Legislature(2001 - 2002)

03/14/2001 02:20 PM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 108-DEPT NATURAL RESOURCES RECORDING FEES                                                                                  
CO-CHAIR SCALZI announced that the  first order of business would                                                               
be HOUSE  BILL NO. 108,  "An Act  relating to the  accounting for                                                               
and appropriation of  fees for recording and  related services by                                                               
the  Department  of  Natural  Resources;  and  providing  for  an                                                               
effective date."                                                                                                                
Number 0165                                                                                                                     
NICO  BUS,  Administration   Services  Manager,  Central  Office,                                                               
Division  of Support  Services, Department  of Natural  Resources                                                               
(DNR), explained  that HB 108  would not change much  of anything                                                               
except the  title of  the revenue  collected, which  would change                                                               
the budget.   He mentioned  that Sharon Young would  be available                                                               
to  answer  questions regarding  the  program.   He  stated  that                                                               
[DNR's] recording  office has been collecting  revenues in excess                                                               
of its  operation for a  number of years,  with a budget  of $2.4                                                               
million and a  collection of over $4 million.   Mr. Bus clarified                                                               
that [HB 108] would not change  any of the fee structures or have                                                               
any impact on the projected revenues.                                                                                           
MR. BUS  told the House  Resources Standing Committee  that [DNR]                                                               
is  asking for  a change  from general  fund program  receipts to                                                               
receipts of supported services, so  that, in terms of the budget,                                                               
the  program  could stand  on  its  own.    He pointed  out  that                                                               
although the customers  pay for the services,  often, when budget                                                               
deliberations   are  done   [by  DNR]   internally,  [the   State                                                               
Recorder's Office] has  to compete with other division.   Mr. Bus                                                               
mentioned being  told by the  [Office of Management  and Budget],                                                               
after the passage of HB 418  last year, that the State Recorder's                                                               
Office would qualify for "this type of classification."                                                                         
MR. BUS stated that the  House Resources Standing Committee could                                                               
get an understanding of why HB  108 was up before them by looking                                                               
at the fiscal  note.  He told the committee  that the increase in                                                               
the cost  of postage on  200,000 documents  has an impact  on the                                                               
budget, adding  that it is hard  to compete for the  general fund                                                               
resources.   Mr.  Bus said  HB 108  would isolate  the recorder's                                                               
office  and would  identify the  receipts  collected and  compare                                                               
them  to  the  expenditures.    He  mentioned  a  [House  Finance                                                               
Committee] subcommittee  on DNR that  pointed out that  there are                                                               
expenditures  for the  recorder's  office that  are  paid for  in                                                               
other state  agencies, such as the  Department of Administration,                                                               
which pays  for most  of the  office leases.   Mr.  Bus suggested                                                               
[the recorder's  office] could  start to pick  up those  types of                                                               
costs and  show its  revenue expenditure more  easily [if  HB 108                                                               
passed], so  that the  users of the  recorder's office  could see                                                               
that their fees  are used appropriately and  that the [recorder's                                                               
office] would not make a huge profit.                                                                                           
Number 0493                                                                                                                     
REPRESENTATIVE  McGUIRE mentioned  an  adage  about expanding  in                                                               
order  to fill  a  gap.   She  asked  for  confirmation that  the                                                               
appropriations and collections were  $2.4 million and $4 million,                                                               
respectively, and suggested that a  modest fee reduction could be                                                               
incorporated, given the large gap between those two figures.                                                                    
MR. BUS  responded that the  fee structure has been  studied, but                                                               
has not been changed significantly  since 1991; he added that the                                                               
amount  of revenue  fluctuates with  the  volume of  transactions                                                               
being processed.   He said [the recorder's office]  fees are very                                                               
reasonable  compared to  those of  other states.   Mr.  Bus noted                                                               
that HB 108  would allow [the recorder's] office to  show more of                                                               
its  true cost,  adding,  "The  $2.4 [million]  is  only for  the                                                               
amount of money that we are  spending in our recorder's office in                                                               
the Department of Natural Resources."                                                                                           
MR. BUS  reiterated that the Department  of Administration spends                                                               
about $300,000 to  pay for [the recorder's office's]  leases.  He                                                               
cited  some examples  of other  expenses:   a lease  cost in  the                                                               
court system and  a fee for storing old records  at Archives [and                                                               
Record  Management Services  ("Archives")].   He explained  that,                                                               
