Legislature(2003 - 2004)
05/09/2004 11:13 AM 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
May 09, 2004
11:13 A.M.
TAPE HFC 04 - 110, Side A
TAPE HFC 04 - 110, Side B
TAPE HFC 04 - 111, Side A
TAPE HFC 04 - 111, Side B (faulty)
TAPE HFC 04 - 112, Side A
CALL TO ORDER
Co-Chair Williams called the House Finance Committee meeting
to order at 11:13 A.M.
MEMBERS PRESENT
Representative John Harris, Co-Chair
Representative Bill Williams, Co-Chair
Representative Kevin Meyer, Vice-Chair
Representative Mike Chenault
Representative Eric Croft
Representative Hugh Fate
Representative Richard Foster
Representative Mike Hawker
Representative Reggie Joule
Representative Carl Moses
Representative Bill Stoltze
MEMBERS ABSENT
None
ALSO PRESENT
Representative Max Gruenberg; Representative Mary Kapsner;
Representative Carl Morgan; Senator Lyda Green; Traci
Carpenter, Staff, Senator Lyda Green; Bryan Butcher,
Legislative Liaison, Alaska Housing Finance Corporation,
Department of Revenue, Anchorage; Paul Fuhs, Lobbyist,
Technical Expert to Representative Carl Moses, Anchorage;
Marc Antrim, Commissioner, Department of Corrections; Jerry
Burnett, Director, Administrative Services Division,
Department of Corrections; Greg Winegar, Director, Division
of Investments, Department of Community & Economic
Development; Linda Hall, Division of Insurance, Department
of Community and Economic Development; Jody Simpson, Member,
Mat Su Borough Assembly; Ray Gillespie, Lobbyist, Mat-Su
Borough; Vern Jones, Chief Procurement Officer, Department
of Administration; Jerry Rhinewald, Lobbyist, Blue Cross and
Blue Shield of Alaska, Juneau; Zack Warwick, Staff, Senator
Gene Therriault
PRESENT VIA TELECONFERENCE
Rick Hohnbaum, City Manager, City of Whittier; Dee Hubbard,
Citizen Activist, Sterling
SUMMARY
HB 562 An Act relating to the establishment of the
Interior Rivers Port Authority; and providing for
an effective date.
CS HB 562 (FIN) was reported out of Committee with
a "do pass" recommendation and with a new
indeterminate note by the Department of Community
& Economic Development.
CS SB 65(FIN) am
An Act relating to the qualifications of
correctional officers, parole officers, and
probation officers; authorizing the Department of
Corrections to enter into lease- purchase
agreements with municipalities for new or expanded
public correctional facilities in the Fairbanks
North Star Borough, the Matanuska-Susitna Borough,
Bethel, the Municipality of Anchorage, and the
City of Seward; relating to the development and
financing of privately operated correctional
facility space and services; authorizing the
Department of Corrections to enter into a lease-
purchase agreement with the City of Whittier for
the confinement and care of prisoners in privately
operated correctional facility space if the state
cannot provide the same level of services required
in state law or regulation for the same or less
cost; giving notice of and approving, and
authorizing the entry into and issuance of
certificates of participation for, the upgrade,
expansion, and replacement of certain jails in
Dillingham and Kodiak; and providing for an
effective date.
HCS CS SB 65 (FIN) was reported out of Committee
with "individual" recommendations and with fiscal
note #2 by the Department of Corrections.
CS SB 224(STA)
An Act relating to a minor operating a vehicle
after consuming alcohol, to a minor refusing to
submit to chemical tests, and to driving during
the 24 hours after being cited for one of those
offenses; and providing for an effective date.
CS SB 224 (STA) was SCHEDULED but not HEARD.
CS SB 232(FIN)
An Act relating to federal tax requirements for
and other provisions of the teachers' retirement
system, the public employees' retirement system,
and the judicial retirement system; removing
village public safety officers from the public
employees' retirement system; eliminating the
public employees' retirement system conditional
duty to refund contributions under $1,000 to
inactive employees; limiting service credit for
village public safety officer service in the
public employees' retirement system to five years;
and providing for an effective date.
CS SB 232 (FIN) was SCHEDULED but not HEARD.
CS SB 279(FIN)
An Act authorizing and relating to the issuance of
bonds by the Alaska Housing Finance Corporation
for safe and clean water and hygienic sewage
disposal facility capital projects and other
capital projects; providing for the repayment of
the bonds and bond costs; relating to the dividend
paid to the state by the Alaska Housing Finance
Corporation; and providing for an effective date.
CS SB 279 (FIN) was reported out of Committee with
"individual" recommendations and with zero note #3
by the Department of Revenue.
CS SB 302(FIN)
An Act relating to the authority to take oaths,
affirmations, and acknowledgments in the state, to
notarizations, to verifications, to
acknowledgments, to fees for issuing certificates
with the seal of the state affixed, and to
notaries public; and providing for an effective
date.
CS SB 302 (FIN) was SCHEDULED but not HEARD.
CS SB 311(JUD)(efd fld)
An Act providing for a special deposit for
workers' compensation insurers; relating to the
board of governors of the Alaska Insurance
Guaranty Association; stating the intent of the
legislature, and setting out limitations,
concerning the interpretation, construction, and
implementation of workers' compensation laws;
relating to restructuring the Alaska workers'
compensation system; eliminating the Alaska
Workers' Compensation Board; establishing a
division of workers' compensation within the
Department of Labor and Workforce Development and
assigning certain Alaska Workers' Compensation
Board functions to the division and the Department
of Labor and Workforce Development; establishing a
Workers' Compensation Appeals Commission;
assigning certain functions of the Alaska Workers'
Compensation Board to the Workers' Compensation
Appeals Commission and the Workers' Compensation
Hearings Board; relating to agreements that
discharge workers' compensation liability;
providing for hearing examiners and hearing panels
in workers' compensation proceedings; relating to
workers' compensation awards; relating to an
employer's failure to insure and keep insured or
provide security; providing for appeals from
compensation orders; relating to workers'
compensation proceedings; providing for supreme
court jurisdiction of appeals from the Workers'
Compensation Appeals Commission; providing for a
maximum amount for the cost-of-living adjustment
for workers' compensation benefits; providing for
administrative penalties for employers uninsured
or without adequate security for workers'
compensation; and relating to assigned risk pools
and insurers.
