Legislature(1999 - 2000)

05/11/1999 05:35 PM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
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CS FOR HOUSE BILL NO. 40(FIN) am                                                                                                
"An Act merging certain departments in the executive                                                                            
branch of state government; changing the names of                                                                               
certain departments in the executive branch of state                                                                            
government; transferring duties among departments and                                                                           
offices in the executive branch of state government;                                                                            
providing that certain discretionary duties formerly                                                                            
performed by the Department of Community and Regional                                                                           
Affairs are mandatory in the department to which those                                                                          
duties are transferred; relating to the licensing of                                                                            
child care facilities; relating to the division of                                                                              
vocational rehabilitation; relating to the Alaska                                                                               
Human Resource Investment Council; adjusting the                                                                                
membership of certain multi-member bodies; providing                                                                            
that a certain commissioner may designate department                                                                            
employees to serve in the commissioner's place on a                                                                             
board, council, or similar entity; providing for                                                                                
advice to be given by a department head to the                                                                                  
governor and other commissioners on the delivery of                                                                             
government services to rural areas and providing for                                                                            
recommendations to be made to the governor and other                                                                            
commissioners by that same commissioner about policy                                                                            
changes that would affect rural governments and rural                                                                           
affairs; relating to the federal community development                                                                          
quota program; eliminating references to the division                                                                           
of tourism; eliminating a reference to manpower                                                                                 
training programs; eliminating references to the                                                                                
director and deputy director of international trade;                                                                            
eliminating the requirement for a local advisory                                                                                
committee for consideration of rural electrification                                                                            
loans; and providing for an effective date."                                                                                    
                                                                                                                                
                                                                                                                                
This was the first hearing for this bill before the Senate                                                                      
Finance Committee.                                                                                                              
                                                                                                                                
REPRESENTATIVE VIC KOHRING, sponsor of the bill testified.                                                                      
With the current difficult financial situation, he felt the                                                                     
legislature needs a more creative approach to address the                                                                       
budget beyond simply making cuts. He thought the                                                                                
legislature should look further to find more efficient ways                                                                     
to deliver programs.                                                                                                            
                                                                                                                                
HB 40 combines the Department of Community and Regional                                                                         
Affairs and the Department of Commerce and Economic                                                                             
Development into one department titled the Department of                                                                        
Community and Economic Development. According to                                                                                
Representative Vic Kohring, both departments have similar                                                                       
missions to implement programs that encourage economic                                                                          
development. He stated that by combining the departments,                                                                       
the state would realize cost savings while maintaining the                                                                      
same level of service.                                                                                                          
                                                                                                                                
Representative Vic Kohring referred to an organizational                                                                        
chart that was before the members.  The chart shows the                                                                         
placement of various programs under the proposed                                                                                
configuration of HB 40. He noted that the Department of                                                                         
Administration, Department of Labor, the Department of                                                                          
Health and Social Services and the Office of the Governor                                                                       
are also impacted by the legislation.                                                                                           
                                                                                                                                
Two programs currently under the Department of                                                                                  
Administration, the Capital Matching Grants (Incorporated)                                                                      
program and the Municipal Grants program, would move to the                                                                     
Department of Community and Economic Development.                                                                               
                                                                                                                                
The Department of Labor will become the Department of Labor                                                                     
and Workforce Development and gain five programs. These                                                                         
programs were: the Adult Basic Education and the Vocational                                                                     
Rehabilitation programs currently in the Department of                                                                          
Education; the Job Training Partnership Act and the State                                                                       
Training and Employment Program currently in the Department                                                                     
of Community and Regional Affairs and the Alaska Human                                                                          
Resource Investment Council currently in the Office of the                                                                      
Governor.                                                                                                                       
                                                                                                                                
The Department of Education will become the Department of                                                                       
Education and Child Development and incorporate four                                                                            
additional programs. Programs moving from Department of                                                                         
Community and Regional Affairs are Head Start, ChildCare                                                                        
Pass II, III and Day Care Assistance. The Licensing of                                                                          
ChildCare Facilities would move from the Department of                                                                          
Health and Social Services to the Department of Education                                                                       
and Child Development.                                                                                                          
                                                                                                                                
Representative Vic Kohring told the Committee that Senator                                                                      
Pete Kelly had initiated the concept of reorganizing                                                                            
programs four years ago with different legislation.                                                                             
Representative Vic Kohring said he and Senator Pete Kelly                                                                       
have worked together since then to streamline the concept                                                                       
into HB 40. Representative Vic Kohring pointed out there                                                                        
had been substantial hearings over the years on the matter                                                                      
and that an argument could not be made that the process was                                                                     
being rushed.                                                                                                                   
                                                                                                                                
Representative Vic Kohring stressed the main purpose of HB
40 to save money year after year. He added that programs                                                                        
will be delivered with much greater efficiency. He thought                                                                      
this legislation places programs into departments in a                                                                          
logical manner for budget planning.                                                                                             
                                                                                                                                
Representative Vic Kohring then listed features of the                                                                          
legislation. One feature is to streamline bureaucracy by                                                                        
eliminating a commissioner's office and creating a new                                                                          
agency that will cost less to operate.                                                                                          
                                                                                                                                
