Legislature(2023 - 2024)ADAMS 519
04/30/2024 10:00 AM House FINANCE
Note: the audio ![]()
and video ![]()
recordings are distinct records and are obtained from different sources. As such there may be key differences between the two. The audio recordings are captured by our records offices as the official record of the meeting and will have more accurate timestamps. Use the icons to switch between them.
| Audio | Topic |
|---|---|
| Start | |
| HB122 | |
| HB169 | |
| HB234 | |
| HB55 | |
| HB145 | |
| Adjourn | |
| HB55 |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 187 | TELECONFERENCED | |
| + | HB 234 | TELECONFERENCED | |
| + | HB 55 | TELECONFERENCED | |
| += | HB 145 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 169 | TELECONFERENCED | |
| += | HB 122 | TELECONFERENCED | |
HOUSE FINANCE COMMITTEE
April 30, 2024
12:57 p.m.
12:57:18 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 12:57 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative DeLena Johnson, Co-Chair
Representative Julie Coulombe
Representative Mike Cronk
Representative Alyse Galvin
Representative Sara Hannan
Representative Andy Josephson
Representative Dan Ortiz
Representative Will Stapp
Representative Frank Tomaszewski
MEMBERS ABSENT
Representative Bryce Edgmon, Co-Chair
ALSO PRESENT
Representative CJ McCormick, Sponsor; Callan Chythlook-
Sifsof, Staff, Representative CJ McCormick; James Cockrell,
Commissioner, Department of Public Safety; Representative
Ashley Carrick, Sponsor; Kris Curtis, Legislative Auditor,
Division of Legislative Budget and Audit; Don Etheridge,
Alaska AFL-CIO; Palmona Harbour, Director, Division of
Employment and Training Services, Department of Labor and
Workforce Development; Chad Hutchinson, Director of
Government Relations, University of Alaska; Representative
Stanley Wright, Sponsor; Rachael Gunn, Staff,
Representative Stanley Wright.
PRESENT VIA TELECONFERENCE
Randy Ruaro, Executive Director, Alaska Industrial
Development and Export Authority; Joe Felkl, Legislative
Liaison, Department of Fish and Game; Flip Pryor,
Aquaculture Chief, Division of Commercial Fisheries,
Department of Fish and Game; Kendra Kloster, Co-Director,
Law and Policy, Alaska Native Women's Resource Center;
Charlene Apok, Native Movement and Executive Director, Data
for Indigenous Justice, Anchorage; Traci Fitka, Self,
Anchorage; Antonia Commack, Self, Wasilla; Terra Burns,
Advocate, Community United for Safety and Protection,
Fairbanks; Dirk Craft, Executive Director, Alaska Workforce
Investment Board; Alesia Kruckenberg, Director of Strategy
Planning and Budget, University of Alaska; Deborah Riddle,
Division Operations Manager, Innovation and Education
Excellence, Department of Education and Early Development;
Patrick Brenner, President, Southwest Policy Institute, Las
Cruces, New Mexico; Scott Pearson, Self, Los Angeles,
California; Andrew Duke, CEO, Online Lenders Alliance,
Arlington, Virginia; Andrew Kushner, Senior Policy Counsel,
Center for Responsible Lending, Oakland, California.
SUMMARY
HB 55 EXTEND WORKFORCE INVEST BOARD ALLOCATIONS
HB 55 was HEARD and HELD in committee for further
consideration.
HB 122 RAILROAD CORP. FINANCING
HB 122 was HEARD and HELD in committee for
further consideration.
HB 145 LOANS UNDER $25,000; PAYDAY LOANS
CSHB 145(FIN) was REPORTED out of committee with
nine "do pass" recommendations and with one new
fiscal impact note from the Department of
Commerce, Community and Economic Development.
HB 169 FISHERIES REHABILITATION PERMIT/PROJECT
CSHB 169(FSH) was REPORTED out of committee with
seven "do pass" recommendations and three "amend"
recommendations and with one previously published
fiscal impact note: FN2 (DFG).
HB 234 MISSING/MURDERED INDIGENOUS PEOPLE;REPORT
HB 234 was HEARD and HELD in committee for
further consideration.
CSSB 187(FIN)am
APPROP: CAP; REAPPROP; SUPP
CSSB 187(FIN)am was SCHEDULED but not HEARD.
Co-Chair Foster reviewed the meeting agenda.
HOUSE BILL NO. 122
"An Act authorizing the Alaska Railroad Corporation to
issue revenue bonds to finance the replacement of the
Alaska Railroad Corporation's passenger dock and
related terminal facility in Seward, Alaska; and
providing for an effective date."
1:01:13 PM
RANDY RUARO, EXECUTIVE DIRECTOR, ALASKA INDUSTRIAL
DEVELOPMENT AND EXPORT AUTHORITY (via teleconference),
relayed that Alaska Industrial Development and Export
Authority (AIDEA) had issued over $1.3 billion in bonds in
the most recent history. He reported that AIDEA had no
defaults and the information was detailed on pages 29 to 35
of the 2023-2024 Alaska debt report. He stated that the
agency had a good track record of issuing bonds and
operated through the Open Meetings Act; the public was
given notice and opportunity to be heard on significant
actions such as the issuance of bonds. He relayed that the
agency had a good track record of supporting resource
development. He highlighted the Red Dog Mine as AIDEA's
standout project, which had produced billions of dollars in
economic value for Alaskans from corporate income tax to
Alaska Native Claims Settlement Act (ANCSA) 7(i) and 7(j)
funds flowing out to every Alaska Native shareholder in the
state.
Mr. Ruaro addressed Section 3 of HB 122, the amendment that
would give AIDEA $300 million in bonding authority for
projects related to critical minerals and rare earth. He
stated it was AIDEA's intent to be ready to work with a
federal program at the U.S. Department of Energy (DOE)
where $290 billion in loans and loan guarantees had been
made available through the DOE Loan Program Office (LPO).
He believed the funds were only available for two years,
but they were very flexible and could be used for rare
earth critical mineral access roads and energy sources
(including renewable energy). The agency hoped it would be
able to move forward with the bonding authority. He stated
that no bonds would be issued without a public process and
no bonds or projects would be accepted without going
through the agency's thorough regulatory due diligence
process. He noted it was not infrequent for AIDEA to spend
months on due diligence for projects. He urged the
committee to support the language in Section 3 of the bill.
1:04:25 PM
Co-Chair Foster noted that the committee would likely work
into the evening and on Saturday.
Representative Hannan asked if a couple of the language
elements in Section 3 were standard when AIDEA asked for
bonding. She read language in Section 3(c) and (d)
respectively: "bonds authorized may not be considered in
calculating the authority's bonding limitation for a 12-
month period" and "this section constitutes legislative
approval."
Mr. Ruaro answered that he was unsure whether the language
was standard. He explained that the language separated the
specific purpose related to critical minerals and rare
earth from AIDEA's other statutory bonding authority that
was much more general. He elaborated that the language was
an effort to keep the two things separate. He relayed that
in 2014, SB 99 was a similar bill that approved bonding
authority for Bokan Mountain and Niblack mine. He stated
that the language was not uncommon.
Representative Hannan asked if the two projects mentioned
by Mr. Ruaro had already been approved and bonded for or if
AIDEA would think to bond for them under the $300 million.
Mr. Ruaro answered that the Niblack mine was more of a
copper/silver mine. The Bokan Mountain mine was rare earth
and would be eligible for funding under the bonding
authority or the SB 99 bonding authority, which he believed
was still on the books.
Representative Hannan noted that the project example given
by Mr. Ruaro was specific and she assumed it had a specific
bonding level. She stated the language in the bill giving
AIDEA blanket authority was giving her heartburn with no
context except for rare earth minerals. She remarked
exploration did not always result in the desired outcome.
She asked if there was a reason the bill language did not
specify the specific projects and needed bonding authority
for each.
1:07:52 PM
Mr. Ruaro replied that due to the limited life of the
federal matching funds, there was a pressure to have
generic authority available if needed. There were currently
no specific projects that had gone through AIDEA's due
diligence process and were recommended for bonding. The
inclusion of the language was an effort to have the bonding
authority in hand in order to avoid missing the expiration
date of the federal funding. He added it was similar to
some broad authority AIDEA had for energy and energy
related projects such as transmission lines that were not
defined by project and amount.
Representative Hannan wondered why an AIDEA bond bill had
not been introduced a year earlier to include a request and
take advantage of federal funding instead of trying to
piggyback on top of a small bonding and narrow project
bill.
Mr. Ruaro responded that AIDEA had previously been trying
to qualify as a federal state energy financing institution
(SEFI) and it had now qualified. He detailed that AIDEA was
one of 13 entities in the nation that had the foresight to
do so. He elaborated that the status gave AIDEA an extra
leg up in accessing the federal funding.
1:09:59 PM
Representative Josephson asked Mr. Ruaro if he believed
there would be no need for further legislative review of
the bond opportunity included in the amended bill.
Mr. Ruaro replied that he believed there was always an
opportunity for legislative review and consideration
through the Legislative Budget and Audit Committee (LB&A);
however, there would not be a requirement for a vote.
Representative Josephson remarked that Mr. Ruaro and AIDEA
had talked about public transparency and comment. He had
reviewed AIDEA statutes, and it was his understanding that
AIDEA only needed to offer public testimony for one hour.
He highlighted the contrast between the extensive
legislative public testimony process compared to the AIDEA
process. He asked if his understanding was accurate.
Mr. Ruaro answered that he was unfamiliar with that
regulation or statute. He personally believed the better
policy was to take the time necessary for full public
comment.
Representative Galvin was interested in more detail about
AIDEA's full public process. She had received public
comments comparing the provision in the bill unfavorably to
past projects such as Bokan Mountain and the Niblack mine.
She remarked there had been a lot of state support for the
two projects, but they appeared to be abandoned or stalled.
She asked for an update on the investments and if Mr. Ruaro
could differentiate them from the proposal in the bill.
Mr. Ruaro responded that it was his understanding that the
Bokan Mountain project was focused on developing a
separation technique that would allow for the economic
cost-effective separation of the rare earth minerals from
other minerals. He relayed that the work was underway, but
until the technology was sorted out, the project was not in
a position to move forward. He was not certain about the
status of the Niblack project other than that the entity
holding the mining patents was looking for a larger
investor.
1:13:35 PM
Representative Galvin asked for verification that any
potential project that may result from the bill would still
maintain a full public process and due diligence. She
referenced Mr. Ruaro's statement that there was a two-year
window for the federal funding. She asked about the
projects AIDEA anticipated that would potentially utilize
the funding if there would be time for the public process
and due diligence.