CS SB 311(JUD)(efd fld) was SCHEDULED but not
HEARD.
CS SB 357(FIN)
An Act relating to the regulation of insurance,
insurance licenses, qualifications of insurance
producers, surplus lines, fraud investigations,
electronic transactions, and compliance with
federal law and national standards; and providing
for an effective date.
HCS CS SB 357 (FIN) was reported out of Committee
with a "no recommendation", a Letter of Intent and
with zero note #1 by the Department of Community &
Economic Development.
CS SB 364(HES)(EFD FLD)
An Act relating to liability for expenses of
placement in certain mental health facilities; and
relating to the mental health treatment assistance
program.
CS SB 364 (FIN) was SCHEDULED but not HEARD.
CS SB 368(FIN) am
An Act relating to taxes on cigarettes and tobacco
products, to tax stamps on cigarettes, to
forfeiture of cigarettes and of property used in
the manufacture, transportation, or sale of
unstamped cigarettes, and to licenses and
licensees under the Cigarette Tax Act; and
providing for an effective date.
CS SB 368(FIN) am was SCHEDULED but not HEARD.
SB 387 An Act authorizing the making of certain
commercial fishing loans to eligible community
quota entities for the purchase of certain fishing
quota shares; and providing for an effective date.
SB 387am was reported out of Committee with a "do
pass" recommendation and with zero note #1 by the
Department of Community & Economic Development and
zero note #2 by the Department of Fish & Game.
SB 392 An Act relating to the expenses of investigation,
hearing, or public advocacy before the Regulatory
Commission of Alaska, to calculation of the
regulatory cost charge for public utilities and
pipeline carriers to include the Department of
Law's costs of its public advocacy function, to
inspection of certain books and records by the
attorney general when participating as a party in
a matter before the Regulatory Commission of
Alaska; and providing for an effective date.
SB 392 was SCHEDULED but not HEARD.
CS SB 395(FIN) am
An Act authorizing the Alaska Railroad Corporation
to extend its rail line to Fort Greeley, Alaska,
and relating to that extension; authorizing the
corporation to issue bonds to finance the cost of
the extension and necessary facilities and
equipment; relating to the Railroad Planning,
Platting, and Land Use Regulation Task Force; and
providing for an effective date.
CS SB 395 (FIN)am was HEARD and HELD in Committee
for further consideration.
CS FOR SENATE BILL NO. 65(FIN) am
An Act relating to the qualifications of correctional
officers, parole officers, and probation officers;
authorizing the Department of Corrections to enter into
lease- purchase agreements with municipalities for new
or expanded public correctional facilities in the
Fairbanks North Star Borough, the Matanuska-Susitna
Borough, Bethel, the Municipality of Anchorage, and the
City of Seward; relating to the development and
financing of privately operated correctional facility
space and services; authorizing the Department of
Corrections to enter into a lease-purchase agreement
with the City of Whittier for the confinement and care
of prisoners in privately operated correctional
facility space if the state cannot provide the same
level of services required in state law or regulation
for the same or less cost; giving notice of and
approving, and authorizing the entry into and issuance
of certificates of participation for, the upgrade,
expansion, and replacement of certain jails in
Dillingham and Kodiak; and providing for an effective
date.
SENATOR LYDA GREEN, SPONSOR, explained that the State
suffers from overcrowding in statewide prison facilities and
that Alaska needs a responsible solution to address these
serious issues, which arise from the overcrowding,
deteriorating physical plants and anticipated growth in
prisoner populations. SB 65 is the resulting legislation
from numerous conversations, revealing a need for compromise
in order to pass a comprehensive, long-term correctional
facility plan that adequately addresses public safety. The
bill would:
· Ensure local involvement in the process and
guarantees open and fair competition;
· Creates a level playing field between the public and
private sectors; and
· Requires the use of the State procurement process, a
feasibility study, and approval of facility designs
by the Commissioner of the Department of
Corrections.
Senator Green believed that the end result would be
consistency in facility design and operation. The bill
additionally, allows the State of Alaska to bring prisoners
back from Arizona, directing that money into the State
economy.
Senator Green provided a sectional analysis of the bill.
Co-Chair Harris inquired if the fiscal note cost included
bringing prisoners back from Arizona. Senator Green
acknowledged that it did and requested her staff to address
the concern. She advised that the Department of Public
Safety would be transporting the prisoners across the State.
She added that there would be an increase as numbers
continue to rise with the current trend continuing.
Co-Chair Harris pointed out that the bill indicates a "cost
not to exceed" $14,600 dollars per year, per bed in the
Fairbanks and Mat-Su areas. He asked the current yearly
costs for incarcerating the Arizona prisoners.
TRACI CARPENTER, STAFF, SENATOR LYDA GREEN, stated that the
current total amount is $14.154 million dollars for out of
state contracts. Senator Green interjected that the
calculations could be "no more than" as included in the
note. The costs have been calculated over the past 15
years. Ms. Carpenter added that the language indicates 25
years, but for purposes of calculation, the fiscal note
allows for 15 years. Senator Green added that at the end of
the 15-year period, the bed space could not exceed $14.6
million dollars.
Co-Chair Harris understood that the bill would allow listed
communities such as Seward and Anchorage and a federal
issue, Bethel, Mat-Su, and Fairbanks North Star Borough to
agree to a bond based upon a State contact to house beds.
Senator Green clarified that it would not only house those
beds but also construct the facility.
Co-Chair Harris noted that the bill provided a maximum and
"not to exceed" capital costs of $135 thousand dollars for
urban areas and $155 thousand dollars in Bethel. Senator
Green affirmed that information.
