Legislature(2017 - 2018)ADAMS ROOM 519

04/06/2018 01:30 PM FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Recessed to 4/7/18 at 1:00 pm --
+= HB 231 CFEC: BD. SALARY;STAFF CLASSIFIED SERVICE TELECONFERENCED
Moved CSHB 231(FIN) Out of Committee
+= HB 299 EXTEND: ALCOHOLIC BEVERAGE CONTROL BOARD TELECONFERENCED
Heard & Held
+= HB 217 RAW MILK SALES; FOOD EXEMPT FROM REGS TELECONFERENCED
Moved CSHB 217(FIN) Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
Meeting will recess to 4/7/18 at 1:00 pm
HOUSE BILL NO. 217                                                                                                            
                                                                                                                                
     "An  Act  relating  to  the   Alaska  Food,  Drug,  and                                                                    
     Cosmetic  Act;  relating  to the  sale  of  milk,  milk                                                                    
     products,  raw   milk,  and  raw  milk   products;  and                                                                    
     providing for an effective date."                                                                                          
                                                                                                                                
1:37:26 PM                                                                                                                    
                                                                                                                                
DIANA RHODES, STAFF,  REPRESENTATIVE GERAN TARR, highlighted                                                                    
that the raw  milk and food exempt from  regulations bill no                                                                    
longer included  raw milk or  food exempt  from regulations.                                                                    
She relayed the sponsor supported the [upcoming] amendment.                                                                     
                                                                                                                                
1:38:31 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:40:33 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                
Co-Chair Foster relayed the amendment sponsor, Vice-Chair                                                                       
Gara, was not present to offer the amendment.                                                                                   
                                                                                                                                
Representative Guttenberg MOVED to ADOPT Amendment 1, 30-                                                                       
LS0593\T.2 (Wayne, 3/3/0/18) sponsored by Vice-Chair Gara                                                                       
(copy on file):                                                                                                                 
                                                                                                                                
     Page 2, line 26, through page 3, line 10:                                                                                  
     Delete all material and insert:                                                                                            
     11* Sec.  4. AS 29.71.040(a) is  repealed and reenacted                                                                    
     to read:                                                                                                                   
     (a)  If a municipality that  receives state money seeks                                                                    
     to   purchase   an    agricultural   product   and   an                                                                    
     agricultural   product  harvested   in  the   state  is                                                                    
     available  that  is of  like  quality  compared with  a                                                                    
     similar  agricultural  product  harvested  outside  the                                                                    
     state, the municipality                                                                                                    
     (1) shall  purchase the product harvested  in the state                                                                    
     if the  product is priced  not more than  seven percent                                                                    
     above the similar product harvested outside the state;                                                                     
     (2)   may purchase the  product harvested in  the state                                                                    
     only if the product is  priced not more than 15 percent                                                                    
     above the similar product harvested outside the state.                                                                     
     * Sec. 5. AS 29.71.040(b)  is repealed and reenacted to                                                                    
     read:                                                                                                                      
     (b) If  a municipality that receives  state money seeks                                                                    
     to  purchase  a  fisheries   product  and  a  fisheries                                                                    
     product harvested or  processed within the jurisdiction                                                                    
     of  the state  is  available that  is  of like  quality                                                                    
     compared with a similar  fisheries product harvested or                                                                    
     processed outside  the jurisdiction  of the  state, the                                                                    
     municipality                                                                                                               
     (1)  shall purchase the  product harvested or processed                                                                    
     within the jurisdiction of the  state if the product is                                                                    
     priced not  more than seven  percent above  the similar                                                                    
     product    harvested   or    processed   outside    the                                                                    
     jurisdiction of the state;                                                                                                 
     (2) may purchase the product  harvested or processed in                                                                    
     the jurisdiction  of the state  only if the  product is                                                                    
     priced  not  more than  15  percent  above the  product                                                                    
     harvested or processed outside  the jurisdiction of the                                                                    
     state.                                                                                                                     
     * Sec. 6. AS 29.71.040(c) is amended to read:                                                                              
     (c) A  solicitation by a municipality  for the purchase                                                                    
     of  agricultural  or  fisheries products  must  include                                                                    
     written  notice   of  the  purchase   requirements  and                                                                    
     limitations  under  (a) and  (b)  of  this section  and                                                                    
     [SHALL]  specify  [THE REQUIREMENT]  that  agricultural                                                                    
     products harvested in the  state and fisheries products                                                                    
     harvested or  processed within the jurisdiction  of the                                                                    
     state will [SHALL] be used where possible.                                                                                 
     subject to  the limitations under  (a) and (b)  of this                                                                    
     section. If  a municipality  that receives  state money                                                                    
     purchases agricultural  products harvested  outside the                                                                    
     state  or  fisheries  products harvested  or  processed                                                                    
     outside the  jurisdiction of  the state,  the municipal                                                                    
     officer responsible  for the purchase shall  certify in                                                                    
     writing   the   reasons  that   agricultural   products                                                                    
     harvested in the state  or fisheries products harvested                                                                    
     or processed within the jurisdiction  of the state were                                                                    
     not purchased."                                                                                                            
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
     Page 3, line 13:                                                                                                           
     Delete "of'                                                                                                                
    Insert "not less than seven percent nor more than"                                                                          
                                                                                                                                
