Legislature(2003 - 2004)

04/25/2003 02:53 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                  HOUSE FINANCE COMMITTEE                                                                                       
                       April 25, 2003                                                                                           
                          2:53 PM                                                                                               
TAPE HFC 03 - 65, Side A                                                                                                        
TAPE HFC 03 - 65, Side B                                                                                                        
TAPE HFC 03 - 66, Side A                                                                                                        
CALL TO ORDER                                                                                                                 
Co-Chair Williams called the House  Finance Committee meeting                                                                   
to order at 2:53 PM.                                                                                                            
MEMBERS PRESENT                                                                                                               
Representative John Harris, Co-Chair                                                                                            
Representative Bill Williams, Co-Chair                                                                                          
Representative Kevin Meyer, Vice-Chair                                                                                          
Representative Mike Chenault                                                                                                    
Representative Eric Croft                                                                                                       
Representative Richard Foster                                                                                                   
Representative Mike Hawker                                                                                                      
Representative Carl Moses                                                                                                       
Representative Bill Stoltze                                                                                                     
Representative Jim Whitaker                                                                                                     
MEMBERS ABSENT                                                                                                                
Representative Reggie Joule                                                                                                     
ALSO PRESENT                                                                                                                  
Representative Pete  Kott; Representative Peggy  Wilson; Rick                                                                   
Urion,   Director  Occupational   Licensing,  Department   of                                                                   
Community   and  Economic   Development;  Edgar   Blatchford,                                                                   
Commissioner,   Department   of    Community   and   Economic                                                                   
Development; Tom  Lawson, Director, Administrative  Services,                                                                   
Department  of  Community  and  Economic  Development;  Diane                                                                   
Barrans,   Executive   Director,    Postsecondary   Education                                                                   
Commission,  Department  of  Education;  Rhonda  Richtsmeier,                                                                   
Assist Chief,  Section of Public Health Nursing;  Linda Fink,                                                                   
Alaska  State  Hospital  and Nursing  Home  Association;  Tom                                                                   
Irwin,   Commissioner,  Department   of  Natural   Resources;                                                                   
Ernesta  Ballard, Commissioner,  Department of  Environmental                                                                   
Conservation; Larry Persily, Deputy  Commissioner, Department                                                                   
of  Revenue;  Gary Zimmerman,  Vice  President,  AVIS;  Jerry                                                                   
Burnett,  Commissioner,   Department  of  Corrections;   Fred                                                                   
Coven, Alaska State Employees Association.                                                                                      
PRESENT VIA TELECONFERENCE                                                                                                    
John Robertson, Medical Director,  Department of Corrections;                                                                   
Dick  LeFebvre,  Acting Deputy  Commissioner,  Department  of                                                                   
Natural  Resources;   Cameron  Leonard,  Assistant   Attorney                                                                   
General, Department of Law; Andrew Halcro, AVIS.                                                                                
HB 162    "An  Act increasing  the fee  for a state  business                                                                   
          license; and providing for an effective date."                                                                        
          CSHB 162 (FIN) was heard  and HELD in Committee for                                                                   
          further consideration.                                                                                                
HB 192    "An  Act  designating  the  Department  of  Natural                                                                   
          Resources  as lead agency for resource  development                                                                   
          projects;   making   conforming   amendments;   and                                                                   
          providing for an effective date."                                                                                     
          HB  192 was REPORTED  out of  Committee with  a "do                                                                   
          pass"  recommendation  and two  zero fiscal  notes:                                                                   
          #1  from Department  of  Natural  Resources and  #2                                                                   
          from Department of Environmental Conservation.                                                                        
HB 211    "An  Act  relating  to  a  student  loan  repayment                                                                   
          program for nurses,  and amending the duties of the                                                                   
          Board of  Nursing that relate to this  program; and                                                                   
          providing for an effective date."                                                                                     
          HB 211 was heard and  HELD in Committee for further                                                                   
HB229     "An Act relating to special medical parole and to                                                                     
          prisoners   who   are    severely   medically   and                                                                   
          cognitively disabled."                                                                                                
          HB 229 was heard and  HELD in Committee for further                                                                   
HB 271    "An  Act levying and  providing for the  collection                                                                   
          and  administration of an  excise tax  on passenger                                                                   
          vehicle  rentals; and  providing  for an  effective                                                                   
          HB 271 was heard and HELD in Committee for further                                                                    
SB 115    "An  Act  allowing  expenses  of  the  correctional                                                                   
          industries  program that may  be financed  from the                                                                   
          correctional   industries  fund   to  include   the                                                                   
          salaries and benefits of state employees."                                                                            
          HCS  SB 115  (FIN) was  REPORTED  out of  Committee                                                                   
          with a "do pass" recommendation  and one previously                                                                   
          public  fiscal impact note  from the Department  of                                                                   
HOUSE BILL NO. 192                                                                                                            
     "An Act designating the Department  of Natural Resources                                                                   
     as  lead  agency  for  resource   development  projects;                                                                   
     making  conforming  amendments;  and  providing  for  an                                                                   
     effective date."                                                                                                           
TOM  IRWIN,  COMMISSIONER, DEPARTMENT  OF  NATURAL  RESOURCES                                                                   
testified in  support of the  bill and provided  information.                                                                   
He  stressed  his  support  of  the  Governor's  priority  to                                                                   
develop natural  resources.  He highlighted the  intention of                                                                   
the legislation  to lead and coordinate the  operations only,                                                                   
and not  to take authority  away from the other  Departments.                                                                   
He read from prepared testimony as follows:                                                                                     
        The purpose of  this bill is  to help facilitate  and                                                                   
        expedite resource  development in  Alaska. This  bill                                                                   
        would specifically  provide the  Commissioner of  the                                                                   
        Department  of   Natural  Resources  with   statutory                                                                   
        authority  under   AS   38.05.020(b)   to  lead   and                                                                   