Co-Chair Harris questioned Senator Green's intent for the
Whittier concern. Senator Green responded that following
passage of the bill, the City of Whittier could begin
discussions with the State about bonding and continuing
contract service costs with the State by housing the
prisoners with continued care. The bill requires that it be
an open and competitive process according to the State
procurement codes. She pointed out the need for the
feasibility study.
Co-Chair Harris asked if the feasibility study indicated
that private prison care would be cheaper, would there be
language included to indicate that other facilities should
contract out. Senator Green explained that the language
deals only with the Whittier concern. Co-Chair Harris asked
if there could be a "mandate" on the Department to contract
with the private sector when costs could be lowered.
Senator Green did not know.
Representative Hawker referenced the Whittier proposal
feasibility study, asking if it would be conducted
internally or by an independent third party. Senator Green
understood that there would be an independent contractor
hired.
Co-Chair Harris asked if the referenced facility was the
Sutton Prison. Senator Green affirmed it is.
Representative Chenault noted that the indicated annual
lease costs shows the facility at the Anchorage Correctional
Center @ $1.76 million dollars and the Spring Creek Center @
$1.76 million dollars. Ms. Carpenter explained that those
numbers are based on actual best estimates of anticipated
costs and are less than what is allocated in the bill.
Representative Croft asked about the competitive bidding
process and if the RFP determined that the feasibility was
competitively bid. Senator Green responded that an RFP or
bid provides a feasibility study, first and intended that
any statewide contractors would be allowed to bid.
Representative Croft questioned if they "all" would be
competitive. Senator Green replied that in the process, a
competitive bid is required and that the language mirrors
that.
Representative Croft agreed that it was covered under the
feasibility study, however, pointed out language on Page 4,
Lines 11-12, indicating that the Department of Corrections
would be required to agree with the City of Whittier. There
is already an agreement between the City of Whittier with
companies wanting the work. He did not see any discretion
that after the study was done, it would be cheaper to do
anything but a predefined contract. Senator Green noted
language on Page 4, Line 23. Representative Croft
questioned the effect with the City of Whittier for design,
construction and operations of a facility. Senator Green
explained that the intent was for those projects only to
come and the others would be "grandfathered" in.
Representative Hawker mentioned that there were people
present who could testify on the bidding process the city
went through.
Representative Chenault asked if other municipalities had
been required to follow the State Procurement Code. Senator
Green affirmed, because they would be dealing directly with
the State on the design and approval of the facilities.
Representative Chenault reiterated concerns with the annual
lease costs. He pointed out that Fairbanks indicates
maximum-security costs while others mention only minimum-
security costs. Ms. Carpenter stated that under the bill,
the annual total lease cost for the City of Seward would be
$2.1 million dollars, however, the estimate is $1.76 million
dollars. She noted there is leeway for errors.
Representative Hawker referenced commentary in the fiscal
analysis, indicating no consideration of an independent
facility in Whittier and asked what that meant. Senator
Green did not know and requested that someone from the
Department respond.
Representative Fate asked where the projected numbers for
the Anchorage expansion originated. Senator Green explained
that was a separate federal issue and that those funds would
expand the Anchorage facility for the housing of federal
prisoners. That money would only be an authorization by the
State for use. She added that Governor Murkowski has
indicated that Alaska needs a large, central location
facility to house prisoners who stay from a medium to long
period of time. There needs to be an expansion in Bethel,
as during the process, the State currently transfers from
the overcrowded Bethel facility to the one in Anchorage.
The Fairbanks facility also has needs for additional beds
also, which could be balanced out by a large South-central
facility, designed for long-term use. It currently, houses
those prisoners being sent to Arizona, creating a ripple
effect without enough statewide prison beds.
Representative Joule noted that he was happy to see that
some of the contract jails had been included, however,
pointed out that the bill does not indicate "contract"
concerns. Senator Green responded that at present time,
there is ongoing litigation to address that concern.
Co-Chair Harris inquired if the bill covers the rural hub
areas. Senator Green responded that all areas with the
greatest needs are covered. She added that local government
must agree to accept the process of advocating and
willingness to assume the bonding burden on that there are
many communities not interested in doing that. SB 65 is
designed as a lease/purchase; the State will own the
facility and the community will be involved in design,
construction, maintenance and use of it. In response to Co-
Chair Harris, Senator Green added that is the same with the
Whittier facility and that the State would ultimately own
it.
JODY SIMPSON, MEMBER, MAT SU BOROUGH ASSEMBLY, voiced
support for SB 65. She noted that the Mat-Su Assembly
adopted a resolution supporting the concept of establishing
State-operated prisons for the following reasons:
· Pressing need to reduce overcrowding in Alaska
prisons;
· Bringing home prisoners currently housed out of
State;
· Providing needed construction and year-round jobs;
and that
· Maintaining prisoners in-state, allows them to be
closer to their families and culture, enhancing
rehabilitation.
Representative Stoltze mentioned the Valley Hospital and
other new triads. He asked their ability to provide secure
beds. Ms. Simpson did not understand the connection between
the two facilities.
RAY GILLESPIE, LOBBYIST, MAT SU BOROUGH, explained that
there had been extensive discussions with Triad regarding
the need for bed security in the event that the prison is
built. It is understood that it would be provided by the
Valley Hospital.
MARC ANTRIM, COMMISSIONER, DEPARTMENT OF CORRECTIONS,
indicated that the Department and the Governor support SB
65, allowing the Department of Corrections to address
longstanding capacity issues. At any given time, the
Department is at 100% capacity with 750+ out of State
prisoners. SB 65 provides a vehicle for the Administration
to address these concerns. The bill has a bonding component
built into it, so that the State can only fund projects,
which will not negatively affect credit rating.
Representative Stoltze inquired about the status of the
Correction Corporation from Florence. Commissioner Antrim
responded that the Department currently has an RFP for out-
of-state contract beds and that the Corrections Corporation
of America is the contractor that the Department is
currently working with.