     Page 3, line 17:                                                                                                           
     Delete "of'                                                                                                                
    Insert "not less than seven percent nor more than"                                                                          
                                                                                                                                
     Page 3, following line 19:                                                                                                 
     Insert a new bill section to read:                                                                                         
     "* Sec. 9. AS 36.15.050(c) is amended to read:                                                                             
     (c) A solicitation for the  purchase of agricultural or                                                                    
     fisheries products  must include written notice  of the                                                                    
     preferences  under  (a) and  (b)  of  this section  and                                                                    
     [SHALL]  specify  [THE REQUIREMENT]  that  agricultural                                                                    
     products harvested in the  state and fisheries products                                                                    
     harvested or  processed within the jurisdiction  of the                                                                    
     state  will  [SHALL] be  used  where  possible. If  the                                                                    
     state or  a school  district that receives  state money                                                                    
     purchases agricultural  products harvested  outside the                                                                    
     state  or  fisheries  products harvested  or  processed                                                                    
     outside  the  jurisdiction  of the  state  the  officer                                                                    
     responsible for  the purchase shall certify  in writing                                                                    
     the  reasons that  agricultural  products harvested  in                                                                    
     the state or fisheries  products harvested or processed                                                                    
     within  the   jurisdiction  of   the  state   were  not                                                                    
     purchased."                                                                                                                
                                                                                                                                
     Renumber the following bill sections accordingly.                                                                          
                                                                                                                                
Representative Kawasaki OBJECTED for discussion.                                                                                
                                                                                                                                
Ms.  Rhodes   detailed  the   amendment  had   been  briefly                                                                    
addressed by Representative Geran Tarr  at a past meeting as                                                                    
it  had  been   included  in  a  previous   version  of  the                                                                    
legislation.  There was  an existing  7 percent  procurement                                                                    
preference. The  sponsor wanted  to provide  flexibility for                                                                    
agencies  that wanted  to purchase  Alaska grown  items. The                                                                    
amendment would  allow agencies  to spend  up to  15 percent                                                                    
more on an Alaska grown product.                                                                                                
                                                                                                                                
Co-Chair Foster  noted that Vice-Chair  Gara had  joined the                                                                    
meeting.                                                                                                                        
                                                                                                                                
