Legislature(2001 - 2002)
04/11/2001 08:52 AM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 11, 2001
8:52 AM
TAPE HFC 01 - 81, Side A
TAPE HFC 01 - 81, Side B
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 2:00 PM.
MEMBERS PRESENT
Representative Bill Williams, Co-Chair
Representative Eldon Mulder, Co-Chair
Representative Con Bunde, Vice-Chair
Representative Eric Croft
Representative John Davies
Representative John Harris
Representative Bill Hudson
Representative Ken Lancaster
Representative Jim Whitaker
MEMBERS ABSENT
Representative Carl Moses
Representative Richard Foster
ALSO PRESENT
Senator Gene Therriault; Mike Tibbles, Staff, Representative
Williams; Representative Gary Stevens, Sponsor; Steve White,
Assistant Attorney General, Department of Law; Mary
McDowell, Commissioner, Commercial Fisheries Entry
Commission;
PRESENT VIA TELECONFERENCE
There were no teleconference testifiers.
SUMMARY
HB 193 "An Act relating to the primary election; and
providing for an effective date."
CSHB 193 (FIN) was REPORTED out of Committee with
a "do pass" recommendation and with a new fiscal
impact note by the Office of the Lieutenant
Governor.
HB 194 "An Act relating to fees for commercial fishing
licenses and permits; and providing for an
effective date."
HB 194 was heard and HELD in Committee for further
consideration.
CSSB 103(FIN)
"An Act relating to election campaigns and
legislative ethics."
HCS SB 103 (FIN) was REPORTED out of Committee
with a "do pass" recommendation and with a
previous published fiscal impact note (#2) by the
Department of Administration.
HCR 13 Relating to the nonresident fee differential for
commercial fishing permits and licenses.
HOUSE BILL NO. 193
"An Act relating to the primary election; and providing
for an effective date."
MIKE TIBBLES, STAFF, REPRESENTATIVE WILLIAMS discussed the
committee substitute work draft 22 GH1089\P, which
incorporates a conceptual amendment adopted by the Committee
on April 10, 2001, contained on line 28, page 3: the day of
the primary election [JUNE 1].
Co-Chair Mulder noted that the amendment is consistent with
the concerns expressed by the Department of Law. Individuals
would be able to file a petition by the primary election
day. Mr. Tibbles observed that the drafter concurs with the
change.
Co-Chair Mulder reviewed the fiscal note by the Office of
the Lieutenant Governor: $5.2 thousand dollars in FY02 and
$269.5 thousand dollars in FY03.
Co-Chair Mulder MOVED to report CSHB 193 (FIN) out of
Committee with the accompanying fiscal note. There being NO
OBJECTION, it was so ordered.
CSHB 193 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a new fiscal impact note by
the Office of the Lieutenant Governor.
CS FOR SENATE BILL NO. 103(FIN)
"An Act relating to election campaigns and legislative
ethics."
Mr. Tibbles noted that members were provided with a proposed
committee substitute, work draft 22-LS0148\H. He noted that
three sections were modified or deleted by the proposed
committee substitute. He discussed the changes.
Section 1 of the Judiciary version was deleted. Section 1
would have required the Commission to develop a single form
for financial disclosure statements. The requirement was
removed because the statute referenced two separate
disclosure laws: one applied to the legislature and one
applied to all public officials. The laws are distinct and
different. The issue is still being reviewed.
Section 5 was also deleted. Section 5 allowed the use of
office account funds to influence the outcome of an election
concerning a ballot proposition if the use was permitted
under the ethics law. Mr. Tibbles noted that testimony by
Brook Miles, Executive Director, Alaska Public Officers
Commission indicated that deletion of the section would not
prevent the practice. The intent is to clarify that public
money could not be used other than to perform the usual and
customary duties of one's job. Members can support of oppose
ballot propositions and send mailings. Members could not
operate a campaign or influence a campaign out of their
office.
Section 6, subsection 4(a)(ii): use by a political party was
deleted. Mr. Tibbles explained that the provision was
confusing. Under current law, a union or corporation could
mail to their shareholders or members and families only if
it is a regular communication, such as a newsletter. Special
bulletins would not be allowed. It would be limited to $500
dollars.
