Legislature(1999 - 2000)
02/16/2000 01:40 PM House FIN
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
February 16, 2000
1:40 P.M.
TAPE HFC 00 - 34, Side 1
TAPE HFC 00 - 34, Side 2
TAPE HFC 00 - 35. Side 1
TAPE HFC 00 - 35, Side 2
CALL TO ORDER
Co-Chair Therriault called the House Finance Committee
meeting to order at 1:40 P.M.
PRESENT
Co-Chair Mulder
Co-Chair Therriault Representative Foster
Vice Chair Bunde Representative Grussendorf
Representative Austerman Representative Williams
Representative J. Davies Representative Phillips
Representative G. Davis
Representative Moses was not present for the meeting.
ALSO PRESENT
Representative Jeannette James; Ginny Fay, Director,
Division of Tourism, Department of Community & Economic
Development; James Baldwin, Assistant Attorney General,
Department of Law; Ann Campbell, Chair, Alaska Travel
Industry Association, Anchorage; Bob Dindinger, Vice
President, Marketing Chair, Alaska Travel Adventures,
Juneau; Robert Wells, Board Member, Board of Agriculture and
Conservation, Matsu, (Testified via Teleconference).
SUMMARY
HB 116 An Act relating to the Board of Agriculture and
Conservation, to the agricultural revolving loan
fund, to the disposal of state agricultural land,
and to the Alaska Natural Resource Conservation
and Development Board; and providing for an
effective date.
HB 116 was HEARD and HELD in Committee for further
consideration.
Overview: Millennium Plan Update by:
Alaska Tourism Marketing Council
Alaska Travel Industry Association
No Committee Action. This portion of the meeting
was taken in computer log note format.
Millennium Plan Update by:
Alaska Tourism Marketing Council
Alaska Travel Industry Association
The following overview was taken in log note format. Tapes
and handouts will be on file with the House Finance
Committee through the 21st Legislative Session, contact 465-
2156. After the 21st Legislative Session they will be
available through the Legislative Library at 465-3808.
LOG
SPEAKER
DISCUSSION
TAPE HFC 00 - 34
SIDE 1
000
Co-Chair Therriault
Co-Chair Therriault convened the meeting
at 1:40 p.m.
MILLENNIUM PLAN UPDATE BY:
ALASKA TOURISM MARKETING COUNCIL
ALASKA TRAVEL INDUSTRY ASSN.
150
ANN CAMPBELL, CHAIR,
ALASKA TRAVEL
INDUSTRY ASSN.,
ANCHORAGE
Spoke to her background and the goals of
the Alaska Travel Industry Assn. (ATIA).
Ms. Campbell distributed the handout.
[Copy on File]. She noted that ATIA is
in the initial stages of developing
Alaska's statewide tourism programs that
will replace the Alaska tourism Marketing
Council, the Alaska Visitors Association
(AVA) as well as assume the marketing
functions of the State through a contract
with the Division of Tourism.
365
MS. CAMPBELL
Explained that the new millennium plan
resulted from the passage of SB 107. She
noted that ATIA has spent a good deal of
time gathering charter members. She
stated that current charter membership
consists of 1056 members, which consists
primarily of small business throughout
Alaska. Ms. Campbell pointed out that
only 19% of the membership has more than
15 employees.
470
MS. CAMPBELL
The organization has seated its board of
directors, consisting of 23 industry
businesses ranging from sole proprietors
to large companies. She noted that she
was elected as the Chair of the Board and
that Tina Lindgren was hired as
President/CEO. Public forums were held
in several cities to gather input for the
organizational development and dues
structure has been established.
Seventeen directors have been elected.
Those directors represent a wide group of
people throughout the State and that only
four of the directors represent large
companies.
528
MS. CAMPBELL
Pointed out that the work of the
directors was to perform the
organizational work which would make ATIA
a legal entity so to do the business.
The initial work was to initiate a search
for the president and chief operating
officer which resulted in the hiring of
Ms. Lindgren. Then six members were
appointed to the Board which consists of
two cruise operators, one highway tourism
business, one raft operator, a
representative from the Native
Corporation who runs hotels in Anchorage.