Mr. Ruaro answered that AIDEA was hopeful it could play a
role in the Graphite One project. He stated that graphite
was a significant rare earth critical mineral and AIDEA was
hoping to play a role in the financing, keep jobs in state,
and develop processing capabilities. There were a number of
other projects. He believed the Red Dog Mine had a mixture
of rare earth and critical minerals in its tailings. He
thought the Ambler mining district project had cobalt. He
stated it was common for mines in Alaska to often have some
elements of rare earth. He remarked that based on a USGS
report, the Pogo Mine had some rare earth enriched in its
ore.
Representative Galvin was familiar with all of the projects
mentioned. She asked if Mr. Ruaro was saying that the
public process and due diligence had already taken place to
some extent, and it may not be a hurdle or concern.
Mr. Ruaro asked for a repeat of the question.
Representative Galvin complied.
1:16:53 PM
Mr. Ruaro responded that he had been referring to the more
formal due diligence process AIDEA put projects through,
which was lengthy and took months. He relayed that the
process had not been completed for any rare earth mines or
mineral projects. The public process he was referring to
was the post [due diligence] decision by staff to forward a
project to the full board for consideration and comment. He
explained that the board meetings were publicly noticed and
there was an opportunity for public comment and board
action.
Representative Cronk asked if there was any reason the
committee should not support the bonding authority besides
the idea of not wanting to develop resources in Alaska.
Mr. Ruaro believed that based on AIDEA's history of over
$1.3 billion in bonding, no defaults, and its due diligence
process formalized in regulation 3 AAC, the legislature
could entrust AIDEA with the authority. He elaborated that
if the legislature had any concerns along the way, LB&A
provided an opportunity for oversight and review.
Representative Cronk asked how the bonding authority could
help the state with any energy issues it may have.
Mr. Ruaro replied that the authority was broad enough to
extend to transmission lines and renewable energy projects
including wind turbines. He stated there may be
opportunities for a source of renewable energy to be used
at a mine that was reducing the load for a nearby city or
community and potentially adding power to the grid.
1:19:40 PM
Representative Coulombe asked if AIDEA's project vetting
process included an environmental impact study (EIS).
Mr. Ruaro answered that AIDEA did not perform any
environmental permitting work, but it required a project to
be ready to go and the beneficiaries of a project to be in
a position to commit to repayment of the bonds. He
elaborated that National Environmental Policy Act (NEPA)
environmental reviews played a role in the process, but
AIDEA did not perform the review.
Representative Coulombe kept hearing that provision in the
bill gave blanket bonding authority. She highlighted the
bill language that gave AIDEA permission to issue bonds to
finance infrastructure and construction costs of
infrastructure that support the development of critical
mineral and rare earth element projects located in the
state. She recognized that it could be considered broad.
She asked for some examples of the infrastructure and
construction costs. She asked if it included roads,
buildings, or other things.
Mr. Ruaro answered it could include things like a road and
a renewable energy source such as wind turbines or
geothermal. Additionally, it could include a processing
facility, which was one of the types of facilities eligible
for the federal funding. There was a push at the federal
level to try to generate domestic supply chains to avoid
dependence on overseas sources like China. He noted that in
the past China had refused to export to countries it viewed
as being adversarial.
1:22:11 PM
Representative Josephson provided a scenario where the
legislature approved the bill as originally drafted and did
not approve Sections 2 and 3. He asked what kind of cash
reserves AIDEA currently had on hand to spend on critical
infrastructure projects.
Mr. Ruaro answered that if the bill did not pass, AIDEA
would still review critical mineral projects that came
forward and it had some resources available. He elaborated
that the bonding authority would be helpful if a larger
project came forward and AIDEA could potentially secure the
95 to 5 federal match through the DOE LPO.
Representative Tomaszewski thanked the committee for
hearing the bill. He believed the bill was important for
the state and that it would improve the economic situation,
create jobs, and bring in more tourism.
Co-Chair Foster relayed the amendment deadline was the
following day at 5:00 p.m.
HB 122 was HEARD and HELD in committee for further
consideration.
1:24:37 PM
AT EASE
1:29:06 PM
RECONVENED
HOUSE BILL NO. 169
"An Act relating to certain fish; and establishing a
fisheries rehabilitation permit."
1:29:31 PM
Co-Chair Foster relayed that there would be a brief recap
of the bill. The committee would also consider four
amendments.
REPRESENTATIVE MIKE CRONK, SPONSOR, provided a brief review
of the bill relating to certain fish and establishing a
fisheries rehabilitation permit. He emphasized that the
bill did not contain the word "hatchery." He stressed that
the legislation was about wild fish and would allow the
collection of [a limited number] of fish from a river to
fertilize and hatch the eggs, which would then be placed
back in same river. The bill did not pertain to farmed
fish. He relayed that he and Co-Chair Foster both
represented the Yukon River. He detailed that the bill
orignated about six to seven years back due to the issue on
the Yukon River. He highlighted that fish in the Yukon had
to travel up to 2,000 miles to return to spawn. He stated
that the bill arose because individuals on the river had
been unable to put any fish in their freezer for the past
four years, yet there were hatcheries around the state
producing fish for commercial fishing and trolling. He
remarked that no one seemed to have a problem with that,
but people were up in arms about the bill. He explained
that the bill did not really change anything, it gave
entities the opportunity to work with the Department of
Fish and Game (DFG) to begin rebuilding primarily chinook
stock that were returning in fewer and fewer numbers. He
remarked that there were many contributing factors, but it
was necessary to ensure the state had tools in the toolbox
to help. He noted that DFG had entered into a seven-year
agreement with Canada to not harvest any more fish. He
stressed the state would be going on eleven years of not
catching a single fish for food security.
Representative Cronk stated that the bill did not allow
individuals to rear fish and dump them in the river. He
relayed that the bill had been vetted by DFG. He noted that
the state spent millions on DFG to trust it to do the right
thing. He considered that perhaps no one would use the
bill, but it would be a tool to allow the return of wild
fish into the river in order for people to catch fish and
continue cultural traditions.
1:33:25 PM
Representative Ortiz thanked Representative Cronk for
bringing the bill forward. He referenced Representative
Cronk's statement that it would likely be entities rather
than individuals taking advantage of the legislation. He
asked if there had been a demand for the bill from
different entities.
Representative Cronk responded that he did not want to
speak for anyone. He remarked that there was a process of
things happening and perhaps a bit of distrust with the
state. He referenced an article he had printed on the topic
of rewilding baby salmon using indigenous knowledge in
California. He envisioned entities including tribes on the
Yukon River being involved. He did not want to speak for
any of the entities. He wanted to provide the option as a
tool for the future.
Co-Chair Foster recognized Representative Jesse Sumner in
the audience.
Representative Galvin thanked Representative Cronk and
emphasized that she shared his passion for returning fish
wholeheartedly. She thought it was a question of how it
would be done. She believed different solutions had been
tried. She understood the bill to be a tool Representative
Cronk was hoping people would use. She asked if tribal
organizations or others living in the region had given the
green light and supported the idea.
Representative Cronk answered that prior to bringing the
bill forward there were groups that had supported the idea,
but they had taken a step back and there was currently
distrust of the state from tribes. He stated the idea had
been around and it could be used to help rebuild the salmon
runs.
Representative Galvin appreciated knowing there was some
energy around the idea and now there was some uncertainty
potentially due to politics or science. She was not sure
those were the reasons for the uncertainty. She wondered if
California was having success [rewilding baby salmon] why
DFG was not doing the practice on its own currently.
Representative Cronk deferred the question to DFG. He
believed the state was studying as many things as it could
and there were things going on in the ocean that no one
fully understood. He remarked that perhaps there was a hope
that someday the salmon would return, but he did not have
that hope. He elaborated that there had to be a lot of
salmon returning 2,000 miles up a river to produce enough
salmon to make the journey.
1:37:43 PM
JOE FELKL, LEGISLATIVE LIAISON, DEPARTMENT OF FISH AND GAME
(via teleconference), answered that currently the
department did not have the statutory authority to issue a
permit purely for rehabilitating a depressed run. The
department's permits were limited to education or
scientific purposes.
Representative Galvin noted there was something similar in
DFG statute for study related to the propagation of fish
and it did not limit the type of fish. She understood the
permit was currently used for scientific and educational
opportunities including propagation. She asked why the
department currently would not have the authority to do
what was proposed under the legislation.
Mr. Felkl deferred the question to a colleague.
FLIP PRYOR, AQUACULTURE SECTION CHIEF, DIVISION OF
COMMERCIAL FISHERIES, DEPARTMENT OF FISH AND GAME (via
teleconference), answered that under regulatory authority 5
AAC 41.610 (permit classification), the department had a
permit for propagative research that could be issued to
scientific and educational institutions for research
primarily for something like looking to see if a site was a
good place to put a hatchery. The department did not have
the ability to provide a permit to a nonprofit or other
entity that wanted to rehabilitate a river. The department
did not have that clear authority under its current
permitting structure.
1:41:14 PM
Representative Galvin asked for verification that the
current permitting structure was limited to someone wanting
to start a hatchery.
Mr. Pryor answered that it was the example he had used. He
clarified that the permit could currently be issued to
educational or research facilities. The department could do
some things under a cooperative agreement, but it was not
done very frequently.
Representative Galvin believed the permits could be issued
to federal, state, local entities such as tribes, and any
institution of higher learning. She thought it appeared to
be pretty broad. She understood there was some oversight
and perhaps necessary qualifications. She asked if the bill
allowed something different than what was currently in
place in terms of who may be able to propagate salmon.
Mr. Pryor answered that the bill would clarify who DFG
could give permission to. He relayed that currently the
department could issue permits to certain people and the
bill would clarify who exactly would qualify for the
permit.
Representative Galvin asked why DFG had not tried the same
activities as she surmised it was the department's mission
to ensure fish populations remained healthy and strong. She
asked if DNR had already done the work itself.
Mr. Pryor replied that DFG used to have a division called
Fisheries Resource Development and Enhancement [Fisheries
Rehabilitation, Enhancement and Development] that was
tasked with the role, but it no longer had that staffing.
The department currently only had staffing for oversight
over issuing permits and no longer had the people to do
boots on the ground enhancement projects.
1:44:45 PM
Representative Josephson asked for verification that while
the bill would allow private citizens or groups to engage
in fisheries enhancement, the department could not
currently do so.
