Legislature(1995 - 1996)
05/06/1996 12:25 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 216
An Act relating to fees or assessment of costs for
certain services provided by state government,
including hearing costs related to the real estate
surety fund; fees for authorization to operate a
postsecondary educational institution or for an
agent's permit to perform services for a
postsecondary educational institution;
administrative fees for self-insurers in workers'
compensation; business license fees; fees for
activities related to coastal zone management,
training relating to emergency management
response, regulation of pesticides and broadcast
chemicals, and subdivision plans for sewage waste
disposal or treatment; and providing for an
effective date.
NANCY SLAGLE, DIRECTOR, DIVISION OF BUDGET REVIEW, OFFICE OF
MANAGEMENT AND BUDGET, OFFICE OF THE GOVERNOR provided
members with a sectional analysis of SB 216 (copy on file).
She reviewed the sectional analysis.
* Section 1. Allows the Department of Commerce
and Economic Development to charge costs of
hearings related to the Real Estate Surety
Fund. This is a fund shift from the General
Fund. There is a cap in how much can be held
in this fund. The Fund is approaching its
cap.
* Section 2. Allows the Department of
Education to charge fees by regulation for
applications to operate and permits related
to postsecondary education institutions.
* Section 3. Allows the Human Rights
Commission to charge fees for education and
training services.
* Section 4. Allows the Department of Labor to
charge a 4 percent user fee on self insured
employers. Municipalities and local
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governments would be exempted.
* Section 5. Allows the Department of Natural
Resources to charge a fee for direct costs
associated with the Exploration Incentive
Program for mine development.
* Section 6. Allows municipalities to charge
for prisoners in their facilities up to $70.0
dollars a day.
Representative Mulder questioned if Section 6 would refers
to prisoners in state funded contract jails.
JERRY SHRINER, SPECIAL ASSISTANT DEPARTMENT OF CORRECTION
explained that Section 6 only applies to municipal
prisoners. Prisoners held on a state charge could not be
assessed the fee. There would no impact on the General
Fund.
In response to a question by Representative Parnell, Mr.
Shriner explained that state contract jails are paid for a
lump sum number of beds regardless if they are full.
Representative Mulder noted that Juneau and Anchorage are
the only two municipalities charging under municipal law.
Representative Brown MOVED to insert after "may charge a
prisoner," "prosecuted under a municipal ordinance or held
in a municipal facility" on page 3, line 21. There being NO
OBJECTION, it was so ordered.
* Section 7. Allows the Department of
Transportation and Public Facilities to
charge for the use of state marine or harbor
facilities and requires municipalities that
lease state marine or harbor facilities to
charge comparable fees and account for those
fee separately.
* Section 8 & 12. Involve the removal of the
exemption of gasohol for the definition of
motor fuel.
Ms. Slagle estimated that the State lost $6.0 million
dollars in FY 96 from the exemption of gasohol in the motor
fuel definition.
BOB BARTHOLOMEW, DEPUTY DIRECTOR, INCOME AND EXCISE AUDIT
DIVISION, DEPARTMENT OF REVENUE explained that gasohol is
being sold year around. He could not estimate how the tax
would effect the price or availability of gasohol.
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* Section 9. Increases business licenses fees
charged by Occupational Licensing by $12.50
dollars per year for a two year license.
* Section 10. Allows the Department of
Military and Veterans Affairs to charge fees
for emergency management response training.
* Section 11. Allows the Department of
Environmental Conservation to charge chemical
firms fees for pesticide and broadcast
chemical use and for review of subdivision
plans for sewage waste disposal.
Representative Therriault asked the estimated fee cost. Ms.
Slagle stated that the estimated yearly income for pesticide
and broadcast chemical use fees is $100.0 thousand dollars.
The estimation yearly income from subdivision sewage
disposal plan review fees would be $22.0 thousand dollars.
JANICE ADAIR, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION explained that the
Department would be allowed to charge a fee for subdivision
sewage disposal plan review only in areas outside a borough
or municipality. Only approximately 10 percent of the plans
would be affected. The estimated fee per subdivision sewage
plan would be $300 hundred dollars.
Representative Mulder questioned if plans could be approved
by civil engineers. Ms. Adair explained the current
procedure. She noted that the Department of Environmental
Conservation does the compliance review in all areas of the
State except for Valdez. She noted that waste water and
sewage disposal is being reviewed to ensure that lots are
sized sufficiently and water systems are far enough away
from an on lot sewage system.
Representative Mulder questioned if there is a duplication
of the civil engineer's review. Ms. Adair explained that
the civil engineer reviews municipal ordinances or Title 29
requirements. She noted that Anchorage has adopted
ordinances on this topic. She acknowledged that the
Department of Environmental Conservation reviews work
completed by the civil engineer.
