Legislature(2021 - 2022)ADAMS 519
03/18/2021 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB69 || HB71 | |
| Presentation: Reverse Sweep - Office of Budget and Management | |
| HB128 | |
| HB76 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 69 | TELECONFERENCED | |
| += | HB 71 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| *+ | HB 128 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 76 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
March 18, 2021
1:32 p.m.
1:32:43 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:32 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Kelly Merrick, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Bryce Edgmon
Representative DeLena Johnson via Teleconference
Representative Andy Josephson
Representative Bart LeBon
Representative Sara Rasmussen
Representative Steve Thompson
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Neil Steininger, Director, Office of Management and Budget,
Office of the Governor; Representative Zach Fields,
Sponsor; Tristan Walsh, Staff, Representative Zack Fields.
PRESENT VIA TELECONFERENCE
Colleen Glover, Director, Tax Division, Department of
Revenue; Jason Motyka, Owner, 49th State Brewing Company,
Anchorage; Jamie Klaes, Marketing Director, Alaska EXCEL,
Anchorage; Michelle DeWitt, Director, Bethel Community
Service Foundation, Bethel; Andrew Dunmmire, Attorney,
Legislative Legal Services; Megan Wallace, Director,
Legislative Legal Services, Alaska State Legislature.
SUMMARY
HB 69 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 69 was HEARD and HELD in committee for further
consideration.
HB 71 APPROP: MENTAL HEALTH BUDGET
HB 71 was HEARD and HELD in committee for further
consideration.
HB 76 EXTENDING COVID 19 DISASTER EMERGENCY
HB 76 was HEARD and HELD in committee for further
consideration. [Note: meeting was recessed until
the following afternoon where the bill hearing
continued. See separate minutes dated 3/19/21 for
detail.]
HB 128 USE OF INTERNET FOR CHARITABLE GAMING
HB 128 was HEARD and HELD in committee for
further consideration.
PRESENTATION: REVERSE SWEEP - OFFICE OF BUDGET AND
MANAGEMENT
Co-Chair Foster reviewed the agenda for the meeting.
HOUSE BILL NO. 69
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; amending
appropriations; making reappropriations; making
supplemental appropriations; making appropriations
under art. IX, sec. 17(c), Constitution of the State
of Alaska, from the constitutional budget reserve
fund; and providing for an effective date."
HOUSE BILL NO. 71
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; making
supplemental appropriations; and providing for an
effective date."
1:34:09 PM
^PRESENTATION: REVERSE SWEEP - OFFICE OF BUDGET AND
MANAGEMENT
1:34:13 PM
Co-Chair Foster hoped the presentation would help to answer
some common questions about the reverse sweep and how it
functioned. He advised the presenter to keep the
presentation brief, as there were two bills that would also
be addressed in the meeting.
NEIL STEININGER, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET,
OFFICE OF THE GOVERNOR, introduced the PowerPoint
presentation: "Constitutional Budget Reserve Sweep and
Reverse Sweep" (copy on file). Turning to slide 2 He
indicated that the Alaska Constitution addressed three
distinct funds: The Alaska Permanent Fund (PF), (Article 9,
Section 15); the Constitutional Budget Reserve (CBR),
(Article 9, Section 17); and the general fund (GF). Each of
the funds had different restrictions. Specific revenues
were deposited into the PF and only the income of the fund
could be appropriated. The Constitutional Budget Reserve
Fund included money received from the termination of
administrative and judicial proceedings involving mineral
revenues. He reported that the concept of the sweep came
from the CBR. The general fund contained money received
from taxes, fees, and other sources not constitutionally
directed to the CBR or the PF including the various
designated general fund accounts used in the state budget
system.
Co-Chair Foster announced Representative Edgmon and
Representative Wool had joined the meeting.
Mr. Steininger turned to slide 3 which was a reproduction
of Article 9, Section 17 regarding the Constitutional
Budget Reserve Fund (CBR). It was added to the constitution
in 1990 via an amendment. Subsection (d) pertained to the
sweep and the reverse sweep and outlined the repayment
requirement. He read the subsection:
Repayment requirement "If an appropriation is made
from the budget reserve fund, until the amount
appropriated is repaid, the amount of money in the
general fund available for appropriation at the end of
each succeeding fiscal year shall be deposited in the
budget reserve fund. The legislature shall implement
this subsection by law."
Mr. Steininger reported that over the previous decade, the
state had drawn a considerable amount from the CBR in order
to meet state needs and fill a structural deficit. As a
result, the state owed a considerable amount to the CBR
which triggered the repayment requirement on an annual
basis.
1:37:23 PM
Mr. Steininger continued to slide 4 to review the repayment
requirement commonly known as the "sweep." Between FY 95
and FY 10 the requirement was also triggered. It peaked at
a debt of $5.2 billion in FY 05 which was fully repaid by
FY 10. The state's current debt began in FY 15. Presently,
the state owned more than $11 billion to the CBR.
Mr. Steininger reviewed the mechanics of the sweep's
execution. The Sweep was effective at midnight on June 30th
of each year. Any balance in an account on the night of
June 30th would be swept to the CBR. It was reversed
through the reverse sweep pending a three-quarter vote of
the legislature and a signature of the governor in an
appropriation bill. The reversal occurred at 12:01 a.m. on
the following day. He explained that because the state's
accounting systems did not close exactly at midnight, the
state had 2 months to do clean-up. It ensured that all
accounting transactions were in the right place and were
made to the correct funds before closing out the fiscal
year on August 31st on an annual basis.