Another feature of the bill is to protect the integrity of                                                                      
programs to the benefit of rural communities, according to                                                                      
Representative Vic Kohring. He surmised that because the                                                                        
programs will cost less to operate, they would be less                                                                          
likely to suffer budget cuts.                                                                                                   
                                                                                                                                
Representative Vic Kohring stated that as a result of                                                                           
placing the economic development programs together into the                                                                     
new department, there would be a greater focus on economic                                                                      
development in the state.                                                                                                       
                                                                                                                                
Representative Vic Kohring said the new department creates                                                                      
a one-stop shopping center.                                                                                                     
                                                                                                                                
He brought the Committee's attention to another handout                                                                         
that showed nine economic development programs saying it                                                                        
was strong justification for this bill in that it pointed                                                                       
out similarities between the Department of Commerce and                                                                         
Economic Development and the Department of Community and                                                                        
Regional Affairs.  He hoped that over time when the                                                                             
legislation was implemented the two agencies would be                                                                           
blended and would operate with less overhead.                                                                                   
                                                                                                                                
Representative Vic Kohring stated that there would be                                                                           
future savings beyond what was reflected in the fiscal                                                                          
note. The Administration would be responsible for achieving                                                                     
those savings.                                                                                                                  
                                                                                                                                
Another feature of the bill was that it ensures that local                                                                      
government assistance will continue, according to                                                                               
Representative Vic Kohring. The bill enhances                                                                                   
infrastructure planning and the state's economic                                                                                
development strategy.                                                                                                           
                                                                                                                                
Representative Vic Kohring said the bottom line was that                                                                        
the bill puts the State Of Alaska "on a path to smaller and                                                                     
smarter government."                                                                                                            
                                                                                                                                
Representative Vic Kohring told the Committee that great                                                                        
effort was put into selecting the new department names. He                                                                      
said there was a concern that one of the agencies was being                                                                     
eliminated when actually only the name was going away.                                                                          
                                                                                                                                
Representative Vic Kohring referred to another handout that                                                                     
addressed the benefits to rural Alaska.  He wanted to                                                                           
alleviate concerns that the bill would be detrimental to                                                                        
rural communities. The purpose of HB 40 was strictly                                                                            
economically related, he stressed and would unify scoping                                                                       
and planning assistance, infrastructure construction and                                                                        
financial assistance into one department.                                                                                       
                                                                                                                                
Representative Vic Kohring intended that the budget                                                                             
subcommittees of both the House of Representatives and the                                                                      
Senate would evaluate the results of the reorganization in                                                                      
the next year and locate additional savings potential. The                                                                      
evaluation was not dictated in the bill, but he expected it                                                                     
would occur.                                                                                                                    
                                                                                                                                
Representative Vic Kohring said that there was concern that                                                                     
this new department would become a mega-agency. However, he                                                                     
claimed, the department would employ approximately 450                                                                          
people and would be the fourth smallest agency in state                                                                         
government. Another concern was that additional                                                                                 
responsibility would be placed on existing personnel.                                                                           
Representative Vic Kohring did not believe that would                                                                           
happen with the exception of additional oversight by the                                                                        
new commissioner's office.                                                                                                      
                                                                                                                                
Great care was taken when drafting the bill to ensure                                                                           
federal funds were not jeopardized, according to                                                                                
Representative Vic Kohring.                                                                                                     
                                                                                                                                
Representative Vic Kohring then read excerpts from two                                                                          
letters in support of the legislation written by people                                                                         
formally involved with the affected agencies.  The first                                                                        
was from Don Tanner, former Deputy Commissioner of the                                                                          
Department of Community and Regional Affairs. His letter                                                                        
stated that HB 40 is a smart way to cut government,                                                                             
eliminate unnecessary overhead and allow one department to                                                                      
be responsible for improving the state's economy. It also                                                                       
stated that the legislation would increase efficiencies and                                                                     
greatly enhance economic growth in rural areas.                                                                                 
                                                                                                                                
Paul Fuhs, former Commissioner of the Department of                                                                             
Community and Economic Development under the Hickel                                                                             
Administration wrote the second letter.  It stated that                                                                         
combining the Department of Commerce and Economic                                                                               
Development and the Department of Community and Regional                                                                        
Affairs would create a more effective program. The letter                                                                       
also referred to complaints received from participants who                                                                      
felt they were bounced from agency to agency when trying to                                                                     
access services.                                                                                                                
                                                                                                                                
Representative Vic Kohring summarized his testimony saying                                                                      
that the legislation streamlines government, protects                                                                           
important programs and provides better service for the                                                                          
public by delivering services for less money.                                                                                   
                                                                                                                                
Senator Pete Kelly noted the bill proposed moving the Head                                                                      
Start and the Day Care Assistance programs to the                                                                               
Department of Education and asked if feedback on this was                                                                       
received during hearings in previous committees.  MIKE                                                                          
KRIEBER, staff to Representative Vic Kohring, answered that                                                                     
the original bill moved the two programs to the Department                                                                      
of Health and Social Services. The intent of the move was                                                                       
to combine those programs into one.  In working with the                                                                        
Administration it was determined that the programs would be                                                                     
best served under the Department of Education, according to                                                                     
Mike Krieber.                                                                                                                   
                                                                                                                                