Representative Mulder argued that civil engineers "are going
to be extremely cautious about making those kind of
determinations and putting their name on any document."
Representative Therriault asked if all organized boroughs
would do their own review. Ms. Adair agreed that the
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implication is that all organized boroughs would do their
own review. She referred to a letter of intent adopted by
the Senate. She noted that the Department of Environmental
Conservation did not support the amendment to make organized
boroughs responsible for this review. She noted that the
implementation date of July 1, 1996, would occur in the
middle of the construction season. She stressed that with
more time some organized municipalities could take over the
review, but estimated that some second class cities will not
be able to implement the review.
Ms. Adair clarified that the Department would not charge a
fee in areas that have their own system. Representative
Therriault acknowledged that local communities should do the
function. He stressed that there should be more time to
allow negotiation between the Administration and local
governments. He expressed concern with the section.
Ms. Adair noted that the Administration supports the
restriction requiring that each of the four parcels within
the lot is at least 1 acre in size. Ms. Adair noted that
the Administration would like to have "outside of an
organized borough or municipality" deleted from the bill.
She emphasized that the Department would continue to work
with local governments.
Representative Brown asked if it is clear that
municipalities have the authority to charge fees if they
assume this function. Ms. Adair could not confirm that
there is authorization in statute. She pointed out that
Anchorage and Valdez charge fees. She stressed that there
is nothing in Title 29 to preclude municipalities from
charging a fee. She noted that there is specific language
in the Department's statues stating that to the extent that
a program is done by a municipal government the Department
of Environmental Conservation may not charge a fee for that
service.
In response to a question by Representative Martin, Ms.
Slagle explained that there are only three sections that
have any effect on expenditures. She noted that
unrestricted general fund dollars would be freed by the
transfer to program receipts.
Representative Brown MOVED to delete "outside an organized
borough or municipality" on page 5, lines 13 & 14. There
being NO OBJECTION, Amendment 1 was so ordered.
Representative Grussendorf referred to page 3, line 20. He
suggested that "prosecuted or held" be changed to
"prosecuted and held". He MOVED to RESCIND Amendment 1.
There being NO OBJECTION, it was so ordered. He MOVED to
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AMEND Amendment 1 by adding "prosecuted and held". There
being NO OBJECTION, it was so ordered. He MOVED to adopt
Amendment 1 as amended, "may charge a prisoner prosecuted
and under a municipal ordinance." There being NO OBJECTION,
it was so ordered.
PAUL GROSSI, DIRECTOR, WORKMEN'S COMPENSATION, DEPARTMENT OF
LABOR discussed Section 4. He noted that the section was
included to approximate the fee that employers pay when they
buy a workers' compensation policy. He emphasized that the
legislation would assure that self-insurers pay their fair
share. He estimated that the amount is less than they would
pay if they purchased a workers' compensation policy. He
noted that state and local governments are exempt. He noted
that local governments were included in the original
version. He explained that the State was excluded because
it was deemed that the State already pays. The legislation
was amended in the Senate Finance Committee. The University
is also exempted from the requirement.
Representative Grussendorf questioned if the legislation
could be amended to include a fee of up to 4 percent. Mr.
Grossi explained that it would be possible to make the
amendment. He was uncertain of the effect.
Representative Martin noted that the University was
encouraged to become self insured to save funds. Mr. Grossi
agreed that self-insurers save money. He emphasized that
some of the Division's workload is accounted to interaction
with self-insurers.
In response to a question by Representative Martin, Mr.
Grossi noted that approximately $55.0 thousand dollars would
be charged to CARRS Inc.
Representative Therriault summarized that the 4 percent
would be based on the amount paid out in previous years.
(Tape Change, HFC 96-167, Side 2)
Mr. Grossi noted that the Division's total cost is $2.6
million dollars.
Representative Martin MOVED to adopt Amendment 3 (copy on
file). Amendment 3 would delete the requirement for self
insurers to pay 4 percent of the total amount reported in
the report filed by the employer under AS 223.30155 (m), for
the preceding calendar year and substitute a $100 hundred
dollar fee. Representative Brown OBJECTED. Representative
Brown OBJECTED.
DWIGHT PERKINS, SPECIAL ASSISTANT, DEPARTMENT OF LABOR noted
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that the Department intended that the fee be included in SB
216 from its origin. He spoke in support of the amendment.
He maintained that self-insurers receive the same work from
the Department that employers that are not self insured
receive.
Mr. Grossi explained that the Division regulates self-
insured employers, conduct hearings to resolve disputes,
provides data base information, and maintains an injury
fund.
