Legislature(2017 - 2018)ADAMS ROOM 519

04/10/2018 01:30 PM House FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
<Bill Hearing Canceled>
<Pending Referral>
-- Public Testimony --
Heard & Held
-- Public Testimony --
Moved HCS SB 97(FIN) Out of Committee
<Bill Hearing Canceled>
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved SB 107 Out of Committee
-- Public Testimony --
Moved CSHB 316(FIN) Out of Committee
<Bill Hearing Canceled>
                  HOUSE FINANCE COMMITTEE                                                                                       
                      April 10, 2018                                                                                            
                         1:36 p.m.                                                                                              
1:36:46 PM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Foster  called the House Finance  Committee meeting                                                                    
to order at 1:36 p.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Representative Neal Foster, Co-Chair                                                                                            
Representative Paul Seaton, Co-Chair                                                                                            
Representative Les Gara, Vice-Chair                                                                                             
Representative Jason Grenn                                                                                                      
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
Representative Dan Ortiz                                                                                                        
Representative Lance Pruitt                                                                                                     
Representative Steve Thompson                                                                                                   
Representative Cathy Tilton                                                                                                     
Representative Tammie Wilson                                                                                                    
MEMBERS ABSENT                                                                                                                
ALSO PRESENT                                                                                                                  
Shea  Siegert,  Staff,  Representative  Jason  Grenn;  Emily                                                                    
Nauman,     Attorney,     Legislative    Legal     Services;                                                                    
Representative    Harriet    Drummond,   Sponsor;    Patrick                                                                    
Fitzgerald,  Staff, Representative  Harriet Drummond;  Nancy                                                                    
Meade,   General   Counsel,   Alaska  Court   System;   Kaci                                                                    
Schroeder,  Assistant Attorney  General, Criminal  Division,                                                                    
Department of  Law; Senator  Anna MacKinnon,  Sponsor; Deven                                                                    
Mitchell,  Executive Director,  Alaska  Municipal Bond  Bank                                                                    
Authority;  Rob  Carpenter,   Analyst,  Legislative  Finance                                                                    
PRESENT VIA TELECONFERENCE                                                                                                    
David  Gibbs,  Fairbanks  North Star  Borough,  Director  of                                                                    
Emergency,  Fairbanks;  Kathryn  Monfreda,  Chief,  Criminal                                                                    
Records and Identification Bureau, Department of Public                                                                         
Safety, Anchorage.                                                                                                              
HB 316    RESTRICT ACCESS MARIJUANA CRIME RECORDS                                                                               
          CSHB 316 (FIN) was  REPORTED out of committee with                                                                    
          an "amend"  recommendation and  with one  new zero                                                                    
          fiscal  note by  the Department  of Public  Safety                                                                    
          and  one previously  published  zero fiscal  note:                                                                    
          FN1 (JUD).                                                                                                            
HB 385    ENHANCED 911:MULTI-LINE TELEPHONE SYSTEMS                                                                             
          HB  385  was  HEARD  and  HELD  in  committee  for                                                                    
          further consideration.                                                                                                
SB 97     PENSION OBLIGATION BONDS                                                                                              
          HCSSB 97 (FIN) was  REPORTED out of committee with                                                                    
          a  "do pass"  recommendation and  with a  new zero                                                                    
         fiscal note by the Department of Revenue.                                                                              
SB 107    ALASKA CAPITAL INCOME FUND                                                                                            
          SB 107  was REPORTED out  of committee with  a "do                                                                    
          pass" recommendation  and with  a new  zero fiscal                                                                    
          note by the House Finance Committee.                                                                                  
Co-Chair Foster reviewed the agenda for the day.                                                                                
HOUSE BILL NO. 385                                                                                                            
    "An Act relating to multi-line telephone systems."                                                                          
1:38:03 PM                                                                                                                    
REPRESENTATIVE JASON GRENN, SPONSOR, proudly served                                                                             
District 32.                                                                                                                    
SHEA SIEGERT, STAFF, REPRESENTATIVE JASON GRENN, introduced                                                                     
Representative Grenn reviewed the legislation. He read from                                                                     
a prepared statement:                                                                                                           
     Alaskan residents  have relied on dialing  911 to reach                                                                    
     local  emergency  services  for decades.  Enhanced  911                                                                    
     (E911)  is a  service that  automatically displays  the                                                                    
     telephone  number  and  physical location  of  the  911                                                                    
     caller  on the  emergency  operator's  screen. This  is                                                                    
     unlike Basic  911 service, where the  distressed caller                                                                    
     must  tell the  operator  where he  or  she is  calling                                                                    
     from.  E911  is  crucial  in  circumstances  where  the                                                                    
     caller  cannot  communicate  their whereabouts,  as  it                                                                    
     ensures the  operator is still  able to  send emergency                                                                    
     response  services to  the correct  location. With  the                                                                    
     advancement  of  technology,   E911  has  significantly                                                                    
     improved  the  effective  delivery of  critical  public                                                                    
     safety  and  emergency  response  services  across  the                                                                    
     There is  a large segment  of E911 end-users  in Alaska                                                                    
     using  Multi-Line   Telephone  Systems   (MLTS).  These                                                                    
     systems  do not  have  the same  level  of E911  safety                                                                    
     protections as small  business and residential systems.                                                                    
     MLTS  connects   dozens,  hundreds,  or   thousands  of                                                                    
     "extension"   phones   to   a   central,   computerized                                                                    
     telephone  "switchboard". MLTS  are frequently  used by                                                                    
     government   agencies,  banks,   hotels,  health   care                                                                    
     facilities, and schools.                                                                                                   
     When individuals  call 911 from  a phone  in Multi-Line                                                                    
     Telephone  System,  that  system  may  only  relay  the                                                                    
     physical   street  address   of  the   facility's  main                                                                    
     building or  the address of  the building in  which the                                                                    
     MLTS  is  located. However,  it  may  not provide  more                                                                    
     specific   information  about   where  the   distressed                                                                    
     individual is  physically located,  such as  a building                                                                    
     number, floor number, or room  number. When callers are                                                                    
     also  unable   to  provide  their   specific  location,                                                                    
     because  they   are  either  unaware  of   their  exact                                                                    
     location  or  are  physically   unable  to  convey  the                                                                    
     information,   emergency   responders  face   avoidable                                                                    
     delays that can result in tragedies.                                                                                       
     House  Bill  385  will   help  ensure  911  dispatchers                                                                    
     receive  accurate  location  information  so  emergency                                                                    
     responders  will not  be delayed  while trying  to find                                                                    
     the   emergency   caller   in  need.   HB   385   gives                                                                    
     municipalities the option to  require MLTS operators in                                                                    
     their   region  to   provide   an  Automatic   Location                                                                    
     Information  (ALI) record  for every  telephone capable                                                                    
     of  dialing 911.  By  automatically providing  specific                                                                    
     location information through  the 911 system, emergency                                                                    
     operators  can immediately  dispatch  fire, police,  or                                                                    
     EMS  responders to  the  caller's  location, even  when                                                                    
     that  person is  incapacitated. This  requirement would                                                                    
     apply only to new MLTS  installations or upgrades to an                                                                    
     existing MLTS.                                                                                                             
     Alaskans depend  on fast and reliable  access to public                                                                    
     safety resources when faced with emergency situations.                                                                     
     I urge your support for House Bill 385.                                                                                    
Representative Grenn indicated his staff, Mr. Siegert,                                                                          
would review the sectional analysis.                                                                                            
1:41:15 PM                                                                                                                    
Mr. Siegert read the sectional analysis from a prepared                                                                         
     Section 1:                                                                                                                 
     This  section provides  a municipality  the ability  to                                                                    
     opt-in  to  requiring  a  multi-line  telephone  system                                                                    
     operator to comply with the provisions in this bill.                                                                       
     The first  section also states that  the operators must                                                                    
     comply  with the  provisions when  they  install a  new                                                                    
     multi-line  telephone system  or  make  upgrades to  an                                                                    
     existing multi-line telephone system.                                                                                      
     Section 2:                                                                                                                 
         Paragraph (b) Subpoint (1): requires a multiline                                                                    
          telephone system have direct dial access to a                                                                         
          public safety answering point.                                                                                        
         Paragraph (b)   Subpoint   (2):   requires   the                                                                    
          multiline telephone system to provide automatic                                                                       
          number and location information for the call                                                                          
          being placed to the public safety access point.                                                                       
         Paragraph (c): provides that any information in                                                                     
          the  location  database  is   owned  by  the  MLTS                                                                    
          operator and may not be  shared unless required by                                                                    
          law  and  may  not  be used  by  a  public  safety                                                                    
          answering point for any purpose except to                                                                             
          facilitate an emergency response to a 911 call.                                                                       
         Paragraph (d): provides for systems that are                                                                        
          exempt under section one of this bill to have                                                                         
          signage which gives clear and readable directions                                                                     