Mr. Pryor asked for clarification. He asked if
Representative Josephson was asking whether the department
had the ability to do the work if it wanted.
Representative Josephson confirmed it was his question.
Mr. Pryor responded that the department had the authority
to do the projects if it wanted and if it had staffing. He
relayed that the prior FRED division [Fisheries
Rehabilitation, Enhancement and Development] had been
eliminated in the early 1990s.
Representative Josephson stated the existing program would
allow the take of 50,000 eggs or equivalent in spawning
pairs. He asked for verification that the bill would allow
for ten times more than the existing program.
Mr. Pryor replied that for a vocational project the answer
was yes; however, there was another level of the same
aquatic resource permit for propagative research, which
allowed for the number of eggs that could produce 5,000
returning adults. Under the current bill it was 500,000
eggs. He detailed that at a 1 percent marine survival it
would result in 5,000 returning adults, which he believed
was pretty generous.
1:48:12 PM
Representative Josephson stated that Section 2 of the bill
could be read to say that if the DFG commissioner found
there were fisheries enhancements in an area it may allow
the commissioner to sign off on construction and work
(which could be mining) notwithstanding other concerns the
commissioner may have about lakes, streams, etcetera. He
asked why Section 2 was needed if the goal was fisheries
enhancement.
Mr. Felkl answered that that DFG interpreted Section 2 to
be a conforming change. The department viewed the section
to mean that when the commissioner made a determination
about whether construction work or other use sufficiently
protected fish and game, the commissioner also must
consider any ongoing fisheries rehabilitation project
created under the bill to ensure DFG was factoring in those
types of projects before determining whether fish and game
in the area were protected.
Representative Josephson remarked that he did not think it
was a great answer.
1:49:59 PM
AT EASE
1:51:16 PM
RECONVENED
Co-Chair Foster moved to the amendment process.
Representative Josephson MOVED to ADOPT Amendment 1, 33-
LS0763\B.5 (Bullard, 4/29/24) (copy on file):
Page 2, following line 22:
Insert a new subsection to read:
"(c) At least 30 days before issuing a permit under
this section, the department shall provide public
notice of the proposed project."
Reletter the following subsections accordingly.
Representative Cronk OBJECTED.
Representative Josephson believed the department may be
neutral on the amendment. He stated that the bill did not
provide for any public notice or opportunity to participate
in the permitting process. He stated that the bill allowed
the state to approve fishery rehabilitation permits that
had potential to adversely impact wild fish populations. He
stated there was disagreement about that. He relayed there
were 150 emails from the public expressing there could be
adverse impacts on wild fish populations and could
constrain fisheries management and further deplete weak
stock fisheries. He stated that a public process was
necessary to ensure that stakeholders could weigh in to
better inform permit decisions.
1:53:01 PM
Representative Cronk opposed the amendment and viewed it as
unnecessary. He remarked that the 150 emails received were
all the same. He had not taken much time to read them
because they could have been mass produced. He noted there
were different entities against the bill such as Salmon
State that were against any development in Alaska. He
emphasized that the bill was about subsistence and
rebuilding wild runs. The bill would be a tool in the
toolbox. He remarked that leaders seemed to want to keep
studying and studying things to death. He stated that
"before we know it there's no more fish and then its too
late to actually do something like this." He did not like
using the words crisis and catastrophe; however, after the
moratorium it would be 11 years until any Native Alaskan or
resident on the Yukon River could harvest salmon. He
stressed it should be a concern for everyone. He stated
that the bill was about subsistence, food priority, and
continuing culture. He reiterated his opposition to the
amendment.
Representative Hannan supported the amendment. She stated
that although the example that the committee had talked
about almost exclusively in the context of the bill was the
Yukon River and king salmon, the bill was not restricted to
the biggest river in the state or to salmon. She envisioned
a small community and small creek that used to have
sheefish in it. She stated that before someone developed
it, she wanted the neighborhood to know. She clarified that
all the amendment did was ensure there was a public notice
process. She added that 5,000 returning king salmon would
not be a harvestable amount, but reintroducing sheefish in
a neighborhood to a small tributary could be a significant
change and people had the right to know what was happening.
She thought that people sometimes viewed public process as
a burden or obstacle, but it was also the way to amplify
success.
1:56:14 PM
Representative Josephson provided wrap up on the amendment.
He appreciated the bill sponsor's passion for the issue. He
stated that a number "of us" think it is a climate
phenomenon, a high seas take issue, and a habitat issue.
For example, in 2017 the bill had been opposed by the Kenai
River Sportfishing Association and Trout Unlimited. He
highlighted that some of the emails received on the bill
were not cookie cutter emails. He believed the emails were
all from individual Alaskans and there was no evidence to
the contrary. He had lived on the Kuskokwim River in the
past and he knew the importance of all of the highlighted
questions to indigenous people. He reasoned if it had been
a seven-year problem, it probably could withstand another
30 days. He was told the department was neutral on the
amendment.
Representative Stapp MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Galvin, Josephson, Ortiz, Hannan
OPPOSED: Cronk, Stapp, Tomaszewski, Coulombe, Johnson,
Foster
The MOTION to adopt Amendment 1 FAILED (4/6).
Representative Josephson MOVED to ADOPT Amendment 2, 33-
LS0763\B.4 (Bullard, 4/29/24) (copy on file):
Page 2, line 23, following "the":
Insert "department surveys water from which fish will
be taken or fish eggs placed, and the"
Representative Stapp OBJECTED.
Representative Josephson explained that the amendment would
require DFG to do surveys. He explained that the department
would hear an application and do a survey. He noted that
the work had previously been by DFG under the former FRED
division, but the division had been eliminated. He believed
the department should support a finding that there was a
depleted stock and that the action under the bill was a
potential remedy.
Representative Cronk opposed the amendment.
Representative Stapp MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Galvin, Josephson, Hannan
OPPOSED: Coulombe, Stapp, Tomaszewski, Cronk, Ortiz,
Johnson, Foster
The MOTION to adopt Amendment 2 FAILED (3/7).
2:00:02 PM
Representative Josephson MOVED to ADOPT Amendment 3, 33-
LS0763\B.3 (Bullard, 4/29/24) (copy on file):
Page 4, line 7:
Delete "500,000"
Insert "50,000"
Representative Stapp OBJECTED.
Representative Josephson explained the amendment. He
referenced a distributed copy of 5 AAC 41.610 on permit
classifications. The committee had been told that the work
was currently done through scientific and educational
activities, but those only allowed 5,000 eggs. He
highlighted that the level in the bill was 500,000. He
referenced a public testimony email from Gail Vick from
Fairbanks who was a long-term Alaskan resident and
fisheries policy consultant with more than 35 years of
experience in the Yukon River drainage. Her testimony
stated that finding original brood stock from a local
stream was a major obstacle and that an egg take of 500,000
would take 150 to 200 wild female salmon and twice as many
males. She stated that a single permit in any depleted
stock region would require more fish than the depleted
stock could afford. She noted that in discussions with the
commissioner, permits for severely depleted stocks would
not be granted. He thought 500,000 involved too many fish.
Representative Cronk opposed the amendment. He stated that
50,000 eggs were three salmon and would not make a
difference. The purpose of the bill was to rebuild a fish
run so it no longer needed enhancement. He stated the
number in the amendment was not acceptable. He noted the
committee had just heard that less than 1 percent of the
number would return.
Representative Stapp MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Hannan, Josephson, Ortiz, Galvin
OPPOSED: Coulombe, Stapp, Tomaszewski, Cronk, Johnson,
Foster
The MOTION to adopt Amendment 3 FAILED (4/6).
Representative Josephson MOVED to ADOPT Amendment 4, 33-
LS0763\B.2 (Bullard, 4/29/24) (copy on file):
Page 5, lines 1 - 5:
Delete all material.
Renumber the following bill section accordingly.
Representative Stapp OBJECTED.
Representative Josephson explained the amendment. He noted
that he had asked about the topic and had not found the
department's answer satisfactory. He did not understand why
Section 2 was necessary. He stated that the bill was about
increasing salmon availability principally in the Interior
rivers. He remarked that the department said the section
was conforming, but he did not know why it was necessary.
The section related to construction and work in a section
called protection of waterways for anadromous fish. He
elaborated that the key section AS 16.05.871 created a
balancing test where the DFG commissioner had to sign off
when permits were brought forward. He furthered that the
section specified that the commissioner shall approve the
proposed construction work or use in writing unless he or
she found the plans or specifications insufficient for the
protection of fish and game. The subsection specified that
the commissioner shall consider fisheries rehabilitation
projects when considering construction and work. He did not
know how it possibly helped with enhancement. He believed
it ran counter to enhancement at some level. He stated it
was designed to tell the department to relax on its
toughness when considering construction and work permits.
The language did not even specify that the projects had to
be successful. He highlighted that the amendment did no
damage to the bill.
Representative Cronk opposed the amendment.
Representative Ortiz found the amendment persuasive. He
stated that the language [in Section 2 of the bill] did not
contribute to the overall goal of the bill to enhance runs.
He thought it made good sense to remove it.
Representative Galvin supported the amendment. She
highlighted that the language in the bill specified that
the commissioner shall consider related fisheries
rehabilitation projects. She noted that the bill did not
define whether or not a project was successful. She
believed a project's success would better inform the
commissioner as to how they should be weighing the project.
She did not believe the language sufficiently guided the
commissioner.
Representative Stapp MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Josephson, Galvin, Hannan
OPPOSED: Coulombe, Stapp, Tomaszewski, Cronk, Johnson,
Foster
The MOTION to adopt Amendment 4 FAILED (4/6).
Co-Chair Johnson MOVED to REPORT HB 169(FSH) out of
committee with individual recommendations and the
accompanying fiscal note.
2:08:38 PM
Representative Josephson OBJECTED for discussion. He
opposed the bill. He expressed concern based on testimony
from 2017 and the previous week. He noted that Ms.
Hillstrand of Seldovia spoke eloquently against the bill in
2017 and at the present time. He highlighted there were
over 100 emails in opposition to the bill. He understood
the bill concept came from a very honorable place, which
was that people who had been in Alaska for 10,000 to 15,000
years had been more impacted than many other people in
terms of living their culture, sustaining their lifestyle,
and having the nutritional food source. He referenced the
email from Ms. Vick in Fairbanks he had spoken about
earlier. The email talked about her concern with creating a
catastrophic take of depleted wild spawners, creating an
introgression of distinct populations. Additionally, Ms.