Mr. Steininger continued that There being NO OBJECTION, it
was so ordered. state accounted for all payroll and bills
that were pending and being received. The sweep transaction
would not be executed until the administration was finished
closing out the year and following the completion of an
audit and a review by the Legislative Finance Division. As
they prepared the annual comprehensive financial report,
they looked at the balances of the account and determined
the amounts that were actually in the accounts and subject
to the sweep at midnight on June 30th. The mechanics of the
sweep actually happened much later than June 30th.
Mr. Steininger reviewed how the state determined which
funds were subject to the sweep. The state did not have
much guidance on how to interpret the constitutional
provision. He suggested that a test had to be applied to
different funds to determine whether the sweep should be
applied to them and whether their amounts would appear in
the annual financial report. Funds that were subject to the
sweep were funds the legislature could appropriate and
required further legislative appropriation. Funds that
listed purposes for which the money could be used but still
required legislative appropriation were also subject to the
sweep. The rule came down to the availability of
appropriation by the legislature.
Mr. Steininger reviewed items that were not subject to the
sweep including money and funds that were already validly
appropriated - obligated funds. For example, the sweep
would not defund an existing capital project. Also, federal
funds were not subject to the sweep. Other trust funds with
an obligation behind them such as the public employee's
retirement fund or other funds that could only be used for
a specific stated purpose under law or held in trust were
not subject to the sweep. Additionally, donations were not
subject to the sweep, because they usually came with
strings attached by the person making the donation.
Accounts that were subject to expenditure without
appropriation, capitalized funds, were not subject to the
sweep as well. Receipts subject to refund were not subject
to the sweep including the Alaska Marine Highway System
(AMHS) receipts and the University of Alaska (UA) tuition
receipts.
1:42:31 PM
Mr. Steininger discussed the sweep reversal on slide 6. He
explained that the sweep reversal was an action taken
annually in the state's operating budget or capital budget
depending on where it fell in the legislative process. In
the current year, the reverse sweep proposal was in
Section 28(a) in the FY 22 governor's proposed operating
budget. The language on the slide replicated the language
in the budget implementing the sweep. The language stated
that any monies swept from a fund or sub fund of the
general fund or an account within the general fund were
appropriated back to the funds from the CBR. Technically,
it was a draw from the CBR and required a three-quarter
vote of the legislature. The intent of the appropriation
was to prevent programmatic problems that could be caused
by the emptying of the various funds, sub funds, and
accounts within the general fund.
Mr. Steininger advanced to slide 7 to discuss the impacts
of the sweep. If the sweep reversal was not enacted there
were 3 categories of impacts. There were high impact funds,
funds that did not have projected revenues for FY 22
including the scholarships coming from the Higher Education
Fund and any appropriation made from the Power Cost
Equalization (PCE) Fund. Both funds did not receive
revenues on a fiscal year basis. Rather, they were savings
accounts set aside in prior years by the legislature that
produced income that provided for the cost of certain state
programs including the PCE Program and the scholarship
program.
Mr. Steininger explained that medium impact funds were
funds that would receive revenue in the following fiscal
year. There would be money to back some of the
appropriations. However, the revenue was less than the
amount being appropriated in FY 22. Some of the programs
included the Alcohol Safety Program, Chronic Disease
Prevention within the Department of Health and Social
Services (DHSS), substance abuse grants, the Domestic and
Sexual Assault Prevention Program, AMHS operations, and the
Spill Prevention and Response (SPAR) Program within the
Department of Environmental Conservation (DEC). All of the
programs he mentioned had revenues coming in the following
fiscal year. However, the revenue was not sufficient to
cover all of the appropriations.
1:45:30 PM
Representative Josephson brought up the SPAR account. He
thought the response portion of the funding was already
fully appropriated, as it had to be available for use at a
moment's notice. He was uncertain the item should be on Mr.
Steininger's list.
Mr. Steininger thanked Representative Josephson for his
question. He responded that there was a strange
technicality to the way the SPAR fund was filled. The Spill
Prevention and Response accounts were filled with
surcharges on fuel. However, during the fiscal year, the
surcharges were held within an account in the general fund
and in the following fiscal year the legislature
appropriated the amount collected in the prior year. The
appropriation into the account occurred on July 1st. The
sweep occurred on June 30th and was subject to a holding
account where revenues were placed. He continued that
because of the way the money was appropriated into the SPAR
account, the response account was not subject to the sweep.
It was the revenue collections from the year that were
about to be deposited into the fund that were subject to
the sweep. The account itself was not subject to the sweep,
as it was fully obligated. However, revenues going into the
account were impacted by the sweep. There were areas where
there might be unforeseen circumstances in which a fund
would be impacted by the sweep indirectly.
Co-Chair Foster asked members to hold their questions until
the presentation was finished.
Mr. Steininger indicated there were funds that experienced
no real immediate impacts such as funds without FY 22
appropriations reliant on existing balances. There were
holding accounts for revenues used for specific purposes
but did not have ongoing reliance on a specific program.
Mr. Steininger looked at a non-comprehensive yet high-level
summary of some of the impacts if the sweep occurred but
was not reversed in FY 22. The table reflected dollar value
shortfalls of several funds where there would be
significant impacts to the FY 22 budget. He had already
reviewed the impacts to the PCE fund and the Higher
Education Fund. There were use taxes such as tobacco use
education and cessation that were directed towards
prevention and public health, or things that addressed
domestic violence or substance abuse. There were also
industry impacts such as the Commercial Fisheries Entry
Commission Fund where there would be a shortfall in the
FY 22 budget without a reverse sweep. He noted that the
impacts would be mitigated with the enactment of
Section 28(a) of the governor's proposed operating budget.
He concluded his presentation.
Co-Chair Foster had wanted a refresher on the topic. He
thanked Mr. Steininger for his presentation. He was glad to
see the governor had included the sweep language in his
budget.
1:50:54 PM
Representative LeBon referred to slide 7 and the Alaska
Housing Capital Corporation Account. He wondered if the
fund was not subject to the sweep because it was considered
a capitalized account.