              How to dial a public safety answering point                                                                    
               that   includes    the   pertinent   location                                                                    
               information of the caller.                                                                                       
       Paragraph (e): defines the pertinent terms                                                                            
Representative  Grenn   was  available  for   questions.  He                                                                    
conveyed that  Emily Nauman  was available  from Legislative                                                                    
Legal Services was available to testify.                                                                                        
Co-Chair Foster reviewed the list of testifiers online.                                                                         
1:44:41 PM                                                                                                                    
Representative  Kawasaki  mentioned  that  the  bill  talked                                                                    
about the  municipalities having  to opt-in. He  asked about                                                                    
the  conditions in  which  they wound  not  have to  opt-in.                                                                    
Representative Grenn deferred to his staff.                                                                                     
Mr.  Siegert indicated  that municipalities  opted  in on  a                                                                    
voluntary basis. A  municipality would not opt-in  if it was                                                                    
going to incur  an extreme cost, did not have  access to 911                                                                    
operations, or  if they were an  unorganized borough without                                                                    
access  to 911  service. If  they found  that their  private                                                                    
businesses  would   incur  an   abnormally  large   cost  to                                                                    
implement the system,  they might not opt-in.  For all other                                                                    
purposes he did  not foresee a municipality  turning down an                                                                    
ordinance to opt-in if they had the capabilities to do so.                                                                      
Representative  Kawasaki asked  if a  municipality would  be                                                                    
impacted if they  wanted to upgrade but not  to a multi-line                                                                    
system. Mr.  Siegert responded in the  negative. He reminded                                                                    
members that  Carrie's Law, HR  582, was signed into  law by                                                                    
President  Trump in  February  2018. The  law provided  that                                                                    
after  2020  all  multi-line   telephone  systems  sold  and                                                                    
manufactured in the United States  would be required to have                                                                    
911 capabilities. He suggested  that most multi-line systems                                                                    
had the capability.                                                                                                             
Representative Kawasaki asked about  the potential costs for                                                                    
a  multi-line  system  upgrade. He  wondered  who  would  be                                                                    
responsible. Representative Grenn responded  that one of the                                                                    
best things about the bill  was that the costs were minimal.                                                                    
For some, it would not cost  anything - especially if it was                                                                    
a matter of a software update.  For others it could cost $25                                                                    
per phone.                                                                                                                      
Representative  Wilson  asked if  the  bill  was limited  to                                                                    
municipalities.  Mr. Siegert  responded in  the affirmative.                                                                    
He  indicated that  most unorganized  boroughs did  not have                                                                    
access to  911 or 911  enhanced services and would  not opt-                                                                    
in. If an  unorganized borough needed to  opt-in, they would                                                                    
have  to go  to  the state.  He deferred  to  Ms. Nauman  to                                                                    
1:49:49 PM                                                                                                                    
EMILY   NAUMAN,   ATTORNEY,  LEGISLATIVE   LEGAL   SERVICES,                                                                    
understood  Representative Wilson's  question to  be whether                                                                    
the bill applied  or how the bill applied  to an unorganized                                                                    
borough. She  informed members  that an  unorganized borough                                                                    
was  technically  governed  by the  state  legislature.  The                                                                    
unorganized  borough had  no authority  by  itself to  enact                                                                    
ordinances  that required  an enhanced  multi-line telephone                                                                    
system.  She suggested  that if  the legislature  wished the                                                                    
requirement  to apply  to an  unorganized borough,  it would                                                                    
have to enact a law.                                                                                                            
Representative  Wilson asked  if  the  legislature would  be                                                                    
giving boroughs  and cities a  power they did not  have. Ms.                                                                    
Nauman directed attention to the  bill. The bill showed some                                                                    
of the powers  that they already had related  to an enhanced                                                                    
911 system. The bill amended those powers.                                                                                      
Representative  Wilson  asked  if  they  currently  had  the                                                                    
powers.  Ms. Nauman  thought the  sponsor would  be able  to                                                                    
better detail  the specific  changes made  in the  bill. The                                                                    
municipalities  had  the  ability   to  elect  an  ordinance                                                                    
related to an  enhanced 911 system. She was  not as familiar                                                                    
with all the details of the current law.                                                                                        
Mr. Siegert responded  that Representative Hawker introduced                                                                    
legislation  that  passed  in 2005,  HB  249  [Short  Title:                                                                    
Enhanced 911  Surcharges and Systems], that  was supposed to                                                                    
give the  Regulatory Commission of Alaska  (RCA) the ability                                                                    
to implement and  regulate the 911 system.  The problem that                                                                    
came  from the  10-year docket  open from  2005 to  2015 was                                                                    
that (cited  in R-05-005 order no.  7) the RCA did  not have                                                                    
the requisite authority  to do so. He provided  a quote from                                                                    
the former Attorney General,  "Since the specific delegation                                                                    
in AS 29.035 only authorizes  the agency to define generally                                                                    
accepted industry standards for  E911, we lack the requisite                                                                    
authority   to   enforce   those  standards   by   resolving                                                                    
disputes."  House  Bill  249  did   not  give  the  RCA  the                                                                    
requisite authority  to enforce and implement  the generally                                                                    
accepted standards  they agreed  upon. Another  conflict the                                                                    
RCA had during the 10-year  open docket was finding a waiver                                                                    
system  that  would  not be  overly  burdensome  on  certain                                                                    
borough versus  others. The basis of  passing legislation to                                                                    
provide  an opt-in  municipal ordinance  was  to give  every                                                                    
borough  local control  of  the provisions  in  the bill  to                                                                    
avoid  becoming  overly  burdensome   on  one  borough  over                                                                    
Representative Wilson asked if  the legislature was giving a                                                                    
borough  power  that  they  did   not  currently  have.  She                                                                    
wondered if  she was  correct. Mr.  Siegert thought  she was                                                                    
1:53:38 PM                                                                                                                    
Representative  Wilson figured  it  was up  to  the city  or                                                                    
borough to  determine the strictness  of the  ordinance. She                                                                    
wondered if  the municipality would determine  the number of                                                                    
lines in  a multi-line  system that  would be  required. She                                                                    
wondered   how  far   the  bill   would  reach   into  small                                                                    
businesses.  Representative Grenn  thought Ms.  Nauman could                                                                    
respond best to Representative Wilson's question.                                                                               
Emily  Nauman  explained that  the  bill  was a  take-it  or                                                                    
leave-it bill.  The municipality did not  have the authority                                                                    
to adopt something  slightly different than what  was in the                                                                    
bill. They had  to adopt their ordinance  in accordance with                                                                    
the rules set  out in the bill. She  suggested that anything                                                                    
shy of  it or  anything that  directly conflicted  with what                                                                    
was in  the bill  would likely  cause a  preemption problem;                                                                    
the  state law  would directly  conflict with  the municipal                                                                    
ordinance.  She noted  that  the  municipal ordinance  would                                                                    
likely be thrown  out by a court. In terms  of the number of                                                                    
telephone  lines,   she  referred   to  the   definition  of                                                                    
multi-line systems on  page 4 of the bill,  starting on line                                                                    
20.  It did  not specify  a number  of telephone  lines. she                                                                    
reported that in the past  the Alaska Supreme court upheld a                                                                    
"narrow,  but reasonable"  interpretation  of  this type  of                                                                    
law. There  was some  room for  a municipality  to determine                                                                    
how many lines constituted a multi-line system.                                                                                 
Representative  Wilson suggested  that  if an  entity had  a                                                                    
multi-line system like the one  she had at her own business,                                                                    
they  would end  up bearing  the cost  depending on  how the                                                                    
ordinance was  written. Ms.  Nauman did  not have  a comment                                                                    
except to reiterate  her earlier response that  the bill was                                                                    
silent on  how many  phones constituted a  multi-line phone.                                                                    
There might be some flexibility  for a municipality to flush                                                                    
it out in its ordinance.                                                                                                        
Representative Wilson  originally thought the bill  was only                                                                    
for  places such  as major  hotels that  would upgrade.  She                                                                    
wondered if an  impact study had been  conducted for smaller                                                                    
businesses.  She asked  the sponsor  to distinguish  between                                                                    
large  and small  businesses.  Representative Grenn  replied                                                                    
that he  did not have  any information regarding a  study on                                                                    
the impacts of the bill.  He had previously spoken about the                                                                    
cost of  upgrading a line.  There was no  difference between                                                                    
any 911 software  in the multi-line telephone  system or $15                                                                    
to $20 per  line. He reported that Mr. Gibbs  was online and                                                                    
could comment.                                                                                                                  
1:58:02 PM                                                                                                                    
DAVID  GIBBS,  FAIRBANKS  NORTH STAR  BOROUGH,  DIRECTOR  OF                                                                    
EMERGENCY,   FAIRBANKS   (via  teleconference),   introduced                                                                    
Representative  Grenn repeated  his question  concerning the                                                                    
cost  of   upgrading  a  small   business  with   a  smaller                                                                    
multi-line system.  Mr. Gibbs responded that  the cost would                                                                    
likely be nothing. It would simply  be the cost of the labor                                                                    
to  provide  the  information  to   the  911  authority  for                                                                    
