Legislature(1999 - 2000)

03/22/2000 01:50 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HOUSE BILL NO. 361                                                                                                            
                                                                                                                                
     "An  Act   relating  to  charges  for   state  services;                                                                   
     requiring  that  fees levied  by resource  agencies  for                                                                   
     designated  regulatory services be  based on  the actual                                                                   
     and reasonable  direct cost  of providing the  services,                                                                   
     except in the case of certain  negotiated or fixed fees;                                                                   
     relating  to  negotiated   or  fixed  fees  of  resource                                                                   
     agencies;   relating   to    invoices   for   designated                                                                   
     regulatory  services;  establishing a  petition  process                                                                   
     regarding   fees  charged   by  resource  agencies   for                                                                   
     regulatory  services;  and  providing for  an  effective                                                                   
     date."                                                                                                                     
                                                                                                                                
Co-Chair Therriault  provided members with Amendment  2 (copy                                                                   
on file).                                                                                                                       
                                                                                                                                
MIKE  TIBBLES,  STAFF,  REPRESENTATIVE   THERRIAULT  provided                                                                   
information on  Amendment 2. He  observed that  the amendment                                                                   
was  drafted  in  response  to   concerns  expressed  by  the                                                                   
Department  of  Environmental   Conservation,  Department  of                                                                   
Natural Resources and the Department of Law.                                                                                    
                                                                                                                                
Mr.  Tibbles  discussed  amendment  2.  On Page  2,  line  10                                                                   
"sales" was deleted and "sale  or lease" inserted. The change                                                                   
makes sure that the limitation  on fees does not apply to the                                                                   
state of  Alaska's interest in  leases on property.  This was                                                                   
in  response  to  concerns  of   the  Department  of  Natural                                                                   
Resources.                                                                                                                      
                                                                                                                                
On page 4, line  3 "serve upon" was deleted  and "provide to"                                                                   
inserted.  This  was in  response  to concerns  expressed  by                                                                   
Representative   J.   Davies.   This   clarifies   that   the                                                                   
determination would be provided to the applicant.                                                                               
                                                                                                                                
A  new subsection  was  added on  page 4,  line  10: "(f)  No                                                                   
action  taken  by   a  resource  agency  or   the  Office  of                                                                   
Management and  Budget under (c)  of this section  is subject                                                                   
to AS  44.62  (Administrative Procedure  Act)." This  assures                                                                   
that no one is required to establish fees in regulations.                                                                       
                                                                                                                                
On page 7, line  16 "for" was added before  "associated with"                                                                   
to clarify that if there is a  pipeline right-away-lease that                                                                   
other fees associated with the lease would not be included.                                                                     
                                                                                                                                
The  last change  was  on  page 8,  line  31. The  Office  of                                                                   
Management  and Budget was  added to  section 4, which  gives                                                                   
each agency  involved the authority  to adopt  regulations to                                                                   
implement the act.                                                                                                              
                                                                                                                                
Co-Chair Therriault  reiterated that the  amendment addresses                                                                   
concerns by  the Department of Natural  Resources, Department                                                                   
of Law and by Representative J. Davies.                                                                                         
                                                                                                                                
Co-Chair Therriault MOVED to ADOPT Amendment 2.                                                                                 
                                                                                                                                
KEN  FREEMAN,   EXECUTIVE   DIRECTOR,  RESOURCE   DEVELOPMENT                                                                   
COUNCIL  (RDC)  observed  that  RDC  is  in  support  of  the                                                                   
amendment.                                                                                                                      
                                                                                                                                
In response  to a  question by  Representative Williams,  Co-                                                                   
Chair Therriault explained that  the Office of Management and                                                                   
Budget  was given the  authorization to  adopt regulation  at                                                                   
the request of the Department of Law.                                                                                           
                                                                                                                                