Mr. Steininger responded that the fund was subject to the
sweep but without any material impact to the FY 22 budget.
The capital corporation account was an account at Alaska
Housing Finance Corporation (AHFC). However, they were not
able to spend from it without further appropriation and did
not meet the other categories that would take it out of the
scope of the sweep as he viewed the guidelines.
Representative LeBon clarified that it would be subject to
the sweep. He asked for an example of a capitalized account
not subject to the sweep.
Mr. Steininger responded that a good example would be the
vaccine assessment account - the account that funded the
purchase of vaccines. The state received payments from
entities and pooled them together to purchase vaccines. The
state received payments as general fund revenue, then it
capitalized the account and allowed DHSS to spend without
an appropriation to make bulk purchases of vaccines to keep
costs down.
Vice-Chair Ortiz referred to slide 4 regarding funds
subject to the sweep. He asked if the state had always
swept funds that were subject to the sweep in 1995. Mr.
Steininger responded affirmatively but only on paper. He
elaborated that no actual money was moved from account to
account. The funds were not physically moved across
accounts.
Vice-Chair Ortiz asked if there had been any broadening of
the funds subject to the sweep. Mr. Steininger responded
that the funds subject to the sweep had shifted with
different understanding over time. In prior years (1995 to
2010) the sweep had been reversed in a timely manner.
Several years ago, there was uncertainty as to whether the
sweep would be reversed. In order to ensure the that the
provision was implemented correctly, the state needed to
review the issue with greater rigor.
1:56:16 PM
Vice-Chair Ortiz asked if the review had been done by each
administration. He specifically asked about whether the PCE
Fund and the Higher Education Fund had always been swept.
Mr. Steininger responded that they were more recently a
part of the sweep. He noted they had not necessarily been
considered or reviewed with rigor in the past.
Representative Josephson relayed that in the case of Hickel
vs. Cowper the implication was that the PCE Fund was not
sweepable according to the Legislature's legal counsel.
However, the administration disagreed. He believed that if
the PCE Fund was swept permanently, litigation would
result. He asked Mr. Steininger if he agreed with the idea
of crafting a law defining the sweepable accounts. He noted
the CBR provision stated, "As prescribed by law."
Mr. Steininger commented that the most recent attorney
general's opinion on the matter was his reference point as
the OMB Director. The opinion determined that PCE was
sweepable based on the analysis of the information
available. In response to Representative Josephson's
question about whether there should be a law, he thought it
would be helpful in guiding interpretation. Currently,
there was little criteria available to determine
sweepability. He suggested that there were many different
funds impacted by the sweep. The policy position of whether
to reverse the sweep and its impacts on the state budget
and state programs did not really change depending on the
outcome of some of the arguments about the higher profile
funds. The importance of the budget item being discussed
did not change based on a determination. It was still an
important budget item to enact for the health of state
operations. He thought it was an important thing to note as
the funds were being discussed.
2:00:52 PM
Representative Carpenter referred to slide 8. He asked
about the programs represented by the dollar figures. He
wondered if the legislature had created a program funded by
a specific account which would go unfunded without a
reverse sweep. The legislature had the option to fund the
program with different funds. He asked if he was correct.
Mr. Steininger replied that if, for example, instead of
using the Tobacco Use Education and Cessation Fund for $2.7
million an unrestricted general fund appropriation was made
to the programs, the impact would go away. It would require
an appropriation of $2.7 million UGF.
Representative Carpenter suggested that if a program was
important enough, it would make sense to fund the account
with UGF into perpetuity. He wondered why the state did not
just do it the way he was suggesting. Mr. Steininger
thought it was a policy decision for the legislature to
make.
Representative Carpenter believed the legislature was
unable to do so based on the Alaska Constitution. It would
be a dedicated fund. They were designated funds because
they had to be reappropriated every year. The legislature
did not have the authority to make it a dedicated fund. Mr.
Steininger clarified that the policy decision would be
which fund to use to support the program: the Tobacco
Education and Cessation Fund or the general fund. The
policy for what fund to use for any given appropriation was
up to the legislature.
Representative Carpenter asked what percentage of funds
that were swept were on the list. Mr. Steininger indicated
there was a list in member's packets that listed the total
amounts of funds that were swept at the end of FY 20 and
totaled about $1.5 billion.
2:03:59 PM
Representative Edgmon indicated that the reverse sweep vote
on the floor, which required a three-quarter vote of 30
members in the House and 15 members in the Senate, could
prevent the legislature from getting its job done in a
timely manner. He indicated that the SBR was established in
1986, and the CBR (a place to park billions of oil
settlement dollars) was established in 1990. The accounts
were created in an era of insufficient revenues, several
budget cuts, and the Permanent Fund Dividend had to be
paid. At the time oil prices were about $8 or $9 per
barrel. The Constitutional Budget Reserve was a vault where
legislators could not get their hands on it without a super
majority vote. He requested an opportunity to look at the
history of the funds and why they came to be. He
appreciated the presentation but noted that no one really
understood the concept.
Co-Chair Foster liked Representative Edgmon's suggestion
concerning a historical lookback.
HB 69 was HEARD and HELD in committee for further
consideration.
HB 71 was HEARD and HELD in committee for further
consideration.
2:06:47 PM
AT EASE
2:07:25 PM
RECONVENNED
Co-Chair Merrick called the meeting back to order and
invited the bill sponsor to begin his presentation.
HOUSE BILL NO. 128
"An Act relating to charitable gaming online ticket
sales and activities."