Representative Croft agreed with the elimination of
subsection 4(a)(ii) and pointed out that there is a
constitutional right to associate with people that want to
form a group to communicate on issues.
Representative John Davies MOVED to ADOPT Amendment 1:
A campaign that receives $500, or goods or services of
a value of $500, may file a contributor's statement as
required under this section on behalf of the
contributor.
Co-Chair Mulder noted that the amendment had been discussed
in the previous meeting. The amendment would allow the 15.5
reports to be filed by the campaign with the Alaska Public
Officers Commission.
There being NO OBJECTION, it was so ordered.
Representative John Davies MOVED to ADOPT Amendment 2:
Section 19.25.105 is amended by adding:
(a) (7) Political campaign signs no larger than 4 feet
by 8 feet may be within the right of way within 45 days
of an election in which a candidate or ballot issue or
constitutional amendment is to be decided, and those
signs must removed within 10 days after that election.
Section 19.25.150 is amended by adding:
A sign in violation of AS 95.25.105 (a) (7) may be
removed immediately by the department, and returned to
the candidate or campaign for upon receipt of a $100
handling fee per sign.
Representative John Davies explained that the amendment
would address the use of political campaign signs. He
observed that there is confusion regarding the law. The
amendment would allow the use of signs within 45 days of an
election. Signs would have to be removed within 10 days
after an election. The amendment would also clarify the
penalty. The department would be able to immediately remove
signs that are in violation of the law. Signs would be
returned to the campaign with a $100 handling fee. He noted
that his intent is to clarify the law and even the playing
field.
Representative Hudson expressed support for the amendment.
He noted that the department must currently give a 30-day
notice before signs can be removed. He maintained that there
are violations under the current law. He noted that signs
could not be placed near election sites and would not affect
billboard laws. The amendment would legalize the status quo.
Co-Chair Mulder spoke in support of the amendment. He
observed that current law has been inconsistently applied
from location to location and campaign to campaign.
In response to a question by Representative Whitaker,
Representative John Davies explained that the state version
of the 1966 federal act was adopted by initiative. State law
disallows billboards along state maintained roads. The
Department of Transportation and Public Facilities has made
a distinction between rural roads. During the last election,
the Northern Region of the Department of Transportation and
Public Facilities enforced the law on all state maintained
road in Fairbanks. He observed that there was a lot of
confusion regarding the use of signs. The department's
interpretation was viewed as onerous, although it was the
correct interpretation of the law. The amendment would
clarify the law and draw a bright line as to the use of
campaign signs.
Representative Lancaster questioned if the amendment would
be self-serving.
SENATOR GENE THERRIAULT expressed concern that a specific
allowance would be carved out. He noted that the Department
of Transportation and Public Facilities is protective of the
right away. He added that signs are not allowed if they are
visible from a state maintained road on private property. He
expressed concern that the amendment would set the
Legislature up for criticism.
Representative John Davies responded that the exemption
would be handled in the same way as other exemptions. He
stressed that a large number of people are putting up signs.
The amendment would specify what is allowed and what is not.
He acknowledged that the 30-day rule makes sense for most
business uses, but argued that the 30-day rule invites
people to place signs 29 days before the election in
violation of the law. The amendment would clarify the rules.
Representative Croft acknowledged that it creates an
exception that other businesses won't have but stressed that
it would confirm the current practice. He pointed out that
there would not be further opportunity to debate the issue,
since it is the final committee assignment on a senate bill.
He acknowledged the need to review the issue, but suggested
that it should be taken up in other legislation.
Representative Whitaker spoke against the amendment. He
observed that the public approved of the limitations placed
on the signs in the Northern Region.
Representative Harris questioned if there is any provision
to allow the department to designate areas allowing signs.
Senator Therriault clarified that the department does not
allow signs in the road right-of-way. He noted that the bill
was scheduled for floor action that day and that there would
be little time to review the amendment.
A roll call vote was taken on the motion.