STEVEN DAUGHERTY,  ASSISTANT ATTORNEY GENERAL,  DEPARTMENT OF                                                                   
LAW  explained  that the  legislation  previously  referenced                                                                   
only  the  natural  resource   agencies  and  gave  them  the                                                                   
authority to adopt regulations.  The Office of Management and                                                                   
Budget was given  responsibility, but was not  included under                                                                   
the definition  of a  natural resource  agency and  therefore                                                                   
did  not have  regulation adoption  authority. He  emphasized                                                                   
that   regulation   adoption    authority   is   needed   for                                                                   
implementation of the bill.                                                                                                     
                                                                                                                                
Co-Chair Therriault  clarified  that the regulation  adoption                                                                   
authority is only given for implementation of HB 341.                                                                           
                                                                                                                                
PATRICK   GALVIN,   DIRECTOR,    DIVISION   OF   GOVERNMENTAL                                                                   
CORDINATION (DGC),  OFFICE OF  MANAGEMENT AND BUDGET,  OFFICE                                                                   
OF  THE GOVERNOR  explained  that  DGC  would carry  out  the                                                                   
petition  portion of  the Office of  Management and  Budget's                                                                   
functions that  are recognized  in the legislation.  He spoke                                                                   
in support  of Amendment 2 and  noted that DGC  was uncertain                                                                   
if regulations  would be needed to fulfill  their legislative                                                                   
mandate.  He stated  that he  would be  uncomfortable if  DGC                                                                   
were precluded  from adopting regulation through  omission of                                                                   
regulatory authority.                                                                                                           
                                                                                                                                
JACK KREINHEDER, SENIOR POLICY  ANALYST, OFFICE OF MANAGEMENT                                                                   
AND BUDGET, OFFICE  OF THE GOVERNOR observed  that the Office                                                                   
of the  Governor did not submit  an updated fiscal  note. The                                                                   
original  fiscal  note  requested  two  positions  at  $157.6                                                                   
thousand dollars.  Contractual costs of $20  thousand dollars                                                                   
were  also  included.  He  acknowledged  that  the  committee                                                                   
substitute  would reduce  their  fiscal  cost by  authorizing                                                                   
appeals at the agency level. He  emphasized the difficulty of                                                                   
predicting the workload.                                                                                                        
                                                                                                                                
There being NO OBJECTION, Amendment 2 was adopted.                                                                              
                                                                                                                                
Representative Phillips MOVED to ADOPT Amendment 3:                                                                             
                                                                                                                                
     Page 6, line 31:                                                                                                           
     Delete " or"                                                                                                               
                                                                                                                                
     Page 7, line 2, following "provided;"                                                                                      
     Insert "or (G) travel expenses for inspecting                                                                              
     businesses having not more 6 than 20 employees;"                                                                           
                                                                                                                                
Representative  Phillips explained that  the amendment  is an                                                                   
attempt to  help small miners  in Alaska, who are  located in                                                                   
very remote, rural areas.                                                                                                       
                                                                                                                                
Co-Chair  Therriault  expressed  concern that  the  amendment                                                                   
would carve  out one section  of the regulated  industry, but                                                                   
emphasized  small operations would  have had  to pay  for the                                                                   
cost  of  flying someone  to  remote  sites  and that  he  is                                                                   
sensitive to the needs of small placer miners.                                                                                  
                                                                                                                                
Vice Chair  Bunde observed that  small mining  operations pay                                                                   
only  20 percent  of  what it  actually  costs  the state  to                                                                   
permit  and supervise  them. He questioned  if more  expenses                                                                   
would be put  on large mining operations to  exempt the small                                                                   
miners.                                                                                                                         
                                                                                                                                
Co-Chair Therriault  stated that  the amendment  would retain                                                                   
the status  quo for  small miners.  Vice Chair Bunde  pointed                                                                   
out that  the status quo  is being changed  for the  rest (of                                                                   
the mining operations).  He questioned how long  miners would                                                                   
be subsidized.                                                                                                                  
                                                                                                                                
There being NO OBJECTION, Amendment 3 was adopted.                                                                              
                                                                                                                                
Representative J.  Davies MOVED to ADOPT Amendment  4: insert                                                                   
on  page 6,  line 12  "food, drugs,  and  cosmetics under  AS                                                                   
17.20."  He explained  that  the  amendment would  bring  the                                                                   
inspection   of  restaurants   under   the  legislation.   He                                                                   
maintained  that the  amendment fits  under the  legislation.                                                                   
The Department of Environmental  Conservation could implement                                                                   
the amendment with a minimal of additional work.                                                                                
                                                                                                                                