2:07:42 PM
REPRESENTATIVE ZACH FIELDS, SPONSOR, appreciated the
opportunity to introduce his bill to the committee. He
explained the purpose of HB 128. The bill made one simple
change - it made regulations that allowed for the sale of
charitable gaming raffle tickets online and in-person
during the pandemic permanent. Passage of the bill was
needed to ensure Alaska's many non-profits could continue
to raise money into the future. Time was of the essence, as
some of the non-profits were currently planning events
during the ongoing pandemic. A local business owner had
suggested the bill because the sort of raffles online were
necessary to raise funds for the Anchorage Duck Race which
benefited Excel Alaska and many other non-profits.
Representative Fields continued that while the concept was
proposed to him by an Anchorage business owner, charitable
raffles occurred throughout the state. He provided several
examples including the Great Alaska Duck Race in Anchorage,
the Kuskokwim Ice Classic in Bethel, and the Nenana Ice
Classic. He noted some of the beneficiaries of the raffles
including the American Cancer Society, KUAC Radio in
Fairbanks, and the Public Library. The Fairbanks Chamber of
Commerce had a rubber ducky race, and many sportsman's
groups used raffles to raise money.
Representative Fields noted that the raffles not only
benefited individual groups but also put more money into
Alaskan communities for management and conservation. He
mentioned that the Kenai River Sportfishing Association
(KRSA) was one of the many groups that purchased raffle
tickets and was an example that illustrated why it was
important to extend the regulations. He detailed that in
the current year KRSA sold tickets online in addition to
in-person. Even though the raffle tickets were available
in-person at many sporting goods stores like Cabela's, they
sold the majority of tickets online. As a result he thought
that the rules needed to remain in place for Alaska's
charities to survive during a pandemic.
Representative Fields also suggested that by putting the
regulations in place permanently, the state would raise
more money for very important functions longer term. It
made sense to make online raffle sales permanent. He was
available for questions.
Representative LeBon spoke with the Fairbanks Chamber of
Commerce who supported the bill. He also spoke with one of
the pull tab operators in his district who had sold tickets
online which boosted his business and indirectly benefited
non-profits. He wondered if a provision was included that
would ensure that tickets were sold to eligible Alaskans.
He wondered how to address the issue.
Representative Fields reported that the bill simply made
permanent the same framework put in place by the governor
which contained the requirement.
2:11:00 PM
Representative Rasmussen asked if there was a reason why
the state would not want people from outside of Alaska to
purchase raffle tickets that benefited Alaskan non-profits.
Representative Fields responded that it was a topic of
conversation he had had with some groups. He believed the
issue would be addressed to everyone's satisfaction as the
bill progressed.
Representative Wool asked if pull tab activity was allowed
online. Representative Fields indicated that pull tabs
would not be sold online. He invited his staff to respond
in more detail. The Department of Revenue (DOR) was also
available online.
TRISTAN WALSH, STAFF, REPRESENTATIVE ZACK FIELDS, answered
that the language that was adopted followed HB 76
[Legislation which passed in 2021 regarding extending the
Covid 19 disaster emergency] that was put forward by the
Department of Law and in the bill before the other body.
The Department of Revenue might be able to speak to the
reason pull tabs were not included in the original bill.
2:12:26 PM
COLLEEN GLOVER, DIRECTOR, TAX DIVISION, DEPARTMENT OF
REVENUE (via teleconference), explained that the initial
language that went into the emergency declaration,
including some of the public health orders, were geared
towards online games, raffles, derbies, and classics. Pull
tabs were not included. It would open up several issues
about electronic pull tabs and other issues that required a
larger discussion. The division wanted to limit it to
something easy to manage at the time.
Representative Wool did not personally support online pull
tabs and was glad it was not included. He did not see
charitable gaming in the bill. He thought the bill related
to raffles or lotteries. Representative Fields responded
that it was a different section in statute, AS 05.15.690.
Vendors were not affected by the bill. The underlying
statute differentiated between the types of charitable
gaming operators.
Co-Chair Merrick indicated that the committee would be
hearing from invited testimony.
2:14:14 PM
JASON MOTYKA, OWNER, 49TH STATE BREWING COMPANY, ANCHORAGE
(via teleconference), introduced himself and reported
having businesses in Anchorage and Denali Park. He was the
treasure of the downtown community council and volunteered
with Excel Alaska and other non-profits throughout the
state. He relayed that at the start of the pandemic his
organization supported a number of non-profits that had
events at his facilities to try to raise money for various
organizations. It became apparent that all of the
organizations and their fundraising efforts would likely
come to a halt which occurred. He reached out to
Representative Fields and Senator Begich to see if there
was anything the council could do to keep the events going
and expand them. They quickly facilitated businesses being
able to operate during the pandemic. He increased sales
significantly and expand the operation throughout the
state. The effort was tremendous success which brought in a
significant number of non-profits into a race held in
Downtown Anchorage. He reported that over $100,000 was
raised for organizations to utilize.
Mr. Motyka continued that the idea of changing the rule
permanently was important given the uncertainty of what
would happen to public events. He also pointed out that
Alaska needed to adapt to rules that other states had in
place. Online gaming platforms were being built across the
country. The technology was more secure and accurate for
tracking gaming transactions than was currently required.
As technology advanced and Alaskan organizations understood
how to use the platforms to reach a greater audience,
fundraising would change. He thought it was important to
distinguish between pull tabs and the events currently
being discussed. He argued that it opened up different
problems if pull tabs were included. The bill provided
tremendous benefits to organizations which allowed the
state to track changes more accurately into the future.
Mr. Motyka agreed with Representative Rasmussen's idea of
selling to people outside of Alaska. It was important to
note that when the race in Anchorage was started
originally, the idea was to sell tickets to tourists
because of the number of visitors Alaska had each year. He
agreed with the prospect of using tourist dollars to help
support Alaska's non-profits. He thanked the committee.