She pointed out that they tried to get a
wide diversity of people on the Board.
608
MS. CAMPBELL
During that time, the group was holding
forums throughout the State to determine
what the process should be for the ATIA
Board. At present time, the group is
determining what the goals and priorities
of a statewide association should be in
regards to organization, structure and
membership goals.
662
MS. CAMPBELL
The association has made some decisions
regarding the dues structure. A small
category has been added as an
informational category for any business
with three employees or under. If you do
not want to pay the membership fee but
still want to be involved, for $100
dollars a year, you can do that. A lower
cost category has been added for those
businesses that sell to the visitor
business industries. She stressed that
these were added to try to insure that
the association is accessible to the
smallest of businesses.
742
MS. CAMPBELL
Advised that at this time, the
organization is dealing with the transfer
of assets from the Alaska Visitors
Association. She pointed out that there
are a lot of legal and accounting issues
related to that transfer. Additionally,
she noted that there are a few issues
that relate to the Alaska Tourism
Marketing Council (ATMC) sunset in June.
It is important that those tools continue
into the millenium marketing program.
797
MS. CAMPBELL
Noted that ATIA is trying to finalize the
contract negotiations by August. It is
important to have a contract in order so
that ATIA will be able to make sure the
marketing commitments are in place. Ms.
Campbell stressed that a marketing plan
needs to be implemented now.
837
MS. CAMPBELL
Emphasized that it is important that the
industry match be raised. She noted that
ATIA is well on its way to accomplishing
that. Ms. Campbell commented that
organization is in the process of having
conversations to assess their budgets for
that process. They are coming to some
conclusion as to what would be a fair
process. She emphasized that it is
important to get the marketing plan put
together.
925
MS. CAMPBELL
She noted that the sale of the Vacation
Planner ads will generate a good portion
of the match. Ms. Campbell indicated
that ATIA is on track to raising the
match and that it would not be a barrier
to ATIA moving forward. There is more
concern regarding structural issues and
the ability to get the marketing plan
out.
960
BOB DINDINGER, VICE
PRESIDENT, MARKETING
CHAIR, ALASKA
TOURISM INDUSTRY
ASSOCIATION, JUNEAU
Spoke to the reasons that ATIA was
created. He noted that the industry was
to take greater responsibility for
marketing tourism in Alaska. That plan
was to be broadly representative of the
diverse interests of Alaska traveler.
ATIA has embraced those goals. He noted
that ATIA has been fortunate with the
assistance of the Legislature and the LBA
Committee to receive funds that were not
program receipts.
1053
MR. DINDINGER
That money allowed purchasing almost $1
million dollars of tourism marketing that
would not otherwise have been possible.
Those funds allowed ATIA to be on
television this winter. He voiced his
appreciation of that decision.
1087
MR. DINDINGER
Pointed out the request for the
millennium plan called for in SB107 which
was for $5 million dollars to be
allocated for marketing activity for the
FY01 marketing program. The industry
would make a matching contribution of
$2.1 million dollars. The fiscal note
referenced legislative intent that money
would be allocated through a separate
BRU. He noted that in the Governor's
budget proposal, it is difficult to find
that money. He emphasized that has been
a challenge for ATIA when trying to
develop the plan. He encouraged the
Committee to look to identify the BRU
where those funds could be raised.
1174
MR. DINDINGER
The intent of ATIA over the next two
years is to scale back the State
contribution to $4 million dollars. He
noted that was an aggressive goal, which
could be accomplished.
1210
MR. DINDINGER
Noted that ATIA is prepared to take on
all the existing marketing activities of
the Division of Tourism, Alaska Visitors
Assn., and those that have been done by
ATMC in the past. That action will have
internal savings. He noted that there is
a passive understanding with the ATMC to
assist. He suggested that by doing that
it will provide continuity from year to
year and also reduces the risk of
dropping any valuable program elements
1277
MR. DINDINGER
Noted that there is concern if there
exists a clear understanding as to the
extend the Division of Tourism ceases to
exist. He asked about the State
mandating the components of a tourism-
marketing plan. He asked if it was the
responsibility of the industry to fully
design a plan and fund it or if the State
instead designs the plan, and then the
industry must be active at that design.
