Legislature(2005 - 2006)HOUSE FINANCE 519
04/15/2005 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB71 | |
| HB33 | |
| HB147 | |
| HB71 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 147 | TELECONFERENCED | |
| + | HB 144 | TELECONFERENCED | |
| + | HB 33 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
HOUSE BILL NO. 33
"An Act relating to the effect of regulations on small
businesses; and providing for an effective date."
Co-Chair Meyer gave a brief history of the bill. In 1980
Congress passed the Regulatory Flexibility Act (RFA), which
mandated that agencies consider the impact of their
regulations on small businesses. Based on the success of
that federal program, the Office of Advocacy has drafted
legislation for states to follow. Over 37 states have found
success with this program. This bill would require state
regulatory agencies to consider the impact of regulation on
small businesses and have the freedom to examine alternative
methods. More expense would not be added to the agencies.
2:11:00 PM
MIKE PAWLOWSKI, STAFF, CO-CHAIR MEYER, referred to a flow
chart "Steps in the Regulation Adoption Process Under HB 33"
(copy on file.) He proceeded to inform the committee about
the various steps that would be taken under this bill to
change the regulatory process. He related the history of
regulation, including checks and balances.
Co-Chair Meyer noted that most of the other 37 states did
not need a fiscal impact note attached to their legislation.
Mr. Pawlowski concurred. He described the office of the
small business advocate.
2:16:30 PM
Co-Chair Meyer asked if Amendment 1 would zero out all
fiscal notes. Mr. Pawlowski replied that it would.
2:16:57 PM
CONNIE MARSHALL, SMALL BUSINESS ADVOCACY, U.S. SMALL
BUSINESS ADMINISTRATION, (via teleconference) read portions
from her written testimony:
As the Regional Advocate for Region X, my job is to be
the direct link between state and local governments,
small business groups and small business owners and
employees and the Office of Advocacy, based in
Washington, DC. My chief concern is to help identify
regulatory concerns of small business by monitoring the
impact of federal and state policies at the grassroots
level. It is my goal to see that programs and policies
that encourage fair regulatory treatment of small
business are developed and implemented to ensure future
growth and prosperity. This is why I am testifying in
support of proposed legislation, which will strengthen
small business regulatory flexibility in Alaska.
The Office of Advocacy enforces the Regulatory
Flexibility Act (RFA) on the federal level in order to
lessen the regulatory burden on small business. More
than 93 percent of businesses in every state are small
businesses. As you may know, small businesses with
less than 20 employees spend $6,975 each year per
employee to comply with federal regulations-that is 60
percent more per employee than large firms with more
than 500 employees spend. And that is just the cost of
federal regulations. Small business owners also have
to shoulder the cost of state regulations.
Under the RFA, Advocacy has shown time and again that
regulations can be reduced and the economy improved
without sacrificing such important goals as
environmental quality, travel safety, and workplace
safety. By working with federal agencies to implement
the RFA, in 2004 the Office of Advocacy saved small
businesses nationwide over $17 billion in foregone
regulatory costs that can now be used to create jobs,
buy equipment and expand access to health care for
millions of Americans, or simply maintain
competitiveness in the marketplace.
While some states have state regulatory flexibility
legislation that mandates state agencies to perform
economic impact analysis before they regulate, many do
not. For that reason, in December of 2002 the Office
of Advocacy drafted model legislation patterned after
the federal Regulatory Flexibility Act and presented it
in a report titled, Small Business Friendly Regulation:
Model Legislation, which can be found on our website at
www.sba.gov.advo.
There are five critical elements contained in the
Regulatory Flexibility Act model bill. Successful
state-level regulatory flexibility laws should have:
(1) a small business definition that includes most
small businesses, (2) a requirement that state agencies
perform an economic impact analysis before they
regulate, (3) a requirement that state agencies
consider less burdensome alternatives that still meet
regulatory goals, (4) judicial review so that the law
has teeth, and (5) a provision for state government to
periodically review all its regulations. To be
effective, there should be few, if any exemptions from
the law. Even the best regulatory flexibility
initiative has little value if the majority of state
agencies are exempted from it. In order for regulatory
flexibility to work, there is a need for the Governor's
leadership, trained and educated state agencies that
understand their responsibilities, and the continued
involvement of the small business community.
During this time of tight state budgets, you may be
wondering how much it costs a state to implement
regulatory flexibility for small business. The answer
is that implementing a regulatory flexibility system
can be done at little to no additional cost to the
state. Let me share information from three states that
have recently implemented regulatory flexibility
provisions.
