, there is a
likelihood of owning one percent of a local real estate LLC or a
local tourism or restaurant business. He said all would agree
that a person should not take official action affecting that
investment while in state office. Mr. Jones' point is good, but
having both [percentage and dollar standard] will "capture it."
9:19:16 AM
MR. JONES said the provision is in SB 64 on page 6, lines 24 to
26. He continued:
What we propose, there, is a presumption that stock or
other ownership interest is insignificant if it's less
than $5,000 in value. The advantage of a presumption
is that it deals with both those situations where a
business interest really is significant and those
situations where, even though the value of that
interest may currently be less than $5,000, the
official action that the officer is taking has the
potential to really increase the value of that
interest. For example, if I have a $4,000 interest and
I can take action that will increase the value of that
interest to $40,000, this presumption allows us, under
the ethics act, to address that situation by saying:
OK, even though it's under $5,000 now, because this
would stand to benefit you so dramatically, you may
not, consistent with the ethics act, take official
action on that matter.
CHAIR MCGUIRE asked how that would play out. If there is no
disclosure, how would it be found out?
9:21:19 AM
MR. JONES said it would be the same process as is currently
followed, including self-reporting and reporting by others.
9:21:40 AM
CHAIR MCGUIRE closed testimony and offered Amendment 1, labeled
25-LS0160\K.2, Wayne, as follows:
Page 1, line 2, following "interest;":
Insert "prohibiting certain persons from engaging
in activity as lobbyists;"
Page 2, following line 20:
Insert a new bill section to read:
"* Sec. 2. AS 39.52.180(d) is amended to read:
(d) A former governor, lieutenant governor,
[OR] head or deputy head of a principal
department in the executive branch, chair of a
state board or commission which has the authority
to adopt regulations, or employee of the Office
of the Governor in a policy-making position may
not engage in activity as a lobbyist under
AS 24.45 for a period of one year after leaving
service as the governor, lieutenant governor,
[OR] department head or deputy head, chair of a
state board or commission which has the authority
to adopt regulations, or employee of the Office
of the Governor in a policy-making position, as
appropriate. This subsection does not prohibit
service as a volunteer lobbyist described in
AS 24.45.161(a)(1) or a representational lobbyist
as defined under regulations of the Alaska Public
Offices Commission."
Renumber the following bill section accordingly.
Page 2, following line 26:
Insert a new bill section to read:
"* Sec. 4. The uncodified law of the State of
Alaska is amended by adding a new section to read:
APPLICABILITY. Section 2 of this Act applies to a
person who leaves state service on or after the
effective date of sec. 2 of this Act."
SENATOR FRENCH objected.
CHAIR MCGUIRE said Amendment 1 would prohibit "certain persons
from engaging in activities as lobbyists." It expands that law
to apply to a deputy head, "and that's come from Governor Palin
herself." A deputy head can be fairly high up in negotiations on
certain issues, so it is not a bad provision, she stated. She
said she is expanding it to include chairs of state boards or
commissions that have the authority to adopt regulations or to
an employee of the office of governor in a policy-making
position. She noted an incident six years ago surrounding the
Regulatory Commission of Alaska (RCA) when the chair went
immediately into the private sector as a highly paid CEO of one
of the phone companies. "It rubbed a lot of people wrong, again,
it's the appearance of it. I'm not here to say it was real or
not, but it was the appearance of it that bothered people." A
chair of a regulatory authority may even have more power than a
lieutenant governor or a deputy head, she stated.
9:24:12 AM
SENATOR STEVENS asked who would be covered.
CHAIR MCGUIRE said she could get a list, but it is narrowed down
so not all boards and commissions are included. Hairdressers and
barbers would not be included, but only those that have the
authority to adopt regulations, including the RCA. She wasn't
sure about the railroad.
9:24:55 AM
DAN WAYNE, Attorney, Legal Services Division, Legislative
Affairs Agency, said he has been looking at who has the power to
adopt regulations. He said many boards and commissions do,
including those of limited entry, real estate, fisheries, game,
psychologists and psychological associates, and examiners. He
learned that some directors have the power to adopt regulations,
like the director of the insurance division. He said he is
trying to figure out a way to exclude commissions and boards
that mainly perform licensing functions.
9:26:17 AM
SENATOR FRENCH asked if the amendment would fix the
aforementioned scenario with the RCA.
SENATOR GREEN said the person went to work for someone she had
previously regulated.
SENATOR FRENCH noted that Amendment 1 only prohibits lobbying.
9:27:24 AM
CHAIR MCGUIRE said the language covers lobbying, which can
include lobbying the board that regulates the industry. A
telephone company would lobby the RCA, she explained.
SENATOR STEVENS said it goes back to the issue of definition.
Someone who serves the on the Board of Fish might not be allowed
to work for a fishing company, he said. He cautioned the
committee about denying legitimate opportunities to make a
living.