Senator Loren Leman wanted to know how the other new                                                                            
department names had been conceived. Representative Vic                                                                         
Kohring replied the Administration recommended the names                                                                        
and he thought it didn't matter what the departments were                                                                       
called so long as they reflected the goals laid out in this                                                                     
legislation.                                                                                                                    
                                                                                                                                
Senator Al Adams appreciated the consideration given to                                                                         
rural communities. He wanted to know why the Municipal                                                                          
Grants program and the Capital Matching Grants program                                                                          
should be moved from the Department of Administration since                                                                     
they were already small and efficiently run operations.                                                                         
Representative Vic Kohring responded that it would be                                                                           
better to have the programs in the new department because                                                                       
they were already administered through the Department of                                                                        
Community and Economic Development but funded through the                                                                       
Department of Administration. The change would eliminate                                                                        
the extra step involved with the funding allocation.                                                                            
                                                                                                                                
Senator Al Adams hoped the personnel who currently operated                                                                     
the grants programs would be transferred to the new                                                                             
department since they knew the system.                                                                                          
                                                                                                                                
Senator Al Adams referred to the boards and commissions                                                                         
attached to the three affected agencies. He pointed out the                                                                     
elimination of two seats on the Power Project Loan                                                                              
Committee and wanted to know the reason for the reduction                                                                       
and if other boards or commissions are similarly changed.                                                                       
Representative Vic Kohring responded the change was made to                                                                     
the bill with an amendment in the House Finance Committee.                                                                      
Mike Krieber explained that the board had seats for the                                                                         
commissioners of the Department of Community and Regional                                                                       
Affairs and the Department of Commerce and Economic                                                                             
Development.  With the combination of the two agencies and                                                                      
elimination of one of the commissioner positions, only one                                                                      
department representative seat is needed. That left the                                                                         
board with an even number of seats. To balance the board                                                                        
for voting purposes, one of the public member seats is also                                                                     
eliminated.                                                                                                                     
                                                                                                                                
Mike Krieber continued by saying that the Alaska Coastal                                                                        
Policy Council along with other miscellaneous boards will                                                                       
have a reduction of one seat to reflect the combination of                                                                      
the two commissioner's offices. The Oil and Gas Policy                                                                          
Committee is one of several other boards that increases its                                                                     
membership to include the commissioner of the Department of                                                                     
Revenue.                                                                                                                        
                                                                                                                                
Senator Gary Wilken referred to the sponsor's cost savings                                                                      
handout showing savings of $970,000 and to the fiscal note                                                                      
showing a saving of only $355,000 and wanted the sponsor to                                                                     
reconcile the differences. Representative Vic Kohring                                                                           
suspected that when the legislation is implemented, the                                                                         
actual savings would be somewhere between the two analyses.                                                                     
He felt there are other areas of potential savings that are                                                                     
not listed on either analysis such as the elimination of                                                                        
additional positions. For example, he thought the director                                                                      
position for the current Division of Community and Regional                                                                     
Development is no longer needed because the childcare and                                                                       
job training programs will be transferred from the                                                                              
Department of Community and Regional Affairs and the                                                                            
Department of Community and Economic Development.                                                                               
                                                                                                                                
Senator Gary Wilken commented on the department name                                                                            
changes, saying he felt there could be some confusion with                                                                      
the similar acronyms of the new names and existing                                                                              
department names.                                                                                                               
                                                                                                                                
Senator Loren Leman wanted to see department titles as                                                                          
short as feasible and to reflect the functions of the                                                                           
department.                                                                                                                     
                                                                                                                                
                                                                                                                                
Tape: SFC - 99 #133, Side B    6:23 PM                                                                                          
                                                                                                                                
                                                                                                                                
Senator Loren Leman continued pointing out that three                                                                           
departments end with "Development". His desire was to make                                                                      
the titles as simple as possible.                                                                                               
                                                                                                                                
Senator Al Adams asked how the four components shown on the                                                                     
handout titled "Benefits to Rural Alaska" increase                                                                              
efficiencies or enhance economic development in rural                                                                           
Alaska. Representative Vic Kohring responded that the new                                                                       
agency focuses entirely on economic development by                                                                              
extracting non-economic development programs to the                                                                             
Department of Education and the Department of Labor where                                                                       
they are more appropriate. As far as efficiencies,                                                                              
Representative Vic Kohring thought that if the economic                                                                         
development programs were under one roof, then when a                                                                           
community leader seeks funding or loan programs they only                                                                       
have to make one phone call.  He hoped that in blending the                                                                     
programs together, there would be less need for expensive                                                                       
overhead in office space, employees and equipment.                                                                              
                                                                                                                                
Representative Vic Kohring hoped that in time, all the                                                                          
related programs would blend together.                                                                                          
                                                                                                                                
Co-Chair John Torgerson wanted to know if this bill made                                                                        
any substantial changes to statute. Representative Vic                                                                          
Kohring qualified that he knew the legislation was                                                                              
intimidating but that it only shuffles programs and repeals                                                                     
unnecessary statutes. He pointed out that Manpower Training                                                                     
Program, which the Administration currently did not                                                                             
operate, is eliminated in statute at the Governor's                                                                             
request.                                                                                                                        
                                                                                                                                
Representative Vic Kohring noted the presence of                                                                                
Representative Gene Therriault who contributed greatly to                                                                       
the legislation.                                                                                                                
                                                                                                                                