Co-Chair  Therriault pointed  out  that  drugs and  cosmetics                                                                   
would  be  added. Representative  J.  Davies  explained  that                                                                   
drugs and  cosmetics were included  because they are  part of                                                                   
the statutory site.                                                                                                             
                                                                                                                                
Mr.  Freeman stated  that  the Resource  Development  Council                                                                   
would  have difficulty  supporting the  amendment. He  stated                                                                   
that he  had envisioned  the bill  as a  model that  could be                                                                   
applied  to  other  programs.  He maintained  that  the  best                                                                   
approach  would be  to look  at  the four  programs that  are                                                                   
currently  within  the  regulatory services.  These  are  the                                                                   
programs that  RDC has  worked with.  He stressed that  there                                                                   
would be  complexities  with the addition  of restaurant  and                                                                   
hair salon  inspections.  He spoke in  support of  addressing                                                                   
restaurant inspections in other legislation.                                                                                    
                                                                                                                                
Co-Chair   Therriault  spoke   against   the  amendment.   He                                                                   
emphasized  that the  food industry  had  not had  sufficient                                                                   
time to respond to the amendment.                                                                                               
                                                                                                                                
Representative J.  Davies spoke in support of  the amendment.                                                                   
He felt that the food industry would support the amendment.                                                                     
                                                                                                                                
Co-Chair Therriault  stressed  that resource industries  have                                                                   
good   associations   for   collecting    and   disseminating                                                                   
information. He did not think  that there was sufficient time                                                                   
to disseminate  the information  to the restaurant  industry.                                                                   
He stated  that he  would like to  see more participation  by                                                                   
the restaurant industry.                                                                                                        
                                                                                                                                
Representative J. Davies pointed  out that significant budget                                                                   
impacts were  made on the  industry, in increasing  fee rates                                                                   
while decreasing  service, without  their input.  He stressed                                                                   
that the  amendment would  level the  playing field  and give                                                                   
them  the   same  kind  of   protections  in  terms   of  the                                                                   
development of fees. He felt that  the food industry would be                                                                   
supportive.                                                                                                                     
                                                                                                                                
JANICE  ADAIR, DIRECTOR,  DIVISION  OF ENVIRONMENTAL  HEALTH,                                                                   
DEPARTMENT  OF   ENVIRONMENTAL  CONSERVATION   testified  via                                                                   
teleconference. She observed that  the amendment would result                                                                   
in lower  permitting fees for  food facilities in  the state.                                                                   
The  food industry  is  currently assessed  a  flat fee.  She                                                                   
clarified  that  the  department  does  not  charge  fees  to                                                                   
hairdressers  or salons. The  amendment would eliminate  some                                                                   
of the  items that  are currently included  in fees  from the                                                                   
fee structure.                                                                                                                  
                                                                                                                                
Co-Chair Therriault  questioned  if the hospitality  industry                                                                   
had reached a  unified decision on which direction  they wish                                                                   
to pursue.                                                                                                                      
                                                                                                                                
Ms.  Adair stressed  that she  had  not heard  from a  single                                                                   
business  that did  not support  the reduction  of fees.  She                                                                   
noted that there  is recognition, in the food  industry, that                                                                   
state oversight  of food  service and  processing is  needed.                                                                   
There is also a strong desire to see fees reduced.                                                                              
                                                                                                                                
Mr. Freeman acknowledged that  fees need to be addressed from                                                                   
a broader perspective,  but emphasized that it  has taken two                                                                   
years  to get to  the current  point with  the four  programs                                                                   
included  in  the  legislation.  He  expressed  concern  that                                                                   
additional  programs would inhibit  the legislation's  chance                                                                   
to be enacted.                                                                                                                  
                                                                                                                                