The industry believes they know what the
Legislature's intent was. He requested
that clarification be made in this
process.
1325
MR. DINDINGER
Summarized the current issues:
? The need to clearly define what
funding will be allocated to ATIA
during the budget process; and
? To what degree the industry will be
involved in the design and to list the
components to design for.
The current ATIA proposal will be adopted
this week and will comprise a substantial
portion of the ATIA board and past
participants of the ATMC to provide
continuity. The intent is to bring in
marketing organizations throughout the
state. He emphasized that ATIA needs the
funding and political support throughout
Alaska. Mr. Dindinger voiced little
concern with ATIA's ability to formulate
a marketing plan by July 1, 2000.
1418
CO-CHAIR THERRIAULT
Asked the size of the pool from which the
17 marketing directors were chosen.
1428
MS. CAMPBELL
Replied that 40-50 people had run for the
board from throughout the State.
1441
CO-CHAIR THERRIAULT
Asked if there was anything that ATIA was
not willing to provide in the contractual
arrangement.
1456
MR. DINDINGER
Agreed.
1463
CO-CHAIR THERRIAULT
Asked how ATIA expected the money for the
match and timing expectation of it coming
to the required places on schedule.
1474
MR. DINDINGER
Replied that traditionally, the contracts
have been received through the
solicitation of advertising in the
Vacation Planner. Those contracts will
go out within the next two months and are
expected back by the July 1st. He stated
that would raise a large portion of those
funds. A smaller amount of funds are
raised throughout the year by selling the
names that are generated from the (800)
number. He noted that a fair amount of
the money is front-loaded into the
program. ATIA is intent on designing a
"pay to play" program which would pull
together those operators who have an
interest in those programs to make the
organization more self supporting.
1545
CO-CHAIR MULDER
Noted that last year the Legislative
intent was to create a tourism-marketing
plan. He questioned how cooperative the
Department has been in that effort.
1612
MR. DINDINGER
Replied that there is a lot of
"tenseness" between the Department and
the industry. He acknowledged that there
is a change going on. He voiced concern
that the Department has not been
forthcoming in giving direction for a
tourism-marketing program. They have
been tenacious and holding on to the
reins of control which has been counter
productive. The Department has not been
helpful in this process and has slowed
the process down.
1683
REPRESENTATIVE
AUSTERMAN
Noted that he was a supporter of the
industry, however, voiced concern with
the lack of tourist taxes. He asked why
the industry has not come forward with a
proposal of statewide tax. He stressed
that it is important to support their own
way. It is difficult to understand why
the fishing industry continues to put
money into the tourism industry. There
should be tourist taxing used for
highway, harbors and roads.
1770
MR. DINDINGER
Acknowledged the concerns voiced by
Representative Austerman. He noted that
the challenge is that the dynamics of the
two different industries are very
different. He stated that there is an
easy porthole for all fishermen to
participate. The challenge on the
tourism side is that there is not a
single place to place a mechanism that
would evenly effect all tourists and
operators. The industry has recommended
a sales tax but there are many challenges
to offer that. He suggested that would
be the fairest tax to guarantee that all
paid equally.
1859
MR. DINDINGER
Continued, not all businesses that
benefit from tourists are tourism
businesses. He reiterated that there is
not an easy collection opportunity. He
noted that he was optimistic that the
program would work. The expectation is
that the new business signed on will
cooperate in these concerns.
1904
REPRESENTATIVE
AUSTERMAN
Agreed that there is not a way to
equalize the tax base, which does not
mean that it is a good argument. The
industry has an obligation to the State
of Alaska to help maintain the
"industry". When everyone else in the
State is paying their fair share, the
industry should also be contributing.
1975
REPRESENTATIVE
FOSTER
Echoed his concerns. He emphasized that
the industry is not paying its share and
that is not fair to any Alaskan.
1990
CO-CHAIR THERRIAULT
Asked if there have been any other
"problems" identified by ATIA other than
the contractual date.
2006
MR. DINGDINER
Requested that the budget structure issue
be stipulated. Additionally,
clarification regarding the design,
control and management outlined in SB
107. It is appropriate that the State
have an overview of how the activities
and funds are being spent.