IN FAVOR: Davies, Hudson, Mulder
OPPOSED: Croft, Harris, Lancaster, Whitaker, Williams
Representatives Foster, Moses and Bunde were absent from the
meeting.
In response to a question by Senator Therriault, Co-Chair
Mulder restated the intent of Amendment 1. He emphasized the
intent of diminishing the "hassle factor" for individual
donors.
Senator Therriault reviewed statute requirements for
contributions. He noted that the contributor must state that
they are not prohibited by law from making the contribution.
He questioned if a campaign could fill out a form for the
candidate. He questioned if the language had been reviewed
by the Department of Law.
Representative John Davies pointed out that the amendment is
permissive and states that they "may". He stressed that
regulation would allow the intent to fit with the statute.
Senator Therriault did not have problems with the intent,
but expressed concern that he was not sure how the drafter
would interpret the language.
Co-Chair Mulder observed that the Division of Legal Services
was reviewing the amendment. He noted that it was not his
intent to diminish or threaten the bill. He noted that if
the result is adversarial that the amendment could be
withdrawn.
Co-Chair Mulder MOVED to report HCS SB 103 (FIN) out of
Committee with the accompanying fiscal note.
HCS SB 103 (FIN) was REPORTED out of Committee with a "do
pass" recommendation and with a previous published fiscal
impact note (#2) by the Department of Administration.
HOUSE BILL NO. 194
"An Act relating to fees for commercial fishing
licenses and permits; and providing for an effective
date."
REPRESENTATIVE GARY STEVENS, SPONSOR testified in support of
HB 194. He noted that the legislation is the result a class
action suit against the Commercial Fisheries Entry
Commission (Carlson vs. state). In the past the state has
charged a ratio 3 to 1 - nonresidents to residents on
commercial fishing licenses. The Court has disallowed the
differential. The Court ruled that differentials must be
based on the differences between resident and nonresident
taxes. The bill would not affect the Carlson case, but would
prevent further debt from acquiring. The legislation would
reduce the cost to the state of Alaska in the event that it
loses the case. The legislation repeals the 3 to 1 ratio.
Wording would be added to allow the state to charge the
maximum amount allowed by law. The state has argued in
Superior Court that there are six categories where
nonresidents should be charge more than residents. The
Superior Court provided a formula, which outlines what the
state can charge. Court allowed only two of the six
categories. The suit could cost the state $22 million
dollars in claims and more 10.5 percent in interest. If the
bill is passed the Commercial Fisheries Entry Commission
(CFED) would begin to use the Court's criteria. He
maintained that passage of the legislation would help
resolve problems without creating new ones. It would also
demonstrate that the state of Alaska is acting in good
faith.
Representative Harris summarized that Alaska residents are
paying what they should, but that non-residents are paying
too much.
Representative Stevens responded that the Court has not
commented on the amount charged. The Court has maintained
that there needs to be a logical reason to charge
nonresidents more than residents.
Representative Harris concluded that the formula is flawed
and the methodology must be changed.
TAPE CHANGE, HFC 01 - 81, SIDE B
Co-Chair Mulder noted that the maximum charge to fish in
Alaska waters is $750 dollars. He questioned if the amount
was unreasonable and pointed out that out of state fishers
can make as much as $50,000 dollars. He wanted assurances
that the legislature could charge the maximum amount.
Representative Stevens responded that the legislation would
allow the state to charge what the courts would allow in
each of the six categories. He pointed out that the bill
responds to federal law and that rights cannot be denied to
U.S. citizens. The bill doesn't prevent the maximum from
being charged.
Co-Chair Mulder questioned how the legislation presents the
policy of the Legislature regarding the costs to the state
that are not incurred by out of state residents.
Representative Stevens pointed out that the state is bound
by the options provided by the Court. He did not agree with
the Court's limitation to the two categories. Co-Chair
Mulder suggested that language be added to represent the
Legislature's position regarding the fair costs incurred by
the state of Alaska in relations to the fisheries.
Representative Stevens noted that the Commercial Fisheries
Entry Commission must continue to follow the 3 to 1 ratio
[in its licensing structure] unless the statute is changed.