In North Dakota, agencies were granted no additional
funds to carry out their duties under the new RFA
legislation. The state legislative review committee is
responsible for reviewing the regulations that their
state agencies, using economic impact analysis, have
determined might be overly burdensome to small
business. So other than additional regulations for the
committee to review, North Dakota has simply absorbed
the new duties into their already existing system.
Similarly, in Colorado, agencies were granted no
additional funds to carry out their duties under the
new RFA legislation. The Office of Policy Research and
Regulatory Review in Colorado's Department of
Regulatory Agencies was given responsibility for
implementing the new law. To meet the new obligations,
they shifted personnel in their office and dedicated
part of an IT person to implement their e-rulemaking
notification system. Like North Dakota, Colorado
simply absorbed the new responsibilities into their
current structure.
In Oklahoma, the fiscal note estimated that it would
cost $ 75,000 per year to support the Small Business
Regulatory Review Committee in the Department of
Commerce and to implement the regulatory flexibility
law. Since implementation began in 2002, the
Department of Commerce has not exceeded the $ 75,000
budget. Expenditures have been for printing marketing
materials, travel compensation for the review committee
members and compensation for the committee
coordinator's time.
The benefits of implementing a regulatory flexibility
system truly outweigh the costs. Let me give you an
example of how regulatory flexibility works from a
state that has had an active regulatory flexibility
program for nearly ten years. In October 2004, New
York State adopted an emergency regulation to prevent
prescription fraud by requiring the use of an official
State prescription form for all prescribing done in New
York. The official prescription forms utilize security
features that will curtail alterations and forgeries
that divert drugs to black market sale to unsuspecting
patients and cost New York's Medicaid program and
private insurers tens of millions of dollars annually
in fraudulent claims.
Under New York's State Administrative Procedure Act and
an Executive Order signed by Governor Pataki, the
Department of Health was required to perform a
regulatory flexibility analysis for small business
(RFASB). It was found that the proposed regulation
would affect small businesses such as practitioners,
pharmacists, retail pharmacies, hospitals and nursing
homes.
Therefore, in drafting the regulation, the Department
of Health met with and considered comments from the
affected small businesses. By consulting with small
business throughout the rule writing process, the New
York Department of Health was able to craft a
regulation that met its goals without unduly burdening
small entities. For example, the regulation includes
the following flexibilities for small business:
· Establishes a grant administered by the Department of
Health to defray costs for software adjustments faced
by pharmacies;
· Eliminates the official prescription fee for
practitioners and institutions; and
· Allows practitioners, pharmacists, retail pharmacies,
hospitals and nursing homes 18 months to transition
to the new prescription form system.
As a result of the Serialized Official New York State
Prescription Form regulation, private insurers and the
Medicaid program are expected to save millions of
dollars by reducing fraudulent prescription claims
while at the same time benefiting the state, its
citizens, and private insurers.
Since December of 2002, my fellow Regional Advocates
and I have been working with state legislators across
the country to make regulatory flexibility for small
business a legislative priority. In 2003, twelve
states introduced regulatory flexibility legislation.
Governors in North Dakota and Colorado signed
regulatory flexibility legislation into law, while
Massachusetts Governor Mitt Romney and West Virginia
Governor Bob Wise signed Executive Orders to implement
regulatory flexibility. In 2004, 17 states
(California, Connecticut, Georgia, Idaho, Illinois,
Kansas, Kentucky, Missouri, Nebraska, New Jersey,
Pennsylvania, Rhode Island, South Carolina, South
Dakota, Tennessee, Washington, and Wisconsin)
introduced regulatory flexibility legislation and seven
states have signed it into law (Connecticut, Kentucky,
Missouri, Rhode Island, South Carolina, South Dakota,
and Wisconsin).
To date in 2005, eighteen states have introduced
regulatory flexibility legislation (Alaska, Alabama,
Hawaii, Indiana, Iowa, Mississippi, Missouri, Montana,
New Jersey, New Mexico, North Carolina, Ohio, Oregon,
Pennsylvania, Tennessee, Utah, Virginia, and
Washington). Virginia Governor Mark Warner and New
Mexico Governor Bill Richardson recently signed
regulatory flexibility legislation into law. Also this
year, Arkansas Governor Mike Huckabee signed an
Executive Order to implement regulatory flexibility.
One of the many reasons, I believe, this legislation
has been so successful over the last two years is
because policy makers across the country are realizing
that regulatory flexibility is as an economic
development tool. There are over 23.7 million small
businesses in the United States and they are the job
creators: small firms create between 60 and 80 percent
of the net new jobs in our economy.
There is no question that small business is the
backbone of the economy here in Alaska just as it is
throughout the country. According to the federal
definition of small business (500 employees or less),
96.9 percent (15,485) of Alaska's employers are
considered small and employ over 59.6 percent (127,757)
of Alaska's non-farm sector employees.