        coordinate  all  matters  relating   to  the  state's                                                                   
        review  and  authorization  of  resource  development                                                                   
        As the  state  focuses  more  on development  of  its                                                                   
        resources the  department  needs  clear and  explicit                                                                   
        authority  to  carry   out  its  role  to   lead  and                                                                   
        coordinate the  state's review  and authorization  of                                                                   
        resource  development   projects.  Even   though  the                                                                   
        department has  and will  continue to  serve as  lead                                                                   
        for mining  projects, the  department's authority  to                                                                   
        serve as lead  agency for other resource  development                                                                   
        projects is not as  explicit. This bill  will provide                                                                   
        the necessary clarity  as the state moves  forward in                                                                   
        the development of its resources.                                                                                       
        The  primary  responsibility  in  the  Department  of                                                                   
        Natural  Resources  for  carrying   out  lead  agency                                                                   
        coordination functions will  rest with the  Office of                                                                   
        Project Management  and Permitting.  This new  Office                                                                   
        within   the   department   includes    the   project                                                                   
        management  function  and  the  Alaska  Coastal  Zone                                                                   
        Management program.                                                                                                     
        Large  resource  development  projects,   because  of                                                                   
        their scope  and  complexity,  are  more  efficiently                                                                   
        reviewed  and  authorized  using  a  lead  agency  to                                                                   
        coordinate and  integrate,  to the  extent  possible,                                                                   
        the various  permitting  processes  of  the  agencies                                                                   
        involved using  the  project team  approach.  Smaller                                                                   
        projects, normally less  complex and requiring  fewer                                                                   
        permits, may  benefit from  lead agency  coordination                                                                   
        for review but may  not require the  establishment of                                                                   
        a project team.                                                                                                         
        Resource  development  projects  utilizing  the  lead                                                                   
        coordinating agency and project review  team approach                                                                   
        will  go through  a  three  phase  process.  Phase  I                                                                   
        focuses  on   evaluating   a  proposed   project   to                                                                   
        determine if  the lead agency  project team  approach                                                                   
        would best  address the review  and permitting  needs                                                                   
        of the project. Phase II results  in establishment of                                                                   
        the  project  team,  development   of  an  integrated                                                                   
        agency review  schedule,  delineation of  information                                                                   
        requirements,  and   completion   of  any   necessary                                                                   
        agreements amongst the agencies and  applicant. Phase                                                                   
        III is the  actual project  review and  authorization                                                                   
        process,  including  public  participation,  tailored                                                                   
        specifically to the  requirements for  permitting the                                                                   
        Additionally, we view  this bill as assisting  in our                                                                   
        efforts   to    streamline    project   review    and                                                                   
        authorization. This bill will help to facilitate:                                                                       
        The state's  ability  to  pull together  agencies  to                                                                   
        address project specific concerns,  and to facilitate                                                                   
        and expedite the review and authorization  process; a                                                                   
        more cohesive  working  relationship  amongst  agency                                                                   
        representatives;    better    communication,     more                                                                   
        efficient  permitting,  consolidated  public  process                                                                   
        where possible,  and  to  assist in  integrating  the                                                                   
        state's process with that of the federal agencies.                                                                      
        Speaking   from   personal   experience,   the   laws                                                                   
        governing  resource  development  have  proliferated,                                                                   
        and  there are  now  more  agencies  than  ever  with                                                                   
        permitting  authority   over   resource   development                                                                   
        projects. Resource development should  not be held up                                                                   
        by the sheer complexity  of government. This  bill is                                                                   
        intended to help alleviate that problem  as this bill                                                                   
        would  authorize  DNR  to  lead  and  coordinate  the                                                                   
        permitting   activities   of   all    agencies   with                                                                   
        jurisdiction over the project.                                                                                          
Commissioner Irwin noted that in effect all operations would                                                                    
be brought into one office to facilitate coordination.                                                                          
ERNESTA BALLARD, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL                                                                      
CONSERVATION expressed support of the bill.  She referred to                                                                    
her prepared statement:                                                                                                         
     Governor  Murkowski is committed  to enhancing  Alaska's                                                                   
     economy  through  resource  development. He  is  equally                                                                   
     committed to  protecting Alaska's environment.  A strong                                                                   
     economy  will  generate  the revenue  base  to  continue                                                                   
     funding   our  important   regulatory  and   development                                                                   
     projects.  Without a  strong economy  we cannot  hope to                                                                   
     have a strong government.                                                                                                  
     I have been before this committee  to speak on behalf of                                                                   
     other governor's  bills and  have opened with  that same                                                                   
     message.   It  is  a   fundamental  principle   to  this                                                                   
     administration and bears repeating.                                                                                        
     In  any undertaking,  be it  your home,  your office,  a                                                                   
     small  business  or a  large complex  organization  like                                                                   
     state   government    - critical    path   planning   is                                                                   
     fundamental; with  out it time is wasted.  This bill, HB
     192,  is about critical  path planning.  It directs  the                                                                   
     Department of  Natural Resources to lead  and coordinate                                                                   
     resource   development    projects.   It   directs   the                                                                   
     permitting    agencies   to    sequence   actions    and                                                                   
     requirements   so  time  lines   are  met.   Armed  with                                                                   
     sequenced  and prioritized project  plans we  can insure                                                                   
     that   each   of   our   own   department's   permitting                                                                   
     requirements are met without delay                                                                                         
     The genesis  of this bill  goes back several  years. The                                                                   