The legislation would allow the state to charge the maximum
allowed by the Court, which currently only includes the two
categories. He argued that the state could charge more if
the additional categories are added. Representative Stevens
observed that the Commercial Fisheries Entry Commission must
follow state statute. The legislation would allow the
maximum amount allowable by law.
Co-Chair Mulder questioned who establishes policy in the
state of Alaska and indicated that the Legislature properly
establishes policy. He stressed that the legislative policy
should be clearly put in record to the Court. He asked what
would be the (monetary) affect on resident licenses.
In response to a question by Representative Croft,
Representative Stevens pointed to page 4, section 5 as an
assurance that the maximum amount could be collected.
Representative Croft questioned why the legislation should
not included language indicating that the state wants to
ignore the federal Constitution's restrictions on
discrimination between residents and nonresidents.
Representative Stevens responded that there is an
accompanying resolution (HCR 13), which would outline the
state of Alaska's position. He maintained that the Court
would determine the case based on facts with a rational
approach. He did not think that all of the categories should
be contained in the legislation.
Representative Croft summarized that the legislation gives
the Commission the authority to charge the maximum allowable
amount, once it is determined. Representative Stevens noted
that it is the intent of the Commission to charge the
maximum amount allowable to out-of-state fisherman.
Representative Lancaster pointed out that the legislation
does not jeopardize the state's case before the Court.
Representative Stevens maintained that the legislation would
not indicate fault or guilt and leaves the state of Alaska
in a strong position. The legislation would allow charges in
any of the six categories.
Representative Harris asked if the state had exhausted its
legal options. Representative Stevens noted that the
Superior Court has ruled. The case is on appeal to the
Supreme Court.
Representative John Davies referred to page 4, lines 7 - 9:
The fee shall be higher and not exceed the maximum. He
questioned why the fee should not equal the maximum.
Representative Stevens did not have an answer.
STEVE WHITE, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF LAW
provided information regarding the legislation. The Superior
Court decision was decided and appealed with the Alaska
Supreme Court. The issues on appeal concern the six budget
categories, payment of issues and class action issues
regarding the composition of the class. The Alaska Supreme
Court would be guided by other decisions by the U.S. Supreme
Court and other United State decisions.
Mr. White noted that the purpose is to direct a mechanism
for charging fees in the future. The formula needs to be
placed into statute. The maximum amount under the formula
would be charged. The formula itself is not a matter of
appeal. The sooner the formula is placed into statue, the
sooner the state begins to save in potential refunds. The
Alaska Supreme Court first announced the formula in 1991.
The class and the state of Alaska tested the formula. The
Court confirmed it with a few adjustments in 1996. The basic
formula is set; it says the state can charge a dollar amount
more for nonresidents than residents based on what the state
spends for commercial fisheries, derived from the amount
that only residents pay for direct services. The formula
would be put into statue. He reiterated that the Court's
decision is based on federal constitutional law.
MARY MCDOWELL, COMMISSIONER, COMMERCIAL FISHERIES ENTRY
COMMISSION responded to questions. She noted that the
legislation was worded to not exceed the maximum because the
exact amount is unknown until the following year. It would
not be administratively feasible to estimate the exact
maximum dollar amount. The bill does not drop nonresident
fees across the board. Passage of the legislation would not
result in a negative fiscal impact in 2001. The current
maximum differential in the highest fee category is $500
dollars. Other fee categories are less. The legislation
would place the maximum allowance on every fee category.
Nonresident fees would go up on the lowest categories. The
bill also addresses crewmember licenses, where the state is
currently foregoing nonresident revenues. Under Carlson the
average differential was $118 dollars. In areas such as
crewmember licenses where the 3 to 1 ratio is under the
differential there is no refund. The legislation would add
more money to the state by raising the crewmember licenses
to the maximum amount that it would lose from nonresident
permit holders. The legislation changes who has the burden
of paying, but the overall total would be approximately the
same. If the state of Alaska were to succeed in its argument
before the Supreme Court and the legislation were to become
law then state revenues would be greater than under the
current 3 to 1 ratio.
