05/02/1995 02:04 PM House HES

 HB 119 - EXEMPT SCHOOLS FROM CERTAIN DEC FEES                               
                                                                               
 Number 1160                                                                   
                                                                               
 CO-CHAIR BUNDE noted that since this was the first public hearing             
 on HB 119, he would not ask HESS Committee members to vote on it at           
 this hearing.                                                                 
                                                                               
 REPRESENTATIVE GENE KUBINA, sponsor of the bill, explained that HB
 would exempt schools from having to pay the Department of                 
 Environmental Conservation (DEC) fees for inspecting kitchens and             
 food programs.  In 1992, the legislature authorized the DEC to                
 charge user fees.  This was a way for DEC to pay for part of their            
 budget.  Fiscal year (FY) 1993 was the first year the DEC engaged             
 in that practice.                                                             
                                                                               
 REPRESENTATIVE KUBINA continued that during FY 93 and FY 94, the              
 DEC did not charge schools because it did not want to add to the              
 budget problems of the schools.  Evidently, the DEC subsequently              
 had some legal counsel which advised that it cannot arbitrarily               
 choose who it is going to charge for services.  Therefore, this               
 year, FY 95, the DEC began charging school districts for inspecting           
 kitchens and food programs.                                                   
                                                                               
 REPRESENTATIVE KUBINA said the net effect is a shift of $25,000               
 from schools to the DEC's budget.  The DEC has never charged                  
 schools before.  Representative Kubina felt the school budget,                
 which has not been getting cost of living increases, is more                  
 important than the budget of the DEC.  The DEC is also better able            
 to absorb the costs.                                                          
                                                                               
 REPRESENTATIVE KUBINA noted that this is a policy decision by the             
 legislators concerning who is going to pay out of what budget.  He            
 feels that the DEC should continue to pay.  Therefore, the bill was           
 introduced.                                                                   
                                                                               
 Number 1238                                                                   
                                                                               
 CO-CHAIR TOOHEY asked how many visits the DEC makes to a school in            
 a nine month period or each school year.                                      
                                                                               
 REPRESENTATIVE KUBINA said the DEC makes a minimum of one visit per           
 school year.                                                                  
                                                                               
 CO-CHAIR TOOHEY said she could not believe that the charge would be           
 so extensive for one visit.                                                   
                                                                               
 REPRESENTATIVE KUBINA noted that the charge was for several                   
 schools.  A smaller school district would not pay as much.   The              
 total cost, statewide, is about $25,000.  That is why there is a              
 fiscal note of $25,000 that would, in essence, come back out of the           
 DEC budget.  Representative Kubina asked HESS Committee members to            
 remember that the DEC had not been charging schools up to this                
 point anyway.                                                                 
                                                                               
 Number 1280                                                                   
                                                                               
 REPRESENTATIVE DAVIS asked if there are currently other exemptions            
 in this program.                                                              
                                                                               
 REPRESENTATIVE KUBINA said in the original law, nonprofit agencies            
 were exempted.  He felt that had it been considered at the time,              
 the legislature would have also exempted schools.                             
                                                                               
 REPRESENTATIVE DAVIS asked if nonprofit organizations included                
 senior citizen centers and pioneers' homes.                                   
                                                                               
 REPRESENTATIVE KUBINA said he felt the exemptions were for homeless           
 shelters and other such entities.                                             
                                                                               
 REPRESENTATIVE DAVIS said he would like to see a list of current              
 exemptions.                                                                   
                                                                               
 Number 1345                                                                   
 KIT BALLANTINE, Acting Director, Division of Environmental Health,            
 DEC, said the only exemption from the fees occur if an entity                 
 qualifies as a charitable organization under IRS regulations rather           
 than a nonprofit.  Schools do not qualify as charitable                       
 organizations.  They are therefore not exempt under IRS guidelines            
 and they are therefore not exempt from DEC fees.                              
                                                                               