     resource   agencies   came    together   to   coordinate                                                                   
     permitting   issues  on   large   mine  projects.   They                                                                   
     discussed, planned and communicated,  and found that the                                                                   
     permitting  process became  more efficient.  It was  not                                                                   
     only  more  efficient  for  the agencies;  it  was  more                                                                   
     productive   for  industry.   Why?   Because,  we,   the                                                                   
     permitting    agencies,   identified   our    regulatory                                                                   
     requirements  in  a  systematic   and  sequenced  manner                                                                   
     insuring that the most critical  needs and timelines for                                                                   
     the project were established.  Because we, DNR, Fish and                                                                   
     Game  and   DEC  had  identified  and   articulated  the                                                                   
     critical points  and times in our  regulatory processes,                                                                   
     industry  understood its  responsibilities and  provided                                                                   
     the   needed  information   on  time.  Additionally   by                                                                   
     evaluating  its regulatory  responsibilities as  a whole                                                                   
     industry can gain what synergies are possible.                                                                             
     Critical  path planning  provides  efficiencies for  the                                                                   
     departments  as well.  We  hold joint  meetings. We  use                                                                   
     staff   resources    efficiently.   Industry    provides                                                                   
     information  we can all  use because  we agreed,  at the                                                                   
     outset, on data standards acceptable to all.                                                                               
     The  state's citizens  benefit  from  this approach.  In                                                                   
     rural  communities   it  is  more  difficult   to  track                                                                   
     separate  agency processes so  when agencies  hold joint                                                                   
     public meetings concerned  citizens are given the entire                                                                   
     regulatory  picture. With  out  critical path  planning,                                                                   
     public participation happens  based in the public notice                                                                   
     requirement of  individual permits, which  can be months                                                                   
     even years apart depending on the project.                                                                                 
     I have  also talked  with many of  you about how  we are                                                                   
     reviewing our regulations and statutes to ensure they                                                                      
     are meaningful  and not  a victim  of mission  creep. As                                                                   
     part  of  that process,  we  are  deleting  46.35 Permit                                                                   
     Coordination and Extension.  This statute was enacted in                                                                   
     1977.  That same  year the  legislature established  the                                                                   
     Coastal  Management  Program,  which became  the  permit                                                                   
     coordinator.  AS  46.35 has  become  a  relict.  However                                                                   
     there  is one small  section of  AS 46.35 that  is being                                                                   
     relocated.  Sections  2 and  3  of  this bill  move  the                                                                   
     Department of Environmental  Conservation's authority to                                                                   
     use our appeals process to other sections of law.                                                                          
     The DEC  process is easier to  use and well laid  out in                                                                   
     understandable regulations.                                                                                                
     It is also important to understand  what HB 192 does not                                                                   
     do.  HB   192  bill  does  not  change   the  protective                                                                   
     standards  that the state  has developed and  fine-tuned                                                                   
     over the last decade. It  does not change the Department                                                                   
     of      Environmental     Conservation's      permitting                                                                   
     requirements, its regulatory  discretion, enforcement or                                                                   
     appeal process.  This bill simply insures  critical path                                                                   
Commissioner  Ballard summarized that  the bill provided  the                                                                   
opportunity  to be more  organized.  She  noted that,  as the                                                                   
permitting  agency, DEC  benefited  from  identifying at  the                                                                   
outset key data  requirements needed to produce  permits in a                                                                   
timely fashion.   She stressed that having  clear legislative                                                                   
language  provides the  agency with  a clear  mandate in  the                                                                   
permitting project.                                                                                                             
Ms.  Ballard  emphasized  the  importance  of  critical  path                                                                   
planning.  By moving  permits and  the project  forward in  a                                                                   
coordinated way,  the department  is able to effectively  use                                                                   
resources and to present to the  public the entire project as                                                                   
it  moves  forward.   Otherwise,  the  public may  only  view                                                                   
portions of  the projects and  may not be able  to understand                                                                   
its impact on  their community.  She noted  her commitment to                                                                   
both resource  development and resource conservation  and her                                                                   
belief  that  they  are  compatible.    She  also  noted  her                                                                   
determination to identify instances of "mission creep".                                                                         
Ms.  Ballard  explained  that,  resulting from  a  review  of                                                                   
statutes and  in conjunction with  HB 192, the  Department is                                                                   
deleting AS 46.35, "permit coordination  and extension".  She                                                                   
stated  that  the  statute  had never  been  used  since  its                                                                   
enactment  in  1977,  the  same  year  that  the  legislature                                                                   
established the Coastal Management  Program, which became the                                                                   
permit  coordinator.   She  noted that  they  had proposed  a                                                                   
relocation of  a small segment of  the statute:  Section  2 &                                                                   
3,  which  would move  DEC's  authority  to use  the  appeals                                                                   
process to other sections of law.                                                                                               
Ms.  Ballard  expressed  her  enthusiasm  for  this  type  of                                                                   
coordination, and  reiterated the importance  of coordinating                                                                   
the permitting process  to provide a clear path  for resource                                                                   
Representative Croft  asked if AS  46.35 had ever  been used.                                                                   
Ms. Ballard confirmed that it  had never been used. She noted                                                                   
that they  retained the  authority to  use their own  appeals                                                                   
CAMERON LEONARDS,  ASSISTANT ATTORNEY GENERAL,  DEPARTMENT OF                                                                   
LAW,  in response  to  a  question by  Representative  Croft,                                                                   
explained  that  two  provisions  of 46.35  would  remain  in                                                                   
statute following  the proposed bill,  one of which  would be                                                                   
relocated  from  46.35.090  (e).     The  relocated  language                                                                   
clarifies  that procedures  to  review  DEC permit  decisions                                                                   
need not conform  to the Administrative Procedure  Act (APA).                                                                   
He  explained  that sections  2  and  3  of the  bill  simply                                                                   
transplanted  this  existing  provision  to two  chapters  of                                                                   
Title 46 that govern DEC permitting decisions.                                                                                  
Representative Croft  asked which provisions did  not need to                                                                   