Vick highlighted concern about the proposal carrying a high
potential for transmission of disease and genetic damage,
and an opportunity for unmonitored egg transport from
distant populations. The committee had heard from DFG that
it no longer provided much oversight of the area. He was
not reassured by DFG that it would make efforts to do so.
He stated that the overall concern from critics was that
the most vulnerable wild salmon would potentially not
survive the threat because it created too much competition
for resources and other mal effects that could be
detrimental to wild stocks. He opposed the bill.
Representative Cronk wondered where stocks would be if the
legislature had passed the bill in 2017. He stated it was
seven years back and now there would be seven more years
without catching fish. He stressed that the state had
continued to do nothing and had no vision to help anything.
He suggested that if putting more wild fish in the river
would create more competition, perhaps hatchery fish needed
to stop in order for wild fish to have a better opportunity
to survive. He stated it was a catch-22.
Representative Galvin remarked that it was a troubling
issue to be wrestling with. She appreciated the bill
sponsor's intent. She was not an expert on the topic and
had heard there were many problems with the two major
rivers. She understood the issues around bycatch,
overfishing, erosion, and more. She did not believe enough
energy had been put into the research. She was concerned
that more of the projects may have been done by the
department if there were enough experts at DFG. She
believed experts trained in marine biology should be doing
the work to determine whether the idea was the answer. She
found the idea of starting something without the oversight
of experts concerning. She also understood the desperate
situation. She leaned to the scientists and unfortunately
there were not enough scientists doing working on the
topic. She would rather see scientists working on the topic
considered by the bill than counting fish that were
nonexistent. She did not think the state had done enough to
protect it as a way of life.
Representative Josephson MAINTAINED the OBJECTION.
A roll call vote was taken on the motion.
IN FAVOR: Ortiz, Stapp, Tomaszewski, Coulombe, Cronk,
Foster, Johnson
OPPOSED: Josephson, Hannan, Galvin
The MOTION PASSED (7/3).
There being NO further OBJECTION, it was so ordered.
CSHB 169(FSH) was REPORTED out of committee with seven "do
pass" recommendations and three "amend" recommendations and
with one previously published fiscal impact note: FN2
(DFG).
Co-Chair Foster reviewed the agenda for the remainder of
the meeting.
2:15:38 PM
AT EASE
2:24:51 PM
RECONVENED
HOUSE BILL NO. 234
"An Act relating to police officer training;
establishing the Missing and Murdered Indigenous
Persons Review Commission; relating to missing and
murdered indigenous persons; relating to the duties of
the Department of Public Safety; and providing for an
effective date."
2:25:33 PM
REPRESENTATIVE CJ MCCORMICK, SPONSOR, provided opening
remarks and explained the bill with prepared remarks:
The high statistics of missing and murdered indigenous
people, referred to often as MMIP, MMIW, or MMIWG2S,
have become widely known in the public consciousness
with the recent proliferation of studies in tandem
with modern media including or profiling the issue.
However, this has been an epidemic experienced by
indigenous communities across the state, nation, and
greater continent for a very long time. When I speak
on this issue, I often make the error of speaking
exclusively from a rural Alaska perspective, so I want
to be sure to convey that this does impact every
region of Alaska be it urban, rural, or in between. I
should note that this is an incredibly personal issue.
Individuals myself and even my staffer know are
actually referenced by name in the supporting
documents that we provided on this bill and this
crisis affects everyone in the state.
In summary, House Bill 234 equips the State of Alaska,
law enforcement, communities, families, and tribes
with the tools to protect individuals each day and to
put to rest cold cases that have been around for much,
much too long. House Bill 234 answers the call to many
who have felt ignored by the system and forgotten in
that system. House Bill 234 makes meaningful effort to
bring our families home, to provide closure of many
who have waited too long for justice.
Representative McCormick asked his staff to review a
sectional analysis. He listed invited testifiers available
online.
CALLAN CHYTHLOOK-SIFSOF, STAFF, REPRESENTATIVE CJ
MCCORMICK, reviewed the sectional analysis (copy on file):
Section 1: Amends AS 18.65.240(a) by adding a
mandatory cultural training to the requirement
standards as an appointed police officer and
stipulates this training be administered by an
indigenous coordinator or entity.
Section 2: Amends AS 18.65.620, stipulating the duty
of law enforcement agencies to submit a missing person
report to the National Missing and Unidentified
Persons System within 30 days of an initial report.
Section 3: Amends AS 18.65.630(a) to provide a form to
the family, next of kin, or legal guardian of the
missing person authorizing the release of medical and
dental records to the National Missing and
Unidentified Persons System at the time of a missing
persons report.
Section 4: Amends AS 18.65.630(c) to include
submission of medical and dental records of a missing
person to the National Missing and Unidentified
Persons System.
Ms. Chythlook-Sifsof noted that Sections 3 and 4 were
general baseline processes for the National Missing and
Unidentified Persons System. She continued the sectional
analysis:
Section 5: Adds a subsection to AS 18.65.630 which
stipulates that when available, law enforcement
agencies will submit fingerprints, photographs, and
voluntary DNA samples from family members of the
missing person to the National Missing and
Unidentified Persons System.
Section 6: Amends AS 44.41 by adding Sec. 44.41.023,
directing the Department of Public Safety to employee
at least four persons to investigate cases involving
missing and murdered indigenous peoples and act as
liaisons between law enforcement agencies, communities
in the state, and federally recognized tribes.
Section 7: Amends the uncodified law of the State of
Alaska by adding the Missing and Murdered Indigenous
Persons Review Commission.
Section 8: Directs the Department of Public Safety to
conduct a needs assessment to determine how to
increase protective and investigative resources for
identifying and reporting cases of missing and
murdered indigenous persons within the state criminal
justice system. No later than January 1, 2025, the
department must submit a written report to the Senate
Secretary and Chief Clerk of the House of
Representatives and notify the legislature that the
report is ready.
Section 9: Stipulates that police officers with a
certificate issued under AS 18.65.240 on or before the
effective date of this Act, be granted two years from
the effective date of this Act to fulfill the
requirements.
Section 10: Sets a sunset date for Section 8 of
January 1, 2026.
Section 11: Sets a sunset date for Section 7 of
January 1, 2027.
Section 12: Sets an effective date of January 1, 2025.
Ms. Chythlook-Sifsof relayed there were several changes to
Senator Donny Olson's bill SB 151 that she could speak to
at any time.
2:32:27 PM
Co-Chair Foster moved to invited testimony.
Representative McCormick requested to hear from Ms. Kloster
first.
KENDRA KLOSTER, CO-DIRECTOR, LAW AND POLICY, ALASKA NATIVE
WOMEN'S RESOURCE CENTER (via teleconference), introduced
herself. She shared that she was also a member of the
MMIG2S Alaska working group comprised of five Alaska Native
nonprofits working together to support efforts of missing
or murdered indigenous persons (MMIP) and related issues.
She discussed how the bill had come about. The working
group had been working on the MMIP crisis and ways to end
it on a number of different fronts. The bill was a result
of conversations with the community and identifying what
was happening. She detailed that it was a generational
issue that had come to light in 2018 with the Urban Indian
Health Institute Report and a couple of years later with
Data For Indigenous Justice reports that put Alaska in the
top five states with the highest number of MMIP cases and
Anchorage as one of the top cities experiencing the
problem. The problem had been known for a long time, but
the data was finally available showing the severity. She
stated Alaska was standing in a place it did not want to be
in for the safety of its people.
Ms. Kloster explained that the working group reached out to
community members and vice versa to identify gaps in the
system and what needed to be done. The group had a good
working relationship with the Department of Public Safety
(DPS) and the commissioner in talking about what needed to
be done. She relayed the MMIP investigative unit [within
DPS] had been developed and had four investigators, which
was an important step. Additionally, an assistant attorney
general [within the Department of Law] for MMIP had been
hired the previous year. The bill identified specific
pieces including solidifying the MMIP investigator
positions in statute. She explained that the step was
necessary because currently the positions relied on the
budget from year-to-year. She emphasized there were so many
MMIP cases that could not be dropped, making stability for
the investigator positions important.
Ms. Kloster spoke to the cultural training component of the
bill. She explained there had been barriers between law
enforcement and others in the communities. She elaborated
that law enforcement officers and others traveling to rural
Alaska were not always familiar with the community or the
culture. There were numerous things that happened around
communication barriers. Ensuring ongoing cultural training
for all law enforcement officers was important to build
relations and for officers to understand what it was like
to live in different parts of the state. She noted there
had been conversations and work with the DPS commissioner
on the cultural training, which was an important piece of
the bill. The review commission was coming about because
the working group was hearing from families that different
cases were getting different levels of attention. She spoke
to the need to look at all of the different cases, solve
them, understand what was going well, and learn what may be
going wrong and how to fix it.
Ms. Kloster referenced the companion bill SB 151 and
appreciated that the bill kept the commission. She remarked
that it came from a conversation and understanding that it
was a long-term issue and there would be continued review.
She highlighted that all of the work going to MMIP was good
for the public safety of all people across Alaska. She
assured the committee they would continue to work on the
efforts and to partner with all entities going forward. She
understood the bill was one piece of the solution.
Ms. Kloster pointed out that currently HB 234 included four
investigator positions whereas SB 151 had two positions.
She supported the inclusion of four positions in the final
bill as it reflected the four MMIP investigator positions
currently housed in DPS. She stated the individuals were
doing fantastic work. She noted there were enough cases to
warrant even more investigator positions. She thanked the
committee.
2:39:45 PM
Representative Hannan asked for clarity on the number of
investigator positions in the bill. She did not believe the
bill before the committee had four positions.
Ms. Kloster answered there were four investigators included
in HB 234, which was the bill before the committee. She
clarified that there were currently four investigator
positions [within DPS] funded through the budget. She
explained that Senator Olson's bill [SB 151] included two
MMIP investigators.
Representative Hannan asked about the difference between
the two bills Ms. Kloster had mentioned.
Ms. Kloster responded that HB 234 was currently before the
committee. Additionally, the companion bill, SB 151, passed
the Senate recently and was also currently in the House
Finance Committee.
Representative Hannan relayed that Ms. Kloster had been her
student.
2:42:15 PM
CHARLENE APOK, NATIVE MOVEMENT, AND EXECUTIVE DIRECTOR,
DATA FOR INDIGENOUS JUSTICE, ANCHORAGE (via
teleconference), shared that she began actively working on
the issue since 2018, but as a survivor family member of
MMIP cases she realized more recently she had been prepared
to work on the issue her entire life through her life
experiences. She relayed that she was a story keeper, many
families across Alaska and from the Lower 48 had shared
stories with her for many years. As a result, she began
tracking data beginning in 2018 for and with the community.