Vice-Chair Gara  shared he  was open  to the  bill sponsor's                                                                    
views  on  the amendment.  The  amendment  maintained the  7                                                                    
percent  local  producer's   preference  for  fisheries  and                                                                    
agricultural products; local producers  could charge up to 7                                                                    
percent higher and still win  in the procurement process. He                                                                    
noted it had been the law for  a long time. There had been a                                                                    
discussion  about changing  the  preference  to 15  percent,                                                                    
which had  caused some  concern that the  amount may  be too                                                                    
expensive  for schools  and  other  entities facing  limited                                                                    
funds.  The amendment  reflected an  earlier version  of the                                                                    
bill  that included  a 7  percent local  preference to  help                                                                    
local producers and  if a state or community  entity (e.g. a                                                                    
school)  wanted to  go above  the 7  percent they  could add                                                                    
another 8 percent to the price  in order to select the local                                                                    
product. He  explained it would  save money for  schools and                                                                    
other  entities strapped  for  cash as  the  bill would  not                                                                    
force them to  pay the extra 8 percent.  The negative aspect                                                                    
was the uncertainty  that entities would ever opt  to pay an                                                                    
additional  8  percent  for local  dairy  or  fisheries.  He                                                                    
requested to hear the sponsor's view on the amendment.                                                                          
                                                                                                                                
1:44:26 PM                                                                                                                    
                                                                                                                                
Co-Chair Foster  replied that Ms.  Rhodes had  indicated the                                                                    
sponsor's support.                                                                                                              
                                                                                                                                
Representative Wilson  communicated she was amenable  to the                                                                    
7 percent. She provided a  scenario where an entity chose to                                                                    
go up to 12 percent  to purchase carrots, but simultaneously                                                                    
opted not to pay 9 percent  for another type of product. She                                                                    
remarked the amendment took a  subject with strict rules and                                                                    
would leave it  up to each district to choose  between 7 and                                                                    
15 percent. She  was uncertain how the  change would comport                                                                    
with existing  procurement rules.  She wondered  whether the                                                                    
change could result  in law suits or  complaints because the                                                                    
percentage   would  no   longer  be   consistent.  Currently                                                                    
entities had  to opt for  the producer within the  7 percent                                                                    
range. She did  not know how allowing an entity  to select a                                                                    
producer between the 7 and 15 percent range would work.                                                                         
                                                                                                                                
Vice-Chair Gara  did not see  a possibility for a  law suit.                                                                    
The  law  would  maintain  the   existing  7  percent  local                                                                    
preference. No  one would have  the ability to sue  a school                                                                    
district or other  entity for deciding to  pay an additional                                                                    
8 percent.  For example,  the law  would require  paying the                                                                    
additional 7  percent and  if a local  dairy cost  9 percent                                                                    
more,  the school  district, prison,  or other  state entity                                                                    
could choose to pay the extra amount.                                                                                           
                                                                                                                                
Representative Wilson clarified there  were two bidders on a                                                                    
procurement. She gave an example  of an Alaskan business and                                                                    
a  Washington  business  submitting bids  to  provide  milk.                                                                    
Under existing  law, an Alaskan  business could bid up  to 7                                                                    
percent more and still win the  bid. She believed if the bid                                                                    
from  the Alaskan  business was  9 percent  more the  entity                                                                    
would have  to select the Washington  business because there                                                                    
was only  a 7 percent  addition. She believed  the amendment                                                                    
would allow  an entity to  pay 9 percent, which  she thought                                                                    
was contrary to procurement rules.                                                                                              
                                                                                                                                
Representative Pruitt  agreed with the amendment.  He stated                                                                    
a  municipality or  school district  would have  to put  the                                                                    
range  in  their procurement  code  because  they could  not                                                                    
randomly change the percentage.  He detailed entities had to                                                                    
have a  standard in their  procurement codes.  He elaborated                                                                    
that  a code  could either  specify 7  percent or  up to  15                                                                    
percent. Entities'  procurement decisions would be  based on                                                                    
their procurement  codes. The entities would  not decide how                                                                    
to  apply  their  procurement haphazardly,  which  would  be                                                                    
subject  to  a  lawsuit.  He explained  that  would  not  be                                                                    
allowable. He detailed a municipality  would have to publish                                                                    
its  procurement rules  at the  beginning of  a process.  An                                                                    
applicant   would  then   apply  based   on  the   specified                                                                    
procurement  rules. He  clarified  the rules  would be  made                                                                    
known  beforehand,  not  in  the  middle  of  a  procurement                                                                    
process.                                                                                                                        
                                                                                                                                