inclusion in the automatic location information database.                                                                       
Representative Wilson asked about  costs associated with new                                                                    
upgrades.  She   thought  businesses  might  be   forced  to                                                                    
purchase  new phones  and software.  She  wondered how  many                                                                    
places  would be  affected in  the North  Star Borough.  Mr.                                                                    
Gibbs  was  unsure  how  many   small  businesses  would  be                                                                    
affected by the legislation. He  clarified that there were a                                                                    
number of services  for small businesses. He  thought a cost                                                                    
of $20 to $25 cost per  handset per month might apply when a                                                                    
business  wanted  to subscribe  to  a  phone system  on  the                                                                    
Cloud. He had  done some research on the  internet and found                                                                    
a cost between $10 and  $30. The cost included the handsets,                                                                    
the switching,  and the database  maintenance. The  bill did                                                                    
not require a business to upgrade their systems.                                                                                
2:00:21 PM                                                                                                                    
Co-Chair Foster OPENED public testimony.                                                                                        
2:00:44 PM                                                                                                                    
Co-Chair Foster CLOSED public testimony.                                                                                        
Representative  Wilson  asked  if   the  bill  included  the                                                                    
military.  Mr. Siegert  deferred to  Ms. Nauman.  Ms. Nauman                                                                    
responded  that  she  would  be  skeptical  if  a  municipal                                                                    
ordinance  could   affect  the  telephone   requirements  on                                                                    
federal  property, particularly  a  military base.  However,                                                                    
she was not certain.  Representative Wilson asked Ms. Nauman                                                                    
to find out the answer to her question.                                                                                         
HB  385  was  HEARD  and   HELD  in  committee  for  further                                                                    
HOUSE BILL NO. 316                                                                                                            
     "An  Act  relating  to the  sealing  of  certain  court                                                                    
     records;   restricting  the   publication  of   certain                                                                    
     records   of  convictions   on  a   publicly  available                                                                    
     website; relating to public  records; and amending Rule                                                                    
     37.6, Alaska Rules of Administration."                                                                                     
2:02:30 PM                                                                                                                    
Co-Chair Foster indicated the committee  last heard the bill                                                                    
on March  30, 2018.  At the hearing  the committee  heard an                                                                    
introduction of  the bill and  closed public  testimony. The                                                                    
committee had a committee  substitute (CS), version N. There                                                                    
was  also  one  amendment.  He asked  the  bill  sponsor  to                                                                    
address the changes in the CS.                                                                                                  
REPRESENTATIVE   HARRIET   DRUMMOND,   SPONSOR,   introduced                                                                    
herself. She  deferred to her  staff to explain  the changes                                                                    
from the previous version of the bill.                                                                                          
PATRICK FITZGERALD, STAFF,  REPRESENTATIVE HARRIET DRUMMOND,                                                                    
introduced  himself and  reviewed the  changes to  the bill.                                                                    
The  first  change in  Section  1  was  to allow  an  opt-in                                                                    
program through  the Department of Public  Safety (DPS). The                                                                    
reason  for  the change  was  because  it would  reduce  the                                                                    
burden and cost for DPS placing  it on the person who wanted                                                                    
to classify their  record. Another change that  was made was                                                                    
the  elimination of  Sections 4  and 5,  the indirect  court                                                                    
rule.  It  was inserted  with  the  original legislation  to                                                                    
error on the side of  caution, but the legislation would not                                                                    
interfere  with   the  court   rule.  Section  3   was  also                                                                    
eliminated.  It accomplished  what other  parts of  the bill                                                                    
already accomplished.                                                                                                           
Representative  Wilson referred  to  page 1.  She asked  for                                                                    
clarification  for  the   cost  decreasing.  Mr.  Fitzgerald                                                                    
responded that DPS already had the form.                                                                                        
2:05:39 PM                                                                                                                    
KATHRYN    MONFREDA,    CHIEF,    CRIMINAL    RECORDS    AND                                                                    
IDENTIFICATION   BUREAU,   DEPARTMENT  OF   PUBLIC   SAFETY,                                                                    
ANCHORAGE (via teleconference),  asked Representative Wilson                                                                    
to repeat her question.                                                                                                         
Representative Wilson  thought the  department was  going to                                                                    
have  to look  at  the  cases. She  wondered  if the  person                                                                    
initiating the  change would  have to  complete a  from. Ms.                                                                    
Monfreda  responded  that  she   was  correct.  Rather  than                                                                    
flagging  the  records,  the  department  would  wait  until                                                                    
someone came  to the department. She  thought the department                                                                    
could absorb the work without needing extra people.                                                                             
Representative Wilson asked if  the person would be required                                                                    
to show  that there were no  other charges at the  time. Ms.                                                                    
Monfreda believed the information  would already be in their                                                                    
files.  The  department  would  know  if  there  were  other                                                                    
charges involved. The department  would be asking the person                                                                    
to  prove  that  the  amount  was  less  than  an  ounce  of                                                                    
marijuana and that there were no other charges in the case.                                                                     
Co-Chair   Seaton   MOVED   to  ADOPT   proposed   committee                                                                    
substitute for HB 316, Work Draft (30-LS1017\N).                                                                                
There being NO OBJECTION, it was so ordered.                                                                                    
Representative Wilson MOVED to  ADOPT Conceptual Amendment 1                                                                    
(30-LS1017\U.3) (copy on file):                                                                                                 
     Page l, line I 0, following "substance":                                                                                   
          Insert "and was not charged with any other crime                                                                      
          in that case"                                                                                                         
     Page l, line 13:                                                                                                           
          Delete all material and insert:                                                                                       
               "(3) has not been convicted of any other                                                                         
               charges since the conviction under (I) of                                                                        
               this subsection."                                                                                                
     Page 2, line 6, following "substance":                                                                                     
          Insert "and was not charged with any other crime                                                                      
          in that case"                                                                                                         
     Page 2, line 9:                                                                                                            
          Delete all material and insert:                                                                                       
               "(3) has not been convicted of any other                                                                         
               charges since the conviction under (I) of                                                                        
               this subsection."                                                                                                
     Page 4, lines 22 - 23:                                                                                                     
          Delete "and was not convicted of any other                                                                            
          charges in that case"                                                                                                 
          Insert", was not charged with any other crimes in                                                                     
          that case, and has not been convicted of any                                                                          
          other charges since that conviction"                                                                                  
Representative Grenn OBJECTED for discussion.                                                                                   
Representative  Wilson read  the amendment  (copy on  file).                                                                    
The amendment  outlined that  the charge  could be  the only                                                                    
thing on a person's record in  order to have it sealed. If a                                                                    
person had  been charged and  found guilty of  other things,                                                                    
it  would  not  make   a  difference  whether  other  things                                                                    
appeared on someone's record. She  was okay with the idea of                                                                    
a person  with only one  charge having their  record sealed.                                                                    
However,  she opposed  the notion  of someone  with multiple                                                                    
offenses having a record sealed, as it showed a pattern.                                                                        
Representative Ortiz asked if  the amendment sealed only the                                                                    
one  item  having to  do  with  past  use of  marijuana.  He                                                                    
wondered what was gained.                                                                                                       
2:10:11 PM                                                                                                                    
Representative Wilson suggested that  what was brought up by                                                                    
the  representative was  that a  person would  have a  black                                                                    
mark  on  their record.  People  having  something on  their                                                                    
record  made  it  difficult  to find  employment  at  a  job                                                                    
requiring  a background  check. She  wondered why  something                                                                    
would be removed from a  person's record if they already had                                                                    
other  things listed.  She  was fine  with  having a  record                                                                    
sealed if it was their only offense.                                                                                            
Representative  Ortiz   asked  about   the  intent   of  the                                                                    
amendment. He wondered if the  record would be reopened once                                                                    
any  additional  records   came  into  play.  Representative                                                                    
Wilson  responded that  there was  no  retroactivity of  the                                                                    
Co-Chair Foster asked  the sponsor if she had  an opinion on                                                                    
the  amendment.   Representative  Drummond   clarified  that                                                                    
charges  were  different  from  convictions.  The  amendment                                                                    
appeared to insert, "and was  not charged." She believed the                                                                    
issue was  already covered in the  bill on line 13,  page 1.                                                                    
The intent  of the bill was  not to cover for  bad actors of                                                                    
other  acts of  violence  or other  whatever other  criminal                                                                    
acts they had  on their record. She did not  believe the bad                                                                    
actors would  be looking to have  their marijuana possession                                                                    
crime  hidden if  they  had several  other  things on  their                                                                    
record. If  they were to  remove their  marijuana conviction                                                                    
they would  still be  bad actors. They  were not  the people                                                                    
