Legislature(1999 - 2000)
03/22/2000 01:50 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
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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