Sometimes, because of their size, the aggregate
importance of small businesses to the economy is
overlooked. Because of this, it is very easy to fail
to notice the negative impact of regulatory activities
on them. The intent of HB 33 is to require regulatory
agencies to consider small businesses when regulations
are developed and particularly to consider whether
there are alternative regulatory solutions that do not
unduly burden small business but still accomplish the
agency goal. Giving small employers a voice early in
the process is a key to reducing the negative impact of
regulations on small businesses, increasing the level
of regulatory compliance and passing on cost savings to
state economies.
This legislation is good for small business in Alaska
and the Office of Advocacy commends you for bringing
House Bill 33 forward.
2:23:39 PM
WAYNE STEVENS, PRESIDENT, ALASKA STATE CHAMBER OF COMMERCE,
testified in support of HB 33. He asked the legislature to
create and maintain an efficient, expedient regulatory
environment, which is supportive of business investment and
development, and encourages businesses to locate and grow in
Alaska. He spoke in favor of having an effective oversight
mechanism, simplified regulations, and a reduction in
administrative costs.
2:24:59 PM
KRISTIN RYAN, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION, suggested that the
fiscal note for the department be zeroed out.
Representative Kelly requested that exceptions to the law be
addressed.
2:27:18 PM
Mr. Pawlowski replied that the bill has gone through a long
process. He shared some of the reasons for going to a
limited application. Some troubling issues were raised.
Questions about the Natural Resources sector and allocation
decisions by the Boards of Fish and Game were taken off the
table.
Representative Kelly asked, of the 37 states, how many did
the same thing. Mr. Pawlowski replied that several did,
especially those with heavy resource development. He
referred to a map showing the states that have adopted
regulatory flexibility (copy on file.) It varies among
states, but most have exceptions. He offered to provide
more details.
2:30:08 PM
Representative Kelly asked if this bill captures "90
percent". Co-Chair Meyer replied yes.
2:30:31 PM
Co-Chair Meyer MOVED to ADOPT Amendment 1:
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(a) of this section must provide, if available from
information gathered under (b) of this section,"
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"(6) that address standards, requirements, or
conditions for reimbursement by the designated state
agency for services to be rendered on behalf of the
designated state agency, that address amounts or rates
of that reimbursement, or that adjust those amounts or
rates to contain costs within the amount of
appropriations from the legislature for a state fiscal
year; or
(7) that establish standards, requirements,
or conditions for the eligibility of an individual for
assistance under AS 18 or AS 47, or that establish
standards for determining the amount of assistance that
an eligible person is entitled to receive."
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Co-Chair Chenault OBJECTED.
Mr. Pawlowski noted that most of the amendment is conforming
language. The primary purpose of the amendment is a
clarification in Section 1 of the proposed legislation. It
brings the economic effect statement out of subsection (b)
to subsection (c), a clarification which gives the agencies
better direction. The second major change is on page 3,
following line 18. This addresses Health and Social
Services regulation such as reimbursement, cost containment,
and eligibility standards. He explained that this section
clarifies that cost reimbursement is off the table.
2:33:24 PM
CHRIS KENNEDY, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, (via teleconference) explained that he does not have
more to add to the discussion of Amendment 1. The solution
is satisfactory to everyone concerned. He offered to answer
questions.
2:34:30 PM
Representative Croft related that the first part of the
amendment makes a lot of sense by not requiring businesses
to seek extra, independent analysis. He spoke of a concern
on the second page of the amendment regarding reimbursement
rates for services provided by small businesses. The effect
on small businesses by the Department of Health and Social
Services is so pervasive that it would take too much time to
consider. It goes from being a burden to defining the
business. He opined that it seems to be vital and should
not be shied away from.
Co-Chair Meyer noted that this was discussed with the
Commissioner.
2:37:08 PM
Representative Hawker related that the Commissioner was in
agreement with the amendment. He referred to Representative
Croft's comment and opined that there is a differentiation
between a small, private business and outsourcing a
necessary state service. He spoke in strong support of the
amendment.
2:39:01 PM
Mr. Pawlowski added that regulations have to be drafted to
achieve cost containment. Policy calls need to consider
whether this is an effective use of state resources and
whether there is a benefit to the private sector. The
application to this from a public policy statement is that
consideration needs to be done at the finance level during
the approval of the budget, and perhaps not in the
implementation of the regulations. It happens at the
regulatory review committee level and during finance
committee meetings.
Representative Croft related that when Department of Health
and Social Services establishes a new Medicaid rate, if that
rate is lowered, it is viewed as cost containment. If by
lowering that rate, more services are provided to more
people, it is viewed as a benefit. What is not adequately
considered is the effect on the people trying to provide the
services. This needs to be looked in terms of impacts on
small businesses and alternative means sought.