9:29:25 AM
SENATOR BUNDE said this is not a lifetime prohibition; it
requires someone to sit out for one year, and that may allow
some of those close personal relationships to cool. A year isn't
that long for a person with talent and experience.
9:30:02 AM
SENATOR GREEN referred to the Agriculture Conservation Board.
She was told that the legislature could not approve the
governor's appointments because of their fiduciary
responsibility. There is another level of boards that adopts
regulations and has control over money, she noted.
CHAIR MCGUIRE said there is a broader discussion as to whether
working for a company is allowed, but the amendment says a chair
with significant power can't engage as a lobbyist for one year.
People will still be able to go work for a fisheries company
after serving on the Board of Fish, but they just can't be a
lobbyist to lobby the very board they just chaired in a policy
role for one year. "You don't want to have a situation where the
appearance or reality is that somebody is using that year as an
opportunity to curry favor to steer regulating-writing
authority, decision making or negotiations in a direction of
somebody who they will ultimately benefit from privately."
9:32:57 AM
SENATOR STEVENS asked why the language should stop at the chair,
and not the members, like the members of the Board of Regents.
They all have enormous power, he stated.
MR. WAYNE said the rest of AS39.52.180 doesn't show up in the
bill, but it says that a public officer who leaves state service
may not represent or advise for compensation regarding a matter
that was under consideration by the administrative unit served
by that public officer for two years. He said that seems to
address the person who left the RCA to work for a utility
company. "Although it doesn't talk about lobbying," he said. He
stated that he doesn't know why the amendment language is
limited to the heads of the boards. In response to Senator
Green, he said he thinks the language could say that boards and
commissions that fall under AS 08.01.010 would be excluded from
the provision, because that is a chapter that deals with
centralized licensing. It doesn't include things like limited
entry, fisheries, and the regulatory board. But it includes
licensing boards, like nursing, pharmacy, big game commercial
services, dental services, "and things of that nature."
CHAIR MCGUIRE said that is the chapter under centralized
licensing.
9:36:18 AM
SENATOR STEVENS asked if Mr. Jones is saying that a member of
the RCA would have less opportunity for mischief than the chair.
MR. WAYNE said he is not saying that, but obviously the chair
has a different type of authority and some may say it is
greater. But other members, including a person with the swing
vote, can have tremendous power.
9:37:13 AM
CHAIR MCGUIRE offered an amendment to Amendment 1 that will
"exempt those boards and commissions under AS 08.01.010 in
centralized licensing." She said that includes boards like
veterinarian examiners, concert promoters, and midwives. She
said, "So I'll do it as a conforming amendment and give you the
latitude to put it where you think is appropriate." Hearing no
objection, Amendment 1 to Amendment 1 carried.
SENATOR FRENCH offered a second amendment to Amendment 1. "It
looks as if we're capturing the governor, lieutenant governor,
commissioners, now deputy commissioners." He said he would like
to add division directors because many of them, particularly in
oil and gas, the Department of Environmental Conservation, and
with tax or revenue duties "just carry enormous amounts of power
over industries that they're regulating and to let them turn
around and come back as lobbyists immediately, I think strikes
many folks as being a little too close." The person may be able
to get a job in private industry using knowledge gained in the
public, but to come back in the halls and lobby a month later
"is a little too close," he explained.
9:39:30 AM
CHAIR MCGUIRE saw no objection, therefore Amendment 2 to
Amendment 1 carried.
SENATOR STEVENS maintained his objection to Amendment 1, as
amended.
SENATOR GREEN said executive directors of boards "are far more
powerful than the chair." The executive director sets out the
agenda and determines what is on the calendar.
CHAIR MCGUIRE said it is up to the committee, but perhaps that
should be another amendment after Amendment 1. A roll call vote
was taken on Amendment 1. Senators French, Green, Bunde,
Stevens, and Chair McGuire all voted in favor; therefore,
Amendment 1, as amended, carried.
9:41:23 AM
CHAIR MCGUIRE asked if the executive directors of these boards
and commissions should be included in the legislation.
SENATOR FRENCH said he needs more information about who the
individuals are and if they are state employees.
CHAIR MCGUIRE asked if there is any statutory reference to that.
MR. WAYNE said he is looking it up.
SENATOR GREEN said executive directors are generally hired by
the boards.
9:42:48 AM
CHAIR MCGUIRE asked if all boards get an executive director.
SENATOR GREEN said she didn't know but some are handled through
the division and many have a single executive director. "This
may be going way deeper than we want to go, particularly without
testimony," she noted.
CHAIR MCGUIRE said the bill goes to the Senate Finance Committee
and the issue could be explored prior to that hearing. It would
give Mr. Wayne time to consider it as well.
SENATOR FRENCH moved SB 19, as amended, from committee with
individual recommendations and accompanying fiscal notes. There
being no objection, CSSB 19(STA) moved out of committee.
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