Senator Randy Phillips was concerned about the fiscal note                                                                      
and the differences between it and the sponsor's analysis.                                                                      
Representative Vic Kohring noted the Administration                                                                             
anticipated it would cost $200,000 to implement the bill,                                                                       
which he thought was reasonable considering the major                                                                           
restructuring. As far as the projected savings,                                                                                 
Representative Vic Kohring believed there was simply a                                                                          
difference of opinion between himself and the                                                                                   
Administration.                                                                                                                 
                                                                                                                                
Senator Randy Phillips said the real question was who                                                                           
handled the merger, the Administration or the Legislature.                                                                      
Representative Vic Kohring said all involved parties would                                                                      
watch the process. He repeated details of particular                                                                            
positions and programs he felt could be combined or                                                                             
eliminated.                                                                                                                     
                                                                                                                                
Senator Randy Phillips commented about a past executive                                                                         
order to combine public works and public highways into the                                                                      
Department of Transportation and Public Facilities. He                                                                          
expected there were many more employees and a larger budget                                                                     
since that merger twenty years ago. He did not know if                                                                          
greater savings and more efficient delivery of services                                                                         
were the result.                                                                                                                
                                                                                                                                
Representative Vic Kohring hoped to use HB 40 as a model                                                                        
for the future. He had been working on the bill for four                                                                        
years and plans to monitor the success rate once it passes                                                                      
into law.  He said he intends to determine where cost                                                                           
saving is realized and where additional savings can be                                                                          
addressed. Additional legislation could be considered for                                                                       
future adjustments, he added. He also hopes the budget                                                                          
subcommittees will watch the progress.                                                                                          
                                                                                                                                
Senator Al Adams wanted to know if the plan is to eliminate                                                                     
the municipal revenue sharing programs. Representative Vic                                                                      
Kohring answered that it is not.                                                                                                
                                                                                                                                
Senator Al Adams then asked if moving the Power Cost                                                                            
Equalization program to AIDEA had been considered. Mike                                                                         
Krieber said it was discussed. AIDEA is currently in the                                                                        
Department of Commerce and Economic Development and will be                                                                     
moved into the new department along with the energy                                                                             
programs currently in the Department of Community and                                                                           
Regional Affairs.                                                                                                               
                                                                                                                                
Senator Gary Wilken asked if there would be public                                                                              
testimony in this committee. He was interested in hearing                                                                       
comments on the movement of education programs. Co-Chair                                                                        
John Torgerson noted that no one was signed up but could                                                                        
speak if they chose.                                                                                                            
                                                                                                                                
Senator Randy Phillips asked if it wouldn't be better to                                                                        
combine this bill with a fiscal plan for implementation                                                                         
rather than adopt this bill and worry about implementation                                                                      
next session.  Senator Lyda Green commented that the Senate                                                                     
Finance Committee is the proper forum to do so.  Senator                                                                        
Randy Phillips stressed the fiscal implementation direction                                                                     
was the missing link.                                                                                                           
                                                                                                                                
Representative Vic Kohring responded that he had made                                                                           
significant accomplishment in coming to agreement with the                                                                      
Administration. He noted that originally the Administration                                                                     
calculated a cost of $1.6 million to implement the bill and                                                                     
that he was pleased the cost had been brought down. He was                                                                      
disappointed with the elimination of some positions.                                                                            
Ultimately, he felt a delicate balancing act was achieved.                                                                      
                                                                                                                                
KAREN REHFELD, Department of Education came to the table at                                                                     
the request of Senator Gary Wilken. He wanted to know the                                                                       
comfort level of the department taking on the duties of                                                                         
childcare.  Karen Rehfeld said there would be a number of                                                                       
responsibilities added to the Department of Education                                                                           
including the Daycare Assistance Program, Child Care Pass                                                                       
II and III, Head Start, Childcare Licensing and some                                                                            
research programs.  The department did have some concerns                                                                       
since these are new areas.  The department understands the                                                                      
role of quality childcare development in the child's                                                                            
ability to learn once they enter the school system.                                                                             
                                                                                                                                
Karen Rehfeld said the Department of Education has ongoing                                                                      
discussions with the Department of Health and Social                                                                            
Services and the Department of Community and Regional                                                                           
Affairs who are willing to assist in the transfer of the                                                                        
programs.                                                                                                                       
                                                                                                                                
Senator Gary Wilken wanted to know if there was any                                                                             
indication that the preschool program operations would be                                                                       
different than K-12. Karen Rehfeld replied that the                                                                             
licensing of childcare facilities was the area of greatest                                                                      
concern because of the difficulty to implement by the                                                                           
effective date of the bill. Currently, the Department of                                                                        
Health and Social Services combines the childcare licensing                                                                     
functions with licensing of foster care. To split the                                                                           
functions will take longer than the July 1, 1999 date in                                                                        
the bill. An amendment was made in the House of                                                                                 
Representatives to delay the effective date of to July 1,                                                                       
2000.                                                                                                                           
                                                                                                                                
Karen Rehfeld voiced concerns that the Department of                                                                            
Education's current resources is not adequate to cover the                                                                      
costs of preschool certification. A proposal before the                                                                         
Conference Committee on the FY00 Operating Budget would                                                                         
eliminate all general funding for that component.                                                                               
                                                                                                                                