1:49:06 PM                                                                                                                    
                                                                                                                                
Representative Wilson  asked if  it was  the intent  for the                                                                    
state to  use the range  of 7  and 15 percent.  She remarked                                                                    
the  state  would  still  have  the  requirement  for  state                                                                    
contracts including corrections and other.                                                                                      
                                                                                                                                
Vice-Chair Gara replied that a  bidder would bid a price. If                                                                    
a  price  was  8  percent  more,  the  municipality,  school                                                                    
district, or state entity would  be allowed to pay the extra                                                                    
1 percent. There were already rules  to apply to two sets of                                                                    
bids for milk  - they were both at 7  percent and there were                                                                    
rules for deciding  which bids qualified and  which did not;                                                                    
those  rules  would  remain. The  amendment  merely  gave  a                                                                    
district  or  other  entity  the right  to  choose  a  local                                                                    
product  as  long as  it  did  not  exceed an  additional  8                                                                    
percent.                                                                                                                        
                                                                                                                                
Representative  Wilson clarified  her  understanding of  the                                                                    
amendment. She believed Vice-Chair  Gara was stating that in                                                                    
the first round  of bidding if with the 7  percent added, an                                                                    
Alaskan entity would still be  lower than the milk from out-                                                                    
of-state and they would win the  bid based on the 7 percent.                                                                    
She asked for  verification that the school  district or the                                                                    
state could  choose to then pay  8 percent instead of  the 7                                                                    
percent that had been bid.                                                                                                      
                                                                                                                                
Vice-Chair Gara  replied in the  negative. He  believed that                                                                    
was  the  source of  the  confusion.  He clarified  that  if                                                                    
something  was bid  at 7  percent, the  school district  [or                                                                    
other entity] would  take the product at the  7 percent. The                                                                    
school  district would  not be  allowed to  give a  producer                                                                    
more than the bid price.  He provided an example where local                                                                    
dairy  bid  at  9  percent more.  He  explained  the  school                                                                    
district could  choose whether to  accept the 9  percent bid                                                                    
or go with another bid because  it was only obligated to pay                                                                    
7 percent.                                                                                                                      
                                                                                                                                
1:51:26 PM                                                                                                                    
                                                                                                                                
Representative Wilson  pointed to  language in Section  9 of                                                                    
the  amendment  on pages  2  and  3.  She observed  that  if                                                                    
something  was  bought  from  out-of-state,  the  purchasing                                                                    
entity  may  be  required  to  submit  additional  paperwork                                                                    
detailing  why the  out-of-state bidder  had been  selected.                                                                    
She  asked  where  the  paperwork would  go  and  who  would                                                                    
determine what it looked like.                                                                                                  
                                                                                                                                
Vice-Chair Gara  asked Representative  Wilson to  repeat the                                                                    
location in the amendment she was referencing.                                                                                  
                                                                                                                                
Representative Wilson read from Section 9 of the amendment:                                                                     
                                                                                                                                
     A  solicitation for  the  purchase  of agricultural  or                                                                    
     fisheries products  must include written notice  of the                                                                    
     preferences  under  (a) and  (b)  of  this section  and                                                                    
     [SHALL]  specify  [THE REQUIREMENT]  that  agricultural                                                                    
     products harvested in the  state and fisheries products                                                                    
     harvested or  processed within the jurisdiction  of the                                                                    
     state  will  [SHALL] be  used  where  possible. If  the                                                                    
     state or  a school  district that receives  state money                                                                    
     purchases agricultural  products harvested  outside the                                                                    
     state  or  fisheries  products harvested  or  processed                                                                    
     outside  the  jurisdiction  of the  state  the  officer                                                                    
     responsible for  the purchase shall certify  in writing                                                                    
     the  reasons that  agricultural  products harvested  in                                                                    
     the state or fisheries  products harvested or processed                                                                    
     within  the   jurisdiction  of   the  state   were  not                                                                    
     purchased."                                                                                                                
                                                                                                                                
Representative Wilson  observed the  section was  a mandate.                                                                    
She asked where  the paperwork would be filed  and who would                                                                    
determine its accuracy.                                                                                                         
                                                                                                                                
