Legislature(2005 - 2006)CAPITOL 106

02/16/2006 08:00 AM STATE AFFAIRS

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* first hearing in first committee of referral
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= bill was previously heard/scheduled
Heard & Held
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
Moved CSHB 347(STA) Out of Committee
Moved CSHB 238(STA) Out of Committee
Moved HCS CSSB 186(STA) Out of Committee
SB 186-EXECUTIVE BRANCH ETHICS                                                                                                
CHAIR SEATON  announced that  the next order  of business  was CS                                                               
FOR  SENATE BILL  NO. 186(JUD),  "An Act  relating to  the Alaska                                                               
Executive  Branch  Ethics Act;  and  providing  for an  effective                                                               
[Before  the committee  was HCS  CSSB  186, Version  24-LS0874\X,                                                               
Wayne, 1/30/06, as amended.]                                                                                                    
8:19:49 AM                                                                                                                    
REPRESENTATIVE GARDNER moved to adopt Amendment [9], as follows:                                                                
     Page 1, line 11, following ";":                                                                                        
          Insert "or"                                                                                                       
     Page 1, lines 12 - 14:                                                                                                     
          Delete "financial interest in a matter is held in                                                                 
       a blind trust or the public officer does not have                                                                    
     management control over the financial interest; or                                                                     
     Page 3, line 18, through page 4, line 1:                                                                                   
          Delete all material.                                                                                                  
     Renumber the following bill sections accordingly.                                                                          
     Page 9, line 31, through page 10, line 3:                                                                                  
          Delete "establishment of a blind trust for a                                                                      
     period   of  time   or   under  conditions   determined                                                                
     appropriate, placement  of the financial  interest into                                                                
     an  investment   where  the  employee  does   not  have                                                                
     management control over the financial interest,"                                                                       
     Insert "  [ESTABLISHMENT OF A BLIND TRUST,]"                                                                               
REPRESENTATIVE   GARDNER  directed   attention   to  an   article                                                               
[included in the committee packet],  entitled, "Frist Was Updated                                                               
On Blind Trust,"  from CBS News, [dated 9/26/05].   She indicated                                                               
that the article  speaks to the heart of her  concern about blind                                                               
trusts that "they are not  necessarily blind."  She explained, "I                                                               
think that people  understand that if somebody  puts their assets                                                               
in a  blind trust, they  might have  reason to believe  that they                                                               
will still benefit from decisions  made while those assets are in                                                               
a blind trust."  She continued:                                                                                                 
     I think, for example,  ... [Vice President Dick] Cheney                                                                    
     has  assets related  to  his  service with  Halliburton                                                                    
     [Company] and  stock.   And they're  in a  blind trust,                                                                    
     but I  think that everybody understands  that when he's                                                                    
     out of office, he'll probably  be a very much wealthier                                                                    
     man  than  when he  entered,  in  part because  of  his                                                                    
     relationship  with Halliburton.    And there's  nothing                                                                    
     illegal about  that, but  it does raise  - rightly  - a                                                                    
     public concern.  I personally  believe that if you want                                                                    
     to  serve in  government office  and you  have personal                                                                    
     interest   in  particular   companies  or   businesses,                                                                    
     putting  them in  a blind  trust does  not remove  that                                                                    
     interest,  even though  you may  not,  on a  day-to-day                                                                    
     basis know  what is in  the trust.   You know  what you                                                                    
     put in [and] there's an  expectation of what comes out.                                                                    
     And I  think that even if  the decisions you make  as a                                                                    
     public  official  are  not  considering  your  personal                                                                    
     benefit, the perception that it  does is there.  And in                                                                    
     this life, perception is  sometimes even more important                                                                    
     than reality.   If we want public  trust in government,                                                                    
     we must  remove any perception of  conflict of interest                                                                    
     in every way we can.                                                                                                       
REPRESENTATIVE  GARDNER revealed  that she  had tried  to get  an                                                               
attorney, accountant, or  someone who deals with  blind trusts to                                                               
address  this issue  on the  record.   She related  that one  man                                                               
laughed and said,  "Oh, you mean leaky, peaky trusts."   She said                                                               
she thinks  that's very telling.   She explained that,  given the                                                               
importance  of the  issue  of confidence  in  government, she  is                                                               
offering Amendment [9].                                                                                                         
8:23:07 AM                                                                                                                    
REPRESENTATIVE RAMRAS objected to Amendment [9].                                                                                
8:23:22 AM                                                                                                                    