Senator Gary Wilken wanted to follow the progress of the                                                                        
new Department of Education and Childhood Development. He                                                                       
referred to page 9 line 23 of the House Finance Committee                                                                       
substitute that granted the department the ability to issue                                                                     
a variance of up to two years for a childcare center. He                                                                        
wanted to speak further to the witness at a later time on                                                                       
this matter.                                                                                                                    
                                                                                                                                
Co-Chair John Torgerson noted a proposed committee                                                                              
substitute, SCS CS HB 40 (FIN) 1-LS0056/N 5/11/99, before                                                                       
the members for consideration. Senator Lyda Green moved for                                                                     
adoption as a Workdraft. Senator Al Adams and Co-Chair John                                                                     
Torgerson objected.                                                                                                             
                                                                                                                                
Senator Lyda Green detailed the changes proposed in Version                                                                     
"N". The duties of regulating meat, poultry, dairy products                                                                     
and livestock are transferred from the Department of                                                                            
Environmental Conservation to the Department of Natural                                                                         
Resources Division of Agriculture. Senator Lyda Green                                                                           
stated the Division of Agriculture is the typical division                                                                      
of oversight for these programs in most other states.                                                                           
                                                                                                                                
The management of pesticides will also transfer from the                                                                        
Department of Environmental Conservation to the Department                                                                      
of Natural Resources Division of Agriculture under the                                                                          
proposed committee substitute Version "N". Senator Lyda                                                                         
Green explained the lack of a fee structure imposed on                                                                          
manufacturers of pesticides and fertilizers imported to the                                                                     
state and her intent to establish a system in the future.                                                                       
                                                                                                                                
CS HB 40 Version "N" creates a new Division of Safety                                                                           
Inspections within the Department of Public Safety to                                                                           
operate the Alaska Occupational Safety and Health program                                                                       
and perform safety inspections currently managed by the                                                                         
Department of Labor. The Alaska Safety Advisory Council                                                                         
will also transfer to the Division of Safety Inspections.                                                                       
The licensing and issuance of and certificates of fitness                                                                       
will be consolidated into the Division Occupational                                                                             
Licensing in the new Department of Community and Economic                                                                       
Development. The Alaska Labor Relations Agency will                                                                             
transfer from the Department of Labor to the Department of                                                                      
Administration.                                                                                                                 
                                                                                                                                
Co-Chair John Torgerson clarified the committee substitute                                                                      
makes no substantive changes to the law; only shifted                                                                           
programs to different agencies.                                                                                                 
                                                                                                                                
Senator Pete Kelly wanted to hear from the sponsor on the                                                                       
proposed committee substitute Version "N". Co-Chair John                                                                        
Torgerson noted the sponsor did not have a copy of the                                                                          
committee substitute.                                                                                                           
                                                                                                                                
Senator Al Adams asked Senator Lyda Green if impact                                                                             
statements were received from each of the affected                                                                              
agencies. Co-Chair John Torgerson said it was his intent if                                                                     
the committee substitute Version "N" was adopted HB 40                                                                          
would be heard later in the week after department impact                                                                        
statements were submitted.                                                                                                      
                                                                                                                                
AT EASE 6:46PM / 6:47PM                                                                                                         
                                                                                                                                
Senator Lyda Green removed her motion to adopt SCS CS HB 40                                                                     
1-LS0056/N 5/11/99. Co-Chair John Torgerson announced that                                                                      
the committee substitute will be distributed and the                                                                            
departments given an opportunity to comment.                                                                                    
                                                                                                                                
Co-Chair John Torgerson ordered HB 40 held in committee.                                                                        
                                                                                                                                
AT EASE 6:48PM / 7:03PM                                                                                                         
                                                                                                                                
Co-Chair John Torgerson announced SB 113 would not be heard                                                                     
this meeting.                                                                                                                   
                                                                                                                                
                                                                                                                                
CS FOR SPONSOR SUBSTITUTE FOR SENATE BILL NO. 94(HES)                                                                           
"An Act relating to the medical use of marijuana; and                                                                           
providing for an effective date."                                                                                               
                                                                                                                                
                                                                                                                                
Senator Loren Leman, sponsor of the bill, explained this                                                                        
legislation was before the Committee as a result of the                                                                         
ballot measure voters adopted in the last election to                                                                           
legalize the use of marijuana for medical treatment. He                                                                         
became aware of problems with enforcement of the new law by                                                                     
the Department of Public Safety and the Department of Law.                                                                      
He stressed this bill does not repeal the initiative, only                                                                      
provided definition so the law can be enacted as intended.                                                                      
                                                                                                                                
Senator Loren Leman believed "there was a massive campaign                                                                      
of misinformation" involved in the development of this                                                                          
legislation. He added that fortunately, a representative of                                                                     
the Alaskans for Medical Rights organization came the table                                                                     
to work constructively with the Administration and himself.                                                                     
The agreements reached are reflected in the Senate Health                                                                       
and Social Services committee substitute, 1-LS0524/M, and                                                                       
meet most of the requirements of the sponsor, the                                                                               
Administration and the medical marijuana organization.                                                                          
Senator Loren Leman said amendments were before the                                                                             
Committee that will provide further clarification to the                                                                        
bill.                                                                                                                           
                                                                                                                                