2038
CO-CHAIR THERRIAULT
Explained that there has been tension
between various segments of the industry.
He asked how that has played out at this
point.
2057
MS. CAMPBELL
Acknowledged that there are still people
that are skeptical of ATIA. However,
there are many people who are of "good
faith" that the process and the program
will work.
2082
REPRESENTATIVE J.
DAVIES
Requested a list of the current board
members and where they came from. He
noted that he shared concerns voiced by
Representative Austerman. He commented
on the State's role in the plan's
development. He commented that the State
should have a seat in the development of
this plan. The State is investing a fair
amount of money and should have a role in
the developing of the plan. He asked if
there could be a + place for both.
2140
MR. DINDINGER
Replied that there is a place for the
State. The State should identify goals
and objectives. The industry should then
be responsible for reaching those goals
and objectives based on the best
resources that ATIA can accumulate. The
State should establish the intent.
2176
MR. DINDINGER
Added that the State should determine
what they expect ATIA should accomplish
and then measure ATIA after to see if it
has been accomplished.
2181
REPRESENTATIVE J.
DAVIES
Suggested that step go one move further.
He asked if there wasn't a comparable
role for the State in not developing the
entire plan, but to play a role in that
development and implementation through a
representative or set of representatives.
2204
MS. CAMPBELL
Replied that this undertaking has always
been a cooperative effort. She
questioned if this was to be a
partnership or is it a case of the State
laying down the perimeters with ATIA
implementing them.
2237
REPRESENTATIVE J.
DAVIES
Suggested that it would be healthy to
have that discussion.
2249
REPRESENTATIVE
AUSTERMAN
Asked if the number of employees assigned
to handling all the inquiries had been
determined.
2263
MR. DINDINGER
Replied that responding to those
inquiries would be part of the markeing
process, which would be a continuation of
the ATIA marketing structure.
2276
CO-CHAIR THERRIAULT
Pointed out that he is a member of the
budget Subcommittee for the new
Department. He noted that the tourism
aspect would be considered during those
meetings. The Legislature will then be
better able to track what the State
expects.
2299
GINNY FAY, DIRECTOR,
ALSAKA DIVISION OF
TOURISM, DEPARTMENT
OF COMMUNITY &
ECONOMIC DEVELOPMENT
Distributed handouts to Committee
members. [Copy on File]. She noted that
she would speak to the Division's degree
of cooperation, budget and the intent of
the legislation and how to move forward
with the marketing plan. She pointed out
that ATIA has recently determined most of
their board.
TAPE CHANGE 00-34
SIDE 2
000
MS. FAY
Noted that ATIA is having a lot of
internal confusion regarding what their
marketing plan should look like. She
noted that her role has been to listen
and see where they are going. In January,
they went through a strategic planning
process to try to decide what they are
interested in doing. Ms. Fay noted that
the Division of Tourism and ATIA has been
having weekly teleconferences since the
beginning of January.
072
MS. FAY
Referenced the handout regarding the
State's goals.
? Serve as an effective economic
development tool for communities
throughout Alaska;
? Be community driven to allow each
community to decide whether tourism is
appropriate for their community;
? Preserve the cultural values and
quality of life for all Alaska
residents;
? Be environmentally and economically
sustainable in the long term;
? Provide a significant portion of
benefits to the local area where
visitation occurs.
? Increase resident satisfaction with
the visitor industry; reduce impacts
to residents and communities and
maintain the quality of life for
residents;
? Maintain or improve overall visitor
satisfaction.
111
MS. FAY
The Division has laid out what they are
doing, the main activities and the issues
raised when moving from the State funded
to the membership driven option issues.
She stressed that there are major public
policy issues when moving from State
funded programs. Ms. Fay noted that the
issue of the inquiry section is a good
example of this concern.
263
MS. FAY
Spoke to the development of the goals.
As a State agency, the issues are
different as the Division represents the
entire state and not just the specific
issues of the ATIA group. She emphasized
that the State agency has a much broader
constituency. She surmised that is why
there is an issue at this time. The
Division focuses on tourism mainly as an
economic development tool, and that is
why the State of Alaska has invested
money into it. The Division's
constituency includes all the residents
of the State. The Division fully
supports ATIA moving forward; however,
the Division also must consider why the
small community residents might not
become members.