She explained that prior to that time, the information was
not being tracked and it was needed in order to make
informed decision making. The issue had been happening for
a long time and was ongoing. She relayed that too many
families were still experiencing losses at the present
time.
Ms. Apok that the bill was an essential first step for the
state to take in addressing the issue. She highlighted the
complexity of the issue that included components of
cultural training data and many other pieces. She noted it
would take everyone coming together to do the work. The
bill had come from many partnerships and conversations with
families and DPS including investigators. Having a pathway
to justice and having equitable work done to address the
crisis called for doing something different than the status
quo. She noted that funding positions through a bill like
HB 234 was not typical, but she believed it was necessary
to be bold and do something different. Otherwise, it meant
merely upholding an insufficient system that was not
working to address MMIP. She was honored to see the bill
put forward.
Ms. Apok echoed Ms. Kloster's testimony on the need to
maintain the current four investigator positions. She
relayed that the investigators were doing good work and
they had said there was enough work for a lifetime. From a
data perspective, there was a backlog of myriad unresolved
cases and there was not currently capacity to take on new
cases.
Ms. Apok discussed the data component pertaining to the
bill. She shared that she had traveled to Juneau in January
and had some very good conversations. One of the questions
she had been asked was why reporting needed to be mandated
if DPS was already putting data into the federal database.
Her response had been that there were administration
changes and long-term data infrastructure support was
needed. She noted that it was a no-cost request. She
explained that including it would allow the state to build
better data infrastructure long-term to keep tracking and
having cross referencing points on the issue. She was
available for questions. She supported the cultural
training component of the bill because based on experience
it could build needed partnership and trust in communities
with law enforcement. She supported maintaining the
commission. She thanked the committee and the sponsor.
2:47:55 PM
Representative Tomaszewski asked for verification that
Sections 1 and 9 specified existing police officers would
have two years to complete the [cultural] training.
Ms. Chythlook-Sifsof confirmed that Section 9 specified
that officers with a police officer certificate received on
or before the bill's effective date would have two years to
comply with the class.
Representative Tomaszewski asked if the program was
currently ready to go. He observed that it would be
administered by an indigenous coordinator or entity. He
thought it would take time to build the program and
remarked that there would be a shorter amount of time for
existing police officers to get the training.
Ms. Chythlook-Sifsof answered it was her understanding that
the training program was already implemented but not in
state statute. Additionally, there had been long-term
discussions between the MMIPG2S working group about the
program. She deferred to the DPS commissioner for
additional information.
2:50:52 PM
JAMES COCKRELL, COMMISSIONER, DEPARTMENT OF PUBLIC SAFETY,
replied that currently DPS provided cultural training to
all individuals going to the Public Safety Training
Academy. The department also provided cultural awareness
training for its personnel. He relayed that the department
and its tribal liaisons was looking at cultural awareness
training currently being offered to other agencies like the
federal government in order to incorporate their
requirements into the bill.
Representative Tomaszewski asked for verification that the
timeframe [in the bill] was acceptable. He surmised that
DPS would not be hard pressed to meet the timeframe because
the bill spelled out something the department was already
kind of doing.
Commissioner Cockrell answered, "that's fairly accurate."
He explained there would be individuals laterally hired by
other police departments that may not have received the
training. He elaborated that the training would need to be
added to the DPS refresh academy normally held during the
winter. The department was looking at avenues to provide
the specific training.
Co-Chair Foster asked Commissioner Cockrell to provide his
invited testimony.
2:52:26 PM
Commissioner Cockrell shared that when he had taken over
the job three years back, the issue had been an emerging
crisis in Alaska, and DPS quickly realized it needed to do
something. The department had focused on hiring an MMIP
investigator and the one position was overwhelmed fairly
quickly within three months. The department had hired a
second investigator and had ultimately needed to increase
the number to four positions. He detailed that the
positions were long-term and non-permanent filled by
retired Alaska State Troopers (AST) focused specifically on
investigating murdered indigenous people in Alaska. The
investigator positions had been successful, as it was
something the department lacked the resources to do
otherwise. He stated that some of the cases were cold cases
for a reason; DPS was actively working on six cold cases in
four regions of the state.
Commissioner Cockrell relayed that DPS was currently doing
much of what was in the bill. The investigator positions
were filled and the department was putting out a quarterly
report on missing Alaska Native and American Indians that
followed all of the active missing persons in the state.
The department had partnered with police departments in
Anchorage, Fairbanks, Kenai, Soldotna and was hoping to
partner with all police departments to continue to upgrade
the list. The department was working to put all of the
state's missing 1,322 individuals into the federal National
Missing and Unidentified Persons System (NamUs). He
believed DPS had about four individuals left to enter into
the system; it was waiting on police reports from other
agencies and a couple were on hold while DPS investigated
leads. The department's preference was 60 days instead of
30 days related to tracking missing persons. He explained
that DPS received a 30-day notification, and it contacted
the local police department to ensure nothing fell through
the cracks. He stated that NamUs was more of a long-term
missing person clearing house. He noted that family members
were able to add information about a missing person before
DPS. He elaborated that the federal government contacted
DPS prior to putting an individual in the database to
confirm an individual was a missing person in Alaska.
Additional information could continue to be added along the
way such as photos and information from Facebook. The
department also had its own missing person clearing house.
Commissioner Cockrell relayed that there were many good
things about the bill. He explained that an Alaska Native
female was 10 times more likely to get murdered in Alaska
than the national average and four out of five Alaska women
were victims of domestic or sexual violence or death. He
stated that the bill would cement the importance the State
of Alaska put on its indigenous people. He believed there
were areas the state and DPS needed to work on including
prevention. He expounded that he did not want to get to the
point where the investigators were overwhelmed by cold
cases; the crimes needed to be stopped before they
happened. He highlighted that fundamentally how law
enforcement was conducted in rural Alaska would need to
change in order to make that happen.
2:57:38 PM
Commissioner Cockrell stated that since the department had
taken the issue on, its troopers, Village Public Safety
Officers (VPSO), and civilian staff had been overwhelmingly
supportive. He was proud of the direction the department
was going and the commitment it was showing. He hoped to
close some of the cold cases to bring closure for families
and to prevent crimes from happening. The budget provided
funding for community outreach to educate individuals in
rural Alaska on what to do if someone went missing. The
department's budget also included the four investigator
positions. He shared that at one point the department had
received federal funding, but it had been discontinued
after a year. Additionally, Senator Donny Olson had secured
$250,000 for the department to hire two more investigators
the previous year to bring the number up to four. There was
a lot of support for the direction the bill and department
were going. He stated that it was necessary to keep the
pedal to the metal to keep the issue from worsening.
2:59:16 PM
Representative Cronk shared that he had been on the MMIP
working group the past summer. He stated there was good
work taking place and he appreciated everyone's dedication.
He stated that the combined workload of cold cases and
missing people was very large. He believed that any help
the department needed to continue the work was warranted.
Representative Coulombe asked if VPSOs were included in the
cultural training.
Commissioner Cockrell answered that VPSOs received the same
training as troopers for the first part of the DPS academy.
He relayed that 54 villages were covered by VPSOs who acted
as first responders in many cases. He continued that as the
VPSO program continued to grow, the response was quicker.
He reported that a law enforcement presence (including
VPSOs) in a village made it less likely a homicide would
occur.
Representative Coulombe asked about the four investigators.
She stated that some of the struggles with researching the
cases was about getting the information; trying to get
family members or neighbors to talk and villages to give up
information. She remarked that the bill required a lot of
giving up of information. She assumed that was voluntary if
a family did not want to provide information. She asked if
there was an improvement based on the work of the four
investigators. She wondered if the investigators were still
hitting some blocks or not seeing results.
3:02:04 PM
Commissioner Cockrell stated that people were most
comfortable talking to law enforcement if they knew the
officer and the officer was located in their community.
There was a substantial decrease when a trooper or VPSO got
to a village. He elaborated that it took time once law
enforcement was in a village and eventually crimes
decreased. He confirmed that if individuals in a community
did not trust law enforcement it was more difficult to get
information out. He saw the issue more related to drugs
than homicide and violent crime. He was pleased with the
direction the investigators were going and he received an
update about once a month on the status. He stated that
part of the issue was that the status source for DNA for
Alaska Natives was small. He estimated there were about
120,000 Alaska Natives in Alaska, but very few had to
submit DNA. Much of the investigating work was based on old
evidence, most of which was DNA evidence. He was
comfortable with the direction the department was going and
with the troopers doing the investigations. He shared that
one trooper was Alaska Native and spent most of his time in
the Hooper Bay region, another was Alaska Native and grew
up in Nome. He stated that those things helped and the
resulting information was helpful.
Representative Coulombe replied that Commissioner
Cockrell's answer was helpful because she was trying to
determine whether people trusted rural or urban law
enforcement enough to provide the information. She asked
how law enforcement agencies interacted in a missing person
case. For example, she wondered if a case in Anchorage
belonged to the Anchorage Police Department (APD). She
asked if the case was ever transferred to special
investigators. She asked how local law enforcement, DPS,
and the Federal Bureau of Investigation (FBI) interacted.
Commissioner Cockrell answered that Alaska Natives were
victimized in urban Alaska at a higher rate than any other
ethnicity. He relayed that if there was a missing person in
the Anchorage area, APD took the case. The same thing
occurred for Nome and Kotzebue, unless DPS was asked to
take the case. The department was currently working one
cold case in the Kotzebue region. The department was
currently looking at cases within state jurisdiction that
had enough evidence to move forward with continued
investigation. Once that pool was taken care of, DPS would
look at other pools where other police departments had
requested help with cold cases. The department preferred to
take care of its jurisdiction first before going into other
jurisdictions. He referenced the Ashley Barr situation in
Kotzebue where DPS, the FBI, the Kotzebue Police
Department, and the U.S. Marshal Service had been involved.
3:06:53 PM
Representative Hannan noted that Sections 2 through 5 of
the legislation had immediate effective dates. She asked if
the department was prepared to roll the sections out and
make sure officers know how to collect and submit DNA
etcetera.
Commissioner Cockrell needed additional information on each
of the sections.
Representative Hannan explained that the sections pertained
to reporting to NamUs including fingerprints, photographs,
and DNA. She noted that the sections had immediate
effective dates, but she was concerned that if DPS was not
ready to roll the sections out, the work would not actually
start on July 1.