Senator Loren Leman noted Senator Al Adams submitted                                                                            
several amendments, some of which were identical to ones he                                                                     
submitted. Senator Loren Leman supported those identical                                                                        
amendments.                                                                                                                     
                                                                                                                                
ELMER LINDSTROM, Special Assistant, Office of the                                                                               
Commissioner, Department of Health and Social Services,                                                                         
came to the table. He testified that because the statute to                                                                     
legalize medical use of marijuana was passed by the voters,                                                                     
the department had no opportunity to secure funding for the                                                                     
new program. An increment was added to the FY00 Operating                                                                       
Budget under the Bureau of Vital Statistics component for                                                                       
approximately $73,000 for one staff position to operate the                                                                     
registry, produce identification cards and operate the                                                                          
program. That component was not approved in either the                                                                          
House or the Senate Finance Committee budgets noted Elmer                                                                       
Lindstrom. Therefore, the fiscal note reflected the                                                                             
department's reassessment of the amount needed to operate                                                                       
the program. Elmer Lindstrom added that this legislation                                                                        
would add to the department's responsibility even though                                                                        
the amount of the fiscal note is less than originally                                                                           
requested in the FY00 operating budget.                                                                                         
                                                                                                                                
Co-Chair John Torgerson asked if the department supported                                                                       
the legislation.  Elmer Lindstrom answered that the                                                                             
Administration supported clarification of the ballot                                                                            
measure. The Department of Health and Social Services' only                                                                     
concerns were to avoid a great administrative burden and to                                                                     
draft enforcement guidelines that do not hamper the                                                                             
confidentiality relationship between physicians and                                                                             
patients. The department would defer to the Department of                                                                       
Law and the Department of Public Safety on the questions of                                                                     
enforcement legality.                                                                                                           
                                                                                                                                
Co-Chair John Torgerson wanted to know if the committee                                                                         
substitute changed the ballot measure beyond technical                                                                          
clarifications.  Elmer Lindstrom replied that he was not                                                                        
the best person to answer the question. He noted that the                                                                       
Department of Law does not think the bill was a repeal of                                                                       
the initiative or goes beyond the ability granted to the                                                                        
Legislature to amend an initiative.                                                                                             
                                                                                                                                
DAVID FINKLESTEIN of Alaskans for Medical Rights testified.                                                                     
He believed it was important to note that when the bill was                                                                     
first introduced, his organization felt it essentially                                                                          
repealed the proposition. The organization took a defensive                                                                     
posture on the legislation because it felt affected                                                                             
patients would not be able to take advantage of the law to                                                                      
allow medical marijuana use, according to David                                                                                 
Finklestein. He added that the sponsor and the                                                                                  
Administration have since made a good effort to address the                                                                     
public's concerns.                                                                                                              
                                                                                                                                
However, the organization still had some concerns with the                                                                      
committee substitute.                                                                                                           
                                                                                                                                
David Finklestein stressed that the committee substitute is                                                                     
not simply a technical change to the ballot initiative, it                                                                      
is much larger. The mandatory registration requirement                                                                          
requested by law enforcement is not the intent of the                                                                           
initiative, according to David Finklestein. The ballot                                                                          
measure offered voluntary registration for those patients                                                                       
wanting protection under the law. David Finklestein                                                                             
stressed that if this bill passes, it will be the first                                                                         
state of those with medical marijuana laws to impose                                                                            
mandatory registration requirements. SB 94 also contains                                                                        
restrictions on the amount of marijuana a patient can                                                                           
possess and stipulates that a patient must prove a more                                                                         
serious condition to possess a greater amount. A provision                                                                      
in the bill restricts caregivers as well, David Finklestein                                                                     
stated.                                                                                                                         
                                                                                                                                
David Finklestein concluded by stressing that Alaskans for                                                                      
Medical Rights still had major concerns with the bill but                                                                       
noted that the sponsor had done much to address those                                                                           
concerns.                                                                                                                       
                                                                                                                                
Senator Gary Wilken moved for adoption of Amendment #1. Co-                                                                     
Chair John Torgerson objected for explanation.  Senator                                                                         
Gary Wilken explained that during the Senate Health and                                                                         
Social Services Committee hearing on the bill, a draft                                                                          
version contained a provision stating that a person using                                                                       
medical marijuana must visit a physician at least once                                                                          
every three months. The current version of the bill, CS SS                                                                      
SB 94 (HES) 1-LS0524/M, allowed the patient to visit a                                                                          
physician only once, obtain a prescription for marijuana,                                                                       
and not be required to have follow-up visits for renewed                                                                        
prescriptions.  Senator Gary Wilken felt that provision was                                                                     
too liberal. Amendment #1 requires a patient to visit a                                                                         
physician in person at least once a year.                                                                                       
                                                                                                                                
Senator Loren Leman noted he had no objection to the                                                                            
amendment.                                                                                                                      
                                                                                                                                
Senator Gary Wilken asked for David Finklestein's comments                                                                      
on the amendment. David Finklestein concurred with the                                                                          
first two sections of the amendment requiring documentation                                                                     
from the physician, but felt the last section, requiring                                                                        
annual visits to a physician, places a burden on those                                                                          
living in rural areas away from health care facilities.                                                                         
Under this amendment, the patient is required to submit                                                                         
annual documentation from the physician stating that the                                                                        
condition is still present. Therefore, David Finklestein                                                                        
felt that because many conditions are ongoing and not                                                                           
curable, the doctor visits might not have any other benefit                                                                     
than to satisfy this statue.                                                                                                    
                                                                                                                                