354
MS. FAY
Continued, the Division is moving forward
with the same programs into next year,
and outlines the significant issues that
need to be addressed. Ms. Fay emphasized
that the State is not micromanaging ATIA
and that the expectations have been
broad.
395
MS. FAY
Argued that the budget has been a "sticky
point". The Division submitted a fiscal
note, which was not adopted. Ms. Fay
pointed out that the State assembled a
packet that identified where the
different marketing components were. The
issue is that the Division's total does
not add up to the $5 million dollar
fiscal note. There would need to be an
increment to reach that amount.
465
MS. FAY
Advised that last year's fiscal note
included $5.7 million dollars for the
FY01 budget. The Division does not spend
that amount of money for tourism
marketing. She added that there was
never an agreement to reallocate the
money being spent on tourism because
there are many activities involved such
as community planning and development and
business assistance.
542
MS. FAY
Addressed the terms of the intent of the
legislation. She stated that the
Division understands the legislation to
outline that the Division defines the
components and what needs to go into the
marketing plan and then it will be
implemented by ATIA. The Division should
have input as to what the goals should
be. She concluded that there are not a
many issues regarding what the components
should be for this year.
607
CO-CHAIR MULDER
Asked the amount of money spent on
tourism.
628
MS. FAY
Replied that $5 million dollars is not
spent on tourism marketing. At this
time, only $4.1 million dollars is spent
on marketing.
650
CO-CHAIR MULDER
Referenced the fiscal note and noted that
$5.3 million general fund dollars were
spent on tourism marketing last year.
678
CO-CHAIR MULDER
Recognized that the Division did disagree
with last year's fiscal note. He asked
why that had not been incorporated into
the budget.
699
MS. FAY
Explained that would have required an
increment. The Division presented a
status quo budget.
720
CO-CHAIR MULDER
Countered that the point is that a fiscal
note should indicate what is incorporated
and expected. He asked why that had not
been incorporated.
743
MS. FAY
Advised that had been an OMB and
Department decision. She offered to get
back to the Committee on that concern.
765
CO-CHAIR MULDER
Voiced his frustration regarding that
point. He asked if there had been any
staff reductions.
782
MS. FAY
Replied that this year was a transition
year and that there were not suppose to
be any reductions in staff. Next year,
there will be a reduction of three
employees.
806
CO-CHAIR THERRIAULT
Noted that would be worked out in
Subcommittee.
835
CO-CHAIR THERRIAULT
Added that there are many places in which
his staff would be checking from
consideration made from the old fiscal
notes. He added that full effort should
be made to use the fiscal notes as
indicated.
876
CO-CHAIR MULDER
Emphasized that Legislature is the policy
setting body for the State. He expected
that the Administration should carry
forth the policy intended within the
bill.
906
REPRESENTATIVE J.
DAVIES
Noted that these comments are mixing
"apples and oranges". Part of the
process of establishing State policy is
the work of the Administration. He
stressed that the Administration has a
significant role in the development of
that policy.
968
CO-CHAIR MULDER
Submitted that fiscal note concern is a
reflection of the overall attitude by
Administration regarding the
privatization process. He emphasized
that this was a problem and that they are
trying to force the Legislature to carry
out the policy.
1007
REPRESENTATIVE J.
DAVIES
Replied that there has been no "fact"
verifying that information. He submitted
that was a one liner in the fiscal note
and that there are other issues which
need to be addressed. Representative J.
Davies pointed out that the note has
caused a policy disagreement. He stated
that the fiscal note does not bind the
Administration for the following year.
Each proposal can be different each year.
There are significant issues that are yet
unresolved and have not been addressed by
the Legislature to date. He recommended
that there should be continuing
discussion regarding this concern.
1104
CO-CHAIR THERRIAULT
Inquired if there was a bar with getting
through the contractual agreements so
that a contract could be signed sometime
in April versus August.
1128
MS. FAY
Noted that the only issues bound in
statute is that the Division through
statute does not have the authority to
sign it. The Division is trying to be as
flexible as possible in terms of
accounting for the money that comes in.