2:17:57 PM
Representative Rasmussen thought that as long as the
non-profits benefitting from internet raffle ticket sales
were Alaskan, tickets should be available for anyone inside
and outside of Alaska.
Representative Wool commented that certain raffles were
limited by the number of tickets available. He asked
whether restrictions being eased would result in a decrease
in foot traffic because of the fundraisers being conducted
online. He wondered about the potential impacts of moving
things to an online platform.
Mr. Motyka thought the old way of selling, tracking, and
keeping raffle tickets was inefficient. The reality was
that people wanted to get together to socialize and
participate in events. However, he thought the technology
aspect created far more efficiency for organizations for
in-person and online events. He argued that at some point
organizations would need the tools to keep up with the rest
of the country in terms of the use of online platforms for
charitable fundraising efforts.
2:21:28 PM
JAMIE KLAES, MARKETING DIRECTOR, ALASKA EXCEL, ANCHORAGE
(via teleconference),explained that her employer was a non-
profit organization in Anchorage located on the Alaska
Pacific University Campus. Alaska Excel provided
educational opportunities to rural students in grades 7-12
and typically served about 600 students per year. It did
not make sense to her to sell online tickets to people
outside of Alaska. The current regulations allowed non-
residents to purchase tickets if they were in Alaska. The
current regulations also allowed people to buy tickets over
the phone from the Lower 48. She mentioned the Alaska
Airmen's Association giving away an airplane every year.
She indicated that nine times out of ten the winner was
someone from the Lower 48.
Ms. Klaes relayed her support for HB 128, as there were
many benefits to conducting charitable gaming online. Her
organization hosted the Great Alaska Duck Race in 2019.
They sold paper tickets per the regulations and generated
approximately $30,000. In 2020, her organization hosted the
event again. Because of the regulation changes, they sold
tickets online and generated over $100,000 and included 10
additional non-profits from across the state who also
benefited from the proceeds. Alaska Excel expanded its
reach and collaborated with organizations as far as
Utqiagvik which would not have happened without being
online. She noted that the Great Alaska Duck Race event
took a substantial amount of time and energy to host. She
suggested that if it was limited to selling paper tickets
again, her organization would have to take a serious look
at whether it was worth the effort.
Ms. Klaes reported that eleven other states allowed for
online gaming. The American Gaming Association indicated
that in the United States it was a $240 billion business
and employed 1.7 million individuals. She argued that paper
tickets were limiting the ability to generate revenue. They
were more difficult to keep track of and were more time-
consuming. She found from using the online ticket system
compared to paper tickets, it was easier to track, it took
less time, and data collection was streamlined. With the
temporary change in the prior year, Alaska Excel was able
to include Alaskans from all across the state. She thought
rural communities felt more connected to events happening
in Anchorage and Fairbanks. She spoke about growing up in
rural Alaska and feeling isolated from events taking place
in other parts of the state. She reiterated her support for
HB 128.
2:24:59 PM
Representative LeBon referred to Section 2 of the bill that
asked for verification of the legal age of the purchaser
and their physical presence in the state. He asked how to
protect the non-profit organizations from exposure if a
ticket was sold to an underaged person or a person in an
unapproved location. Representative Fields responded that
the language could be tweaked to ensure that non-profits
did not face an impossible burden. Other states had adopted
such language. He agreed with the notion of accepting
someone's money even if they were not from or in Alaska.
Representative Rasmussen would appreciate the opportunity
to put forth an amendment to allow for out-of-state ticket
purchasing. Representative Fields would look forward to
working with her on an amendment.
2:26:57 PM
MICHELLE DEWITT, DIRECTOR, BETHEL COMMUNITY SERVICE
FOUNDATION, BETHEL (via teleconference), reported that her
organization sponsored the Kuskokwim Ice Classic and fully
supported the bill. She elaborated that the ice classic was
a small event highly localized in Bethel. Alaskans tended
to be familiar with the Nenana Ice Classic, a similar
contest. The Kuskokwim Ice Classic was a contest where
customers guessed the month, day, and time of breakup of
the Kuskokwim River and had a very high regional presence,
especially along the Kuskokwim. The revenues from the
contest were dedicated to non-profit groups that provided
services in the community of Bethel and along the river
from Aniak to Kwigillingok. Most groups were youth groups
such as the local youth dance group, the local swim
program, and the youth violence prevention group. In
pre-Covid times, youth groups would sell tickets in stores
to earn money for their clubs or groups.
Ms. Dewitt reported that over the years the foundation had
received feedback about purchasing guesses online. There
was a high demand for online purchasing. She had to turn
folks away in terms of guessing online. People wanted to be
able to participate and have access on their own timeline.
She argued that online purchasing allowed for keeping the
control for submitting guesses online in the hands of
customers instead of relying on a volunteer to write down
and submit a significant amount of data on a guess
accurately.
Ms. Dewitt reported that in the prior year, due to the
pandemic, the ice classic had to pivot at the last minute
to phone sales only. It escalated the need to move to an
online format. Implementing the ice classic by phone as the
only sales strategy was an enormous burden. It had
significant inefficiencies with a high risk for errors.
There was also a huge decrease in sales. She reviewed the
cumbersome process of a phone sale providing the detailed
information collected from the caller by the volunteer
answering the call. She noted that the volunteers worked
from home which meant the organization had to collect all
of the forms associated with ticket sales, sort them, and
conducted a fail-safe check. She reported that the process
occurred over 6000 times in the prior year. She reiterated
that the antiquated process currently being used did not
make sense based on the technology that was available.