Commissioner Cockrell replied that he was not concerned
because the department was already essentially doing what
the bill sections outlined.
Representative Hannan asked if there had been discussion
about including the FBI in the [MMIP review] commission's
work in order to benefit from national work that may be
taking place in other jurisdictions.
Ms. Chythlook-Sifsof answered that the national NamUs
reporting system included a cross jurisdictional avenue for
communication shared between multiple jurisdictions. She
believed it was used by the FBI but was not certain. She
relayed that law enforcement and tribal entities had access
to communication through the database. She deferred to Ms.
Kloster for additional detail.
Ms. Kloster answered that development of the commission had
been done in coordination with DPS and the bill sponsors.
She stated that when the bill had first been introduced
several years back, around 18 people had been looked at as
potential commission members. They had worked to narrow the
size and work had been done to determine which positions
would be most beneficial to be at the table. The commission
looked internally at what was happening in Alaska and in
the specific cases, including considering potentially
confidential information, to determine solutions and
generate a report. She relayed there were many other spaces
where federal representatives were at the table. She
detailed that she and her partners attended many of those
meetings. She believed there were numerous jurisdictional
issues when it came to the cases. She stated that the FBI
tended to jump in upon request or in cases with children.
She noted that Alaska was a bit different because the state
led a lot of the public safety efforts. There were a lot of
open communications between DPS, the FBI, and others. The
makeup of the commission was looking at who had been
involved in the MMIP cases, she was not necessarily opposed
to adding the FBI if it was the will of the department and
legislature. She believed the important thing was having
the commission in place to look at all of the cases. She
deferred to Commissioner Cockrell as well.
3:13:44 PM
Commissioner Cockrell replied that the FBI was not on the
commission but they could be invited. He elaborated that
the AST colonel, deputy commissioner, APD chief, Anchorage
airport chief, marshal service, and all of the federal
agencies met every other week. The state had robust
interactions with all of the federal agencies and local
Anchorage agencies. He expected that the commanders in
Fairbanks, Mat-Su, and the Kenai Peninsula to be talking to
the chiefs of police to ensure they were not missing
something, whether it was drug related or missing persons
related.
3:14:42 PM
Representative Hannan clarified that she was not suggesting
adding in a federal agency and she did not believe they had
that authority. Since the FBI and U.S. marshals were
involved with interstate kidnapping and there was a
jurisdictional problem when an offender left one state and
entered another. She wanted to make sure the commission and
investigative report engaged with federal law enforcement
partners so the state was not continuing to work as an
island. She wanted to make sure the data was nationally
shared and that Alaska was taking advantage of any national
or federally trained law enforcement to address the
problem.
Commissioner Cockrell responded that he felt comfortable
that the state had enough information sharing between state
and federal agencies.
Co-Chair Foster OPENED public testimony.
TRACI FITKA, SELF, ANCHORAGE (via teleconference), shared
that she was a cousin to murdered Kimberly Fitka O'Domin
who went missing on June 15 [2023]. She shared that there
was a recorded call between Ms. Fitka O'Domin and the VPSO
in Marshall, Alaska where the officer stated that he could
not detain a suspect for assault due to a heating fuel
spill in the police department. She stated that as a
result, the individual was left free to cause more
corruption and eventually murder Ms. Fitka O'Domin. She
shared that the family could not get any involvement from
the Alaska State Troopers and the search and rescue team
conducted daily searches for five days until the state
troopers arrived. She elaborated that the troopers would
not provide the case number to the family until they
mentioned MMIP. Ms. Fitka O'Domin's body was found 13 days
after she had gone missing, 130 miles down the river. She
shared that there was a witness statement that Ms. Fitka
O'Domin's neck appeared to be broken. She relayed that the
state medical examiner reported there was no water in her
lungs; however, on July 6, the examiner and troopers
determined she had drowned. She continued that the body had
been released to a funeral home about two months later and
then law enforcement had to retrieve it to complete a
medical exam. She stated that from the beginning the family
had been told law enforcement was doing a homicide
investigation, but they clearly had not been.
Ms. Fitka addressed victim blaming. She shared that the ABI
[Alaska Bureau of Investigation] captain reported slander
to ruin the victim's reputation. She stated that science
did not support the captain's claims. She shared that Ms.
Fitka O'Domin was a mother of seven, a tribal
administrator, school board member, and a member of the
local corporations. She elaborated that the people who
murdered her were free to live their lives. She believed
that training was needed. The AST relied heavily on
pictures and evidence from search and rescue and AST should
have acknowledged they had not been present to take. There
were witnesses who saw Kimberly held on the porch and drug
to the river. She stated that Alaska Cares and an agency in
Bethel did not do very well meeting with the children and
interviewed them in the liquor store. She noted that Ms.
Fitka O'Domin's glasses were produced by a family member of
the suspects. She continued to explain the situation. There
was a lot of information that could be shared. She had
called Senator Lyman Hoffman to get the department
involved, otherwise nothing would have happened. She
thanked the bill sponsor and his staff for taking interest
in the bill and the case. She believed trained law
enforcement could step it up and provide respect and
answers families deserved when a family member went missing
or were murdered.
3:24:21 PM
ANTONIA COMMACK, SELF, WASILLA (via teleconference), shared
that she is Inupiaq from the Native Village of Shungnak and
had been an MMIP advocate for many years. She had started
the work after two of her best friends Robyn Gray and
Kristen Huntington were murdered in Fairbanks. She
elaborated that the two women were victims of domestic
violence and had been violently murdered. Together the two
women left behind six children who now had no mother. She
shared that through her advocacy she had established
meaningful relationships with numerous victims throughout
Alaska. Her primary focus was MMIP cases that were ignored
by DPS and local police departments such as Kotzebue, Nome,
Barrow, and Juneau. She relayed that families all felt they
were not seen or heard by law enforcement, and they all
felt neglected by the people who swore to protect and serve
them. She stated that there was no trust between the
victims' families and law enforcement, and she hoped it
would change with the bill.
Ms. Commack discussed that HB 234 included a mandatory
cultural training under the police standards capsule, which
was extremely important. She recently talked with a retired
Anchorage Police Department officer who had taught at the
police academy in Sitka and the officer told her that no
cultural training existed and that many officers came from
the Lower 48 with no understanding of Alaska Native culture
and customs. She spoke to the importance of building
relationships and trust with those she was speaking to as a
victims' advocate. She stressed it needed to be understood
by law enforcement as well. She added that the four current
MMIP investigator positions were not enough. She had
contacted investigators numerous times and had been told
they were busy and had other cases they were working on.
She shared that she had been asking them about a case in
Kotzebue that Commissioner Cockrell talked about [earlier
in the meeting] that was ruled a homicide. She relayed that
Sue Sue Norton was beaten and strangled in her boyfriend's
home, but there was no investigation by DPS until after an
investigative article was written by Kyle Hopkins. The case
was passed on to DPS MMIP investigators in 2023. She
stressed that Sue Sue died on March 9, 2020. She asked why
her family had to wait so long for justice.
Ms. Commack stated that she had heard the DPS commissioner
say in a previous meeting that his investigators were very
busy and he could keep at least six and up to eight
investigators busy year-round. She believed DPS would
benefit from having more MMIP investigators on staff
because they were not able to keep up with the caseload.
She relayed that the number of cold cases in Alaska far
exceeded the six cases Commissioner Cockrell said the
department was working on. There were many families across
Alaska waiting for justice and they were waiting because no
one was available to work their case. She was not asking
for results overnight, she was asking for the
investigations to begin so families would have some
closure. She highlighted there were barriers to getting
information in rural areas. She had spoken to many families
who constantly told her they were afraid to speak to law
enforcement and they came to her with tips she tried to
pass on to the investigators. She believed the problem
could be fixed if groups worked together to provide better
cultural training and understanding with DPS. She thanked
the committee and stressed the importance of the bill,
which would contribute to finding justice for MMIP.
3:29:04 PM
Co-Chair Foster recognized Representative Maxine Dibert in
the committee room.
TERRA BURNS, ADVOCATE, COMMUNITY UNITED FOR SAFETY AND
PROTECTION, FAIRBANKS (via teleconference), shared that the
entity worked towards safety and protection for people in
Alaska's sex industry. The organization strongly supported
the bill and appreciated the leadership that had gone into
it. She urged the commission to investigate the murders of
several individuals whose deaths had not yet been
investigated. She urged support for the legislation.
Representative Hannan asked Ms. Burns to repeat the names.
Ms. Burns replied Jessica Lake, Sarah Monroe, and Arnoldine
Hill. She relayed that Ms. Monroe's death was not being
investigated as a homicide even though the person who
killed her had talked about it. She shared that Ms. Hill's
body was found along the highway outside of Anchorage a
couple of years back.
Co-Chair Foster thanked the testifiers. He CLOSED public
testimony.
3:31:47 PM
AT EASE
3:32:26 PM
RECONVENED
Co-Chair Foster relayed that the Senate companion bill, SB
151 sponsored by Senator Olson was in the committee as of
the previous evening. The fiscal note was different and
there may have been some changes. He stated the bill would
be scheduled as soon as possible. He asked the bill sponsor
to provide any closing comments.
Representative McCormick thanked the testifiers who had
called in and shared their stories. He stated there was a
pervasive feeling amongst people across the state who were
impacted by MMIP issues that they were left in the dark and
that when they brought the issues to law enforcement the
outcome did not always result in justice. He thanked the
committee for the privilege of sharing the bill. He stated
that the bill had been a long time coming and it had been
an issue he had been aware of for a long time. There were a
lot of family members who had been missing for a very long
time. He urged the committee for swift action. He believed
it was just the beginning and one facet of a multifaceted
issue with getting justice for victims across the state. He
thanked the committee.
Co-Chair Foster relayed that the fastest way to get the
bill passed was to use the Senate Bill as the vehicle. He
stated the current meeting was a good introduction.
3:35:58 PM
Representative Hannan requested an at ease.
3:36:03 PM
AT EASE
3:37:15 PM
RECONVENED
Co-Chair Foster discussed a way to expedite the bill. He
could set a quick amendment deadline once the Senate Bill
was heard by the committee.
Representative McCormick supported the idea.
HB 234 was HEARD and HELD in committee for further
consideration.
Co-Chair Foster discussed his plan for the remainder of the
meeting. There were two additional bills left on the
agenda.
HOUSE BILL NO. 55
"An Act relating to allocations of funding for the
Alaska Workforce Investment Board; and providing for
an effective date."