conform  to  APA  and  why.    Mr.  Leonard  noted  that  the                                                                   
procedures  governing  adjudication   hearings  were  already                                                                   
covered comprehensively  in DEC  regulations and  by existing                                                                   
law were  not subject  to the  APA.   He confirmed  that this                                                                   
paralleled APA procedures.                                                                                                      
Representative  Foster   MOVED  to  report  HB   192  out  of                                                                   
Committee with the accompanying  fiscal note.  There being NO                                                                   
OBJECTION it was so ordered.                                                                                                    
HB  192  was REPORTED  out  of  Committee  with a  "do  pass"                                                                   
recommendation   and  two  zero   fiscal  notes:     #1  from                                                                   
Department  of Natural  Resources and  #2 from Department  of                                                                   
Environmental Conservation.                                                                                                     
HOUSE BILL NO. 229                                                                                                            
     "An Act relating to special medical parole and to                                                                          
     prisoners who are severely medically and cognitively                                                                       
TOM WRIGHT,  STAFF, REPRESENTATIVE  JOHN HARRIS,  deferred to                                                                   
the  Departments   of  Corrections  and  Health   and  Social                                                                   
Services to answer questions about the new fiscal notes.                                                                        
JERRY BURNETT,  DIRECTOR ADMINISTRATIVE SERVICES,  DEPARTMENT                                                                   
OF CORRECTIONS  addressed the new  fiscal note.   He deferred                                                                   
to Dr. John Robertson to answer questions.                                                                                      
JOHN ROBERTSON, MEDICAL DIRECTOR,  DEPARTMENT OF CORRECTIONS,                                                                   
observed  that  the  new  note  more  accurately  takes  into                                                                   
account the life  expectancy of the paroled  inmates, as well                                                                   
as reflecting the resources available  to them and its impact                                                                   
on  potential savings.    He added  that  the  new note  also                                                                   
reflected the cost  of a correctional officer  in relation to                                                                   
patient care.  He expressed confidence in the new figures.                                                                      
Co-Chair  Harris   observed  that  the  projected   potential                                                                   
savings of general  funds in FY 09 was $805  thousand, offset                                                                   
by a projected  general funds  cost of $234 thousand  for the                                                                   
Department of  Corrections, and  calculated that  the overall                                                                   
savings  vs. costs, including  the Department  of Health  and                                                                   
Social  Services,  for  that  year  would  be  $500  thousand                                                                   
Representative  Hawker  noted  material  changes in  the  new                                                                   
fiscal notes and  expressed disappointment in  the quality of                                                                   
information provided by the new notes.                                                                                          
Representative  Foster   MOVED  to  report  HB   229  out  of                                                                   
Committee   with    individual   recommendations    and   the                                                                   
accompanying fiscal note.                                                                                                       
Representative  Hawker OBJECTED.   He  reiterated his  belief                                                                   
that  the  fiscal  information   was  inadequate  to  make  a                                                                   
Representative Whitaker also OBJECTED on that same basis.                                                                       
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Chenault; Foster; Meyer; Harris; Williams                                                                             
OPPOSED: Croft; Hawker; Moses; Stoltze; Whitaker                                                                                
The vote was tied at 5 to 5.                                                                                                    
HB  229  was   HEARD  and  HELD  in  Committee   for  further                                                                   
SENATE BILL NO. 115(efd fld)                                                                                                  
     "An   Act   allowing  expenses   of   the   correctional                                                                   
     industries  program  that   may  be  financed  from  the                                                                   
     correctional  industries  fund to  include the  salaries                                                                   
     and benefits of state employees."                                                                                          
Vice-Chair Meyer MOVED to ADOPT  the Committee Substitute 23-                                                                   
GS1104\D  (4/25).  There  being NO  OBJECTION  the  Committee                                                                   
Substitute was ADOPTED.                                                                                                         
Vice-Chair  Meyer pointed  out the changes  in the  Committee                                                                   
Substitute.   He noted that  the changes were  to incorporate                                                                   
comments  made during  the  previous Committee  hearing,  and                                                                   
made reference  to Co-Chair Harris' concerns  about competing                                                                   
with private industry.  He also  noted concerns raised by the                                                                   
Public Employees  Union, and stated  that these  parties were                                                                   
now in agreement on the bill.                                                                                                   
JERRY   BURNETT,   DIRECTOR    OF   ADMINISTATIVE   SERVICES,                                                                   
DEPARTMENT OF  CORRECTIONS spoke to the changes  contained in                                                                   
the  Committee  Substitute.    He noted  that  the  Committee                                                                   
Substitute   provides  intent   to   keep  the   correctional                                                                   
industries  program   operating  if   it  fails   to  produce                                                                   
sufficient income.   He referred  to Section 3, b  2, stating                                                                   
that the  correctional institute  may sell products  to other                                                                   
companies   as  approved  by   the  Correctional   Industries                                                                   
Commission.  The  section  deletes:  "have  minimal  negative                                                                   
impact  on existing  private  industry  or labor  force"  and                                                                   
inserts: "will be of benefit to".   The purpose of the change                                                                   
is  to  encourage  correctional  institutions  to  work  with                                                                   
private industry.                                                                                                               
Co-Chair  Harris  asked  who determines  the  benefit.    Mr.                                                                   
Barnett   indicated   that   the    Correctional   Industries                                                                   
Commission, appointed by the Governor  and meeting quarterly,                                                                   
determines the  benefit.   In response to  a question  by Co-                                                                   
Chair Harris, Mr. Burnett explained  that the Commission made                                                                   
findings and held public hearings.                                                                                              
FRED  COVEN, ALASKA  STATE EMPLOYEES  ASSOCIATION,  expressed                                                                   
his support for the Committee  Substitute.  He added that the                                                                   
effective  date  gave  the  correctional  industry  the  time                                                                   
needed to plan for budgetary changes.                                                                                           
Public testimony concluded.                                                                                                     
Representative Foster  MOVED to report  HCS SB 115  (FIN) out                                                                   
of Committee with the accompanying  fiscal note.  There being                                                                   
NO OBJECTION it was so ordered.                                                                                                 
HCS SB  115 (FIN) was  REPORTED out of  Committee with  a "do                                                                   
pass" recommendation and one previously  public fiscal impact                                                                   
note from the Department of Corrections.                                                                                        
Vice-Chair  Meyer  MOVED  to  Introduce  a  House  Concurrent                                                                   