 MS. BALLANTINE said although the legislation was passed in 1992,              
 the fees were not implemented until late in 1993, because of the              
 regulatory process.  Therefore, the DEC had not been charging any             
 fees until late 1993.  These fees, however, will make a significant           
 difference in the DEC budget.  The $25,000 is much needed.                    
                                                                               
 MS. BALLANTINE recalled that in 1993, the DEC actually had to ask             
 for a supplemental due to a lack of fee collection.  Last year, the           
 DEC actually had to transfer money from another component because             
 it did not collect fees.  Therefore, that $25,000 will make a                 
 difference in the DEC budget.                                                 
                                                                               
 Number 1406                                                                   
                                                                               
 CO-CHAIR TOOHEY asked how many visits the DEC makes each year to              
 schools.                                                                      
                                                                               
 MS. BALLANTINE answered that the DEC makes at least one visit per             
 year per school.  The visits and fees would also include any                  
 technical assistance, training of food service staff, spot checks,            
 follow up checks, etc., for schools.                                          
                                                                               
 CO-CHAIR TOOHEY asked if a breakdown chart was available per visit.           
                                                                               
 MS. BALLANTINE said the visits depend on the seating and the type             
 of facility.  For example, a large full food service kitchen may              
 serve many satellite kitchens that would warrant a $200 fee.  A               
 small satellite kitchen which only serves food would be charged               
 only $25 to $50.  The fees are determined by the extent of the food           
 service and the number of seats.  Therefore, the scale is sliding.            
                                                                               
 Number 1472                                                                   
                                                                               
 REPRESENTATIVE DAVIS commented that he has studied situations such            
 as this for a number of years.  He has problems with a state                  
 agency, run with state general fund dollars, suing, fining or                 
 charging another state agency.  It is just money going around in              
 circles, and no good is done.  Last year, the Kenai School District           
 was fined in excess of $200,000 by the Occupational Safety and                
 Health Administration (OSHA).  That money went to the Department of           
 Labor.                                                                        
                                                                               
 REPRESENTATIVE DAVIS noted that although there is some local input,           
 much of the money for that district is state dollars.  The                    
 Department of Law fines and sues other agencies, and it is just               
 moving money from one hand to the other.   This is ludicrous.  He             
 does not know what other method can be employed to discipline or              
 punish state agencies, but there must be another method than                  
 creating a paper trail and money exchange.                                    
                                                                               
 Number 1530                                                                   
                                                                               
 CO-CHAIR TOOHEY said she would like the DEC to train one person in            
 every school kitchen to do the job of the DEC inspectors.                     
                                                                               
 REPRESENTATIVE BRICE agreed with Representative Davis in that the             
 funding exchange is circular.  The school districts get money from            
 the state.  The district must then give the money right back to the           
 state to pay for these inspections.  Representative Brice felt that           
 addressing some of these concerns can alleviate a few school                  
 district problems.  It would be a small step, but it would be the             
 first step in a long journey.                                                 
                                                                               
 Number 1594                                                                   
                                                                               
 REPRESENTATIVE VEZEY stated that the consequences of this bill                
 becoming law are not all that apparent.  A law was passed in the              
 Eighteenth Alaska Legislature which mandated that the DEC continue            
 to provide these oversight services and continue to charge fees to            
 pay for the services.  If public agencies are exempted from paying            
 these fees, the DEC is put into a position of having to go back and           
 either raise fees where they can or ask the legislature to raise              
 fees on the private sector.                                                   
                                                                               
 REPRESENTATIVE VEZEY said therefore, a tax would be put on the                
 private sector for a service that is being forced upon it.  No one            
 in the private sector volunteers for these exemptions.  The state             
 says it is going to do something, and those in the private sector             
 are going to pay for it.  The DEC would establish fees by                     
 regulation.  It would be forced to raise fees to remaining entities           
 to cover costs.                                                               
                                                                               
 Number 1644                                                                   
                                                                               
 CO-CHAIR BUNDE added that as the money rotates, there is also a               
 certain amount of evaporation that takes place.  He said the bill             
 would be held in committee.