Without objection, Amendment #1 was adopted.                                                                                    
                                                                                                                                
Senator Al Adams moved for adoption of Amendment #2. Co-                                                                        
Chair John Torgerson objected for explanation. Senator Al                                                                       
Adams explained the current committee substitute requires a                                                                     
physician to provide the Department of Health and Social                                                                        
Services with a list of the patient's symptoms. He believed                                                                     
there was no reason this confidential information should be                                                                     
provided to the department, and noted the department does                                                                       
not plan to include this information in a patients                                                                              
registration records.                                                                                                           
                                                                                                                                
Senator Loren Leman pointed out the reason for the                                                                              
provision to require a list of the patient's symptoms is to                                                                     
reduce the chances of fraud.  However, he concluded that                                                                        
because the list of symptoms would be generic, including                                                                        
pain, nausea, etc., it would probably become useless                                                                            
information. He had no objection to the adoption of the                                                                         
amendment.                                                                                                                      
                                                                                                                                
Without objection, Amendment #2 was adopted.                                                                                    
                                                                                                                                
Senator Al Adams moved for adoption of Amendment #3.                                                                            
Senator Lyda Green objected for explanation.  Senator Al                                                                        
Adams explained that this amendment relates to existing                                                                         
exceptions stipulating that a primary caregiver can serve                                                                       
more than one patient as directed in the ballot initiative.                                                                     
The current committee substitute only allows for caregivers                                                                     
that live in the same household as the patient and are                                                                          
related by blood or marriage. This amendment allows a                                                                           
caregiver to serve more than one patient who is a family                                                                        
member, even if they live in a different household.                                                                             
                                                                                                                                
Senator Loren Leman stated that in the interest of working                                                                      
with the Administration, he concluded that this amendment                                                                       
is a provision he can accept.                                                                                                   
                                                                                                                                
There was no objection and Amendment #3 was adopted.                                                                            
                                                                                                                                
Senator Al Adams moved for adoption of Amendment #4. Co-                                                                        
Chair John Torgerson objected for explanation. Senator Al                                                                       
Adams explained this amendment includes another exemption                                                                       
by giving the Department of Health and Social Services                                                                          
discretion to allow a caregiver to serve more than one                                                                          
patient to avoid unnecessary hardship.                                                                                          
                                                                                                                                
Senator Loren Leman pointed out that in previous testimony,                                                                     
the Department of Law has stated opposition to this                                                                             
amendment because it does not provide specific guidelines.                                                                      
Without direction in statute, this would become a                                                                               
meaningless provision, according to Department of Law                                                                           
testimony given in earlier hearings. Senator Loren Leman                                                                        
was not opposed to crafting guidelines for the Department                                                                       
of Health and Social Services, but had been unable to                                                                           
accomplish that to date. He believed it could be done over                                                                      
the interim.                                                                                                                    
                                                                                                                                
Senator Al Adams asked if David Finklestein had discussed                                                                       
this matter with the Department of Law. David Finklestein                                                                       
answered that this amendment was at the suggestion of the                                                                       
Department of Health and Social Services to assist in                                                                           
administration of the current program. He said the intent                                                                       
is that this exemption will be for the rare occurrences of                                                                      
patients in a hospice program or other unique situations of                                                                     
having more than one caregiver.                                                                                                 
                                                                                                                                
MIKE POLLY, staff to Senator Loren Leman stated that the                                                                        
issue had been raised with the Department of Law. That                                                                          
department argued the importance of maintaining a one-to-                                                                       
one relationship between the patient and the primary                                                                            
caregiver and supported a provision allowing each patient                                                                       
only one caregiver and each caregiver only one patient. The                                                                     
problem with the multiple patient exception, according to                                                                       
Mike Polly, is the creation of a financial incentive to                                                                         
caregivers profiting from the sale of marijuana to a                                                                            
multiple number of patients. This has been a problem in                                                                         
other states with medical marijuana laws. The Department of                                                                     
Law surmised that unless there are detailed guidelines                                                                          
allowing when the exemptions are appropriate, the                                                                               
Department of Health and Social Services will simply                                                                            
"rubber stamp" exemptions.                                                                                                      
                                                                                                                                
Senator Al Adams wanted to hear from the Department of                                                                          
Health and Social Services. Elmer Lindstrom said this                                                                           
language was substantially similar to the initiative                                                                            
language and to the regulations adopted after public                                                                            
review. He detailed the situations of specialized                                                                               
caregivers that the Bureau of Vital Statistics anticipated                                                                      
granting hardship exemptions for. He acknowledged the                                                                           
concerns of the Department of Law and the Department of                                                                         
Public Safety of multiple caregivers serving multiple                                                                           
patients.                                                                                                                       
                                                                                                                                
Co-Chair John Torgerson asked that if this amendment failed                                                                     
to pass would the department simply implement the similar                                                                       
regulations. Elmer Lindstrom responded that no, the                                                                             
regulations would not include exemptions.                                                                                       
                                                                                                                                