Resolution  for  a  title  change:   work  draft  23-LS1047\A                                                                   
(4/24/03) on  the House Floor.  There being NO  OBJECTION, it                                                                   
was so ordered.                                                                                                                 
HOUSE BILL NO. 211                                                                                                            
     "An  Act relating  to a student  loan repayment  program                                                                   
     for  nurses, and  amending the  duties of  the Board  of                                                                   
     Nursing that  relate to this program; and  providing for                                                                   
     an effective date."                                                                                                        
REPRESENTATIVE  PEGGY WILSON,  SPONSOR, provided  information                                                                   
about the legislation.   She emphasized the  nursing shortage                                                                   
in the state of Alaska.  She noted  that the vacancy rate was                                                                   
11.5 percent.  Traveling nurses  from other states were being                                                                   
used  to fill  these vacancies.    The bill  would create  an                                                                   
incentive  in  assisting  nurses  in  repaying  their  school                                                                   
loans.   To  qualify for  the loan  reimbursement program  an                                                                   
individual would have to be hired  as a nurse in Alaska after                                                                   
July 1 of 2003, be licensed in  the state, work in Alaska and                                                                   
have   an  outstanding   school   loan   from  a   recognized                                                                   
institution.   The program  would reimburse  $2 thousand  per                                                                   
year, up  to a total  of $10 thousand.   She noted  that this                                                                   
amount would  not cover a  nurse's entire education  expense,                                                                   
but would  serve as  a tool  in recruitment.   She  explained                                                                   
that  the State  Board of  Nursing would  adopt the  criteria                                                                   
guidelines  for the  loan program  in  consultation with  the                                                                   
Alaska  Commission on  Post-secondary Education.   She  added                                                                   
that  it  would   be  appropriated  from  the   student  loan                                                                   
corporation dividend.                                                                                                           
Representative  Wilson  pointed   out  that  currently  5,200                                                                   
nurses  are  working  in  Alaska   and  that  the  university                                                                   
produced 110  nurses per  year. The intent  is to  double the                                                                   
amount (220  per year).  In  next seven years, due  to growth                                                                   
in health  care needs, Alaska  will need an additional  1,400                                                                   
nurses.  She maintained that the  proposed bill is crucial to                                                                   
meeting that need.                                                                                                              
Co-Chair  Harris asked  whether  loan reimbursement  programs                                                                   
were being  created for any  other groups, such  as teachers.                                                                   
Representative Wilson  stated that a program  already existed                                                                   
for teachers,  which  was used  as a model  for the  proposed                                                                   
program   for  nurses.     Co-Chair  Harris   asked   for  an                                                                   
explanation of  the repayment program. Representative  Wilson                                                                   
explained that if a hospital were  attempting to hire a nurse                                                                   
into  the  state,  the  reimbursement  program  would  be  an                                                                   
additional  incentive   in  providing  reimbursement   of  $2                                                                   
thousand per year,  up to $10 thousand, of  their outstanding                                                                   
student loans.   She also noted that if a new  nurse lived in                                                                   
Alaska,  they might  choose to  stay  in the  state and  take                                                                   
advantage of the program.                                                                                                       
Co-Chair  Harris  observed  that the  student  loan  program,                                                                   
would incur  a cost of  $918,000 in FY  04, up to  a possible                                                                   
$5.1 million in FY 09.                                                                                                          
Representative  Wilson  noted that  if  the  state of  Alaska                                                                   
could not  recruit nurses,  then nurses  would be brought  in                                                                   
from other states.   She emphasized that since  the traveling                                                                   
nurses cost nearly double the  salary of instate nurses, this                                                                   
would escalate health care costs in the state.                                                                                  
In response to a question by Co-Chair  Harris, Representative                                                                   
Wilson  noted  that  nearly every  hospital,  from  small  to                                                                   
large, was  paying large amounts  for traveling nurses.   She                                                                   
speculated that  in Southeast Alaska some hospitals  pay over                                                                   
$100  per year  just on  traveling  nurses.   She noted  that                                                                   
these nurses demanded higher salaries.                                                                                          
Co-Chair  Harris  asked if  there  was a  provision  offering                                                                   
benefits  to   students  who   attended  school   in  Alaska.                                                                   
Representative Wilson noted that  there was no provision, but                                                                   
added that  there were enough  vacancies to fill  with nurses                                                                   
from any location.                                                                                                              
DIANE  BARRANS, EXECUTIVE  DIRECTOR, POSTSECONDARY  EDUCATION                                                                   
COMMISSION, DEPARTMENT OF EDUCATION  pointed out a correction                                                                   
in the analysis of the fiscal  note that inaccurately totaled                                                                   
the number of nurses (2,525).                                                                                                   
Representative   Croft   asked   for   explanation   of   the                                                                   
progression in the  number of nurses.  Ms.  Barrans explained                                                                   
that they used projections from  the Department of Labor from                                                                   
a  report  of  trends  for April  2003.    The  figures  were                                                                   
extracted based on new positions,  estimating that they would                                                                   
be most likely to have student loans outstanding.                                                                               
LINDA  FINK, ASSISTANT  DIRECTOR, ALASKA  STATE HOSPITAL  AND                                                                   
NURSING  HOME   ASSOCIATION  testified  in  support   of  the                                                                   
legislation.   She stated that  they had worked  closely with                                                                   
the University of Alaska to double  the number of nurses, but                                                                   
emphasized  that this would  not meet  projected needs.   She                                                                   
also noted their  work to develop distance  delivery programs                                                                   
and other  training programs.   They  also work with  advance                                                                   
training  programs  for  nurses,   K-12  education,  and  job                                                                   
centers to increase health care  opportunities.  She observed                                                                   
that the bill  presents another avenue to  increase retention                                                                   
and recruitment for nurses.                                                                                                     
HB  211  was   heard  and  HELD  in  Committee   for  further                                                                   
HOUSE BILL NO. 162                                                                                                            
     "An Act increasing the fee for a state business                                                                            
     license; and providing for an effective date."                                                                             
RICK URION,  DIRECTOR OCCUPATIONAL  LICENSING, DEPARTMENT  OF                                                                   
COMMUNITY AND  ECONOMIC DEVELOPMENT, testified  in support of                                                                   