currently, [the  recorder's office]  does not  have the  money in                                                               
its  DNR budget  to  pay those  fees,  but if  the  fee could  be                                                               
changed [through the passage of  HB 108], [the recorder's office]                                                               
could pay  the other agencies  and demonstrate that its  fees are                                                               
reasonable  and  that  they  come  close to  the  amount  of  its                                                               
Number 0672                                                                                                                     
REPRESENTATIVE McGUIRE  rephrased her question and  asked Mr. Bus                                                               
if it is his intent to lower the fee.                                                                                           
MR. BUS answered no.  He added  that the fees would stay the same                                                               
and a  yearly report would  show how  close the revenue  comes to                                                               
the expenditures.                                                                                                               
Number 0704                                                                                                                     
REPRESENTATIVE STEVENS  asked Mr.  Bus to  give the  committee an                                                               
idea  of what  the  total cost  to  DNR would  be  when fees  are                                                               
brought  in  that  are  "paid  by  other  departments,  like  the                                                               
Department of Administration."                                                                                                  
MR. BUS  reiterated that DNR's  recorder's office budget  is $2.4                                                               
million.   He  listed  some of  the major  expenses  paid by  the                                                               
Department of Administration as  follows:  approximately $320,000                                                               
for  lease   costs,  costs  for   central  payroll   and  central                                                               
archiving;  and separate  mainframe and  networks computer  costs                                                               
totaling $100,000.  He added  that the total expenditures come to                                                               
about  $3 million,  based  solely  on the  major  expenses he  is                                                               
currently  aware of;  however, upon  closer scrutiny,  more costs                                                               
could be added to the list.                                                                                                     
MR. BUS explained  that the recorder's office used to  be part of                                                               
the court system;  therefore there are many old  records of deeds                                                               
and trusts  that are in binders  that need to be  filmed and sent                                                               
to  Archives.   He added,  "Archives  charges for  [the] cost  of                                                               
archiving.   This is  permanent archiving,  so we  haven't really                                                               
been charged  for this, but, again,  that would kind of  show the                                                               
customers  that the  ... revenue's  paying for  the cost,  and it                                                               
comes close."                                                                                                                   
REPRESENTATIVE STEVENS  asked Mr.  Bus to  confirm that  the goal                                                               
[of the recorder's office] is to  get all of the approximately $3                                                               
million  in legitimate  expenses  under DNR.    He mentioned  the                                                               
approximately  $1 million  in excess  charges that  would not  be                                                               
used and asked if those funds would end up in the general fund.                                                                 
MR. BUS answered that those  funds go to the unrestricted general                                                               
fund and are available for appropriation.                                                                                       
Number 0902                                                                                                                     
MARY ANN  ROWE, President, Kachemak Bay  Title Company, testified                                                               
via  teleconference  in  support  of  HB 108.    She  stated  the                                                               
importance of  microfilming old records that  currently remain in                                                               
their original  form.   She said  not being  able to  protect the                                                               
records by making copies of  them for Archives would have serious                                                               
effects in the future on landowners.   Ms. Rowe stated her belief                                                               
that it  would be a  good thing for  the recorder's office  to be                                                               
able to utilize its funds/receipts.                                                                                             
Number 0995                                                                                                                     
REPRESENTATIVE GREEN  asked Mr. Bus,  if HB 108 were  passed with                                                               
its  fiscal note,  whether he  would anticipate  that the  budget                                                               
would  rise above  the  $4 million  as  additional requests  were                                                               
Number 1055                                                                                                                     
MR.  BUS answered  that the  workload fluctuates,  and currently,                                                               
because [the  recorder's office] has  to compete for  the general                                                               
fund, it  is at a standstill,  with no ability to  respond to its                                                               
workload.    The  proposed funding  would  give  [the  recorder's                                                               
office] more  freedom to ask for  more money to meet  the cost of                                                               
the workload.                                                                                                                   
MR.  BUS, in  response to  a previous  comment by  Representative                                                               
Stevens,  said,   "This  excludes  our  capital   request."    He                                                               
explained that  there are 14  offices around the state,  and much                                                               
of the equipment used in archiving  has been handed down from the                                                               
court system and is antiquated.   He mentioned an idea to provide                                                               