the state was seeking to assist in reentering society.                                                                          
Representative Wilson  requested that  Ms. Mead come  to the                                                                    
2:14:47 PM                                                                                                                    
NANCY MEADE,  GENERAL COUNSEL, ALASKA COURT  SYSTEM, thought                                                                    
the amendment  narrowed the number  of people that  the bill                                                                    
would  apply to  in two  different ways.  First, the  person                                                                    
could  not have  been  charged with  any  other crimes.  She                                                                    
thought  this addressed  the question  Representative Wilson                                                                    
brought up  at the previous  hearing. For example,  a person                                                                    
might be charged  with possession of meth  and possession of                                                                    
marijuana but only convicted of  possession of marijuana. As                                                                    
she read  the amendment,  it would  exclude the  people with                                                                    
other charges in  the case. The only people  that would have                                                                    
their names taken off CourtView  would be the ones that were                                                                    
not charged  with anything else but  possession of marijuana                                                                    
and then  convicted. Second,  a person  could not  have been                                                                    
convicted of any other crime since the conviction.                                                                              
Ms. Mead noted that with  respect to the numbers, there were                                                                    
about 700  cases in CourtView  since 2007. Prior to  2007 it                                                                    
was difficult  to obtain  data. Marijuana  possession became                                                                    
legal in  2015. Most of the  cases stopped at that  time. Of                                                                    
the 700 cases,  568 had no other charges when  they ended up                                                                    
with  a  conviction  for  simple  possession  of  marijuana.                                                                    
However, of those  568 about 72 percent had  other crimes in                                                                    
the database, about 400 cases.  She concluded that about 160                                                                    
people  since 2007  would be  excluded from  CourtView under                                                                    
the wording of the amendment.                                                                                                   
Ms. Mead  wanted to make  sure everyone knew what  the court                                                                    
would do with  Section 2 of the bill. It  was different from                                                                    
a  prior  version  in  that  it no  longer  made  the  cases                                                                    
confidential.   The  cases   would  no   longer  appear   in                                                                    
CourtView.  The prior  version had  confidentiality, meaning                                                                    
the court  would not also  hand out  the paper file.  In the                                                                    
current version  the record  would not  be available  on the                                                                    
court  website, but  the file  would still  be public  under                                                                    
Section 2 of the bill. She  wanted to make sure there was no                                                                    
misunderstanding  when  and  if the  court  implemented  the                                                                    
Vice-Chair Gara  understood that a person  would not benefit                                                                    
from the  amendment if a  person was  21 years or  older and                                                                    
was expunging  their record because marijuana  was legal. He                                                                    
indicated  he  had been  interrupted  and  was told  he  was                                                                    
incorrect. He asked for clarification from Ms. Mead.                                                                            
Ms.  Mead relayed  that the  amendment was  not expungement.                                                                    
Rather,  the   amendment  would  take  the   record  off  of                                                                    
CourtView  automatically on  the  effective  date. The  file                                                                    
would still be available at  the court house. Secondly, if a                                                                    
person actively walked into DPS  and asked that their record                                                                    
not  be released  in a  general background  check, then  DPS                                                                    
would not  release the  information if  the person  fit into                                                                    
the categories that had been discussed.                                                                                         
Vice-Chair Gara suggested that the  way the bill was written                                                                    
a person's  record would not be  on CourtView if they  had a                                                                    
prior conviction  for just  possessing marijuana  because it                                                                    
was  currently legal.  The  bill also  indicated  that if  a                                                                    
person  was convicted  of something  else at  the time,  the                                                                    
record  would  be  available on  CourtView.  The  conceptual                                                                    
amendment  included  that  if  a  person  was  charged  with                                                                    
something and the charge was  dropped, the information would                                                                    
remain available  on CourtView. He  asked if he  was correct                                                                    
about what was being proposed in the conceptual amendment.                                                                      
2:19:20 PM                                                                                                                    
Representative  Wilson  relayed  that the  amendment  did  2                                                                    
things. First,  if a person  was charged with  another crime                                                                    
but  not convicted,  they  would not  fall  under the  bill.                                                                    
Second, if  a person  had been convicted  since the  time of                                                                    
conviction,  the person  would  not be  able  to have  their                                                                    
record removed from CourtView.                                                                                                  
Vice-Chair Gara opposed  the conceptual amendment. Sometimes                                                                    
people  were  charged  with  something   they  did  not  do.                                                                    
Although his experience in criminal  law was limited, he had                                                                    
had a client charged with  kidnapping, but later the charges                                                                    
were dropped.  He was very uncomfortable  with the amendment                                                                    
and felt it  gutted the bill. A later  conviction would show                                                                    
up  on  CourtView.  He  did  not  see  the  benefit  of  the                                                                    
amendment  unless people  were seen  as guilty  until proven                                                                    
innocent.  In his  world people  were innocent  until proven                                                                    
guilty. He furthered that when  a charge was dropped, it was                                                                    
dropped.  He continued  that when  a  person was  convicted,                                                                    
they were convicted.                                                                                                            
Representative Wilson  clarified that  the charge  part only                                                                    
had to do with the first  case. She provided an example. She                                                                    
offered the amendment  to provide a way for  someone who had                                                                    
only  been charged  with something  that was  now legal,  to                                                                    
remove  it  from their  records.  She  continued that  other                                                                    
convictions would establish  a pattern. She did  not think a                                                                    
person should  get rewarded  if they could  not stay  out of                                                                    
trouble  since   the  initial  conviction.   Mr.  Fitzgerald                                                                    
deferred to Ms. Monfreda.                                                                                                       
Ms.  Monfreda did  not believe  the amendment  would have  a                                                                    
huge  effect on  public  safety in  terms  of redacting  the                                                                    
information.  She thought  it  would  make programming  more                                                                    
Co-Chair Seaton  asked if it  would count as  another charge                                                                    
if someone had a possession  charge and a speeding violation                                                                    
at the  same time.  He relayed  a hypothetical  scenario. He                                                                    
asked if there  would be an additional charge  for a traffic                                                                    
violation.  He  wondered  about  a  marijuana  charge  being                                                                    
removed   from  someone's   record.  Representative   Wilson                                                                    
replied that if  there was an additional charge  at the same                                                                    
time  the marijuana  was found,  then  the marijuana  charge                                                                    
could  not be  removed. She  thought it  would make  it more                                                                    
complicated to try to distinguish between the charges.                                                                          
2:24:42 PM                                                                                                                    
Ms. Mead  explained that  when a  law included  the verbiage                                                                    
"any other crime"  the court interprets that  not to include                                                                    
minor offenses.  In the case  of the example,  the violation                                                                    
would not be  considered a crime. Along similar  lines, if a                                                                    
person was charged  with speeding, a minor  offense, as well                                                                    
as  the  crime of  possession  of  marijuana, it  would  not                                                                    
disqualify the case. On the other  hand, if a person had not                                                                    
been convicted of  any charges since the  conviction, if the                                                                    
intent to mean criminal charges,  it might be something that                                                                    
could  be  clarified  in   the  conceptual  amendment  being                                                                    
discussed. She  thought it might make  the amendment clearer                                                                    
to specify  "not convicted of  any other crimes  or criminal                                                                    
charges."  It  would help to clarify that  the amendment was                                                                    
not  intended  to include  minor  offences  such as  traffic                                                                    
Co-Chair  Seaton  was uncertain  how  many  people had  been                                                                    
charged with simple  possession more than once.  He asked if                                                                    
a person was charged with  simple possession more than once,                                                                    
would it  mean that  their record could  not be  hidden from                                                                    
CourtView.  Ms. Mead  had not  anticipated his  question and                                                                    
did not  have the data  of the  700 cases of  just marijuana                                                                    
possession. She  could look  into it  and provide  data. She                                                                    
did  not  believe the  number  would  be particularly  high.                                                                    
Co-Chair Seaton  thought it could  be something  like people                                                                    
using alcohol.                                                                                                                  
Representative Guttenberg provided  a hypothetical scenario.                                                                    
He wondered  at what point  a violation was written  up. Ms.                                                                    
Mead was not qualified to  answer the question. She deferred                                                                    
to the Department of Law.                                                                                                       
2:28:51 PM                                                                                                                    
KACI   SCHROEDER,  ASSISTANT   ATTORNEY  GENERAL,   CRIMINAL                                                                    
DIVISION, DEPARTMENT OF LAW, replied  that once charges were                                                                    
filed in court, the person  was viewed as being charged from                                                                    
the court's  perspective. The prosecutor might  get the case                                                                    
and  make  different   charging  decisions.  Therefore,  the                                                                    
charges could  change. However, once the  charges were filed                                                                    
in  court  by  either  the officer  or  the  prosecutor  the                                                                    
individual was viewed as being charged.                                                                                         
Representative Wilson MOVED to  ADOPT Conceptual Amendment 1                                                                    
to Conceptual Amendment  1. She proposed to  delete the word                                                                    
"Charges" on line 20 and insert the word "Crimes."                                                                              