It has been established in statute that
the matching dollars had to be available
for the contract to be signed. She
questioned if ATIA was ready for that
commitment. All the money must be on the
table.
1185
REPRESENTATIVE J.
DAVIES
Asked about the State sitting on the
Board. He asked for clarification
regarding the State involvement on the
Board of Directors.
1221
MS. FAY
Replied that when there is a contractual
arrangement with an entity, you can not
sit on that board of the person you are
contracting with. The State can not be a
member of that group.
1246
MS. FAY
Spoke to the fiscal note, pointing out
that the fiscal note binds for one year.
Additionally, it was planned that the
Division would ratchet down the State's
contribution. She questioned if the
Division would be reducing the State's
contribution raising it by $1 million
dollars this year.
1302
REPRESENTATIVE
AUSTERMAN
Stated that his subcommittee will be able
to determine the expectations of the
Division and the ATIA. He commented that
the Industry plans on meeting the
financial obligations of the match. He
questioned the inquiries. He asked if
the Division understood that realm and if
they were hesitant of putting that
language in the contract.
1389
MS. FAY
Replied that it was not fair to say that
the Division is hesitant but rather, it
is important to remember that this
information transmitted over the phone is
divided up on behalf of the entire state
and not representing a certain business
interest. She asked when those inquires
are transferred, will they be handled
fairly.
1480
MS. FAY
Continued identifying services that are
offered free of charge by the Division
and available to the communities.
1499
REPRESENTATIVE
AUSTERMAN
Understood the Division's concerns,
however, he asked if in discussion with
the industry, were they willing to
address that concern. He suggested that
the industry is in the position to do
that through contract. He did not
foresee that as a problem.
Representative Austerman asked what
policy would the Legislature need to set
to monitor these contracts. He inquired
if there were areas which the Division
handles now that the industry should not
take over.
1569
MS. FAY
Replied that the Division is concerned
with the interagency coordination,
community planning, and transportation
issues which should be items handled by
the Division if there continues to be
State money. Ms. Fay emphasized that
these are important roles for State
government. In terms of marketing, it is
not a question of what can or can not be
done, but rather an issue of how it is
done.
1670
MS. FAY
Added that these are public resources
that they should be working on behalf of
the residents of the State and not for
private interest groups.
1690
CO-CHAIR THERRIAULT
Voiced his appreciation for the testimony
of these two groups.
1700
Concluded the overview.
(TAPE CHANGE HFC 00 - 35, SIDE 1)
HOUSE BILL NO. 116
An Act relating to the Board of Agriculture and
Conservation, to the agricultural revolving loan fund,
to the disposal of state agricultural land, and to the
Alaska Natural Resource Conservation and Development
Board; and providing for an effective date.
REPRESENTATVE JEANNETTE JAMES noted that HB 116 was the
culmination of much intensive work by representatives from
the Legislature, the Administration, conservation boards and
the agriculture industry.
She stated that HB 116 would propose a new board, the Board
of Agriculture and Conservation, comprised of the
Commissioner of Department of Natural Resources plus seven
people involved in grass-roots commercial production
agriculture. The legislation would extend the life of the
Agriculture Revolving Loan Fund (ARLF) by instituting grass
roots fiscally conservation board that would have more
control over the Alaska Revolving Loan Fund. HB 116 would
make the ARLF interest rate competitive with other loaning
institutions which are currently drawing farmers away and
shortening the life and income of the ARLF. Representative
James noted that HB 116 would allow flexibility for the new
board to restructure loans in the event of a disaster, and
it would strengthen the emergency loan program.
Representative James added that the bill would assure that
the board would be consulted prior to any disposal of
agricultural land. The new board would take over statutory
duties of the existing Division of Agriculture and would
hire an executive director. She believed that would mean a
predictable continuity for that position. She urged the
Committee's support of the legislation.
Representative James acknowledged that the interest rate
issue had been addressed in a separate piece of legislation
that has already passed out of the House Finance Committee.
Representative James emphasized that it is imperative HB 166
accompany that legislation. She pointed out that all the
land sale decisions would be left in the bill.