In response to a question by Co-Chair Mulder, Mr. White
noted that the courts allowed the direct operating and in
direct operating costs in the calculation of fees. Indirect
operating costs include the overhead costs of departments
that have direct costs. Salaries of fish and game personnel
in the Commercial Fisheries Division are included. Indirect
costs for the Department of Fish and Game would be a
proportion of the overhead that supports those employees.
Co-Chair Mulder pointed out that it costs the state of
Alaska to build hatcheries, support habitat, provide
enforcement, and marine research. Mr. White agreed and noted
that these items were included in the state's arguments.
Enforcement costs have been included as direct costs. Costs
to the University of Alaska have also been included as
direct operating costs.
Co-Chair Mulder noted that there are also costs to the city
of Kodiak for water systems. Mr. White noted that costs to
local communities are outside of the analysis. The Court is
considering what it costs a person to participate in a state
regulated activity and how much the state pays for the
activity.
In response to comments by Co-Chair Mulder, Mr. White noted
that the cost of legislative debates before the Legislature
has been captured and allowed by the Court.
Co-Chair Mulder questioned why all the costs associated with
fisheries management should not be put onto the record in HB
194. Mr. White emphasized that the Court is not going take
into consideration state policy. He felt that additional
itemization of costs would be redundant, but acknowledged
that it would not hurt. He pointed out that he could not
cite the substance of the bill [in arguments before the
Court]. He maintained that the Court would base its decision
on constitutional law. He acknowledged that if the
categories were not included [and were subsequently allowed
by the Court] that the statutes would have to be amended to
add the missed items.
Co-Chair Mulder questioned what provision in constitutional
law states that differentials are allowed. He stated that
the Court has "opened the door" to differentials recognizing
the fact that Alaska spends money in support of its
commercial fisheries.
Mr. White stated that the Court is dealing with a
Constitutional clause that was interpreted in a fisheries
case in a 1948. The Supreme Court announced the principal
that a state can charge a nonresident more if they cause the
state more expenditures and based on the services the state
is providing, which are paid by residents and not the
nonresidents. The state of Alaska has argued that while
state residents don't pay taxes they are foregoing
opportunities from state oil revenues that belong to them.
Oil revenue expenditures are being counted just as if they
are taxes. The ruling is derived from the U.S. Constitution
based on U.S. Supreme Court decisions. The Alaska Supreme
Court is further extending the decisions.
Co-Chair Mulder stressed that characterizations of disparity
are arbitrary. Mr. White responded that they are not
arbitrary, but they are reasonable. There is no precedent in
which a state has had to identify its expenditures in this
manner. The state will look at expert witnesses in public
finance that will identify appropriate costs, which should
be included.
Ms. McDowell pointed out that under the 3 to 1 ration, the
state of Alaska is accruing an additional $1.13 million
dollars of potential liability every year. An additional 250
new members are being added to the Carlson class due to
turnover. Old members remain in the class. If the 3 to 1
ratio were replaced with all of the fees reflecting all of
the budget categories, then the potential liability would
ski rocket. There is a $500 dollar maximum spread between
residents and nonresidents. If all categories were applied
than every permit category would be at the maximum $500
dollar spread, including those that are currently at the
$100 dollar differential. If the state did not prevail all
of this would have to be refunded with interest. The
legislation would keep the revenues from nonresident fees
steady or slightly increased while liability is minimized.
Representative Hudson acknowledged the concern of Co-Chair
Mulder that the legislature makes policy and incurs costs.
He referred to page 4, section 5 line 8. He suggested that
the language be changed to:
The fee for a nonresident entry permit or a nonresident
interim-use permit shall be three times higher than the
annual base fee or by an amount established by the
commission by regulation, that is the maximum allowed
by law.
Representative Hudson stressed the need to spell clearly the
legislative intent, while halting the entry of new
applicants into the class action suit.
HB 194 was heard and HELD in Committee for further
consideration.
ADJOURNMENT
The meeting was adjourned at 10:20 a.m.
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