Representative Pruitt OBJECTED for discussion.                                                                                  
Representative Pruitt asked for clarification.                                                                                  
Representative Wilson  responded that she wanted  to use the                                                                    
word "crimes" rather than "charges"  on line 20. She was not                                                                    
talking  about  things  like speeding  violations.  She  was                                                                    
talking about actual crimes.                                                                                                    
Co-Chair Foster  asked her to repeat  Conceptual Amendment 1                                                                    
to  Conceptual Amendment  1. Representative  Wilson repeated                                                                    
the  conceptual amendment.  The amendment  would read:  "and                                                                    
had  not  been convicted  of  any  other crimes  since  that                                                                    
conviction."  She  clarified  that conviction  was  about  a                                                                    
conviction of marijuana.                                                                                                        
Representative Drummond  was confused.  She believed  the CS                                                                    
that  was  adopted was  only  2  pages long.  Representative                                                                    
Wilson's amendment  referred to  the previous  version which                                                                    
was no  longer in front  of the body.  Representative Wilson                                                                    
responded  that  that  was the  reason  for  her  conceptual                                                                    
Co-Chair Foster  asked Representative  Wilson to  repeat her                                                                    
amendment  to Conceptual  Amendment 1  again. Representative                                                                    
Wilson relayed  that Amendment 1  to Conceptual  Amendment 1                                                                    
on line  20 of  Conceptual Amendment  1. The  word "charges"                                                                    
would  be changed  to "crimes."  She was  not talking  about                                                                    
speeding tickets or infractions.                                                                                                
Ms. Mead  responded that by  changing the word  "charges" to                                                                    
"crimes"   at   the   bottom  of   Representative   Wilson's                                                                    
amendment, it would address what  Co-Chair Seaton brought up                                                                    
about  a   violation.  She  suggested,   as  a   measure  of                                                                    
housekeeping,  line  6  should  probably  reflect  the  same                                                                    
Representative Wilson  clarified her Conceptual  Amendment 1                                                                    
to  Conceptual  Amendment 1.  The  word  "charges" would  be                                                                    
changed to "crimes" on line 6 and line 20.                                                                                      
Representative Guttenberg asked  if the conceptual amendment                                                                    
was relative to the CS.                                                                                                         
2:33:26 PM                                                                                                                    
AT EASE                                                                                                                         
2:34:47 PM                                                                                                                    
Ms.  Schroeder conveyed  that the  conceptual amendment  was                                                                    
adding  language  that stated,  "was  not  charged with  any                                                                    
other crimes in that case and  has not been convicted of any                                                                    
other crimes  since that conviction. She  indicated that the                                                                    
language needed  to be added in  Section 1 on line  13 under                                                                    
4. It  would replace  number 4.  In Section 2  of the  CS on                                                                    
page 2, on line 9 would replace 3.                                                                                              
Representative Pruitt WITHDREW his OBJECTION                                                                                    
Representative Ortiz OBJECTED.                                                                                                  
Representative Ortiz WITHDREW his OBJECTION.                                                                                    
Conceptual  Amendment  1  to   Conceptual  Amendment  1  was                                                                    
Vice-Chair  Gara relayed  that in  his experience,  the most                                                                    
frequent times  where a  charge was  later dropped  was when                                                                    
law  enforcement thought  one person  was responsible,  when                                                                    
another  person  was  really   responsible.  He  provided  a                                                                    
hypothetical  scenario. He  concluded that  a person  should                                                                    
not  be  penalized  from taking  advantage  of  the  benefit                                                                    
provided in  Representative Drummond's bill when  a mistaken                                                                    
charge was later removed.                                                                                                       
Representative  Wilson  was  not  comfortable  because  plea                                                                    
bargains happened frequently. She asked for member support.                                                                     
Representative Grenn MAINTAINED his OBJECTION.                                                                                  
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Thompson, Tilton, Wilson, Pruitt.                                                                                     
OPPOSED:  Gara, Grenn, Guttenberg,  Kawasaki, Ortiz, Foster,                                                                    
The  MOTION  to  ADOPT  Conceptual Amendment  1  as  amended                                                                    
FAILED (4/7).                                                                                                                   
Co-Chair Foster relayed that there  were no other amendments                                                                    
for HB  316. He asked  Vice-Chair Gara to review  the fiscal                                                                    
Vice-Chair Gara  reviewed two fiscal  notes for HB  316. The                                                                    
first fiscal note had a  zero impact and was from Judiciary.                                                                    
The  appropriation  was  the Alaska  Court  System  and  the                                                                    
allocation was  Trial Courts. The  Office of  Management and                                                                    
Budget  (OMB) component  number was  768. The  second fiscal                                                                    
note   by   the  Department   of   Public   Safety  had   an                                                                    
appropriation  of Statewide  Support  and  an allocation  of                                                                    
Criminal  Justice  Information   Systems  Program.  The  OMB                                                                    
component number  was 3200. The note  reflected the previous                                                                    
version of  the bill.  He indicated  someone from  DPS could                                                                    
speak to  the accuracy  of the fiscal  note for  the current                                                                    
version  of   the  bill.  Ms.  Monfreda   replied  that  the                                                                    
department  would be  submitting a  revised fiscal  note for                                                                    
the  new version  of the  bill.  Co-Chair Foster  reiterated                                                                    
that there would be a forthcoming fiscal note.                                                                                  
2:41:48 PM                                                                                                                    
Co-Chair  Seaton  MOVED to  report  CSHB  316 (FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal notes.                                                                                                      
Representative Wilson OBJECTED.                                                                                                 
A roll call vote was taken on the motion.                                                                                       
IN  FAVOR:  Gara,  Guttenberg,  Kawasaki,  Ortiz,  Thompson,                                                                    
Seaton, Foster                                                                                                                  
OPPOSED: Tilton, Wilson, Pruitt                                                                                                 
The MOTION PASSED (8/3).                                                                                                        
CSHB  316  (FIN)  was  REPORTED out  of  committee  with  an                                                                    
"amend" recommendation and with one  new zero fiscal note by                                                                    
the  Department   of  Public   Safety  and   one  previously                                                                    
published zero fiscal note: FN1 (JUD).                                                                                          
2:42:59 PM                                                                                                                    
AT EASE                                                                                                                         
2:43:42 PM                                                                                                                    
SENATE BILL NO. 97                                                                                                            
     "An Act relating to pension obligation bonds."                                                                             
2:43:49 PM                                                                                                                    
Co-Chair Foster relayed  that the last time SB  97 was heard                                                                    
was  April 19,  2017. At  that hearing  the committee  heard                                                                    
public testimony  and called for  amendments. There  was one                                                                    
amendment the committee would be  addressing. He invited the                                                                    
bill sponsor to refresh the committee about the bill.                                                                           
SENATOR  ANNA  MACKINNON,  SPONSOR, relayed  that  the  bill                                                                    
before the  committee addressed a reduction  of pension bond                                                                    
authority. The bill proposed to  move the pension obligation                                                                    
authority  from  $5 billion  to  $2.5  billion. It  required                                                                    
those  entities  that had  the  authority  to issue  pension                                                                    
obligation  bonds   (POB)  to  submit  a   proposal  to  the                                                                    
Legislative  Budget  and  Audit  Committee  outlining  their                                                                    
proposal. She recalled that  the administration proposed use                                                                    
and  started  shopping  to sell  pension  obligation  bonds.                                                                    
There  was  some  consternation in  Alaska  communities  and                                                                    
among legislators  in both houses  to know whether  the sale                                                                    
would affect  the state's credit  rating, how it  would work                                                                    
in  the market,  and what  it would  do to  Alaska's pension                                                                    
plans. She continued that included  in the legislation was a                                                                    
process  that gave  the legislature  the  time necessary  to                                                                    
actually  respond  and  interact with  the  general  public.                                                                    
Hence, taking  the acquisition or  proposal that  might come                                                                    
to  the   Legislative  Budget   and  Audit   Committee.  The                                                                    
administration supported  the bill before the  committee, as                                                                    
it still  left the tool  available to the  administration to                                                                    
address  pension shortfalls  but  reduced  the authority  by                                                                    
$2.5 billion.                                                                                                                   
Representative Wilson asked why  the bill sponsor settled on                                                                    
the  amount of  $2.5  billion.  Senator MacKinnon  responded                                                                    
that  the   number  was  a   compromise.  There   were  some                                                                    
legislators  that  thought   the  possibility  of  borrowing                                                                    
should  be eliminated  altogether. She  continued that  when                                                                    
the  Senate   Finance  Committee  started  looking   at  the                                                                    
proposal and the actions of  the administration, she went to                                                                    
the  governor  asking  for   his  thoughts  about  available                                                                    
authority. In  conversations with  the senate, she  had been                                                                    
talking  about what  could be  done with  an in  significant                                                                    
amount  available to  the  legislature  to bolster  Alaska's                                                                    
credit   standing  with   outside  national   credit  rating                                                                    
agencies.  Some of  the conversations  were around  reducing                                                                    
outstanding bonds  that Alaska could  put out. The  idea was                                                                    
to show  the market that the  state was going to  handle its                                                                    
debt  very  responsibly.  She indicated  that  she  and  the                                                                    
governor  had  discussed  a number.  She  chose  the  number                                                                    