Ms. Dewitt opined that HB 128 offered a solution for the
issue. It would allow customers to participate in online
sales, keep people safer, reach more customers, and allow
for built-in efficiencies with the utilization of current
technologies. She highly supported the bill. She addressed
some of the questions regarding Alaska-based sales versus
sales outside of the state. She had hired an attorney 5
years prior to closely examine the statute and provide some
advice. The guidance she received was that much of the
burden was on the customer to meet the requirements. She
would also support an amendment that would clarify the
issue taking the vagueness out of whether a person had to
be an Alaskan in Alaska. She urged members to support the
bill.
Co-Chair Merrick would be hearing the bill again in another
meeting.
HB 128 was HEARD and HELD in committee for further
consideration.
2:34:28 PM
AT EASE
2:35:55 PM
RECONVENED
HOUSE BILL NO. 76
"An Act extending the January 15, 2021, governor's
declaration of a public health disaster emergency in
response to the novel coronavirus disease (COVID-19)
pandemic; providing for a financing plan; making
temporary changes to state law in response to the
COVID-19 outbreak in the following areas: occupational
and professional licensing, practice, and billing;
telehealth; fingerprinting requirements for health
care providers; charitable gaming and online ticket
sales; access to federal stabilization funds; wills;
unfair or deceptive trade practices; and meetings of
shareholders; and providing for an effective date."
2:35:59 PM
Co-Chair Merrick indicated the committee would be taking up
amendments for HB 76. There were 7 amendments that had been
submitted. She reviewed a list of people available online.
Representative Josephson MOVED to ADOPT Amendment 1 (copy
on file):
Page 1, line 2, following "pandemic;":
Insert "approving and ratifying declarations of a
public health disaster emergency;"
Page 3, line 21, following "EMERGENCY;":
Insert "APPROVAL, RATIFICATION, AND"
Page 3, line 22, following "EMERGENCY.":
Insert a new subsection to read:
"(a) The declarations of a public health disaster
emergency issued by the governor on November 15,
2020, December 15, 2020, and January 15, 2021,
are approved and ratified."
Reletter the following subsections accordingly.
Page 3, line 28:
Delete "(a)"
Insert "(b)"
Page 4, line 5:
Delete "(b)"
Insert "(c)"
Page 11, line 7:
Delete "If this Act takes effect after February
14, 2021"
Insert "(a) Except as provided in (b) of this
section"
Page 11, following line 8:
Insert a new subsection to read:
"(b) Section 2(a) of this Act is retroactive to
November 15, 2020."
Representative Carpenter OBJECTED for discussion.
Representative Josephson reviewed the amendment. He hoped
that the amendment would be agreeable to every branch of
government. It did what had been done in the prior year in
March. The legislature had been sued because there was a
belief that the revised program legislative (RPL) process
had not been followed properly. As a result, the
legislature essentially blessed the governor's first batch
of RPLs. His amendment was analogous. According to the
legislature's counsel, the governor's extension of the
emergency declaration after November 15th was not within
his power. The amendment acknowledged that the legislature
had the power by ratifying the governor's extension. He
thought the governor would like the amendment.
Representative Carpenter thought the legislature failed to
act in the past, and it should be a part of the past. He
did not believe the amendment was necessary.
Representative Edgmon spoke in strong support of the
amendment. He thought it was apparent in the prior
November, December, and January before the convening of the
legislature, that there were impediments associated with
bringing the legislature together to declare a disaster
declaration required by law. The governor decided to make
the declaration under the circumstances. He thought the
governor had made the right decision because of the
restrictions resulting from Covid. He gave additional
reasons behind not being able to come together as a
legislature prior to the beginning of session. He agreed
with the maker of the amendment that it also provided cover
for the governor if there was any kind of litigation
surrounding the issue in the future.
Representative Rasmussen asked Mr. Dunmire to speak to what
the amendment would do to the legislature's ability to
bring forth a lawsuit and whether it protected the governor
from a lawsuit.
2:41:43 PM
ANDREW DUNMMIRE, ATTORNEY, LEGISLATIVE LEGAL SERVICES (via
teleconference), was not prepared to discuss the issue. He
could look into it and get back to the committee.
Representative Rasmussen asked Mr. Dunmmire to speak to the
function of the amendment. Mr. Dunmire responded that the
amendment would put the legislature's stamp of approval on
the three disaster declarations that the governor made in
November [2020], December [2020], and January [2021] during
the interim period when the legislature was not in session.
The law, as it was currently written, allowed the governor
to declare a disaster. However, it was up to the
legislature to extend it. In the current situation the
governor made 30-day extensions in the interim when the
legislature was not in session.
Representative Rasmussen asked if the amendment was
effective regardless of language about an emergency
declaration in any amended version of the bill. In other
words, if the legislature took the language out that was
currently calling a situation an emergency declaration,
would the amendment accomplish the same thing. Mr. Dummier
responded that it would accomplish the same thing because
it would ratify the disaster declarations made in the past
and not anything that was currently taking place.
Representative Wool commented that the past was relevant.
He thought the amendment provided good cover.
Representative LeBon thought an affirmative vote on the
amendment would be recognition that the legislature had not
completely ceded its authority on the action by the
governor. It would also allow the whole body to consider
the question once it reached the house floor as to whether
the retroactive authority was appropriate.
2:45:00 PM
Co-Chair Foster remarked he was hearing the upside to the
amendment and would be supporting it.
Representative Carpenter had a previous conversation with
Megan Wallace about the bill. He was concerned with the
retroactive nature of the amendment and the bill. There was
a Supreme Court case law that supported the use of
retroactivity in bills. There was also some exceptions and
constraints that accompanied retroactivity. The retroactive
application of the extension, as long as it did not impact
substantive rights, was likely okay. However, if it
impacted substantive rights, the legislature might be in
legal jeopardy. He had discussed the issue with Ms. Wallace
and would be happy to share the legal opinion with the
committee. He thought the legislature might be opening
itself up to some scrutiny.