3:38:52 PM
REPRESENTATIVE ASHLEY CARRICK, SPONSOR, thanked the
committee for hearing the bill that would reauthorize the
Technical Vocational Education Program (TVEP). She detailed
that the TVEP program began in 2000 and was intended to
provide noncompetitive grant assistance to education
entities delivering specific vocational and technical
training in Alaska. In 2014, the legislature increased the
funds diverted from the Unemployment Insurance (UI) Fund,
which funded TVEP, from a 0.15 percent distribution up to a
0.16 percent distribution. The distribution amount had
remained the same since the change in 2014. The bill
maintained the ten statutory recipients currently in
statute while maintaining the 0.16 percent distribution and
currently proposed a one-year extension in the House Labor
and Commerce committee substitute.
Representative Carrick discussed the technical training
areas TVEP recipients offered to students. She detailed
that from industries as diverse as healthcare,
transportation, mining, construction, fisheries, aviation,
and other vocational training, TVEP recipients were
providing a large number of different career paths for
students. The funding was distributed through the UI trust
from the employee portion of taxable wages. She noted that
the funds were not unrestricted general funds (UGF). She
relayed that over time the TVEP recipients had changed.
When the program was conceptualized in 2000, there were
three recipients. The University of Alaska had a 52 percent
distribution and the other two recipients were the Kotzebue
Training Center and the Alaska Vocational Technical Center
(AVTEC). A fourth recipient was added in 2001 and two
additional recipients were added in 2004. The program
expanded in 2008 to the 10 current recipients. She noted
that the current recipients distributed funds all across
the state. The University received 45 percent of the TVEP
funding, which was administered statewide, primarily to the
community and regional campuses throughout the system.
Other recipients were located in Bethel, Delta, Kenai,
Nome, Utqiagvik, Dillingham, Galena, Seward, and Kotzebue.
Representative Carrick relayed that in previous years, the
TVEP distribution amount had equated to approximately $10
million to $12 million. In FY 23, the distribution was just
over $13 million across the system. She noted that in the
most recent TVEP reauthorization it had been suggested that
a legislative audit should be included as part of the
reauthorization process in order to better understand the
current return on investment for the programs and the
potential complications or challenges around the statutory
distribution. She clarified that the audit did not say that
the State of Alaska was getting a bad return on investment
from the funds distributed to approximately 8,528 people in
2023 who were trained through TVEP funds. The main audit
concerns cover the statutory designation system, the TVEP
subaccount being subject to the sweep, and some
administration issues with the Alaska Workforce Investment
Board (AWIB). She welcomed the comments and was grateful
the audit took place. The audit results were also
thoroughly discussed in the committee process prior to
reaching the House Finance Committee. She relayed that the
legislation was fairly heavily amended in the House
Education Committee and those changes were walked back in
the House Labor and Commerce Committee. The House Labor and
Commerce Committee version was the bill currently before
the House Finance Committee. The current version of the
bill maintained the ten statutory recipients and proposed a
one-year extension for TVEP.
3:45:33 PM
Co-Chair Foster asked for a review of the audit.
KRIS CURTIS, LEGISLATIVE AUDITOR, DIVISION OF LEGISLATIVE
BUDGET AND AUDIT, discussed that TVEP was created in FY 01
and was intended to be a grant program to adequately fund
technical and vocational education and build capacity at
the postsecondary level. She detailed that the bill passed
in FY 01 included a provision in uncodified law to award
the first year funds to the three specific entities. She
relayed that grant regulations were created in 2002 by the
Alaska Workforce Investment Board. Additionally, AWIB
developed guidelines and a priority list on an annual
basis. She explained that although the grant regulations
were created and the grant process was in statute, the
direct award of TVEP funds to specific training providers
continued each year after the first year (first in
accordance with the uncodified law and then codified in
2009). She relayed that the recipients had increased to 10
providers in FY 22.
Ms. Curtis referenced exhibit 1 on page four of the audit
report (copy on file) showing the 10 providers and
statutory allocation percentages. Page 5 included a map
showing the provider locations, which were dispersed
throughout the state. She explained that TVEP was funded by
diverting a percentage of the unemployment taxes from
employees from the UI fund into a subaccount of the general
fund called the TVEP subfund.
Ms. Curtis reported on audit conclusions. She relayed that
one of the objectives was to report on the use of TVEP
funds. She began on page 10 of the audit report and
highlighted there was $12.9 million expended in FY 22. She
detailed that most of the costs came from the 10 training
providers. The Department of Labor and Workforce
Development (DLWD) incurred approximately $400,000 to help
administer the program. While looking at the expenditures,
the audit noted that 7 of the 10 providers were underpaid
in FY 22. She elaborated that when calculating the amount
due to 7 of the providers, AWIB staff based the amount on
preliminary numbers. She directed attention to exhibit 3
showing which of the providers were underpaid.
Collectively, 7 providers were underpaid $666,500. Exhibit
4 summarized the TVEP expenditures by category. She
highlighted that administrative costs were 7.1 percent of
the total expenditures and by statute, administrative costs
could not exceed 5 percent. The audit found that the 5
percent cap was not being monitored or enforced by AWIB
under a misunderstanding that the cap was only applicable
if the money was awarded via a grant process. She relayed
that AWIB received guidance from the Department of Law
(DOL) after the audit was requested to clarify that the cap
was applicable. She relayed her understanding that the cap
was now being enforced starting in FY 23.
Ms. Curtis relayed that exhibits 5 and 6 on page 13 of the
audit report summarized the participants' training and cost
by type of training category. She pointed out that health
was often the largest category. She moved to page 14
pertaining to the impact of the sweep and reverse sweep on
the TVEP subfund. She detailed that the TVEP subfund was
subject to the constitutional requirement to transfer
available fund balance at the end of the fiscal year to the
Constitutional Budget Reserve (CBR) fund as repayment of
amounts borrowed from the general fund. The repayment was
known as the sweep and historically there was a reverse
sweep provision added to the operating budget in the
following year to restore the amounts swept from the
subfunds. Beginning in FY 22, the reverse sweep was not
included in the operating budget and TVEP had a balance of
$2.4 million that was swept into the CBR. She continued
that because TVEP was funded by diverting employee taxes,
the sweep had the effect of using employee UI taxes to
repay the general fund CBR liability.
3:50:46 PM
Ms. Curtis explained that one of the objectives of the
audit was to evaluate whether TVEP was designed to meet the
training needs of Alaska by region and industry. She
detailed that the program was not operating as intended.
She expounded that TVEP was intended to be a grant program
administered by the state's lead employment training
planning agency AWIB. The grant process was still in
statute, but those statutes were being overridden by other
statutes that directly awarded funds to 10 training
providers.
Ms. Curtis stated her understanding that HB 55 only
reauthorized the direct award to the 10 training providers.
She stated that the program was not being reauthorized. She
furthered that the grant process and diverting of the funds
into TVEP was in statute, which was not being impacted by
HB 55. The audit concluded that the design was not the best
way to go about funding. She elaborated that there had been
no analysis as to whether the 10 training providers were
meeting the needs of the specific regions including
regional access to training, training capacity, and need
for specific types of training.
Ms. Curtis shared that the audit concluded that the funding
process did not afford all Alaskan training providers an
opportunity to participate in the program. Another
objective of the audit was to evaluate TVEP's performance
measures. The audit concluded that TVEP did not have
adequate performance measures. The program had performance
metrics, but those metrics were not evaluated against any
stated objectives or goals. She stated that without the
benchmarking aspect, the metrics fell short of
communicating the program's effectiveness.
Ms. Curtis moved to page 21 of the audit report, which
addressed the impact of TVEP on the balance of the UI fund.
The UI fund was evaluated annually by DLWD staff. The
evaluation included calculating a reserve rate: the ratio
of the fund balance to the total wages of taxable Alaskan
employers. She stated that if the reserve rate was 3
percent or less, employers had a fund solvency adjustment
that was part of the UI tax rate (the tax rate increased);
however, if the rate was 3.3 percent or greater, employers
received a solvency adjustment (the tax rate decreased).
She expounded that TVEP had diverted $204 million from the
UI fund from FY 01 to FY 22. She echoed comments made by
Representative Carrick. She relayed that the audit did not
provide any analysis on whether that was worthwhile or
effective. The audit simply concluded that the design of
how the money was given to providers was not optimal. The
audit concluded that the use of the funds lowered the fund
balance and likely resulted in higher tax rates. She
clarified that the audit did make conclusions about the
program's worthwhileness, justification, or benefit to the
state as a whole.
Ms. Curtis highlighted the two recommendations beginning on
page 23 of the audit report. First, the audit recommended
that the legislature repeal the direct funding of 10
training providers in HB 55. The audit also recommended
that the DLWD commissioner work with the Office of
Management and Budget (OMB) to resolve the underpayments to
the 10 training providers that were collectively underpaid
$666,500.
3:55:27 PM
Representative Ortiz stated his understanding that the bill
called for a one-year extension. He asked if it was a
result of the audit recommendation or if it had been
standard past practice.
Ms. Curtis answered that the audit did not recommend
extension. However, she thought it would be fairly
detrimental for recipients of the funding to no longer have
funding all of a sudden.
Representative Carrick replied that it was part of the
reason the bill only had a one-year extension as opposed to
the original bill's six-year extension.
Representative Ortiz asked if there were concerns about any
of the individual recipients as being legitimate and
constitutional.
Ms. Curtis answered auditors had visited 5 of the 10
training providers and audited about 75 percent of the
total. She detailed that one of the objectives was to make
sure the amounts they were reporting were reliable.
Additionally, auditors had the recipients categorize the
expenditures in different ways in order to present them in
the audit report. She relayed that the information the
recipients provided was accurate as was the methodology
used to break out the information. The audit did not go
into whether one provider training was more valuable than
another. The audit report included profiles of each
recipient in order for legislators to look at the details
of how much each recipient spent, how many people they
trained, and the mode of training. Auditors were impressed
by the University's method of awarding the funds. The
University awarded the funds statewide and had an internal
competitive grant process that aligned with AWIB's
priorities.
3:58:47 PM
Representative Josephson referenced Ms. Curtis's statement
that the statute creating the program was originally
intended to be a grant process. He asked if that meant the
state did not plan to take from a UI fund and would give
cash for training.
Ms. Curtis answered in the negative. She explained that the
program was always intended to be funded with UI taxes.
There were statutes in place specifying that AWIB would
award the funds through a grant process.