rather  than  the governor.  The  number  was close  to  the                                                                    
number  the  administration  sought  in the  market  in  the                                                                    
previous year. She believed that  they were acquiring around                                                                    
$2.1  billion  to  $2.2  billion.  She  conveyed  that  $2.5                                                                    
billion was within the initial  figure considered to meet an                                                                    
unfunded liability.                                                                                                             
Senator  McKinnon  furthered  that  the  second  reason  was                                                                    
because  currently  the  state  had  about  a  $6.6  billion                                                                    
unfunded  liability  in  the  Public  Employees'  Retirement                                                                    
System   (PERS)  and   Techers'   Retirement  System   (TRS)                                                                    
combined. That was  with a criteria of an 8  percent rate of                                                                    
return and  a mortality rate  that needed to be  changed. If                                                                    
the percentage currently being used  to amortize the state's                                                                    
debt over  a period of  time adopted in state  statute, $2.5                                                                    
billion  represented almost  50 percent.  If the  state owed                                                                    
$6.6 billion  then $3.3 billion  would be 50 percent  of the                                                                    
unfunded  liability handled  through debt.  In working  with                                                                    
the House Finance co-chairs as  well as having conversations                                                                    
with the  administration and the  debt service  manager, she                                                                    
recommended to Senate Finance that  a $2.5 billion reduction                                                                    
be sent  to the  House side. She  concluded that  there were                                                                    
multiple reasons for the amount of $2.5 billion.                                                                                
2:48:46 PM                                                                                                                    
Co-Chair Seaton MOVED to ADOPT Amendment 1 (copy on file):                                                                      
     Page 3, line 17 following "2,500,000,000":                                                                                 
          Insert "or a funding ratio of actuarial assets to                                                                     
          accrued liability greater than 85 percent,                                                                            
          whichever is less"                                                                                                    
Representative Wilson OBJECTED for discussion.                                                                                  
Co-Chair  Seaton reviewed  the amendment.  He indicated  the                                                                    
purpose was to make sure the  bonds did not take the state's                                                                    
assets  to the  100  percent  or 105  percent.  There was  a                                                                    
provision in statute  that if the state  reached 105 percent                                                                    
of value, the  state would have to pay  out additional money                                                                    
into the post-retirement pension  adjustment to retirees. He                                                                    
relayed that  it made  sense in  a situation  where retirees                                                                    
had  put their  money  in  and the  period  that would  have                                                                    
earned money  over time. If  it earned more than  8 percent,                                                                    
the funding ratio would be  greater. In such an instance, he                                                                    
suggested  it would  make  sense to  bump  up retirement  by                                                                    
giving a  post-retirement pension adjustment in  addition to                                                                    
the  cost  of  living adjustment  (COLA)  increase  retirees                                                                    
received. In  the case  of doing bonds,  the state  would be                                                                    
taking  general  fund  monies  and  putting  them  into  the                                                                    
retirement  system. However,  if the  state reached  the 105                                                                    
percent funding, it  would be required to give  the money to                                                                    
the  retiree. The  amendment made  sure the  state kept  the                                                                    
funding ration  in a range  that was very stable  and useful                                                                    
without passing general  fund money for bonds  that would be                                                                    
sold and deposited. He had  tried a number of different ways                                                                    
to insert  language so that  there would be a  waterfall. It                                                                    
would  ensure that  the  fund grew  on  its own  investments                                                                    
instead of taking general funds.                                                                                                
2:51:29 PM                                                                                                                    
Representative   Guttenberg  wondered   if   there  was   an                                                                    
alternative to increasing the payout  once the state reached                                                                    
105 percent. Once  the amount was increased it  could not be                                                                    
reversed. He  wondered if the  state had the  flexibility to                                                                    
do  something  different.  Co-Chair MacKinnon  believed  the                                                                    
retirement  pension  board  had  the authority  to  look  at                                                                    
benefits  if  the  funding  went  beyond  105  percent.  She                                                                    
referred to the  amendment on page 3, line  17 following the                                                                    
$2.5  billion.  She  suggested inserting  the  words  "or  a                                                                    
funding  ratio  of  actuarial assets  to  accrued  liability                                                                    
greater than  85 percent, whichever  is less." She  asked if                                                                    
she  was   looking  at  the  correct   amendment  copy.  She                                                                    
explained that  $2.5 billion would be  the maximum allowable                                                                    
debt  to service  the unfunded  liability. She  and Co-Chair                                                                    
Seaton had talked about the  issue that was in state statute                                                                    
where  the state  had been  paying  for a  number of  years,                                                                    
specifically   on  the   PERS  and   TRS  side,   additional                                                                    
contributions  above  22  percent  or  the  12.56  or  12.58                                                                    
percent  for   TRS.  The  state  had   invested  heavily  in                                                                    
additional funding  of state support for  these systems with                                                                    
the recognition that  the state's liability was  to about 60                                                                    
percent of the  overall system in its  entirety (100 percent                                                                    
on  the TRS  side  and  a percent  on  the  PERS side).  The                                                                    
amendment was a  safeguard for all in the  scenario that the                                                                    
outside markets would  look at. She continued  that for that                                                                    
reason she would support the  amendment and ask for support.                                                                    
She  hoped Mr.  Mitchell  could speak  to confirm  whichever                                                                    
number was  lower to avoid decreasing  the state's liability                                                                    
enough to overfund the system.                                                                                                  
2:55:12 PM                                                                                                                    
DEVEN  MITCHELL, EXECUTIVE  DIRECTOR, ALASKA  MUNICIPAL BOND                                                                    
BANK AUTHORITY, agreed  that the amendment was  in line with                                                                    
the   goals   of   the   transaction   envisioned   by   the                                                                    
corporation's  board and  the  Department  of Revenue  (DOR)                                                                    
throughout the  various administrations that  had considered                                                                    
POBs. The target  he had was a maximum not  to exceed amount                                                                    
of  90  percent. He  thought  85  percent was  a  reasonable                                                                    
alternative  to 90  percent. It  was probably  slightly more                                                                    
conservative in the  event there were strong  returns in the                                                                    
years following  a pension  obligation bond  issuance. There                                                                    
could be an outcome of  an overfunding situation. He was not                                                                    
as confident as Senator McKinnon  that the ARM Board had the                                                                    
ability to  diminish benefits to past  employees. He thought                                                                    
those benefits were  strongly protected. Unfortunately, even                                                                    
though it  made sense if  there was  extra money put  in, it                                                                    
was his  personal belief, that those  employees could demand                                                                    
a  post  retirement  payment  if the  funding  went  up  105                                                                    
percent or greater.  He suspected that the  court would side                                                                    
with the retirees.                                                                                                              
Co-Chair  Seaton thought  there was  a misunderstanding.  He                                                                    
had  heard Senator  McKinnon saying  the same  thing he  had                                                                    
said. They had looked at  all of the ramifications but found                                                                    
that  once  the amount  was  there  it  could only  flow  to                                                                    
pensions.  A  pension  plan could  not  be  diminished.  The                                                                    
federal  restrictions  were  tight  so  that  no  one  could                                                                    
diminish   benefits.  Co-Chair   MacKinnon  clarified   that                                                                    
retired  Alaskans   were  guaranteed  their   benefits.  Her                                                                    
response was  to the 105  percent funding liability  that if                                                                    
the state  went above, it  could add additional  benefits in                                                                    
response  to   Representative  Guttenberg's   question.  She                                                                    
relayed that  the retirement  board had  the ability  to add                                                                    
but not  to diminish benefits  under existing state  law and                                                                    
supreme court rulings. A vote  of the people of Alaska would                                                                    
be required.                                                                                                                    
Representative Wilson WITHDREW her OBJECTION.                                                                                   
There being NO OBJECTION, Amendment 1 was ADOPTED.                                                                              
2:58:53 PM                                                                                                                    
Co-Chair Seaton MOVED to ADOPT Conceptual Amendment 2.                                                                          
     Page 3, line 17                                                                                                            
          Delete: "$2,500,000,000"                                                                                              
          Insert "$1,500,000,000"                                                                                               
Representative Wilson OBJECTED for discussion.                                                                                  
Co-Chair Seaton  had talked with  the bill sponsor  and with                                                                    
Mr.  Mitchell. He  wanted to  have them  come to  the table.                                                                    
There  was  general  agreement  that  $1.5  billion  was  an                                                                    
acceptable amount  and remained  a powerful tool  that could                                                                    
be used and  also lowered the amount of debt  the state had.                                                                    
Co-Chair  MacKinnon responded  that she  was not  opposed to                                                                    
the change. The only issue  she wanted consideration for was                                                                    
the number  she brought  before the  committee. She  had run                                                                    
the number  by the administration  and had support  for $2.5                                                                    
billion. She reported that there  were members in the Senate                                                                    
that  thought the  number should  be zero.  She agreed  that                                                                    
$1.5  billion  was  a more  conservative  number.  The  bond                                                                    
rating agencies  would see the  action favorably  because it                                                                    
was taking another $1 billion  away from the state to indebt                                                                    
itself.  She  thought it  would  remain  a functioning  tool                                                                    
available to the administration.  She also believed it would                                                                    