a library  where people could  access records and said  that [the                                                               
recorder's  office] would  need  [new] equipment  to  be able  to                                                               
realize that  idea.  He said  the current capital request  is for                                                               
about $250,000.                                                                                                                 
Number 1155                                                                                                                     
     REPRESENTATIVE  GREEN asked  Mr. Bus,  if there  were a                                                                    
     "rash"  of increases  in requests,  because of  the gas                                                                    
     pipeline, for example,  whether [the recorder's office]                                                                    
     would "rise" or fluctuate with those requests.                                                                             
MR.  BUS answered  that that  was the  intent of  [the recorder's                                                               
office].  He  made note of the increased workload  related to the                                                               
gas pipeline  activity, saying  that if  the prime  rate dropped,                                                               
people  would   start  refinancing,  which  would   increase  the                                                               
workload in  [the recorder's  office].  He  stated that  he would                                                               
like to call on Sharon Young to discuss that issue.                                                                             
Number 1218                                                                                                                     
SHARON   YOUNG,   State   Recorder,   State   Recorder's   Office                                                               
(Anchorage), Division of Support  Services, Department of Natural                                                               
Resources   (DNR),  testified   via   teleconference  to   answer                                                               
questions.   She commented that  the workload [in  the recorder's                                                               
office] is  cyclical, and fluctuates for  many reasons, including                                                               
economic ones.   For  example, she stated  that last  month there                                                               
was a 10,000-document increase because  of the NBA [National Bank                                                               
of Alaska]-Wells  Fargo transactions  being recorded.   Ms. Young                                                               
said those types  of things happen sporadically,  and the current                                                               
fee  structure  of  [the  recorder's office]  is  such  that  the                                                               
revenues are sufficient to cover all  costs.  She added that [the                                                               
recorder's office]  does not anticipate  excessive activity  as a                                                               
result of  the gas pipeline;  it would  be comparable to  the oil                                                               
pipeline.    She said  it  would  affect  a number  of  recording                                                               
districts  and offices.   Ms.  Young stated  the opinion  of [the                                                               
recorder's  office]  that the  funding  is  sufficient to  handle                                                               
that, and added that with the  "ups and downs" in [the recorder's                                                               
office] activity, "it  would be very nice to have  the ability to                                                               
work with  those [funds] and have  a more stable ability  to rely                                                               
on that."                                                                                                                       
Number 1331                                                                                                                     
REPRESENTATIVE FATE asked Mr. Bus  what processes he had in place                                                               
to ensure the efficiency of  the change in accounting centers and                                                               
to guarantee  that the  approximately $1.5  million in  excess of                                                               
expenditures  would not  be  mixed with  other  funds within  the                                                               
department, now that  it was out of "the  general fund scrutiny."                                                               
He specified that he wanted to know  how Mr. Bus would be able to                                                               
show the  legislators involved in  "missions and  measures" where                                                               
that money  went.  He  said if the money  were interdepartmental,                                                               
it  apparently   would  not  "lapse"   into  the   general  fund.                                                               
Representative  Fate stated  that [the  recorder's office]  would                                                               
have  an excess  [of money],  and said  if it  built up  over the                                                               
years, [the recorder's  office] may expect to spend  it on things                                                               
that  are not  necessary,  or  may "be  looking  at other  areas,                                                               
within the department of DNR."                                                                                                  
Number 1449                                                                                                                     
MR. BUS responded with the following:                                                                                           
     First  of all,  the  appropriation  for the  recorder's                                                                    
     office is  limited by the appropriation  that you make.                                                                    
     So,  even  today,  the receipts  that  we  collect  are                                                                    
     limited in  expenditures by the appropriation  we have.                                                                    
     The appropriation  for the recorder's  office currently                                                                    
     is  only  $2.4  million  dollars.   If  you  choose  to                                                                    
     increase that,  we would have  to come to  you, whether                                                                    
     it's  called "program  receipts" or  "receipts for  the                                                                    
     The accounting  and the auditing  - for right  now, the                                                                    
     recorder's  office   [has  a]  separate   budget  which                                                                    
     (indisc.)  complete,  separate   appropriation  in  the                                                                    
     department.  And they don't  mix with [the Division of]                                                                    