Representative Rasmussen agreed with Representative
Carpenter's hesitation about lines 4-6 on page 2 of the
amendment. She wanted to offer a friendly amendment and
asked if the maker was willing to remove the section
keeping everything prior to it. In other words, her
conceptual amendment to the amendment would delete
lines 4-6 on page 2.
Representative Josephson was not willing to remove the
section.
2:47:40 PM
AT EASE
2:48:06 PM
RECONVENED
Co-Chair Merrick asked Representative Carpenter if he
maintained his objection.
Representative Carpenter MAINTAINED the OBJECTION.
[A roll call vote was in progress when Representative
Johnson expressed confusion about what was being voted on.]
2:49:01 PM
AT EASE
2:49:52 PM
RECONVENED
Representative Josephson restated his motion to move
Amendment 1.
Representative Carpenter OBJECTED.
Representative Josephson offered a brief summary of the
amendment.
Representative Rasmussen clarified that the amendment
retroactively dated the entire bill in front of the
committee to November 15, 2020.
2:51:01 PM
AT EASE
2:52:48 PM
RECONVENED
Co-Chair Merrick asked Representative Josephson to clarify.
Representative Josephson thought the retroactivity extended
to Section 2(a) of the bill. It was designed to merely
cover the extensions after the expiration.
Co-Chair Merrick asked if Representative Johnson had any
questions. Representative Johnson responded in the
negative.
Representative Carpenter had a legal opinion from Megan
Wallace which he would distribute to members. He read a
portion of the opinion:
"Retroactive application of the disaster extension
does not appear to affect any substantive rights and
is, therefore, likely to be upheld if challenged."
Representative Carpenter thought it sounded like the
amendment would support what Representative Josephson was
trying to do in his amendment. However, he thought Ms.
Wallace's opinion around a substantive right might be
inaccurate. There were varied substantive rights of people
in Alaska who were unable to travel for certain reasons.
Therefore, he thought the legislature was opening itself up
to potential litigation by taking retroactive action.
Representative Josephson thought Representative Carpenter
had stated that the legislature's lead counsel had problems
with the substantive application of his amendment. However,
Representative Carpenter was currently reading it as if she
did not have problems with it. He wanted to clarify whether
the legislature's lead counsel had problems with his
amendment.
Representative Carpenter thought Ms. Wallace opined that
there was not a problem. However, her argument as to why
did not pass muster.
2:55:21 PM
AT EASE
2:59:23 PM
RECONVENED
Representative Josephson indicated Amendment 1 was before
the committee. He had read the legal opinion by the
Legislature's lead counsel. She indicated that the
amendment was proper, and a court was likely to uphold an
extension with a valid retroactive provision. The provision
contained in the measure the legislature used to extend the
disaster declaration could be done retroactively. It was
not what Representative Carpenter stated the first time he
spoke on Representative Josephson's amendment. If the chair
was inclined to roll the amendment to the bottom, he would
not oppose it.
Co-Chair Merrick thought Megan Wallace of Legislative Legal
Services was online.
Co-Chair Merrick rolled Amendment 1 to the bottom of the
amendment packet.
Representative Josephson MOVED to ADOPT Amendment 2 (copy
on file):
Page 10, lines 16 - 21:
Delete all material.
Renumber the following bill sections accordingly.
Page 10, line 31:
Delete "5 - 12"
Insert "5 - 11"
Representative Rasmussen OBJECTED for discussion.
Representative Josephson reviewed the amendment. He
indicated that SB 241, which passed in March 2020 and
extended the Covid-19 declaration, had two provisions
related to liability in the context of Covid. The
provisions were in Section 4 and Section 32. The provision
in Section 4 contained standing orders that Dr. Zink or her
designee would issue orders on how medical providers would
mitigate their activities to protect patients. The current
bill did not contain such a provision. Section 32 of SB 241
contained a provision exclusive to personal protective
equipment (PPE) and liability around defective PPE. The
same section was not contained in the legislation being
considered. Instead, there was language, which he thought
was problematic, from SB 56 [Legislation introduced in 2021
regarding the extension of the Covid-19 disaster
declaration]. He continued that when the House readopted
the language in HB 76, it needed to be remedied. He read
from a portion of the bill on page 10. He was concerned
that the bill extended liability protection to
corporations. He was also concerned because the language
suggested that if a doctor did anything wrong that did not
comply with an order, proclamation, or declaration, they
would not be held liable. He was proposing to return to the
background liability law, which meant returning to the way
liability was handled prior to Covid. He proposed to delete
the language in Section 12 of the bill.
Representative Rasmussen asked if the amendment had any
impact on somebody at the grocery store who unknowingly
spread Covid-19. Representative Josephson did not know what
the law and liability would be in the context of someone
unknowingly spreading Covid. Obtaining proof was the issue
and liability would not likely attach.
3:05:26 PM
Representative Rasmussen referred to Section 12 of the
bill. She asked if civil liability extended to people
accountable for unknowingly passing on Covid-19. She wanted
to better understand the purpose of the section.
MEGAN WALLACE, DIRECTOR, LEGISLATIVE LEGAL SERVICES, ALASKA
STATE LEGISLATURE (via teleconference), asked the
representative to repeat her question.
Representative Rasmussen restated her question.
Ms. Wallace replied that the civil liability protection in
the bill covered a person for action taken on or after
February 14 [2021]and before the effective date of the act
that did not comply with an order, proclamation, or
declaration adopted by the governor. It meant that any
person that acted between February 14, 2021 (when the
declaration initially expired) and the effective date of
the bill, would not be held liable.
Representative Rasmussen asked if the provision would
include travelers coming to Alaska without testing. Ms.