In response  to a question  by Representative J.  Davies, Ms.                                                                   
Adair  pointed  out  that  the  Department  of  Environmental                                                                   
Conservation's overriding concern  with the bill is the issue                                                                   
of  equity.  She  acknowledged  that there  needs  to  be  an                                                                   
overriding policy  on setting  fees. The restaurant  industry                                                                   
has a lot  of small operators  that are paying as much  as 93                                                                   
percent of  the cost  to the state  to oversee the  industry.                                                                   
There  should be a  rational basis  for any  inequity in  fee                                                                   
structures.  This would  be  the only  other  program in  the                                                                   
Department of  Environmental Conservation  that would  not be                                                                   
covered. She  did not  think that the  inclusion of  the food                                                                   
industry would be difficult to administer.                                                                                      
                                                                                                                                
Representative  J. Davies  maintained that  inclusion of  the                                                                   
food industry would round out  the bill and bring all aspects                                                                   
that are under  the Department of Environmental  Conservation                                                                   
under the legislation.  He observed that the  legislation was                                                                   
limited to the  Department of Environmental  Conservation and                                                                   
the Department of Fish and Game.  He maintained that the food                                                                   
industry is  the only obvious  piece, left out, that  fits in                                                                   
the purview.                                                                                                                    
                                                                                                                                
Co-Chair Therriault  questioned the  impact of the  amendment                                                                   
on the fiscal note. Ms. Adair  responded that the fiscal cost                                                                   
would  be  approximately  $300   thousand  dollars  with  the                                                                   
adoption  of Amendment  3 and $250  thousand dollars  without                                                                   
Amendment 3.                                                                                                                    
                                                                                                                                
Representative G.  Davis observed that restaurant  fees are a                                                                   
problem  throughout  the state.  He  felt that  the  industry                                                                   
would support the amendment.                                                                                                    
                                                                                                                                
Co-Chair Therriault clarified  that there were no discussions                                                                   
with the food  industry. He observed that the  addition would                                                                   
increase the fiscal cost.                                                                                                       
                                                                                                                                
In response  to a  question by  Representative G. Davis,  Ms.                                                                   
Adair  reiterated   that  the  Department   of  Environmental                                                                   
Conservation  does not have  authority for  fees on  drugs or                                                                   
cosmetics.                                                                                                                      
                                                                                                                                
A roll call vote  was taken on the motion to  adopt Amendment                                                                   
4.                                                                                                                              
                                                                                                                                
IN FAVOR: Davies, Foster, Grussendorf, Moses                                                                                    
OPPOSED: Phillips, Williams, Bunde, Therriault                                                                                  
                                                                                                                                
The MOTION FAILED (4-5).                                                                                                        
                                                                                                                                
BARBARA   FRANK,   DIRECTOR,   DIVISION   OF   ADMINISTRATIVE                                                                   
SERVICES, DEPARTMENT  OF ENVIRONMENTAL CONSERVATION  observed                                                                   
that  the  fiscal   note  would  have  to  be   reviewed  and                                                                   
resubmitted  to   reflect  changes  made  in   the  committee                                                                   
substitute. She noted  that there would be different  sets of                                                                   
fees for small and large facilitates  (based on Amendment 3).                                                                   
There would  be no change  in the first  year. Support  for a                                                                   
paralegal  would be  reduced  by approximately  $55  thousand                                                                   
dollars. The revenue projections  would reflect a loss of $75                                                                   
thousand dollars. In the water  quality program $256 thousand                                                                   
dollars  in statutory  designated program  receipts would  be                                                                   
changed to general fund program  receipts. She noted that the                                                                   
department could  not anticipate the mix between  fixed fees,                                                                   
time and materials, and negotiated agreements.                                                                                  
                                                                                                                                
Co-Chair Therriault  suggested that the legislation  could be                                                                   
moved from committee and that  the updated fiscal notes could                                                                   
follow.                                                                                                                         
                                                                                                                                
Vice  Chair Bunde  MOVED  to report  CSHB  361  (FIN) out  of                                                                   
Committee with individual recommendations.                                                                                      
                                                                                                                                
CSHB  361 (FIN)  was REPORTED  out  of Committee  with a  "do                                                                   
pass" recommendation.                                                                                                           
                                                                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    

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