CHAIR SEATON noted that also  included in the committee packet is                                                               
an  article  from the  New  Jersey  Department  of Law  &  Public                                                               
Safety,  entitled, "Executive  Commission on  Ethical Standards."                                                               
He said, "...  You'll notice that at least in  this case, nothing                                                               
that's required to  be recorded in a public office  can be put in                                                               
a  blind trust.   That's  because anything  that's recorded  in a                                                               
public office is  then, of course, known."  He  noted that Alaska                                                               
uses  the Alaska  Public Offices  Commission's (APOC's)  rule for                                                               
financial disclosures for elected officials.   He said, "For this                                                               
case  it  doesn't  seem  like  we have  the  ability  on  elected                                                               
officials."  He referred to a  portion of the handout showing the                                                               
New Jersey department's standards, which read:                                                                                  
     The trust  shall not contain  investments or  assets in                                                                    
     which  the  holder's  ownership right  or  interest  is                                                                    
     required to  the [sic] recorded  in a public  office or                                                                    
     those  assets whose  permanency makes  transfer by  the                                                                    
     trustee  improbable or  impractical; these  investments                                                                    
     or  assets  would  include,  but  not  be  limited  to,                                                                    
     businesses,   real   estate,  security   interests   in                                                                    
     personal property and mortgages;                                                                                           
CHAIR SEATON  remarked, "The probability  that those  will remain                                                               
in the trust is extremely high,  and therefore a person that puts                                                               
something  in that  trust  would have  the  knowledge that  those                                                               
basically  nonliquid assets  would  remain in  the  trusts."   He                                                               
reminded the committee,  "This does not remove  blind trusts from                                                               
the  government.   All this  does is  remove blind  trusts as  an                                                               
absolute, nonconflict of interest; so,  if you put something into                                                               
a  blind trust  under this  bill, you  absolutely don't  have any                                                               
conflict of interest  - even if you  just put it in  and you know                                                               
it's there."   He said he  believes that's the thrust  of the two                                                               
8:26:10 AM                                                                                                                    
A roll call vote was  taken.  Representatives Gardner, Gruenberg,                                                               
Gatto,   and   Seaton   voted    in   favor   of   Amendment   9.                                                               
Representatives Elkins  and Ramras voted against  it.  Therefore,                                                               
Amendment 9 passed by a vote of 4-2.                                                                                            
8:26:56 AM                                                                                                                    
REPRESENTATIVE GRUENBERG moved to  adopt Amendment 10, which read                                                               
as follows [original punctuation provided]:                                                                                     
     Page 2, lines 3-4:                                                                                                         
          Delete all material and insert:                                                                                       
           "(B) does not own stock or options to boy                                                                        
     stock that, when combined,                                                                                             
          (i) equal more than one percent of the stock                                                                      
     in the business; or                                                                                                    
              (ii) have a total value of more than                                                                          
8:27:04 AM                                                                                                                    
CHAIR SEATON objected for discussion purposes.                                                                                  
8:27:52 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG noted  that  there  is a  typographical                                                               
error  in  the  amendment:    "boy" should  read,  "buy".    [The                                                       
committee treated Representative Gruenberg's  notice of the error                                                               
as  sufficient to  change the  error -  no amendment  necessary.]                                                               
Representative   Gruenberg   reminded   the  committee   of   its                                                               
discussion  [during  the 2/14/06  hearing  on  SB 186]  regarding                                                               
whether  stock options  should  be included  in  addition to  the                                                               
actual shares of stock, at  which time the sponsor, Senator Ralph                                                               
Seekins, said he did not object.                                                                                                
8:28:25 AM                                                                                                                    
CHAIR SEATON  removed his objection.   He asked if there  was any                                                               
further objection to  Amendment 10.  There  being none, Amendment                                                               
10 was adopted.                                                                                                                 
8:28:40 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG  noted  that there  were  [three  other                                                               
amendments] stapled to the back of the adopted Amendment 10.                                                                    
8:29:11 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG  moved   to  [rescind  the  committee's                                                               
action in adopting]  Amendment 10.  There being  no objection, it                                                               
was so ordered.                                                                                                                 
8:29:40 AM                                                                                                                    
REPRESENTATIVE GRUENBERG moved to  adopt Conceptual Amendment 11,                                                               
which  includes   the  rescinded  Amendment  10   [text  provided                                                               
previously], plus  the following amendments combined,  which read                                                               