Representative Kohring expressed concern with the amendment.
He noted that self-insurers do not support the amendment.
He pointed to the exemption of state and local governments.
Mr. Grossi explained that employers who purchase a workers'
compensation plan pay a 2.7 percent annual premium tax.
Self-insurers do not pay this amount. The fees paid by the
premium tax goes to the General Fund. He noted that the fee
is not an exact representation of costs.
Mr. Dwight pointed to a seafood company that became self
insured. He noted that their last workers' compensation
premium was $1.4 million dollars at a premium tax of $37.0
thousand dollars. If the Company was charged a four percent
fee on all compensation paid they would have paid under
$15.0 thousand dollars to the State. He explained that the
four percent is only charged on actual claims paid. Mr.
Grossi added that even if their access premium tax were
added in they would pay under $20.0 thousand dollars.
Representative Mulder questioned the actual cost to process
the claims. Mr. Grossi acknowledged that the concept is
fair, but stressed that it would be difficult to assess the
exact cost. He emphasized that there are also ancillary
costs. Representative Mulder suggested that the section
could be amended to state that the self insurers "shall pay
a fee through regulation to cover the direct cost of
administrative overhead by the Department, not to exceed
four percent of the total amount reported."
ERIC TOLLEFSEN, ATTORNEY, CARR-GOTTSTEIN, ANCHORAGE
testified against the legislation. He noted that Carr-
Gottstein Inc. would be the largest payer. He observed that
their cost for the last four years would average $57.0
thousand dollars. He maintained that the tax would be paid
on something that they did not purchase. He emphasized that
they are self insured to save money. He pointed out that
their claims are self adjusted. He noted that their fees on
insurance was $19.0 thousand dollars last year. He alleged
that the four percent fee would be greater than the amount
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needed to directly fund the Division of Workers'
Compensation and the Division of Insurance. He pointed out
that the first year of self insurance is not reflective of
the average cost of several years.
Representative Mulder asked if the industry is willing to
cover their cost to the system. Mr. Tollefsen stated that
the industry would be willing to look at what makes sense.
Representative Mulder asked why the Workers' Compensation
Committee of Alaska (WCCA) did not oppose the legislation in
the Senate. Mr. Tollefson acknowledged that they were not
paying as much attention as they should have been.
Representative Therriault asked the total amount brought in
by the 2.7 percent premium tax. Mr. Grossi stated that the
2.7 percent premium tax results in approximately $4.7
million dollars. The Division of Workers' Compensation's
general fund budget is approximately $2.6 million dollars.
The Division of Insurance's general fund budget pertaining
to self insurers is approximately $1.5 million dollars.
Representative Therriault concluded that the program is self
funded. Mr. Grossi maintained that the total cost is closer
to $5.0 million dollars.
Representative Brown questioned if the effective date should
be delayed to July 1, 1997 to allow parties to find a
solution. Representative Mulder expressed concern with
Representative Brown's proposal. Representative Brown
pointed out that if a solution is not found the issue could
be brought to the next Legislature. Representative
Therriault recommended that the section be deleted.
Representative Brown noted that there would be less
incentive to resolve the issue if the section is not
contained in the legislation. Representative Parnell
pointed out that the section is contained in the title.
Representative Martin emphasized that the industry needs
time to find a solution. Representative Therriault pointed
out that the title consideration could be resolved.
Representative Grussendorf agreed that the title would not
prevent the section's removal.
A roll call vote was taken on the MOTION to adopt Amendment
3.
IN FAVOR: Kelly, Kohring, Martin, Navarre, Foster
OPPOSED: Brown, Grussendorf, Mulder, Parnell, Therriault
Co-Chair Hanley was absent from the vote.
The MOTION FAILED (5-5).
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Representative Mulder MOVED to delete Section 4. There
being NO OBJECTION, it was so ordered. He noted that the
deletion does not reflect that self insurers should pay for
their service. He emphasized that the industry and
Department need to work together for a solution.
Co-Chair Foster MOVED to adopt Amendment 2 (copy on file).
TOM WRIGHT, STAFF, IVAN IVAN explained that Amendment 2
would increase the fees charged prisoners in municipal jails
from $70 to $100 dollars. Representative Mulder spoke in
support of the amendment. He noted that indigent prisoners
will not pay the fee. He emphasized the high prison costs
in Alaska.
Representative Mulder suggested that if municipalities are
reimbursed the reimbursement would be used to offset the
state contract jail contract.