Representative Stoltze asked if the Department anticipates a
large savings during the next round of RFP's. Mr. Antrim
advised the Department is attempting to determine that
through negotiations.
JERRY BURNETT, DIRECTOR, ADMINISTRATIVE SERVICES DIVISION,
DEPARTMENT OF CORRECTIONS, noted "worse fear" scenarios. He
thought it would be surprising if future prices were lower.
The State is currently in active negotiations on price.
Representative Hawker spoke to concerns of the long-term,
down-range costs. No one has challenged the need for the
facilities but he questioned the long-term deferred
maintenance costs. He inquired if the option had been
considered for the City of Whittier to cover the debt for
operations of the facility. Mr. Burnett said there has been
no cost analysis of that issue and that without one, he
would not know the answer. Commissioner Antrim interjected
that in either case, the State will see costs associated
with the facility.
RICK HOHNBAUM, (TESTIFIED VIA TELECONFERENCE), CITY MANAGER,
CITY OF WHITTIER, reaffirmed Whittier's interest and desire
to establish a city-owned and contractually operated private
prison. The economic benefits would be significant for that
small community. The community and the City Council have
continually supported the project. He noted that he had
been encouraged by the City to make sure that every
opportunity was taken to guarantee success. He spoke of the
bidding process and the selection of the firm partnership,
providing:
· Economic benefit to the City of Whittier,
· Financial benefit of cost savings for a private
prison for the State, and
· Social benefit of housing prisoners in the same
State as family with cultural connections for the
long-term benefit of prisoners and families of
prisoners.
TAPE HFC 04 - 110, Side B
Mr. Hohnbaum offered to answer further questions of the
Committee.
DEE HUBBARD, CITIZEN ACTIVIST (TESTIFIED VIA
TELECONFERENCE), STERLING, noted that she supports SB 65 as
it came over from the Senate, especially the inclusion of
the training requirements. She pointed out Representative
Croft's Amendment #3, which would delete Section 5. She
questioned Representative Hawker's Amendment #1, to Line 9,
and asked about a feasibility study extending over a 25-year
period. Ms. Hubbard asked why the Office of Management and
Budget (OMB) had been selected instead of the Department of
Corrections and the Department of Administration to fulfill
the contract. Ms. Hubbard continued addressing concerns of
the amendments. (Copies of All Amendments on File).
Ms. Hubbard identified concerns regarding use for the State
procurement code. She recommended that an audit for
contract monitoring compliance be placed in statute. She
added that there should be a use of fines for non-payment
and a specific list of "powers and non powers" granted to
contractors.
Representative Stoltze recommended that the State
procurement officer address Ms. Hubbard's questions.
Representative Hawker MOVED to ADOPT Amendment #1, #23-
LS0392\NA.8, Luckhaupt, 5/8/04. (Copy on File). Co-Chair
Williams OBJECTED for discussions purposes.
Representative Hawker explained that Amendment #1 clarifies
the Whittier component:
· The first section, Page 4, Line 4, mirrors language
for authorization of other municipal facilities with
intent to relieve overcrowding for the statewide
correctional facilities.
· Page 4, Line 9, language clarifies that when the
contract is signed, there should be a cost analysis
study defined before the State moves forward. An
outside study would be mandated.
· Page 4, Line 10 specifies that the study shall be
contracted in an out-source basis.
· Page 4, Line 12, language defines what the
feasibility study should determine and that it be
completed by October 1, 2004. Representative Hawker
requested to amend that section by changing the date
to January 1, 2005. There being NO OBJECTION, the
date was changed.
· Page 4, Line 15, provides language to guarantee that
comparisons are equal.
Senator Green agreed to most of the amendment except for the
feasibility completion date. She admitted that there are
many steps that need to be addressed before the completion
date; not knowing when the request will move forward would
make that difficult.
Representative Hawker asked if it would relieve Senator
Green's concerns to add language that it be complete within
six months of the proposed receipt from the city. Senator
Green replied that if everything was complete by 2006 that
would be the end date. She did not know how long it would
take and requested that the Department address that.
Co-Chair Harris asked if there had been a required timeframe
for the feasibility study related to other facilities.
Senator Green stated that none had been required and that
the requirement did address contracts and labor force
development. A feasibility study would be required if the
intent were to use anything by the State labor force in
order to build a facility. A method for outsourcing and
privatization could be provided. Therefore, that would make
a feasibility study a requirement. She admitted that she
did not know time constraints associated on the feasibility
studies.
Co-Chair Williams recommended that each community establish
the date. Representative Hawker mentioned concern with
providing a date certain. If the Department of Corrections
had everything in place by a certain time, they would have
to enter into a lease agreement. He thought that there
needed to be protection for communities and that the
completion date or the date certain could be eliminated. He
stressed that the community deserves certainty that there is
a level playing field.
Senator Green replied that there is "no certainty" in any of
the bill. Any city or group that comes to the commissioner
and indicates that their city was willing to go into debt,
there still would be no assurance that they would be given
permission. She stressed that there was no intent in the
bill to provide assurance. The bill is permissive with in-
dates for private & other facilities around the State.
Co-Chair Williams asked Representative Hawker if it would be
okay to make the appropriate changes in that area of the
amendment. Representative Hawker requested that the
Department of Corrections testify regarding any change.
Recess: 12:25 P.M.
Reconvene: 12:40 P.M.
Representative Hawker MOVED to change Amendment #1 by
deleting language on Lines 14 & 15: "The feasibility study
shall be completed by October 1, 2004". Additionally, it
would need to include changing the date on Page 4, Line 5,
from July 1, 2006 to July 1, 2007. Representative Croft
OBJECTED for further clarification. Following the
Department providing that information, Representative Croft
WITHDREW his OBJECTION. There being NO further OBJECTION,
Amendment #1 as amended was adopted.
Representative Hawker MOVED to WITHDRAW Amendment #2, #23-
LS0392\N.A.10, Luckhaupt, 5/8/04. (Copy on File). He noted
that #2 would be replaced by Amendment #5. There being NO
OBJECTION, Amendment #2 was withdrawn.