     Oil &  Gas and all  these other programs, and  so there                                                                    
     is, clearly,  separate accounting.  And  we are limited                                                                    
     to the amount that is  appropriated.  $2.4 million only                                                                    
     funds 11 of  our 14 recorder's offices; there  are 3 of                                                                    
     our recorder's  offices that we  are not  budgeting for                                                                    
     dealing with,  because they are  still under  the court                                                                    
     system.   The court has  asked us repeatedly if  we are                                                                    
     ready and willing to take it  over, and we are.  But we                                                                    
     are, again, limited by our budget.                                                                                         
     And  so   ...  we   have  two  different   branches  of                                                                    
     government  that are  doing the  service.   ... Getting                                                                    
     back to  your issue of  missions and measures:   it's a                                                                    
     problem for  us, because when  a customer comes  to our                                                                    
     court office  where they  want to  do a  recording, and                                                                    
     that court clerk  is busy with a court  case, then they                                                                    
     just put the  recording aside and they  don't deal with                                                                    
     it.  It might be a couple of days.                                                                                         
     And  so, what  Sharon  [Young] would  like  - and  [Ms.                                                                    
     Young]  can  comment  a  little more  -  is  that  full                                                                    
     control of  all the  responsibilities in  the recording                                                                    
     throughout the  state.   And right  now, we  handle the                                                                    
     recording for  11 of the  recording offices, and  3 are                                                                    
     dealt with  through the court  system.  And so,  it's a                                                                    
     little  awkward, and  this, again,  would be  an avenue                                                                    
     where we  could say, through  the court, "Hey,  those 3                                                                    
     offices  - let  us know  what it  would take,  and then                                                                    
     we'll come back to you and  ... we'll present it to you                                                                    
     as a [policymaker],  and say, "Are you  willing to fund                                                                    
     those through  these receipt support  services?   Do it                                                                    
     in  these offices."   That's  another advantage  that's                                                                    
     currently -- we are just  absolutely limited.  We said,                                                                    
     "The  only thing  we will  do is  have the  current 11,                                                                    
     because that 2.4 is all we can do."                                                                                        
Number 1603                                                                                                                     
REPRESENTATIVE  FATE   asked  for  clarification   regarding  the                                                               
receipts and the general fund.                                                                                                  
MR. BUS  replied that the receipts  go into the general  fund and                                                               
then $2.4[million] of that is appropriated.                                                                                     
REPRESENTATIVE FATE  inquired whether  this change  in accounting                                                               
would be more efficient.                                                                                                        
MR.  BUS responded  that it  would  not change  anything for  the                                                               
customer;  it would  just change  the name  of the  receipt.   He                                                               
stated  that  the  change  would  take  [the  recorder's  office]                                                               
outside of  general fund competition,  within the  department and                                                               
within state government, because  it would isolate those receipts                                                               
just for  the recorder's office.   He  added, "If you  say, 'Now,                                                               
recorders, after a  year it's only $2.5[million],'  if we collect                                                               
$4 million, we still give $1.5 million dollars to the treasury."                                                                
Number 1661                                                                                                                     
REPRESENTATIVE  KERTTULA clarified  that like  the fish  and game                                                               
fund, it's all general fund money  and it's up to the legislature                                                               
whether  or not  it gets  used and  for what  purpose.   She said                                                               
talking  about individual  funds  in  it is  like  putting up  an                                                               
imaginary picket  fence, which can  help show  within departments                                                               
what expenses are and how much money was made.                                                                                  
Number 1699                                                                                                                     
CO-CHAIR SCALZI commented:                                                                                                      
      It's [an] excellent idea/concept if we pay attention                                                                      
       to it.  If we don't pay attention to it, then what                                                                       
     Representative Kerttula said is absolutely true.                                                                           
Number 1758                                                                                                                     
REPRESENTATIVE  STEVENS made  a  motion  to move  HB  108 out  of                                                               
committee  with  individual   recommendations  and  the  attached                                                               
fiscal note.   There being  no objection,  HB 108 moved  from the                                                               
House Resources Standing Committee.                                                                                             

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