BOB COLE, DIRECTOR, ADMINISTRATIVE SERVICES, DEPARTMENT OF
CORRECTIONS explained that community jails contracts are at
a fixed price for FY 97 - 98. The amount was fixed by the
Community Jails Task Force. There is no matching
requirement in the contracts. The cost per care varies per
contract. The Department did not object to the amendment.
He did not think there would be a savings to the State. He
noted that many contract jails are supported in part by
local funds. The State only pays the full cost in one or
two contracts. He emphasized that many communities feel
that the state share does not meet the total operating cost
of the jails.
Representative Grussendorf spoke against the amendment.
A roll call vote was taken on the MOTION to adopt Amendment
2.
IN FAVOR: Kohring, Mulder, Kelly, Foster
OPPOSED: Martin, Navarre, Parnell, Therriault, Brown,
Grussendorf
Co-Chair Hanley was absent from the vote.
The MOTION FAILED (4-6).
Representative Therriault referred to Section 11. He noted
constituent frustration with the administration of reviews
of subdivision sewage plans. Representative Brown pointed
out that the funding has been removed which would have
allowed the Department of Environmental Conservation to
continue the function.
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Representative Therriault disagreed that the funding was cut
for the function. He pointed out that the funding was left
in the transfer to statewide public services. The
Department choose to take the cut that was given and spread
it to this function. Representative Brown pointed out that
the result is that the money is not in the budget. She
emphasized that the function will not be done if there is no
money to pay for it.
Ms. Adair summarized that the Subcommittee did not
specifically identify subdivision planning reviews in the
reduction to the Division of Statewide Public Service. She
emphasized that this is the only function that is funded one
hundred percent by general funds. She stressed that the
Department cannot make further reductions without
eliminating programs. She stated that this is the only area
that the reduction could be taken from.
Representative Therriault questioned if the municipality
could empower a local engineer to do the review. Ms. Adair
could not answer. She pointed out that this is a public
health function. There may be restrictions on delegating to
a private entity a public health function that is seen as an
inherent power of government. She emphasized that the
Department wants to establish the function on a fee
structure so that a local government could take it over.
She suggested that it may not be as controversial as a local
fee program if it is established by the State.
Ms. Slagle noted that there is a drafting error in the
effective date section. She noted that Sections 8 and 12
are not reflected in the effective date clause. She noted
that Section 16, on page 6 needs to be amended to include
Sections 8 and 12.
Representative Navarre MOVED to amend Section 16 by
including Sections 8 and 12.
Representative Brown MOVED to report HCS CSSB 216 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes. There being NO OBJECTION, it was
so ordered.
HCS CSSB 216 (FIN) was reported out of Committee with "no
recommendation" and with nine fiscal impact notes, two by
the Office of the Governor, 1/12/96, one by the Department
of Natural Resources, 5/2/96, one by the Department of
Revenue, 5/2/96, one by the Department of Environmental
Conservation, 5/4/96, one by the Department of Commerce and
Economic Development, 1/12/96, one by the Department of
Education, 5/2/96, Department of Military and Veterans
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Affairs, 1/12/96 and one by the Department of Labor.
(Tape Change, HFC 96-168, Side 1)
SENATE BILL NO. 216
An Act relating to fees or assessment of costs for
certain services provided by state government,
including hearing costs related to the real estate
surety fund; fees for authorization to operate a
postsecondary educational institution or for an
agent's permit to perform services for a
postsecondary educational institution;
administrative fees for self-insurers in workers'
compensation; business license fees; fees for
activities related to coastal zone management,
training relating to emergency management
response, regulation of pesticides and broadcast
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chemicals, and subdivision plans for sewage waste
disposal or treatment; and providing for an
effective date.
Representative Mulder MOVED to RESCIND the Committee's
action in reporting HCS CSSB 216 (FIN) from Committee.
There being NO OBJECTION, it was so ordered.
Co-Chair Hanley noted that the removal of Section 4 resulted
in the need for a Resolution adopting a title change.
Representative Mulder MOVED to RESCIND the Committee's
action in failing to adopt Amendment 3. There being NO
OBJECTION, it was so ordered.
Representative Mulder MOVED to adopt Amendment 3. There
being NO OBJECTION, it was so ordered.
Representative Mulder MOVED to report HCS CSSB 216 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal notes.
HCS CSSB 216 (FIN) was reported out of Committee with "no
recommendation" and with nine fiscal impact notes, two by
the Office of the Governor, 1/12/96, one by the Department
of Natural Resources, 5/2/96, one by the Department of
Revenue, 5/2/96, one by the Department of Environmental
Conservation, 5/4/96, one by the Department of Commerce and
Economic Development, 1/12/96, one by the Department of
Education, 5/2/96, Department of Military and Veterans
Affairs, 1/12/96 and one by the Department of Labor.
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