bring  more  comfort  to Alaskans  in  placing  the  state's                                                                    
unfunded liability into a bond market.                                                                                          
Representative  Pruitt referred  to the  actuarial worksheet                                                                    
in  members packets  (copy on  file). He  believed the  $1.5                                                                    
billion amount would  restrict the state from  being able to                                                                    
use the  pension obligation bonds.  He highlighted  that the                                                                    
state  would  cross the  85  percent  mark before  the  $1.5                                                                    
billion was available. He asked  Mr. Mitchell to explain how                                                                    
the  change would  affect  the state's  ability  to use  the                                                                    
bonds.  He wondered  if the  state  should get  rid of  them                                                                    
altogether. Mr. Mitchell responded  that he had not recently                                                                    
reviewed the actuarial worksheets.  He explained that it was                                                                    
based  on  total  liability rather  than  just  the  state's                                                                    
portion.  If  the  total  liability  was  $6.5  billion,  he                                                                    
thought the  state would still  have the ability to  use the                                                                    
$1.5  billion.  He would  have  to  review the  numbers.  He                                                                    
thought the  system's funding levels were  considerably less                                                                    
than  85 percent  even with  the  infusion in  2015 and  the                                                                    
positive market in the previous year.                                                                                           
Representative Pruitt was having to  process and do the math                                                                    
as the meeting was occurring.                                                                                                   
3:04:10 PM                                                                                                                    
Co-Chair MacKinnon  added that  in looking at  the amendment                                                                    
the  word "or"  was  included. The  amount  of $1.5  billion                                                                    
would remain available.                                                                                                         
Representative Guttenberg  asked how  the bill  would affect                                                                    
the state's  other pension bonds, capacity,  or ratings. Mr.                                                                    
Mitchell  suggested that  there  were  several factors  that                                                                    
played  into  the   answer  to  Representative  Guttenberg's                                                                    
question.  One of  the variables  was the  concept of  going                                                                    
from a  soft liability to  a hard liability.  Another factor                                                                    
had to  do with payments  on behalf of other  employers. The                                                                    
state was locking  in the relationship that  was a statutory                                                                    
relationship  that theoretically  could  be modified.  Also,                                                                    
there had  been an  evolution within the  pension obligation                                                                    
fund corporation to move forward  on a transaction since its                                                                    
inception to the present. The  corporation no longer had the                                                                    
ability to to  move forward without the firm  support of the                                                                    
legislature.  Firm support  meant that  an appropriation  of                                                                    
debt service  was necessary for market  participants to take                                                                    
the  state seriously  based  on its  failed  efforts in  the                                                                    
past.  He was  unsure  how the  reduction  would impact  the                                                                    
state's  debt capacity  or credit  rating. He  reported that                                                                    
when the  state was looking  at the transaction in  2016 one                                                                    
of  the three  rating agencies,  Standard and  Poors, had  a                                                                    
contingent downgrade  for the State  of Alaska in  the event                                                                    
the  $2.5 billion  was borrowed.  He indicated  that it  was                                                                    
based on  sheer magnitude.  It was easiest  to think  of the                                                                    
situation as  a refinancing.  The state  owed the  money and                                                                    
had a  constitutional obligation  to repay  it. There  was a                                                                    
statutory framework for the payment  on behalf of structure.                                                                    
The least  responsible way  to refinance  would be  to avoid                                                                    
the following year's payment. This  was Illinois' method. He                                                                    
provided  a   more  detailed  example.  He   continued  that                                                                    
reducing the  authorization to $1.5 billion  would limit the                                                                    
state's ability to impact the state's credit rating.                                                                            
Vice-Chair Gara agreed with the amendment.                                                                                      
3:08:51 PM                                                                                                                    
Representative Pruitt was  fine with $1.5 billion.  It was a                                                                    
policy call. He suggested that  there might be 3 years where                                                                    
the  85 percent/$1.5  billion threshold  would cross  before                                                                    
the state  reached a  funding ratio of  85 percent  based on                                                                    
the   actuarial.  He   concluded  that   $1.5  billion   was                                                                    
substantially more conservative than  the 85 percent funding                                                                    
ratio. He was fine with the amendment.                                                                                          
Co-Chair MacKinnon  relayed that,  at an  8 percent  rate of                                                                    
return,  it had  to do  with best  practice standards  for a                                                                    
pension  plan.  While  the committee  was  considering  $1.5                                                                    
billion of  potential debt against  a $6.6  billion unfunded                                                                    
liability and  seeing the state's  85 percent  funding ratio                                                                    
in sight, she cautioned members  in thinking that in 3 years                                                                    
the state  would be out of  the woods. She continued  that a                                                                    
.25 percent  reduction in earnings  estimated over  the life                                                                    
of  the state's  debt would  have huge  implications on  the                                                                    
unfunded  liability number.  She  highlighted that  Alaska's                                                                    
local  communities   were  carrying   that  debt   on  their                                                                    
financials  as well.  While the  state was  at $6.6  billion                                                                    
presently, she  expected (even  with positive  returns) that                                                                    
if  the ARM  Board made  a  decision to  reduce earnings  or                                                                    
accept the  new mortality rate (people  were living longer),                                                                    
she  did  not believe  the  state  would  be at  85  percent                                                                    
funding in  3 years. She was  working with the ARM  Board to                                                                    
see if there was another  way to adjust the assumed interest                                                                    
earning down. She  would be happy to  share that information                                                                    
at a later time.                                                                                                                
Representative Wilson WITHDREW her OBJECTION.                                                                                   
There  being NO  OBJECTION,  it was  so ordered.  Conceptual                                                                    
Amendment 2 was ADOPTED.                                                                                                        
Representative Guttenberg  relayed that on the  previous day                                                                    
the  committee had  heard a  bill on  PERS and  TRS and  the                                                                    
package options.  He thought the  bill might  correlate with                                                                    
the senator's bill.                                                                                                             
Vice-Chair Gara reviewed  the zero fiscal note for  SB 97 by                                                                    
the Department  of Revenue.  The appropriation  was Taxation                                                                    
and Treasury  and the allocation was  the Treasury Division.                                                                    
The OMB component number was 121.                                                                                               
3:13:02 PM                                                                                                                    
Co-Chair  Seaton  MOVED to  report  HCSSB  97 (FIN)  out  of                                                                    
Committee   with   individual    recommendations   and   the                                                                    
accompanying fiscal note.                                                                                                       
There being NO OBJECTION, it was so ordered.                                                                                    
HCSSB97  (FIN) was  REPORTED  out of  committee  with a  "do                                                                    
pass" recommendation and with a  new zero fiscal note by the                                                                    
Department of Revenue.                                                                                                          
3:13:32 PM                                                                                                                    
AT EASE                                                                                                                         
3:14:22 PM                                                                                                                    
SENATE BILL NO. 107                                                                                                           
     "An Act relating to the Alaska capital income fund."                                                                       
3:14:35 PM                                                                                                                    
Co-Chair Foster indicated the committee  heard SB 107 by the                                                                    
Senate Finance Committee on May  2, 2017. He invited Senator                                                                    
McKinnon to speak to the bill.                                                                                                  
SENATOR  ANNA MACKINNON,  SPONSOR,  had  discussed with  the                                                                    
House co-chairmen  the use of  the capital income  fund. The                                                                    
fund  did  not  sweep  into  the  general  fund.  Typically,                                                                    
capital  budget chairmen  swept  projects  that had  already                                                                    
been utilized  for other capital projects  around the state.                                                                    
It was money  that remained after the allotted  time and was                                                                    
still sitting  unused. The legislature  had two  choices for                                                                    
those  funds. First,  the legislature  could  place it  back                                                                    
into  the  general  fund  and  spend  it  like  GF  dollars.                                                                    
Instead, what SB 107 proposed  to do was dedicate the Alaska                                                                    
capital  income  fund  to  deferred  maintenance.  In  other                                                                    
words, the  money that was  being rolled into the  fund from                                                                    
lapsing projects  would be designated  for a higher  use and                                                                    
prioritized  deferred  maintenance  spending to  extend  the                                                                    
life of  state assets.  She read  from the  prepared sponsor                                                                    
     The  State of  Alaska maintains  over 2,200  facilities                                                                    
     which span  over 14 entities, including  the University                                                                    
     of Alaska and the  Court system. These facilities total                                                                    
     19 million  square feet  of space  and have  a combined                                                                    
     replacement value of $8.6 billion.                                                                                         
     The  State's current  outstanding deferred  maintenance                                                                    
     backlog  totals over  $1.84  billion,  which peaked  in                                                                    
     FY2012  at $2.3  billion. With  current funding  levels                                                                    
     and   no  consistent   funding  source,   the  deferred                                                                    
     maintenance backlog  is expected  to trend  up, causing                                                                    
     our facilities to fall into disrepair.                                                                                     
     The Alaska capital income fund  was created in 2006 and                                                                    
     receives  an annual  deposit of  the earnings  from the                                                                    
     Amerada  Hess  Settlement  invested  by  the  Permanent                                                                    