Representative Croft MOVED to ADOPT Amendment #3. (Copy on
File). Co-Chair Williams OBJECTED.
Representative Croft explained the amendment. He emphasized
that the privatization of the prison system bill has been
around for many years. He recounted the numerous
communities who have attempted to get that proposal and how
devastating it was to each of them. Representative Croft
objected to the litany of "sole source projects". There has
never been a clean proposal presented to the Committee. The
proposals are always sole source, with heavy money deals
directed to one contractor. It is always prearranged and
never clean. He believed that the legislation would result
in sole sourcing being prearranged with political pressure
through construction and continued operations.
Representative Croft warned that the State would see someone
indicted and likely sent to prison over the proposed series.
He stressed that he "hates" this type of proposal because of
what it does to the integrity of the Legislature. He
disliked the "high money and motives money and the
legislators". These proposals historically have left a
trail of damaged communities. Representative Croft warned
that Whittier would regret it at some point.
Senator Green interjected that the amendment language would
return the legislation to the original bill. She pointed
out that the Whittier language had been added with great
deliberation. All the language is "futuristic" and will
result in a lease-purchase owned by the State. She
acknowledged it would be a policy call.
Representative Stoltze commented that Amendment #3 is
important and requested an analysis. He inquired if there
had been an overview of the contract between the City of
Whittier and that contracting group.
VERN JONES, CHIEF PROCUREMENT OFFICER, DEPARTMENT OF
ADMINISTRATION, indicated that the Department had not read
the contract, but had read the City of Whittier's RFP. The
procurement process for the City of Whittier did not comply
with the State's contract process. Whittier would be
subjected to their own ordinances. Without Amendment #3,
the bill requires the City of Whittier procurement process
to comply with the State's. He offered to provide
technicalities regarding negotiation costs.
Representative Hawker acknowledged that the bill could
resolve concerns raised by Representative Croft. He said he
opposed Amendment #3.
A roll call vote was taken on the motion.
IN FAVOR: Croft, Stoltze
OPPOSED: Fate, Foster, Hawker, Joule, Meyer, Moses,
Chenalut, Williams, Harris
The MOTION FAILED (2-9).
Representative Stoltze MOVED to ADOPT Amendment #4, #23-
LS0392\NA.4, Luckhaupt, 5/4/04. (Copy on File). Co-Chair
Williams OBJECTED.
Representative Stoltze advised that the sponsor submitted
the amendment in order to provide clean up language.
Senator Green said it was obvious that a provision,
addressing the qualification concerns of the correctional
officers, needed language for all the hard beds. The
amendment would add new language highlighting the intent.
Co-Chair Williams WITHDREW his OBJECTION. There being No
further OBJECTION, Amendment #4 was adopted.
Representative Hawker WITHDREW Amendment #5, #23-
LS0392\NA.11, Luckhaupt, 5/09/04. (Copy on File).
Representative Croft MOVED to ADOPT Amendment #6, #23-
LSO392,NA.6, Luckhaupt, 5/07/04. (Copy on File). Co-Chair
Williams OBJECTED.
Representative Croft explained that the amendment would add
a "small amount of competitive nature" to the proposal. He
reiterated his concerns regarding sole sourcing
"privatization", creating a combination for the worst
aspects of government and business.
Senator Green noted that she did not object to the
amendment. Co-Chair Williams WITHDREW his OBJECTION.
Representative Fate questioned the powers of the
Department's commissioner to select the facility site.
Representative Croft responded that language was included in
the section about the Whittier proposal and intended to be a
contemplated site. He stated that the key aspect was that
it be open for bid on a non-preferential basis and that it
was included in the authorization list with the City of
Whittier.
Representative Stoltze asked if the proposed amendment would
improve the Department's "comfort level with the process".
Mr. Jones responded that the language of the amendment
requires the competitive process and that made him more
comfortable.
TAPE HFC 04 - 111, Side A
Representative Hawker thought the bill delineated a "forward
looking process" and provides an alignment with State
statute. He added that the amendment serves no function.
Co-Chair Harris pointed out that the language of the
amendment provides a mandatory "shall". He commented that
the Department of Corrections commissioner had no business
selecting the site. The determination should be left to the
party given the proposal.
Representative Hawker advised that there is language in the
bill that the commissioner "shall" approve the design of the
facility.
Representative Stoltze maintained that the commissioner, the
Department and the State should have interest in the site
selection process. The placement of prisons and the manner
in which they interface with those communities is relevant.
The amendment would provide good benefit.
Co-Chair Harris took issue with the possibility of there
being opposition between the State and the public regarding
the chosen area. He believed that the language should not
be included, as the public should determine that policy.
A roll call vote was taken on the motion to adopt the
amendment.
IN FAVOR: Stoltze, Croft
OPPOSED: Fate, Foster, Hawker, Joule, Meyer, Moses,
Chenalut, Harris, Williams
The MOTION FAILED (2-9).
Representative Foster MOVED to report HCS CS SB 65 (FIN) out
of Committee with individual recommendations and with the
accompanying fiscal note.
Representative Croft OBJECTED.
Representative Croft referred to all previous statewide
lawsuits resulting from such a choice.
Co-Chair Harris objected to comments voiced by
Representative Croft. He claimed that the bill as currently
written makes it difficult for any Administration to move
forward. He added that most of the bill is good.
Representative Hawker agreed that the bill was good,
suggesting that most concerns had been thoughtfully
advocated throughout the bill.
A roll call vote was taken on the motion to move the bill
from Committee.
IN FAVOR: Foster, Hawker, Joule, Meyer, Stoltze,
Chenault, Fate, Williams, Harris
OPPOSED: Moses, Croft
The MOTION PASSED (9-2).
HCS CS SB 65 (FIN) was reported out of Committee with
"individual" recommendations and with fiscal note #2 by the
Department of Corrections.