Representative James spoke to the fiscal note. She pointed
out that the $9 thousand dollars travel component had been
determined by Department of Natural Resources. The
Department noted that in creating a new board, there
initially would need to be more meetings to establish
regulations. She explained the funding would come from the
ARLF. She suggested that the board and the Creamery
Corporation would offset some of those costs. The creamery
funds are not listed on the note.
Representative James stated that additionally, there exists
an assumption that the change would result in a reduction in
revenue from the interest rate. She assumed that interest
rate reductions would result in new loans. Currently, the
interest rates are higher than most other loan companies,
which keeps them from being competitive. She disagreed with
the idea of a change to revenues.
Co-Chair Therriault commented on the loss of revenue. He
noted that in the proposed committee substitute, the changes
would conform the loan provisions included in HB 116 with
the Committee's work done on Representative Harris' bill.
Co-Chair Mulder MOVED to adopt the work draft committee
substitute, 1-LS0407\T, Cook, 2/15/00, as the version of the
bill before the Committee. There being NO OBJECTION, it was
adopted.
Co-Chair Therriault referenced the fiscal note. He pointed
out that the sponsor statement indicates that the new board
would take over the duties and responsibilities of the
Division. He asked if it was the intent that the board
takes over "all the responsibilities" of that agency. He
advised that some of those obligations were specified in
statute.
Representative James replied that through the legislation,
the board would be making the decisions currently made by
the Director of Agriculture. She commented that if the
Department wanted to change the direction of the Division,
that would be their prerogative. The authority given by the
Division of Agriculture, which would be managed by a board
of directors, would be the hiring of a director as opposed
to the advising of a director.
Representative James commented that the board has a job to
do and a lot of decision making associated with performing
that work. The intent of the legislation is to keep the
direction going in a forward movement. The purpose of the
legislation is to place the regulation and policy power in
the hands of the Board of Agriculture. They would implement
policies through the statutory authority given to them.
Co-Chair Therriault spoke to the duties assigned to the
Division of Agriculture. He noted the "vested" duties of
each position. The Commissioner delegates certain duties to
the Division Director. He summarized how he envisioned the
legislation had been drafted. He noted that there are few
items that the Division is responsible for which have a
specific statutory directive. He asked what would happen to
those situations delegated by statute to the Commissioner.
Representative James understood that the Division of
Agriculture is under Department of Natural Resources. She
stated that the issues would instead be delegated to the
Division of Agriculture. That Division would be managed by
the Board of Agriculture with hired staff. She did not
foresee anything changing. She commented that she did not
know if there would be a need for a statutory change.
Representative Green did not foresee a Board of Agriculture
with any authority.
Representative Austerman voiced his appreciation on all the
work that Representative James had accomplished for
agriculture business development.
Representative J. Davies echoed his appreciation on that
issue. He voiced concern with the option of the board
hiring the director. He suggested that idea be revamped, as
the current process works well. He stressed that the effect
of the current practice has achieved the intent of the
proposed legislation. He questioned if expanding the
continuity of the director had been considered, because that
action would make it more difficult for a governor to remove
that director.
Representative James responded that the issue had been
considered regarding whether or not the removal of a board
member could occur at the "pleasure of the Governor or for
cause". She believed that the legislation would allow the
removal for cause. In the original version of the bill, in
order to accomplish that, the board would need to be
approved by the Legislature. She noted that at the request
of the Department, that clause was removed.
Representative James maintained that there is an issue
regarding the changing of directors and how that affects the
Board of Agriculture. She maintained that a change in
policy, which comes with a change in director, is difficult.
She stressed the need to provide a continuity of policy and
did not believe that the comparison with the Board of
Forestry was relevant.
Representative Grussendorf questioned if changing the
statutes would cause constitutional problems in the
Governor's power to appoint. Representative James responded
that there are some similarities to the Alaska Seafood
Marketing Institute Board (ASMI). She emphasized that the
concept is how to guarantee continuity of policy.