Tape: SFC - 99 #134, Side A    7:26PM                                                                                           
                                                                                                                                
[Tape malfunction]                                                                                                              
                                                                                                                                
Senator Gary Wilken opposed the amendment                                                                                       
                                                                                                                                
Amendment #4 failed to be adopted by a vote of 1-8. Senator                                                                     
Al Adams voted in favor.                                                                                                        
                                                                                                                                
Amendment #5 was not offered because it was the same as                                                                         
Amendment #2.                                                                                                                   
                                                                                                                                
Amendment #6 was the same as Amendment #3 and also was not                                                                      
offered.                                                                                                                        
                                                                                                                                
Senator Loren Leman moved to adopt Amendment #7. Co-Chair                                                                       
John Torgerson objected. Mike Polly explained the amendment                                                                     
deletes language from the committee substitute that                                                                             
required the patient to prove any marijuana found in                                                                            
possession to be strictly for the treatment of the                                                                              
prescribed medical condition. He said there had been a                                                                          
great deal of feedback in opposition to this provision                                                                          
because of the need to prove a "double negative." The                                                                           
patient is being asked to prove the marijuana is not used                                                                       
for a non-medical purpose.                                                                                                      
                                                                                                                                
Mike Polly consulted with the Department of Law, who did                                                                        
not agree with the double negative interpretation, but                                                                          
indicated that AS 11.71.090(a)(2) as proposed in CS SS SB
94 (HES), containing this provision, is superfluous because                                                                     
of the provision in paragraph 3 of the same statute. AS                                                                         
11.71.090(a)(3) prohibits the manufacture, delivery or                                                                          
possession of marijuana for purposes other than medical                                                                         
use, which accomplishes the same objective as proposed in                                                                       
paragraph 2.                                                                                                                    
                                                                                                                                
Amendment #7 was adopted by a vote of 8-1. Senator Al Adams                                                                     
cast the nay vote.                                                                                                              
                                                                                                                                
Senator Loren Leman moved for adoption of Amendment #8. Co-                                                                     
Chair John Torgerson objected for explaination. Mike Polly                                                                      
explained that in the original version of SB 94, language                                                                       
was included to clarify that the possession limit of one                                                                        
ounce/six plant of marijuana applied collectively to both                                                                       
the patient and the primary caregiver. This provision was                                                                       
inadvertently omitted in the Senate Health and Social                                                                           
Services committee substitute and brought to the sponsor's                                                                      
attention by the Department of Law, according to Mike                                                                           
Polly. By inserting "in the aggregate" after "possess" on                                                                       
page 11 line 10 of the committee substitute, this amendment                                                                     
will reinsert the collective possession limit for both the                                                                      
patient and the caregiver.                                                                                                      
                                                                                                                                
Without objection, Amendment #8 was adopted.                                                                                    
                                                                                                                                
Senator Loren Leman moved for adoption of Amendment #9. Co-                                                                     
Chair John Torgerson objected for explaination. Mike Polly                                                                      
explained the amendment changes the circumstances under                                                                         
which law enforcement will have access to information in                                                                        
the registry of marijuana patients. Currently, the                                                                              
committee substitute allows law enforcement access in the                                                                       
course of any criminal investigation. This issue had been                                                                       
the subject of controversy in previous hearings because of                                                                      
the relatively unlimited access, according to Mike Polly.                                                                       
The amendment stipulates law enforcement only has access to                                                                     
the registration records during the course of a criminal                                                                        
investigation of an individual suspected of a violation of                                                                      
AS 11.71, AS 17.30 or AS 17.37, the statutes that address                                                                       
controlled substances.                                                                                                          
                                                                                                                                
Amendment #9 was adopted without objection.                                                                                     
                                                                                                                                
Senator Al Adams noted that he had three amendments he                                                                          
would not offer at this time.  He hoped the sponsor would                                                                       
work with Alaskans for Medical Rights to address the items                                                                      
in these amendments. If a compromise is reached, the                                                                            
amendments could be offered on the Senate floor, Senator Al                                                                     
Adams said.                                                                                                                     
                                                                                                                                
Senator Dave Donley felt this legislation is a good                                                                             
product. He thought the statute is necessary to implement                                                                       
the ballot initiative. The sponsor, the Department of                                                                           
Public Safety and the Department of Law put a lot of work                                                                       
into the bill, stated Senator Dave Donley.                                                                                      
                                                                                                                                
Senator Loren Leman echoed Senator Dave Donley's comments.                                                                      
He appreciated the assistance and the expertise of the                                                                          
Administration with this bill.                                                                                                  
                                                                                                                                
Senator Loren Leman offered a motion to report CS SB 97                                                                         
(FIN) from committee with individual recommendations and                                                                        
accompanying fiscal note. There was no objection and it was                                                                     
so ordered.                                                                                                                     
                                                                                                                                
                                                                                                                                
HB 209 was not heard because the teleconference link was                                                                        
interrupted.                                                                                                                    
                                                                                                                                
Co-Chair John Torgerson announced the Senate Finance                                                                            
Committee would hear HB 156, HB 68, HB 102, HB 157 and HB
217 the next day.                                                                                                               
                                                                                                                                
ADJOURNED                                                                                                                       
                                                                                                                                
Senator Torgerson adjourned the meeting at 7:37PM.                                                                              
SFC-99 (27) 5/11/99                                                                                                             

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