HOUSE BILL NO. 562
An Act relating to the establishment of the Interior
Rivers Port Authority; and providing for an effective
date.
Co-Chair Harris MOVED to ADOPT work draft version #23-
LS1951\Q, Utermohle, 5/6/04, as the version of the bill
before the Committee. (Copy on File). There being NO
OBJECTION, it was adopted.
CARL MORGAN, SPONSOR, explained that the legislation would
create an Interior Rivers Port Authority, which would
regionalize planning for the small, unorganized communities
in rural Alaska. The Port Authority would include 25
communities. He added that landowners of the region with an
eleven-member board would represent the Authority with six
living physically in the areas and then three public members
including the commissioners of the Department of
Transportation & Public Facilities and the Department of
Community & Economic Development.
Representative Morgan explained that the Port Authority
would have power to accept private, municipal, State, and
federal funds, issue tax exempt revenue bonds and enter into
non-lease acquisitions. It is not intended that the
Authority will create a financial obligation to the State.
Representative Morgan acknowledged skepticism with the new
legislation. He listed the many supporters and pointed out
the main opposition comes from concerns of eminent domain.
Native tribes in Alaska do not own land, whether or not, the
Native and Village Corporations own the land.
Representative Morgan commented that Native Corporations in
the proposed areas support the bill.
Representative Fate noted support for the concept. He
questioned the eminent power domain and safeguards
associated with other allotment areas.
PAUL FUHS, LOBBYIST & TECHNICAL EXPERT TO SENATOR MORGAN,
ANCHORAGE, explained that the only property that could be
taken would have to be within the boundaries of the
authority itself. The language would be like that of the
Department of Transportation & Public Facilities, indicating
that it is for a public purpose. Native corporations are
primarily the private landowners and they have accepted the
proposal. On a regional level, they would be giving up a
portion of autoimmunity. He commented that it has been
specifically noted that it could only be within the port
authority boundaries.
Responding to Representative Fate, Mr. Fuhs explained that
he did not believe it could be within the pipeline corridor.
Regardless, there is no way they could use those properties
for any public purpose.
Representative Hawker MOVED to ADOPT Amendment #1, as
requested by Senator Morgan. (Copy on File). Co-Chair
Williams OBJECTED.
Mr. Fuhs advised that Amendment #1 would bring the bonding
authority in-line with Alaska Development Export Authority
(ADEA) and Alaska Energy Authority (AEA) in the amount of
ten million dollars.
Co-Chair Harris inquired if it would affect other natural
gas projects along the coast. Mr. Fuhs stated that the
"energy is contemplated for that area only" and other than
that, it would be a different issue.
Representative Fate reminded members that the new gas
pipeline would come across the Yukon area, and questioned if
$10 million would be sufficient. Mr. Fuhs admitted that it
probably would not be enough and that they would likely have
to come for further authorization.
Representative Foster MOVED to report CS HB 562 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 562 (FIN) was reported out of Committee with a "do
pass" recommendation and with a new indeterminate note by
the Department of Community & Economic Development.
SENATE BILL NO. 387
An Act authorizing the making of certain commercial
fishing loans to eligible community quota entities for
the purchase of certain fishing quota shares; and
providing for an effective date.
GREG WINEGAR, DIRECTOR, DIVISION OF INVESTMENTS, DEPARTMENT
OF COMMUNITY & ECONOMIC DEVELOPMENT, stated that the
legislation would authorize loans to federally designated
community quota entities authorized by federal regulation to
purchase and hold certain fishing quota shares and to lease
the resultant individual fishing quota shares to community
residents.
The federal government is currently proposing federal
regulations that if adopted, would amend the federal
individual fishing quota (IFQ) program. The definition of
an eligible quota shareholder would be revised to allow
specific communities in the Gulf of Alaska to purchase quota
shares for halibut and sablefish fisheries. The community
quota entity may then hold the shares for lease to their
community residents. Quota shares and loans for their
purchase under the Commercial Fishing Loan Act are presently
limited to individuals.
Mr. Winegar noted that the purpose of the amendment was to
improve the economic viability of those communities through
local ownership of fishing privileges. Since the initial
allocation of quota shares, all but two of the 42 eligible
communities have experienced a significant decline in the
number of quota shares held by residents. The bill would
provide a financing mechanism that could be used by the
communities to help reverse the trend.
Co-Chair Harris MOVED to repot SB 387am out of Committee
with individual recommendations and with the accompanying
fiscal note. There being NO OBJECTION, it was so ordered.
SB 387am was reported out of Committee with a "do pass"
recommendation and with zero note #1 by the Department of
Community & Economic Development and zero note #2 by the
Department of Fish & Game.
CS FOR SENATE BILL NO. 279(FIN)
An Act authorizing and relating to the issuance of
bonds by the Alaska Housing Finance Corporation for
safe and clean water and hygienic sewage disposal
facility capital projects and other capital projects;
providing for the repayment of the bonds and bond
costs; relating to the dividend paid to the state by
the Alaska Housing Finance Corporation; and providing
for an effective date.
BRYAN BUTCHER, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION (AHFC), DEPARTMENT OF REVENUE, ANCHORAGE,
offered to answer questions from the Committee.
Co-Chair Harris MOVED to report CS SB 279 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. Co-Chair Williams OBJECTED.
Following a brief at-ease, Co-Chair Williams WITHDREW his
OBJECTION.
Representative Hawker acknowledged that the village safe
water projects are needed, however, he voiced concern that
the bill would deny general fund money for the future. He
stated that until the entire State is behind a long-term
fiscal policy change, money should not be added to special
project concerns. Representative Hawker OBJECTED to moving
the bill from Committee.
Mr. Butcher pointed out that AHFC's Chief Executive Officer
(CEO), Mr. Dan Fauske, had recommended that the State bond
for village safe water projects and that traditionally,
those projects were paid through dividends. This year, the
Governor decided on a different proposal.
Representative Hawker MAINTAINED his OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Meyer, Chenault, Croft, Fate, Foster, Harris,
Williams
OPPOSED: Stoltze, Hawker
Representative Moses and Representative Joule were not
present for the vote.