ROB WELLS, BOARD OF AGRICULUTRE AND CONSERVATION, MATSU,
(TESTIFIED VIA TELECONFERENCE) expressed concern with the
legislation. He acknowledged the intent to bring continuity
and policy between Administrations and to allow farmers to
control their own entity by managing the revolving loan
fund. He referred to an audit by the Legislative Budget and
Audit Committee (LBA) from two years ago. Mr. Wells noted
that the audit found that the Board is conservative
realizing that most of the Division functions are funded
from the ARLF. He noted, for the record, that there is
concern with the delegation of authority. He advised that
the sponsor statement notes that duties of the Division will
be transferred to the Board.
Mr. Wells added that the three-year appointments could be
problematic. He suggested that the current Governor would
appoint all members. There could be a change of 6 members
in one year, which would most likely result in that Board
choosing a new director. Such action would remove the
continuity that the sponsor is seeking.
Mr. Wells voiced concern with members who have loans, being
able to sit on the Board. He suggested such action could
warrant members being questioned through the Executive
Ethics Act. Mr. Wells agreed with Representative James that
the interest income raising and falling would affect
revenue. He voiced concern with the constitutional powers
of the Governor. A Board should control the State assets in
the revolving loan fund, an action still requiring an annual
budget. It would no longer need to be an inline provision.
Mr. Wells questioned, under the new structure, if an appeal
could be made. He reiterated his concern regarding how this
would function in today's world.
JAMES BALDWIN, ASSISTANT ATTORNEY GENERAL, DEPARTMENT OF
LAW, noted that he had reviewed the bill for the
Administration. He spoke to the concept of the legislation
placing an independent board over a line agency. He
commented that there is a constitutional argument to be
made, indicating such action should not be allowed to happen
under the current framework. In A.S., Article #3, it
clarifies that premise. There is one instance, that you
would be allowed to have a multi member board be at the head
of a principle department, but in that instance, the
Governor would be allowed to approve the Executive Director
hired by that board. It would not be legal to take a small
discrete section of a department and do that. Divisions are
not mentioned in most statutes, as they are an unassigned
function. Mr. Baldwin noted that an instance of making a
division director as an appointee of a division board is an
unusual concept, however, he noted that there have been
compromise situations.
Mr. Baldwin mentioned that if such provisions were in law,
it would be very difficult to remove that board member. He
mentioned that there could be problems with imbezzilment
and/or responsibility to State agencies. Mr. Baldwin
reiterated that it is difficult to enforce a for-clause
provision.
Mr. Baldwin continued, a "for-clause provision" recognizes
that certain individuals have property rights in office.
That type of board member does not have a salary but does
have a "term of office". That term is staggered which could
present a problem. He stressed that continuity is important
in government, but the problem arises when trying to
determine how to fix responsibility for governments actions.
The manner, in which the Alaska Constitution does it, is by
making the Governor responsible. The concern is that the
State of Alaska has "government by board" to run things
locally, but with statehood, the State opted that the
Governor be the responsible party for how government
operates. At present time, one or two people are
responsible. Mr. Baldwin stated that the proposed concept
would be erosion back to the old unworkable ways. He urged
that the Committee not adopt the legislation.
Mr. Baldwin spoke to the "conflict of interest" clause,
which is not that much different from what currently exists.
He referenced Page 2, Line 20, noting concern with the
wording "affects that lease, permit or loan". He commented
that language was "loose" and would cause problems.
Representative James responded to where the board would sit
in the "scheme" of things. She pointed out that those
involved in the agriculture industry fear that the ARLF is
not spending funds appropriately. "A government does not
shrink itself by nature".
Representative James advised that the Commissioner would
supervise the activity. She pointed out that all decision
making power of the Director would go into the Board of
Agriculture. That would result in taking the authority from
one person and putting it into a board. She noted that a
joint group of people would be implementing the intent of
the Commissioner.
Representative James indicated that the legislation would
enhance the agricultural activities of the State. She noted
that regulations and policies would be drafted according to
the statutes. Policies are looser and need to be treated
equally over time. She acknowledged that it would be an
experiment.
(TAPE CHANGE, HFC 00 - 35, SIDE 2).
Representative James emphasized that the allocation of
duties would be fairly distributed.
Co-Chair Therriault noted that HB 116 would be HELD in
Committee for further consideration.
ADJOURNMENT
The meeting was adjourned at 3:50 P.M.
H.F.C. 20 2/16/00
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