     Senate  Bill 107  envisions  using  these funds,  which                                                                    
     cannot  be  used  for dividends,  to  provide  reliable                                                                    
     annual   funding   for    preventative   and   deferred                                                                    
     maintenance. It  is important we set  up this mechanism                                                                    
     to  continue  to  preserve   our  investment  in  these                                                                    
     facilities  as the  infrastructure  ages  and cost  for                                                                    
     repairs and replacement increases.                                                                                         
Co-Chair Seaton  commented that part  of the  capital income                                                                    
fund money came from the Amerada  Hess fund. He asked if the                                                                    
money  had  already  been appropriated.  He  was  trying  to                                                                    
determine  whether  the  swept  money  would  be  designated                                                                    
general   funds.   He   asked   about   keeping   track   of                                                                    
reappropriated funds. He was  concerned with the duplication                                                                    
of funds.  Co-Chair MacKinnon  did not  know the  answer and                                                                    
deferred to Mr. Carpenter.                                                                                                      
3:18:29 PM                                                                                                                    
ROB  CARPENTER,   ANALYST,  LEGISLATIVE   FINANCE  DIVISION,                                                                    
replied that  the bill  was structured  to take  the revenue                                                                    
stream from  the Amerada Hess Settlement,  about $28 million                                                                    
per year,  to the  Alaska capital  income fund  for deferred                                                                    
maintenance projects.  Historically, the funds were  used in                                                                    
the  budget   for  deferred  maintenance  and   all  capital                                                                    
projects. However, when the  legislature started to consider                                                                    
using the earnings reserve account  as general fund revenue,                                                                    
it was  discovered that the  Alaska capital income  fund was                                                                    
not  a  designated  fund  source.  The  money  went  to  the                                                                    
unrestricted  general fund.  The amendment  would make  it a                                                                    
designated  fund source.  Furthermore,  to  the question  of                                                                    
about putting  reapropriations inside the fund,  there would                                                                    
not  be  a  problem  with  funds  being  mixed  because  the                                                                    
reappropriations  had  been  counted in  prior  sessions  in                                                                    
prior fiscal years.                                                                                                             
Co-Chair  Seaton  indicated  that the  legislature  received                                                                    
reports  on   duplicated  funds  and   regular  undesignated                                                                    
general funds.  He was trying  to figure out how  to account                                                                    
for spending each of the funds  that were mixed. He asked if                                                                    
it  would be  difficult  to tract  how  duplicated and  non-                                                                    
duplicated funds were spent from an accounting aspect.                                                                          
Mr.  Carpenter  responded that  to-date  the  state had  not                                                                    
reappropriated   funding  to   the   capital  income   fund.                                                                    
Currently,  the state  would operate  with the  Amerada Hess                                                                    
funds.   Conceptually,   if   the   state   were   to   send                                                                    
reappropriations  into  the  capital income  fund  and  then                                                                    
spend from  it, he did  not think  there would be  a problem                                                                    
with duplication  only in  regard to  how the  state counted                                                                    
the  general   fund  revenue.   The  state   always  equated                                                                    
designated general  fund revenues to the  designated general                                                                    
fund expenditures. They were  always equal, therefore, there                                                                    
would not be a duplication.                                                                                                     
Co-Chair  Seaton  suggested  that  if  the  legislature  put                                                                    
reapporpriations  into the  capital  income  fund, they  had                                                                    
already   been   appropriated.  Mr.   Carpenter   responded,                                                                    
"Correct."  Co-Chair Seaton  wondered, if  they were  spent,                                                                    
whether the  state would be  reappropriating them  again. He                                                                    
wanted to make  sure things were accounted for  if the state                                                                    
mixed duplicated and non-duplicated  funds. He was fine with                                                                    
the bill  but wanted to  make the committee aware  of mixing                                                                    
two types of fund sources. He wanted to raise the issue.                                                                        
Representative  Guttenberg  understood   that  part  of  the                                                                    
Amerada  Hess Settlement  was the  agreement that  the funds                                                                    
could  not be  used for  dividends. The  projected lapse  of                                                                    
time for  that specification to  change was 15 to  20 years.                                                                    
He believed that  theoretically the funds could  be used for                                                                    
dividends in the future.                                                                                                        
Mr. Carpenter thought  Representative Guttenberg was correct                                                                    
that the settlement  timeline had passed and  that the funds                                                                    
could  be redirected  for any  use. He  noted that  in prior                                                                    
versions of Percent  of Market Value (POMV)  bills there was                                                                    
a  provision getting  rid  of the  capital  income fund  and                                                                    
rolling the  funds into the  Permanent Fund.  However, there                                                                    
was  nothing precluding  the  legislature  from keeping  the                                                                    
capital income  fund and the Amerada  Hess Settlement monies                                                                    
set aside.                                                                                                                      
3:24:20 PM                                                                                                                    
Vice-Chair Gara  understood the Amerada Hess  portion of the                                                                    
capital  income fund.  He wondered  if  the legislature  had                                                                    
placed funds in  the capital income fund in  addition to the                                                                    
Amerada Hess funds. He wondered  if the bill being discussed                                                                    
would  govern  whatever  other funds  were  in  the  capital                                                                    
income fund.                                                                                                                    
Mr. Carpenter believed  in the past the  legislature had put                                                                    
other money in the capital  income fund. He could not recall                                                                    
the  time or  amount.  The bill  specifically  spoke to  the                                                                    
revenue shrink from the Amerada  Hess going into the capital                                                                    
income fund. It did not  indicate that the legislature could                                                                    
not  appropriate  additional money  in  the  fund. It  could                                                                    
create a burden in terms of counting the funds.                                                                                 
Vice-Chair  Gara  thought  it  governed  the  whole  capital                                                                    
income fund.  He did  not see anything  in the  bill talking                                                                    
about  only the  Amerada Hess  income stream.  Mr. Carpenter                                                                    
responded  that unless  the  legislature appropriated  money                                                                    
into the fund  it would only be the amount  flowing into the                                                                    
fund which was about $28 million.                                                                                               
Vice-Chair  Gara  did   not  need  to  know   if  there  was                                                                    
additional money in the fund. He forgot his question.                                                                           
3:26:20 PM                                                                                                                    
Co-Chair Foster OPENED public testimony.                                                                                        
3:26:44 PM                                                                                                                    
Co-Chair Foster CLOSED public testimony.                                                                                        
Co-Chair  Foster  directed  Vice-Chair Gara  to  review  the                                                                    
fiscal note.                                                                                                                    
Vice-Chair Gara  read the zero  fiscal note for SB  107. The                                                                    
fiscal  note assumed  that there  were  no additional  funds                                                                    
inside the  capital income  fund. It  stated that  the funds                                                                    
from   the  Amerada   Hess  settlement   would  now   become                                                                    
designated general funds as  opposed to undesignated general                                                                    
funds. It relabeled the $28 million income stream.                                                                              
Co-Chair  Seaton MOVED  to report  SB 107  out of  Committee                                                                    
with individual recommendations  and the accompanying fiscal                                                                    
There being NO OBJECTION, it was so ordered.                                                                                    
SB  107 was  REPORTED  out  of committee  with  a "do  pass"                                                                    
recommendation and with a new  zero fiscal note by the House                                                                    
Finance Committee.                                                                                                              
Co-Chair Foster reviewed the agenda  for the meeting at 5:00                                                                    
Representative  Wilson  had   heard  from  a  superintendent                                                                    
earlier  in  the  day  who  was  also  a  principal  and  an                                                                    
elementary teacher.  He was short  a special  needs teacher.                                                                    
She  wondered where  the  retired teacher  bill  was in  the                                                                    
legislative  process. Co-Chair  Foster  indicated that  both                                                                    
bills  were in  the  House Finance  Committee  and he  would                                                                    
determine  when the  bills  would  be heard.  Representative                                                                    
Pruitt clarified that  the Senate had its  version in Senate                                                                    
Finance  and  the  House  version   was  in  House  Finance.                                                                    
Representative  Wilson  relayed  she had  heard  there  were                                                                    
teacher  openings because  of positions  being difficult  to                                                                    
fill and that  some of those positions could  be filled with                                                                    
retirees. She thanked Co-Chair Foster for the update.                                                                           
Co-Chair  Foster indicated  there were  no further  comments                                                                    
from members.                                                                                                                   
3:30:19 PM                                                                                                                    
The meeting was adjourned at 3:30 p.m.                                                                                          

Document Name Date/Time Subjects
HB 385 - Additional Documents - Diagram.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Additional Documents - FAQ's.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Additional Documents - HR 582.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HR 582
HB 385 - Additional Documents - Research.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Letter of Support - Alaska Fire Chief's Association.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Letter of Support - Alaska Firefighters Association.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Summary of Changes from Ver. A to D.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Letter of Support - AML.PDF HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Sponsor Statement.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Letter of Support - Fairbanks North Star Borough.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
HB 385 - Reso 4829 in Support of HB 385 SB215.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
SB 215
HB 385 - Amendment #1.pdf HFIN 4/10/2018 1:30:00 PM
HB 385
SB 97 - Amendment #1.pdf HFIN 4/10/2018 1:30:00 PM
SB 97
HB 316 - Amendment #1.pdf HFIN 4/10/2018 1:30:00 PM
HB 316
HB 316 Explanation of CS Changes_.pdf HFIN 4/10/2018 1:30:00 PM
HB 316
HB 316 Bill version N.pdf HFIN 4/10/2018 1:30:00 PM
HB 316