The MOTION PASSED (7-2).
CS SB 279 (FIN) was reported out of Committee with
"individual" recommendations and with a zero note by the
Department of Revenue.
CS FOR SENATE BILL NO. 357(FIN)
An Act relating to the regulation of insurance,
insurance licenses, qualifications of insurance
producers, surplus lines, fraud investigations,
electronic transactions, and compliance with federal
law and national standards; and providing for an
effective date.
LINDA HALL, DIVISION OF INSURANCE, DEPARTMENT OF COMMUNITY
AND ECONOMIC DEVELOPMENT, explained that the legislation
would ensure that Alaska statutes are consistent with
federal law (provisions mandated under the Gramm-Leach-
Bliley Act) and with model acts and standards of the
National Association of Insurance Commissioners (NAIC). The
NAIC accreditation team suggested some of the proposed
changes addressing financial oversight of insurance
companies when Alaska was reviewed for a renewal of
accredited status. Some of the proposed changes relate to
updating procedures in order to better reflect current
insurance environment and enabling electronic communications
between the Division of Insurance and the public, industry
and other regulators. Two key elements of the Division of
Insurance are:
· Protecting the consumer
· Enhancing the insurance business environment
Ms. Hall provided a sectional analysis of the bill.
TAPE HFC 04 - 111, Side B (faulty tape - changed)
TAPE HFC 04 - 112, Side A
Ms. Hall continued with the analysis.
Representative Fate inquired if automobile warranties would
be considered in the same manner.
Ms. Hall responded that it would depend on who wrote the
automobile coverage. If the federal government regulates
the company, the State cannot preempt that. There is little
local control on risk groups.
Representative Hawker inquired if there could be testimony
heard from the industry. Co-Chair Williams pointed out that
there were no representatives present from that group.
Representative Hawker asked if the industry supported the
bill. Ms. Hall replied that to date, there had been no
testimony either way on the proposed changes. The changes
will only "standardize" what is currently done by the
Division. Representative Hawker was "astounded" that there
had been no testimony received by the industry.
Co-Chair Williams MOVED to ADOPT Amendment #1, #23-
LS1684\Q.4, Bullock, 5/5/04. (Copy on File). Vice-Chair
Meyer OBJECTED.
JERRY RHINEWALD, LOBBYIST, BLUE CROSS AND BLUE SHIELD OF
ALASKA, JUNEAU, noted that Blue Cross was in the process of
moving from a non-profit company to a per profit company and
currently, is under scrutiny by Alaska's Division of
Insurance. There is concern that Section 18 could create
problems in the transition process that would change the
"rules of the game". He did not believe it would affect the
regulatory environment. Mr. Rhinewald requested the
Committee's consideration of the amendment. Ms. Hall noted
that the Division had no objection to the amendment.
Vice Chair Meyer WITHDREW his OBJECTION. There being NO
further OBJECTION, Amendment #1 was adopted.
Co-Chair Williams pointed out a Letter of Intent. (Copy on
File). Mr. Rhinewald commented that the letter would make
the Alaska market more attractive to national insurance
companies. The Letter of Intent would continue dialogue on
ways to improve making the Alaska market more attractive
without compromising the integrity of the insurance program
or consumer protection.
Co-Chair Williams MOVED to ADOPT the Letter of Intent.
There being NO OBJECTION, it was adopted.
Representative Croft MOVED to ADOPT Amendment #2, #23-
LS1684\Q.7, Craver, 5/9/04. (Copy on File). Co-Chair
Williams OBJECTED.
Representative Croft spoke to the amendment and concerns
with HB 311, replacing Administration needs and placing them
into the worker's compensation. He suggested that could
provide "insurance" for the Commissioner of Insurance.
Co-Chair Harris stated support for Amendment #2, noting that
it is important to get the parts of HB 311 that are non
controversial in place.
Ms. Hall noted that she had authored that language in HB 311
and that she would be "hesitant to remove portions of that
bill", putting them into SB 357.
Co-Chair Williams acknowledged that he also did not accept
the amendment language. If the Committee wants to take-up
HB 311, it should address that bill separately.
Representative Croft understood that the intent to continue
was to provide for a debate. Co-Chair Williams disagreed,
stating that the Committee should work on HB 311 if that is
the concern. Co-Chair Harris reiterated support for the
"intent of the amendment", but indicated that he would vote
with Co-Chair Williams. He requested that policy remain
consistent with bills coming before the Committee.
A roll call vote was taken on the motion.
IN FAVOR: Croft
OPPOSED: Meyer, Stoltze, Chenault, Fate, Foster,
Hawker, Williams, Harris
Representative Joule and Representative Moses were not
present for the vote.
The MOTION FAILED (1-8).
Co-Chair Williams advised that Amendment #3, #23-LS1684\Q.6,
Bullock, 5/8/04 had been WITHDRAWN. (Copy on File).
Representative Foster MOVED to report HCS CS SB 357 (FIN)
out of Committee with individual recommendations and with
the accompanying fiscal note. There being NO OBJECTION, it
was so ordered.
HCS CS SB 357 (FIN) was reported out of Committee with a "no
recommendation", a Letter of Intent and zero note #1 by the
Department of Community & Economic Development.
CS FOR SENATE BILL NO. 279(FIN)
An Act authorizing and relating to the issuance of
bonds by the Alaska Housing Finance Corporation for
safe and clean water and hygienic sewage disposal
facility capital projects and other capital projects;
providing for the repayment of the bonds and bond
costs; relating to the dividend paid to the state by
the Alaska Housing Finance Corporation; and providing
for an effective date.
Representative Croft MOVED to RESCIND previous action taken
on failing to advance CS SB 279 (FIN). There being NO
OBJECTION, the bill was before the Committee.
Representative Croft MOVED to ADOPT Amendment #1. Co-Chair
Harris OBJECTED.
Representative Croft stated that the amendment addressed an
important aspect of the Anchorage Convention Center project.