as follows  [original punctuation  provided with  some formatting                                                               
     Page 2, lines 5-6:                                                                                                         
          Delete all material and insert:                                                                                       
               "(C) owns                                                                                                    
            (i) less than one percent of the equity                                                                         
     interest in the business; or                                                                                           
            (ii) an equity interest in the business                                                                         
     worth less than $10,000;"                                                                                              
     Page 2, line 10:                                                                                                           
          after "provide" insert "or have an option to                                                                  
     Page 2, line 12:                                                                                                           
           after "contract" insert "or have an option                                                                   
     for a contract"                                                                                                        
8:31:14 AM                                                                                                                    
CHAIR  SEATON, regarding  the part  of  the amendment  addressing                                                               
page  2, lines  5-6,  explained that  "equity  interest" means  a                                                               
partnership without a stock.                                                                                                    
8:32:04 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG moved  Conceptual Amendment  1 to  [the                                                               
portion  of] Conceptual  Amendment  11 [which  addresses page  2,                                                               
lines  5-6], to  insert  "or has  an option  to  buy" after  "(C)                                                           
CHAIR  SEATON asked  if  there was  any  objection to  Conceptual                                                               
Amendment 1  to Conceptual  Amendment 11.   There being  none, it                                                               
was so ordered.                                                                                                                 
8:32:45 AM                                                                                                                    
REPRESENTATIVE  GATTO [referred  to the  portion of  Amendment 11                                                               
that read:  "(i) less than  one percent of the equity interest in                                                           
the business; or"], and questioned the  use of the word "or".  In                                                       
response  to  Chair  Seaton   and  Representative  Gruenberg,  he                                                               
explained that he  thinks the intent of the amendment  is to have                                                               
a person  to satisfy both of  these requirements, not one  or the                                                               
8:33:45 AM                                                                                                                    
REPRESENTATIVE GRUENBERG said he  thinks Representative Gatto may                                                               
be right.  He said he thinks there  should be an "and" there.  He                                                               
said  he  would accept  Representative  Gatto's  suggestion as  a                                                               
"friendly amendment."                                                                                                           
[The committee  treated Representative  Gatto's suggestion  as an                                                               
adopted Conceptual Amendment 2 to Amendment 11.]                                                                                
8:35:59 AM                                                                                                                    
REPRESENTATIVE  GRUENBERG spoke  to the  remainder of  Conceptual                                                               
Amendment 11  - the portions  of which  address page 2,  line 10,                                                               
and  page  2, line  12.    Regarding the  former,  Representative                                                               
Gruenberg said, "We  do not want somebody to  have an arrangement                                                               
where  they have  a  sweetheart  deal that  they're  going to  be                                                               
providing  personal services,  and this  just says,  'or have  an                                                           
option  to provide'."   Regarding  the latter,  he said  the same                                                           
goes  for  contracts;  "we  don't  want them  to  either  have  a                                                               
contract or an option for a contract."                                                                                          
8:36:08 AM                                                                                                                    
CHAIR SEATON  removed his objection  to Conceptual  Amendment 11,                                                               
[as amended].   He asked  if there  was any further  objection to                                                               
Amendment 11, as amended.  There being none, it was so ordered.                                                                 
8:36:41 AM                                                                                                                    
REPRESENTATIVE RAMRAS  expressed concern  with the  recent series                                                               
of conceptual amendments.  He  stated, "It just seems like that's                                                               
the  whole  nature  of  everything   we're  doing  here  is  just                                                               
suggesting  that  somebody  [who]  applies   for  a  job  in  the                                                               
executive branch must be dishonest  to even make [an] application                                                               
...."  He offered language to that effect.                                                                                      
8:37:25 AM                                                                                                                    
CHAIR  SEATON responded  that laying  out a  good groundwork  for                                                               
saying what  a member of  the executive  branch should not  do is                                                               
not an accusation; it gives clarity to what is not acceptable.                                                                  
8:38:57 AM                                                                                                                    
REPRESENTATIVE GRUENBERG  moved to  report HCS CSSB  186, Version                                                               
24-LS0874\X, Wayne,  1/30/06, as  amended, out of  committee with                                                               
individual  recommendations and  the  accompanying fiscal  notes.                                                               
There being no  objection, HCS CSSB 186(STA) was  reported out of                                                               
the House State Affairs Standing Committee.                                                                                     

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