the  legislation.    He  stated that  the  cost  of  business                                                                   
licensing had remained at $25  per year in Alaska since 1949.                                                                   
He noted that a  method had been devised [in  the House Labor                                                                   
and  Commerce Committee]  of stepping  up  the licensing  fee                                                                   
depending on  the number  of employees:   $50 for  those with                                                                   
five or less employees, $100 for  those with between 6 and 25                                                                   
employees,  and   $200  for  business   with  more   than  25                                                                   
employees.   He stated that  the revenue generated  from that                                                                   
method was less than desired.                                                                                                   
He  explained  that  the  bill proposed  a  new  method  that                                                                   
depends  on  the  type  of business.    He  noted  that  sole                                                                   
proprietors would be charged $100  per year, and corporations                                                                   
$300  per  year.    He  pointed  out  that  this  new  method                                                                   
generated $2.8 million more revenue  for the state of Alaska.                                                                   
He maintained that  the new method was simple  to administer.                                                                   
He noted that  the only objections to the proposal  have come                                                                   
from small businesses.                                                                                                          
TAPE HFC 03 - 65, Side B                                                                                                      
Mr. Urion  referred to  the proposed  changes in a  Committee                                                                   
Co-Chair Harris  observed that under the new  system, smaller                                                                   
employers that  were incorporated would still  pay the higher                                                                   
amount since corporations would  typically have a larger cash                                                                   
Vice-Chair  Meyer MOVED  to  Adopt the  Committee  Substitute                                                                   
Work  Draft  23-Gh1102\I  (4/25/03).    Representative  Croft                                                                   
Representative  Croft  commented  that  his  small  business,                                                                   
because it is incorporated, would  go from paying $25 to $300                                                                   
per  year.    He  maintained  that  this  was  too  large  an                                                                   
increase.    He  stated  that  he  preferred  the  Labor  and                                                                   
Commerce Committee Substitute.                                                                                                  
A roll call vote was taken on the motion.                                                                                       
IN FAVOR: Foster, Meyer, Stoltze, Williams, Harris                                                                              
OPPOSED: Croft, Moses                                                                                                           
There  being  NO  OBJECTION,  the  Committee  Substitute  was                                                                   
Representative Moses noted that  his small business would now                                                                   
pay the same amount as a large corporation.                                                                                     
Co-Chair  Harris asked  how many categories  now existed;  he                                                                   
pointed out that the previous  Committee Substitute contained                                                                   
three  categores.    Mr.  Urion noted  that  there  were  two                                                                   
categories:    sole proprietorships  and  corporations.    He                                                                   
maintained  that  corporations  would be  more  sophisticated                                                                   
In  response to  a question  by  Representative Stoltze,  Mr.                                                                   
Urion noted that the licenses  would now be annual.  The cost                                                                   
will be  $190 thousand  more per  year, as  indicated in  the                                                                   
fiscal  note,  due  to  the need  for  more  personnel.    He                                                                   
speculated  that  the  system  might be  streamlined  in  the                                                                   
future  when   the  computer  system  is  updated   to  allow                                                                   
purchasing of businesses licenses online.                                                                                       
Representative  Stoltze asked if  businesses could  apply for                                                                   
two-year  licenses.    Mr.  Urion   conceded  that  this  was                                                                   
possible.  He stated  that the goal was to have  a consistent                                                                   
Representative Croft asked for  the reason to begin licensing                                                                   
every year.   Mr.  Urion noted the  rationale that  to charge                                                                   
annually minimized the impact on businesses.                                                                                    
Representative  Moses asked whether  a small family  business                                                                   
would be considered  a sole proprietorship, even  though they                                                                   
have  a  partnership.    Mr.  Urion  confirmed  that  such  a                                                                   
business would be considered a sole proprietorship.                                                                             
Co-Chair  Harris  referred to  the  fiscal note  that  listed                                                                   
three full time positions.  Mr.  Urion stated that the fiscal                                                                   
note referred  to the  Labor and  Commerce proposal  that was                                                                   
more  difficult  to  administer.    He  noted  that  the  new                                                                   
Committee Substitute  required only  two new positions.   Co-                                                                   
Chair Harris observed  that no cost was listed  on the fiscal                                                                   
note for  these two positions.   Mr. Urion could  not produce                                                                   
the rationale for that figure.                                                                                                  
CSHB 162  (FIN) was heard and  HELD in Committee  for further                                                                   
HOUSE BILL NO. 271                                                                                                            
     "An Act levying and providing for the collection and                                                                       
     administration of an excise tax on passenger vehicle                                                                       
     rentals; and providing for an effective date."                                                                             
KRIS  KNAUSS, STAFF,  REPRSENTATIVE  KOTT (SPONSOR)  provided                                                                   
information  regarding the  bill.    He noted  that the  bill                                                                   
implements  a ten  percent tax  on rental cars,  and a  three                                                                   
percent  tax on  recreational  vehicles  (RV's), for  rentals                                                                   
under 90 days.   He highlighted the new fiscal  note prepared                                                                   
by the  Department of  Revenue that  indicated revenue  of $6                                                                   
million  annually.   He referred  to the changes  on page  1,                                                                   
line 7 of the bill and noted that  the sponsor was happy with                                                                   
these  changes.   He  pointed  out  that  the bill  had  been                                                                   
changed from a  15% to a 10% tax, and now included  RV's.  He                                                                   
confirmed  that  the  Sponsor   was  in  agreement  with  the                                                                   
Representative   Stoltze   asked   whether  this   might   be                                                                   
detrimental to  the tourism industry.   Mr. Knauss  responded                                                                   
that they would like to see tourists pay their fare share.                                                                      
Representative  Foster  referred  to the  tax  authorized  by                                                                   
Anchorage  of 8 percent,  and asked  whether the proposed  15                                                                   
percent  would be  added to  that tax,  totaling 23  percent.                                                                   
Mr. Knauss  confirmed that this  was true, placing  Alaska in                                                                   
the top  third of states  in terms of  car rental taxes.   He                                                                   
noted other states with higher rates of tax.                                                                                    
Co-Chair  Harris asked  whether the bill  allowed for  Alaska                                                                   
residents  to be  excluded  from  the rental  car  tax.   Mr.                                                                   
Knauss stated  that the only  exemption was for  governmental                                                                   
employees.   In response  to a  question by Co-Chair  Harris,                                                                   