Wallace responded that testing was a recommendation rather
than a mandate and was completely voluntary. She did not
want to speculate that definitively a person would not be
held liable if they knowingly had Covid and engaged in
reckless conduct.
3:09:36 PM
Representative Josephson asked, if the legislature were to
pass the bill with the language contained in the amendment,
whether the declaration would be the legislature's or the
governor's since the governor did not unilaterally issue
the declaration. Ms. Wallace replied that if the
legislature were to act on the bill it would be an
extension of the governor's extension. Under Title 26 the
disaster act did not specifically provide for a legislative
disaster. In her opinion it would be an extension of the
governor's disaster declaration.
Representative Josephson clarified that the amendment was
more generous to parties that might harm other people by
spreading Covid-19 during the gap period between
February 14, 2021, to the effective date of the act. He
mentioned SB 241. Ms. Wallace did not have the language of
SB 241 in front of her, however she confirmed that the
language was narrower.
3:12:21 PM
Representative Wool understood the gap between February
14, 2021, and the effective date of the bill. He asked
where the civil liability clause was in the bill. He
provided a hypothetical scenario. He wondered if there was
any protection for a business. He was concerned with
frivolous lawsuits.
Ms. Wallace responded that there was no other liability
protection currently in the legislation. Absent the clause
they were discussing, a claim would have to be adjudicated
through the court system based on the current set of rules
and expectations of conduct. Any kind of policy decision or
desire to extend liability protection would have to be
included or made as part of a separate piece of
legislation.
Representative Wool asked if the amendment language only
covered the gap period. Ms. Wallace confirmed the amendment
only covered the gap period. Because the bill was
retroactive, it made it clear that if someone exercised
conduct within the gap period, they would not be held
liable for the conduct.
3:16:14 PM
Representative Wool commented that there were other
amendments the committee would be considering in the
meeting. He referenced an amendment that provided immunity
from liability. If the amendment were included in the bill
and the gap period was removed, there might be increased
vulnerability for a business after the bill passed. Ms.
Wallace did not understand Representative Wool's question.
Representative Wool restated his question and referenced
Section 12 of the bill.
Ms. Wallace clarified that the intent of section 12 and the
liability provision being discussed a person would not be
held liable during the gap period at a time that a mandate
or order was being issued. She indicated the language
clarified that a person would not be liable in the gap
period. Representative Wool thanked Ms. Wallace.
Representative Carpenter asked, in talking about liability
protections, whether she was talking about rights that were
considered substantive. Ms. Wallace explained that when
talking about liability or liability protection, there
could be several liability issues, particularly concerning
the uncertainty of people raising claims against other
persons or businesses after contracting Covid. She did not
think that substantive rights violations were being
discussed. They would fall under the category of
constitutional issues.
Representative Carpenter thought civil liability was being
discussed and Ms. Wallace was excluding civil rights. Ms.
Wallace clarified that the civil liability language in the
bill protected conduct that either complied or did not
comply with an order, proclamation, or declaration. A
person always maintained the power to raise a
constitutional violation and challenge. Someone might
assert that liability protected them. She was articulating
that the difference between certain kinds of liabilities
and those that involved substantive rights were not one and
the same.
Representative Carpenter argued that a substantive right
regarding the Supreme Court's decision would include some
sort of constitutional right. Ms. Wallace's recommendation
to the committee, through her opinion given to him,
specifically stated that retroactive application of the
disaster extension did not appear to affect any substantive
rights and was, therefore, likely to be upheld [in court].
The committee was discussing things the legislature thought
it needed liability from that most definitely could be some
substantive rights issues. He commented that there was some
circular reasoning taking place that might put the
legislature in jeopardy. He felt he had to point out
retroactivity as being a cause.
3:22:59 PM
Ms. Wallace replied that the civil liability provision in
the bill was intended so that if the governor issued a
subsequent order or proclamation, it would not be used as a
basis for what conduct someone should have undertaken in
the gap period. It meant that a person would not be held to
the standard of an order that was not in place at the time
they acted. Absent the language, someone might argue that
they should not have taken an action because it was not
permissible under an order not in place. Her comments were
focused on the liability language in Section 12. Her
opinion was that retroactivity and substantive rights were
separate issues.
Representative LeBon asked how gross negligence played into
civil liability in the current discussion. If someone made
a good faith effort to follow best practices but ended up
acting with gross negligence, he wondered if there would be
civil liability for the person. He suspected the answer was
no. He asked if he was accurate. Ms. Wallace replied that
the language in section 12 was currently drafted broad
enough that it did not distinguish between negative and
grossly negative conduct.
Representative LeBon thought that if a person was
intentionally misbehaving there would still be a potential
for wrong doing even if the committee passed the amendment.
Representative Josephson thought Representative Carpenter
was referring Section 12 which he thought related more to
tort. He provided a hypothetical scenario and asked if it
fit the meaning of Section 12.
Ms. Wallace responded in the negative.
Representative Rasmussen MAINTAINED her OBJECTTION.
A roll call vote was taken on the motion.
IN FAVOR: Edgmon, Josephson, Ortiz, Foster
OPPOSED: Johnson, LeBon, Rasmussen, Thompson, Wool,
Carpenter, Merrick
The MOTION to ADOPT Amendment 2 FAILED (4/7).
3:28:39 PM
AT EASE
3:29:13 PM
RECONVENED
Co-Chair Merrick indicated the meeting would be recessed
until Friday, March 19, 2021, following the University of
Alaska finance subcommittee meeting scheduled to begin at
1:30 p.m.
HB 76 was HEARD and HELD in committee for further
consideration.
^RECESSED TO THE CALL OF THE CHAIR
3:29:30 PM
[Note: meeting was recessed until the following afternoon
where the bill hearing continued. See separate minutes
dated 3/19/21 for detail.]