Vice-Chair  Gara  answered that  it  was  a requirement  for                                                                    
entities  to state  the  reason why  they  rejected a  local                                                                    
bidder. The reasons would be included in procurement code.                                                                      
                                                                                                                                
Representative  Guttenberg   stated  the  language   in  the                                                                    
amendment  consistently referred  to municipality.  He noted                                                                    
it did  not refer to  school districts  until page 3  of the                                                                    
bill.  He asked  if the  definition of  municipality covered                                                                    
school  districts. He  noted that  not all  school districts                                                                    
were  connected  to  a municipality.  He  provided  examples                                                                    
including the Yukon Koyukuk School  District in the Interior                                                                    
and some  Southeast and  possibly Southwest  communities. He                                                                    
wanted  to ensure  the reference  to  municipalities in  one                                                                    
section covered school districts.                                                                                               
                                                                                                                                
1:54:29 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Gara replied  that  the  amendment governed  the                                                                    
same  entities  that  the   procurement  code  covered.  The                                                                    
amendment  did nothing  to change  that. He  noted the  bill                                                                    
sponsor may  know exactly which  entities were  covered, but                                                                    
the amendment did not change that law.                                                                                          
                                                                                                                                
Ms. Rhodes  answered that Vice-Chair  Gara was  correct. She                                                                    
elaborated the amendment changed  nothing in the procurement                                                                    
code.  The  covered  entities   were  school  districts  and                                                                    
municipalities that received state money.                                                                                       
                                                                                                                                
Representative Wilson MAINTAINED the OBJECTION.                                                                                 
                                                                                                                                
A roll call vote was taken on the motion.                                                                                       
                                                                                                                                
IN FAVOR: Ortiz, Pruitt, Thompson,  Gara, Grenn, Guttenberg,                                                                    
Seaton, Foster                                                                                                                  
OPPOSED: Kawasaki, Tilton, Wilson                                                                                               
                                                                                                                                
The MOTION  PASSED (8/3). There being  NO further OBJECTION,                                                                    
Amendment 1 was ADOPTED.                                                                                                        
                                                                                                                                
Vice-Chair  Gara   addressed  the  fiscal  notes   from  the                                                                    
Department of Commerce,  Community and Economic Development.                                                                    
The note reflected a cost of  $5,000 and a change in revenue                                                                    
of $10,000 for FY 19 through FY 24.                                                                                             
                                                                                                                                
1:57:21 PM                                                                                                                    
                                                                                                                                
Co-Chair  Seaton  MOVED  to  REPORT  CSHB  217(FIN)  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
                                                                                                                                
CSHB  217(FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass"  recommendation  and  with  one  previously  published                                                                    
fiscal impact note: FN3 (DNR).                                                                                                  
                                                                                                                                
1:58:07 PM                                                                                                                    
AT EASE                                                                                                                         
                                                                                                                                
1:58:44 PM                                                                                                                    
RECONVENED                                                                                                                      
                                                                                                                                

Document Name Date/Time Subjects
HB 231 AKSupremeCourtCasesJan2018 (003).pdf HFIN 4/6/2018 1:30:00 PM
HB 231
Hb 231 - Amendments 1, 2 & 3.pdf HFIN 4/6/2018 1:30:00 PM
HB 231
HB 231 DOA Response to HFIN 4.5.18.pdf HFIN 4/6/2018 1:30:00 PM
HB 231
HB 231 - Letter of Support.pdf HFIN 4/6/2018 1:30:00 PM
HB 231
HB 231 CFEC employees exempt reasons.pdf HFIN 4/6/2018 1:30:00 PM
HB 231
HB 268 - HFIN Amendments.pdf HFIN 4/6/2018 1:30:00 PM
HB 268
HB 316 Amendments.pdf HFIN 4/6/2018 1:30:00 PM
HB 316
HB 299 Amendment packet.doc.pdf HFIN 4/6/2018 1:30:00 PM
HB 299
HB 217 Amendment #1.pdf HFIN 4/6/2018 1:30:00 PM
HB 217