Mr. Knauss confirmed  that legislators would not  pay the tax                                                                   
when on business trips.                                                                                                         
Vice-Chair Meyer  reiterated that  Anchorage would be  in the                                                                   
top third of states with the additional  tax.  He asked about                                                                   
other communities,  such as Fairbanks.  Mr.  Knauss confirmed                                                                   
that other communities totaled different percentages.                                                                           
Vice-Chair Meyer  asked if the  funding would be  directed to                                                                   
road maintenance.  Representative  Kott stated that page 2 of                                                                   
the bill offered intent language,  and noted that the revenue                                                                   
would be  placed within the  General Fund to  be appropriated                                                                   
according to the legislature.                                                                                                   
Vice-Chair Meyer noted  that there is a dedicated  bed tax in                                                                   
Anchorage  and  questioned if  that  was  the intent  of  the                                                                   
proposed bill. Representative  Kott indicated that the intent                                                                   
language  tax  revenue  might   be  directed  toward  tourism                                                                   
marketing. He  stated that he would  like to see some  of the                                                                   
tax return  to the industry. He  pointed out that,  even with                                                                   
the 10  percent tax, Alaska  would still be several  percents                                                                   
less than  the amount  charged in  Seattle. He stressed  that                                                                   
the cost  of car rentals in  Seattle has never kept  him from                                                                   
renting a car there.                                                                                                            
Vice-Chair  Meyer  observed  that the  tourism  industry  has                                                                   
requested more  funding and added  that he would like  to see                                                                   
more money available.                                                                                                           
Representative   Croft   referred   to   the   state-by-state                                                                   
comparison of rental car taxes  and commented that the reason                                                                   
that  some  of  the  percentages  rose so  high  was  due  to                                                                   
additional sales  taxes.   He noted that  with a  ten percent                                                                   
state rental  tax, Alaska would  actually be in the  top five                                                                   
in  terms  of the  rental  tax  alone.   Representative  Kott                                                                   
confirmed  that  the addition  of  local airport  tax  placed                                                                   
Alaska in the top third of the nation.                                                                                          
Representative Croft  compared Alaska's aggregate  rental tax                                                                   
with other  areas, such as  Seattle, and maintained  that the                                                                   
new tax  would place Anchorage  substantially ahead  of these                                                                   
areas.   Representative Knauss  stated that in  Illinois, the                                                                   
maximum  local tax  rate was  18.5  percent.   Representative                                                                   
Croft  observed  that  Anchorage  paid  19  percent  locally,                                                                   
including  airport charges,  in  addition to  the 10  percent                                                                   
proposed by the bill.                                                                                                           
LARRY  PERSILY, DEPUTY  COMMISSIONER,  DEPARTMENT OF  REVENUE                                                                   
noted that if the  version of the bill [House  Ways and Means                                                                   
Committee]  passed,  it  would   add  up  to  29  percent  in                                                                   
Anchorage,  which  was the  same  combined  tax and  fees  as                                                                   
Seattle.   He noted that all  fees were not reflected  in the                                                                   
chart (copy on file).                                                                                                           
Representative  Croft  also  asked whether,  apart  from  the                                                                   
airport  fees, Anchorage  would  still be  ahead of  Seattle.                                                                   
Mr. Persily  responded that if  one included municipal  sales                                                                   
tax in Seattle  as well as state  sales tax, the rate  of tax                                                                   
was the same as Washington.                                                                                                     
Representative  Stoltze  asked  if  this  proposal  had  been                                                                   
discussed  by  previous legislatures.    Representative  Kott                                                                   
noted that  a similar  bill was introduced  in 1999,  both in                                                                   
the Senate and House.                                                                                                           
Representative  Stoltze asked whether  prices of  rental cars                                                                   
reflected the  cost of taxes.   Representative  Kott observed                                                                   
that the tax  would implement approximately a  $4.50 increase                                                                   
in  the  price of  the  overall  cost  of a  rental  vehicle.                                                                   
Representative  Stoltze asked whether  they had considered  a                                                                   
seasonal  tax, effectively  exempting  Alaskans from  rentals                                                                   
during non-tourist  season.   Representative Kott  maintained                                                                   
that a seasonal  tax would not  be cost effective.   He added                                                                   
that the bill  would not affect Alaskans since  most Alaskans                                                                   
did not need a  rental car in the state for  extended periods                                                                   
of time, with  the exception of state government  work, which                                                                   
is exempted.                                                                                                                    
Mr.  Persily  added  that  in Anchorage  75  percent  of  the                                                                   
vehicle rentals occurred  in the second and  third quarter of                                                                   
the year.   He also  pointed out that  in footnote  #2, there                                                                   
had to be some basis for comparison,  since states might have                                                                   
various additional  fees.  He stated that the  comparison was                                                                   
based on a $50  per day average, but explained  that this did                                                                   
not necessarily represent the percent of charge.                                                                                
Representative  Moses asked  why  recreational vehicles  were                                                                   
charged at a different rate.   Representative Kott noted that                                                                   
originally the  tax was proposed  at the same rate.   However                                                                   
after speaking  with car rental companies, it  indicated that                                                                   
a previous tax  increase might have caused some  companies to                                                                   
go out  of business.  After  reflection, they  concluded that                                                                   
the  fee was  lowered for  RV's  since their  rental fee  was                                                                   
already  substantially  higher   and  this  might  discourage                                                                   
Representative  Moses speculated  that the  vast majority  of                                                                   
the RV's were rented by non-residents,  and proposed that the                                                                   
fees should  not be  lower.   Representative Kott  maintained                                                                   
that it should be kept equitable.                                                                                               
GARY ZIMMERMAN, GENERAL MANAGER-VICE  PRESIDENT, AVIS RENT-A-                                                                   
CAR, ANCHORAGE,  commented that they have  offices statewide.                                                                   
He stated that  his industry opposes HB 271.   He read from a                                                                   
HR  1  regarding  the  importance   of  economic  development                                                                   
throughout the  State, particularly  tourism.  He  questioned                                                                   
why  the  bill  was  introduced  to  target  the  rental  car                                                                   
industry.  He  challenged some of the  background information                                                                   
contained  in   the  sponsor   statement.  For  example,   he                                                                   