2:43:23 PM
Co-Chair Meyer said the argument is that it should be done
when the budget is set, rather than by regulation.
Mr. Pawlowski offered a point of clarification about cost
containment and reimbursement in eligibility regulation
exemptions. He referred to the Department of Health and
Social Services proposed regulations to Title VII, which
govern the conduct of small business.
Representative Croft commented that it does not make sense
to not discuss how daily rates affect small businesses. Co-
Chair Meyer argued that the daily rate is set up by the
budget process rather than by regulation.
2:45:49 PM
JOEL GILBERTSON, COMMISSIONER, DEPARTMENT OF HEALTH & SOCIAL
SERVICES, related that the department has concerns about
regulations causing reductions to programs. He gave an
example of a Medicaid program appropriation reduction of
services. The concern is if there are delays in
implementing regulations because every day of delay costs
the state. The department requested Amendment 1 to deal
with reimbursement regulations. Other regulations would
remain under this legislation.
2:49:13 PM
Representative Croft inquired about rate reductions and
changes in the methods of reimbursements to lessen the
effects on providers. Commissioner Gilbertson responded
that it is a continuous balancing act regarding that issue.
He offered the Medicaid program as an example. Federal law
does not allow for different payment policies.
2:52:13 PM
Mr. Pawlowski added that if benefits and costs are reduced
on the "govern the conduct side", the amount required for
reimbursement goes down. He implied that there is still a
benefit to the business by addressing other regulations that
are not exempt.
Co-Chair Chenault WITHDREW his OBJECTION.
There being NO OBJECTION, Amendment 1 was adopted.
2:53:32 PM
Co-Chair Meyer MOVED to ADOPT Conceptual Amendment 2:
Page 1, lines 1-2 [Delete all material]
Page 1, line 1 - Insert:
"An Act relating to requiring notification to the
Department of Commerce, Community and Economic
Development, economic effect statements, regulatory
flexibility analyses; a private cause of action
relating to the required economic effect statements or
regulatory flexibility analyses; and providing for an
effective date."
Co-Chair Chenault OBJECTED for discussion purposes.
Co-Chair Chenault withdrew his OBJECTION to adopt Conceptual
Amendment 2. There being NO OBJECTION, Conceptual Amendment
2 was adopted.
2:55:20 PM
GUY BELL, ASSISTANT COMMISSIONER, OFFICE OF THE
COMMISSIONER, DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT,
reported that he is relieved at the relative lack of burden
to the department. He noted that the department would
review this legislation and is not bound by a positive
fiscal note.
2:56:12 PM
Co-Chair Meyer noted Department of Health and Social
Services is ok with a new zero fiscal note. The Department
of Environmental Conservation agrees with a new zero fiscal
note. The Department of Law has an indeterminate fiscal
note. The Department of Labor and Workforce Development
will have a zero fiscal note. Department of Commerce,
Community and Economic Development would like assistance in
developing a new fiscal note.
2:58:01 PM
Representative Weyhrauch asked if boards and commissions are
subject to this bill. Mr. Pawlowski replied that boards and
commissions confirmed by the legislature are subject to a
public confirmation process, and are made up of
representatives from the industry that are already aware of
the needs of the industry. When a board or commissions
promulgates a regulation, the costs of that process are
borne by fees, which are returned to small businesses.
Representative Weyhrauch asked if that applies to Fish and
Game. Mr. Pawlowski replied that was a separate issue
regarding emergency allocations. Representative Weyhrauch
asked what happens if the agency does not comply with this
statute. Mr. Pawlowski said that the judicial review was
discussed in the House Judiciary Committee. He explained
the history of the judicial review.
3:00:44 PM
Representative Weyhrauch related a problem he has with the
bill. Representative Weyhrauch expressed his concerns
regarding federal regulations and small businesses having no
power to affect regulation. Mr. Pawlowski agreed that was
a valid concern. He explained that the agency would
consider public commentary and the review committee could
discuss the regulation.
3:02:26 PM
Representative Foster MOVED to report CSHB 33 out of
Committee with individual recommendations and the
accompanying revised fiscal notes. There being NO
OBJECTION, it was so ordered.
CSHB 33 (FIN) was REPORTED out of Committee with a "no
recommendation" recommendation and with the following new
fiscal impact notes: an indeterminate note by the Department
of Law, a zero note prepared by the House Finance Committee
for the Department of Environmental Conservation, a fiscal
note by the Department of Commerce, Community and Economic
Development, a zero note prepared by the House Finance
Committee for the Department of Health and Social Services,
and zero note by the Department of Labor and Workforce
Development.
3:03:09 PM
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