Co-Chair Harris stated that the amount of the Alaska Housing
Finance Corporation (AHFC) dividend authorized for the year
was $45 million dollars.
BRYAN BUTCHER, LEGISLATIVE LIAISON, ALASKA HOUSING FINANCE
CORPORATION, DEPARTMENT OF REVENUE, ANCHORAGE, interjected
that $103 million dollars was the amount this year and that
the proposed number would come from that available amount.
Co-Chair Harris inquired if the amount requested would come
from that $5 million dollars. He asked if it would be
authorized to move to the Municipality of Anchorage if the
voters approved the Convention Center or if that amount
would instead be used to purchase a parking garage.
Representative Croft explained that the funds would be used
to pay a portion of the difference in the price of the
parking garage. Vice-Chair Meyer pointed out that if the
Convention Center is approved, that there are two lots
currently owned by the State, which could be used for
parking. He added that the developer is proposing to build
a new parking garage. If the voters do not approve the
Convention Center, the request will go away.
Co-Chair Harris requested to AMEND Amendment #1. He
referenced the Harborview Developmental Center, which has
not been used for a long time. The City needs about $1.5
million dollars to take care of that building. He thought
SB 279 could be a vehicle to accommodate that request. Co-
Chair Harris MOVED that the requested amount of $1.5 million
dollars for the purchase of that facility be placed into
Amendment #1. Co-Chair Williams OBJECTED.
Co-Chair Harris countered that he would remove his request
if Representative Croft was willing to remove Amendment #1.
Representative Croft WITHDREW Amendment #1.
Representative Foster MOVED to report CS SB 279 (FIN) out of
Committee. Representative Hawker OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Meyer, Croft, Foster, Fate, Chenault, Harris,
Williams
OPPOSED: Hawker, Stoltze
Representative Joule and Representative Moses were not
present for the vote.
The MOTION PASSED (7-2).
CS SB 279 (FIN) was reported out of Committee with
"individual" recommendations and with zero note #3 by the
Department of Revenue.
CS FOR SENATE BILL NO. 395(FIN) am
An Act authorizing the Alaska Railroad Corporation to
extend its rail line to Fort Greeley, Alaska, and
relating to that extension; authorizing the corporation
to issue bonds to finance the cost of the extension and
necessary facilities and equipment; relating to the
Railroad Planning, Platting, and Land Use Regulation
Task Force; and providing for an effective date.
ZACK WARWICK, STAFF, SENATOR GENE THERRIAULT, stated that SB
395 contains two provisions relating to the Alaska Railroad
Corporation and its role as a State transportation and
economic development agent.
SB 395 authorizes the Railroad to issue up to $500 mil1ion
dollars in tax-free revenue bonds to pay for extending a
rail line to Delta Junction and Ft. Greeley. The proposal
would have the bonds secured through federal funds from the
United States Department of Defense. Depending upon
negotiations with the Department, the Railroad could issue
the bonds as early as 2005.
Mr. Warwick noted that SB 395 also addresses a recent Alaska
Supreme Court decision that has called into question the
Railroad's exemption from local planning and zoning
ordinances provided in AS 42.40. The decision jeopardizes a
mode of operation that has been in place since the Railroad
was transferred to the State, 18 years ago. The bill
creates a task force to provide recommendations to the
Legislature in 2005 on whether and to what extent municipal
planning, platting and land use regu1ations should apply to
interests in land owned by the Alaska Railroad. The Alaska
Railroad Corporation is both an interstate common carrier
and an instrumentality of the State of A1aska. Its mission
is to provide transportation services to residents,
businesses, visitors and military installations in the
State, and foster and promote long term economic growth and
development, particularly of the State's land and natural
resources. The Railroad's ability to operate safely,
efficiently and effectively is due in great part to the
singular nature of the corridor. The Railroad's current
track alignment passes through 13 recognized municipal
governments between Seward and the North Pole.
Without protection, local communities could separately
dictate planning and zoning restrictions that would
negatively impact the Railroad's ability to offer safe,
efficient, economical and reliable service to its freight
and passenger customers. Restrictions would increase the
cost of operations, impact train movements, customer
schedules, contract commitments, and the amount of business
the Railroad could accommodate each year due to decreased or
varied hours of operation. In situations where the Railroad
and a municipality are in agreement on a planning and zoning
issue, an individual or environmental group could file a
lawsuit seeking to overturn the municipality's decision,
which could further delay a project.
Mr. Warwick concluded that there are other adverse impacts
that could arise if the Railroad was subject to local
planning and zoning. Inconsistent regulation would decrease
the value of the State's considerable investment in
purchasing the Railroad. It could unreasonably delay and
add significant cost to the Railroad's efforts to improve
the transportation infrastructure of the State through
upgrades of existing track and facilities.
While federal law protects interstate commerce from some of
restrictions, the issue after the Supreme Court decision
invites litigation, which is not only costly to the Railroad
and municipalities, but could result in inconsistent
holdings among various jurisdictions. Mr. Warwick claimed
that the Railroad is an essential part of the State's
transportation network and serves an important State mission
and that the State should be the entity that controls the
Railroad's use land, not the 13 Railbelt municipalities and
boroughs.
Representative Foster pointed out that the earlier bill had
previously received some "no" votes, resulting from the
Percentage of Market Value (POMV) vote. He asked if new
rules were being established.
Co-Chair Harris MOVED to report CS SB 396 (FIN)am out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative Foster OBJECTED.
A roll call vote was taken on the motion.
IN FAVOR: Chenault, Hawker, Meyer, Williams, Harris
OPPOSED: Stoltze, Foster
Representative Moses, Representative Croft, Representative
Joule and Representative Fate were not present for the vote.
The MOTION FAILED (5-2).
Representative Hawker interjected that the proposed
legislation was a revenue bond and that it would not affect
the general fund.
SB 395 was HELD in Committee.
ADJOURNMENT
The meeting was adjourned at 2:10 P.M.
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