maintained  that  the  business  climate in  Alaska  is  very                                                                   
different than  that of Seattle.   He noted the  pressures on                                                                   
his industry to  increase their inventory during  the tourism                                                                   
season,  and to  decrease inventory  during the  rest of  the                                                                   
year.  He  pointed out that  Seattle has an eleven  to twelve                                                                   
month season.  There is a tremendous  increase in business in                                                                   
Alaska  during   the  summer.    He  contended   that  adding                                                                   
additional  taxes to  a price competitive  market would  have                                                                   
drastic consequences for Alaskan rental car businesses.                                                                         
Mr.  Zimmerman noted  that  the sponsor  statement  indicated                                                                   
that  extra  [rental]  vehicles   caused  road  damage.    He                                                                   
contended  that motor  homes  cause far  more  damage in  the                                                                   
tourism field  than a  rental car, since  they are  a heavier                                                                   
vehicle and create parking problems.                                                                                            
Mr. Zimmerman  noted that  the amount  charged for  the lease                                                                   
would  place Alaska  in the  top  one or  two most  expensive                                                                   
market  places in  the United  States.   He  referred to  the                                                                   
earlier mentioned comparative  table, and strongly questioned                                                                   
the validity  of its  information.  He  pointed out  that the                                                                   
table lists local tax as "non  applicable", while it had been                                                                   
stated that Anchorage charges  an airport tax.  He noted that                                                                   
local sales  tax "up to  6 percent" was  not correct,  with a                                                                   
total  of 5  percent  sales tax  plus  a 4  percent  "vehicle                                                                   
guided facilities  fee" in areas  like Sitka.   He maintained                                                                   
that  the current  tax  rate in  Anchorage  was currently  19                                                                   
percent, placing Alaska in the  top ten nationwide, and added                                                                   
that the proposed  tax would then place Alaska  at 29 percent                                                                   
second in the nation.                                                                                                           
Mr. Zimmerman  concluded that the bill requires  more correct                                                                   
information.    He  listed  additional   taxes  for  specific                                                                   
communities in addition to the proposed tax.                                                                                    
TAPE HFC 03 - 66, Side A                                                                                                      
Co-Chair  Williams  encourage  Mr. Zimmerman  to  speak  with                                                                   
Representative  Kott and  Mr. Persly  regarding these  facts.                                                                   
He suggested that additional testimony  could be heard on the                                                                   
Mr. Zimmerman  went on to note  that the car  rental industry                                                                   
concern over the  possibility of a statewide  sales tax being                                                                   
eventually added to  the fee.  He maintained  that this would                                                                   
be disastrous to the industry.                                                                                                  
Mr.  Zimmerman  pointed  out  that  just  the  Fairbanks  and                                                                   
Anchorage car rental  industry paid the State  of Alaska $4.5                                                                   
million dollars per  year, based on the gross  10 percent fee                                                                   
paid to the state.  In addition,  he stated that $1.5 million                                                                   
was  paid  in  fees to  the  Department  of  Motor  Vehicles.                                                                   
Airport parking  totaled $250 thousand, and customers  pay in                                                                   
the  area  $500  thousand  dollars  in state  gas  tax.    He                                                                   
concluded that the industry already  paid fees totaling $6 to                                                                   
$7 million, in  a marketplace which grosses $45  million.  He                                                                   
noted that this therefore represented  a fee of 10 percent of                                                                   
gross receipts.                                                                                                                 
Mr. Zimmerman  also stated  that the  car rental industry  is                                                                   
currently struggling.  Nationwide,  air travel is decreasing;                                                                   
non-cruise  passengers have  decreased by  six percent.   The                                                                   
projections  for this summer  are low and  the market  is not                                                                   
growing.   He  also noted  that  the majority  of car  rental                                                                   
agencies are locally owned and  that some locations have been                                                                   
closed recently.                                                                                                                
Mr. Zimmerman stated  that HEIA, the marketing  branch of the                                                                   
Alaska  Tourism  Industry  Association  is  against  targeted                                                                   
taxes  in the visitor  industry.   He quoted  the Sponsor  in                                                                   
addition  to  the Governor  as  having  stated they  did  not                                                                   
support  a  cruise  ship  tax since  it  "targeted  a  single                                                                   
Mr.  Zimmerman recommended  that the  Legislature needs  more                                                                   
information on  the negative impact  of an additional  tax on                                                                   
the car rental business before making a decision.                                                                               
Vice-Chair  Meyer asked for  a breakdown  of car rentals  for                                                                   
the business sector and the tourism  industry.  Mr. Zimmerman                                                                   
responded  that  the  true  tourist   business  comprised  60                                                                   
percent of the  summer business.  During the  winter, October                                                                   
to late April, the bulk of business is corporate.                                                                               
Vice-Chair  Meyer noted  that  in Anchorage  car rentals  had                                                                   
locations outside  the airport.  He asked if  customers could                                                                   
avoid airport  tax by  using other  location.  Mr.  Zimmerman                                                                   
confirmed that this was true,  although they could not divert                                                                   
business.   He noted  that some  hotels had shuttle  services                                                                   
from  the  airport.    Vice-Chair  Meyer  speculated  that  a                                                                   
customer  could   avoid  airport  tax  by   choosing  another                                                                   
Representative  Moses noted that  the proposed tax  could not                                                                   
be avoided.                                                                                                                     
Representative   Whitaker  asked   whether  the  car   rental                                                                   
industry would  support a  broad based tax  on all  goods and                                                                   
services.   Mr. Zimmerman confirmed  that they  would support                                                                   
such a tax.                                                                                                                     
Representative Croft asked if  Mr. Persily's characterization                                                                   
that 75 percent  of businesses in the summer  comprised three                                                                   
quarters  of the  yearly business.    Mr. Zimmerman  observed                                                                   
that  Mr.  Persily  had  referred to  the  second  and  third                                                                   
quarters.  He noted that the summer  business spanned June in                                                                   
the second quarter and July and  August in the third quarter.                                                                   
He confirmed that in a broad characterization,  approximately                                                                   
50 percent of business was during those three months.                                                                           
HB  271  was   heard  and  HELD  in  Committee   for  further                                                                   
The meeting was adjourned at 4:45 PM                                                                                            

Document Name Date/Time Subjects