Representative Josephson was concerned about the swept
money. He referenced the Hickel v Cowper case, which
specified that if the state had federal dollars those funds
could not be swept because they did not belong to the
state. He highlighted that the state could not sweep other
people's money. He stated it was his understanding that UI
was made up of employer and employee funds. He referenced
Ms. Curtis's testimony that over $2 million was gone [and
had been swept into the CBR]. He asked how it was different
from theft.
Ms. Curtis responded that the money was diverted before it
reached the UI fund. She stated that the legality of that
was something the legislature could look into as far as
dedicated revenues and funds that existed pre-statehood and
whether the state was walking on shaky ground even
diverting anything. She could not speak to the question
about theft. She noted that the program had been in place
since 2001. She added that the State Training and
Employment Program (STEP) existed before TVEP and had the
same funding mechanism.
Representative Josephson stated that it was his
understanding that in Alaska the unemployment funds an
individual received were very modest compared to other
locations such as Washington state. He surmised that TVEP
was a conservative solution to unemployment. He explained
that rather than giving cash, the state was hoping to
retrain workers. He asked if the statements sounded roughly
correct.
Ms. Curtis replied that she saw why Representative
Josephson was saying that. She explained that the people
who received training from STEP actually contributed to the
funding of the program. There was not a direct one-to-one
relationship for people who benefit from TVEP, and they may
not have ever paid into UI fund.
Representative Josephson remarked that in many states the
$2.3 million [that was swept into the CBR in FY 22] would
have gone to unemployed people to survive and instead it
had gone to the general fund, which struck him as improper.
4:02:48 PM
Co-Chair Foster noted he had to step out and would hand the
gavel to Representative Tomaszewski.
Representative Galvin stated that her takeaway from Ms.
Curtis's report was it was not a great review overall. She
surmised that changes needed to be made and there were
perhaps some legal issues. She stated her understanding
that it would be too detrimental to the 10 recipients and
the students to wipe out the program completely at the
current time.
Ms. Curtis clarified that the audit did not have any
conclusions about the worthwhile of the program. She
explained that it primarily considered the two competing
statutes: the statutes for the grant process and the
statutes for the direct award. The auditors were not a fan
of the direct award because its design did not allow the
program to be as effective as it could be. The audit
determined that AWIB was the best entity to identify
priorities, regional needs, and industry needs. She
clarified that the 10 existing recipients may end up being
the entities getting the grants from AWIB, but it was an
unknown. The audit report merely took exception to the
funding mechanism.
Representative Galvin viewed the bill as a placeholder. She
asked if there was a legal problem with continuing the
program as-is for one more year while things were put
together.
4:05:57 PM
Ms. Curtis answered there was no problem prior to the bill
and she believed everyone was onboard that what had been
taking place was legal. She clarified that the audit report
determined it was merely not the best way. She stated it
was a policy decision for the legislature to consider. She
left it up to policymakers to decide whether to extend the
program for one year, five years, or include a transition
to another mechanism.
Representative Galvin directed the same question to the
bill sponsor. She stated the report had not been a good
review overall. She highlighted the poor review of the
administrative process and whether the metrics fit goals.
She asked if HB 55 was the answer. She asked if a decision
had been made that it would be too messy to clean things up
in one year.
Representative Carrick answered there were a lot of
questions about how to move forward in the long term with
TVEP. She highlighted that the value of the training was
not in question. She explained that the legislation would
hold the providers harmless for the coming year. In terms
of what would happen after HB 55, she believed there were
many questions that needed to be answered. She agreed with
comments made by Representative Josephson. She noted his
use of the word theft. She had a lot of concerns about the
fund sweep. She relayed that as soon as she saw the audit,
she had legislation drafted to exempt all UI trust
subaccounts from the sweep. She believed it was something
the legislature needed to pursue as a separate policy call.
She did not recommend including that specific issue in HB
55, in order to hold the current providers and mostly the
current students harmless for the coming year.
Representative Galvin asked if there was a concern that the
UI funds would be contested legally because of the two
conflicting statutes.
Representative Carrick answered that as mentioned by Ms.
Curtis, the program had continued to be reauthorized four
or more times since the program's inception. The two sets
of conflicting statutes had existed since the inception of
the program. She did not believe the state would see an
immediate legal challenge based on something that had
existed for 24 years.
4:09:53 PM
Representative Coulombe thanked Ms. Curtis for the thorough
audit. She asked if Ms. Curtis stated that $200 million had
been used for the program since 2001.
Ms. Curtis confirmed that $204 million had been diverted
out of the UI fund into the TVEP subfund through FY 22.
Representative Coulombe asked for verification that if a
training provider was not currently on the statutory list
as a fund recipient they could not apply for funding.
Ms. Curtis responded affirmatively.
Representative Coulombe stated her understanding of Ms.
Curtis's statements to be that the intention of the program
was to be funded out as grants. She also thought she heard
Ms. Curtis say the intention was to have a noncompetitive
grant fund. She asked for clarification.
Ms. Curtis answered that statute talked about a grant
program established by AWIB. She explained that typically a
grant had competitive type aspects where an entity had to
apply, there was a ranking, and funds were awarded.
Representative Coulombe asked for verification that the
bill was giving money to the training providers and not
reauthorizing TVEP. Alternatively, she asked if the bill
reauthorized TVEP for one year for the specific group of
organizations.
Representative Carrick answered that HB 55 reauthorized
TVEP and would only give the fund percentages listed to the
10 recipients.
Representative Coulombe asked for verification that the
funding went towards the operations of the vocational
centers and not directly to students.
Representative Carrick agreed. She detailed that the funds
went directly to training providers to fund program
operations. The students benefitted from the programs, but
the funding went directly to training providers.
4:12:56 PM
Representative Hannan stated that the audit had been at the
request of the legislature. She asked if Ms. Curtis
anticipated doing another audit in the coming year.
Ms. Curtis answered that another audit would not be
conducted unless it was requested by the Legislative Budget
and Audit Committee. She added that by then it would take a
few years to start it.
Representative Hannan stated she had some heartburn over
the swept funding that had not gone to UI intended
purposes. She noted that TVEP was an intended purpose as
set in statute. She detailed that the legislature had
identified the funding amount that could go into the TVEP
fund; however, if it was not expended in a year, it was
swept. She asked if Ms. Curtis would recommend the funding
mechanism be severed from UI or tied more directly. She
observed it appeared that originally there had been a lag
(e.g., UI funds collected in FY 20 were awarded to TVEP in
FY 21). She asked if Ms. Curtis anticipated a multiyear
grant. She used a welding training center as an example and
explained that it would not be set up for one year at a
time.
Ms. Curtis responded that the AWIB board would create the
regulations. She knew there were questions about stability
and providers knowing [what funding they would receive],
which could be addressed by making multiyear grant awards.
She explained that currently the monies that went into the
fund were paid out in the same year. She noted there were
some weird things about how DLWD estimated how much would
be paid out. She elaborated that they kind of provided a
little cushion; however, there was always the reverse
sweep, so DLWD never had to worry about anything happening
to the funds. She explained there had been a cushion of
funds, one of the providers did not spend most of its
funds, and then there had been the $666,000 underpayment
[to some of the providers], which had resulted in a perfect
storm anomaly where there was a large amount of funding in
the fund at the end of the fiscal year. She did not see any
problem with the funds going in and out in the same year.
She believed the Legislative Finance Division (LFD) already
had a fix for that. She stated that the executive branch
typically set up how the monies were to be granted out,
which they already did with numerous other training
grantees. She added they were already in the process of
doing that with federal and other state money.
4:16:55 PM
Representative Hannan directed a question to the bill
sponsor. She surmised that the bill would extend the
current program for one year and people were already
anticipating the need to clean up the statutory conflict
and ensure the funding mechanism was more secure. She asked
for verification that the legislature should not be
attempting to solve those issues through HB 55.
Representative Carrick responded that the instability that
came with limiting the reauthorization to one year was a
strong signal to the training providers. She speculated
that were the legislature to come back the following
session and immediately begin work on solving some of the
challenges and creating a competitive process, the
providers would hear the message. She noted that AWIB did
not believe it currently had the capacity to immediately do
administration of the TVEP program as a competitive
program. She explained that if the legislature made the
changes in the current year, it would destabilize the
current training providers and would potentially set up a
competitive process for failure. She believed the issues
were some of the considerations made by previous committees
as to why the bill was in its current form.
Representative Hannan asked if there was a companion bill
in the Senate or if HB 22 was the only vehicle to ensure
TVEP funding would be awarded for the coming year.
Representative Carrick answered that HB 22 was the vehicle.
Acting Chair Tomaszewski noted that Paloma Harbour with
DLWD was available for any questions on sweepable.
Representative Stapp asked for verification that HB 55
would essentially put a one-year stay on the program in
order for the legislature to have enough time to figure
things out.
Representative Carrick replied it was how she personally
viewed the situation. She had worked on a potential
committee substitute, which would provide for a competitive
structure per the underlying statute in the legislation and
would address some of the other considerations politically
that had taken place over the years; however, she believed
the potential to destabilize the great workforce
development happening with the funds was paramount to the
decision making at present. She suggested the legislature
put a stay on making those changes. She suggested that two
years was a much better timeframe to avoid a time crunch on
making the decisions in a reauthorization year the
following session.
Representative Stapp stated the program had been going a
long time and he did not want to see it destabilized. He
was in support of at least a one year stay of the program,
which would be less disruptive for the users. He directed a
question to Ms. Curtis. He thought it seemed that some of
the institutions on the list were not public institutions
and the legislature was giving them state money for
educational purposes. He noted there was a recent court
case about that type of issue. He did not know whether it
came up in the audit.
4:21:10 PM
Ms. Curtis answered that the audit had not addressed the
issue and only considered what it had been asked to do. She
noted that if anyone wanted more information about the
recipients, details were in the appendix to the audit
report. She explained there was information about how the
providers conducted their training, the number of people
served, and the cost per participant.
Representative Stapp relayed that he had reviewed the
appendix and noticed that many of the institutions
receiving state money were private and some had religious
overtones. He thought it was interesting that the
legislature was making sure to have at least a one-year
stay on the program so it would not be disruptive.
4:22:12 PM
AT EASE
4:57:58 PM
RECONVENED
Co-Chair Foster OPENED public testimony.
DON ETHERIDGE, ALASKA AFL-CIO, shared that he had been with
the legislation since its inception. The AFL-CIO and the
Alaska Works Partnership had been very active in getting
the program started. He clarified that AFL-CIO members did
not receive money from the program. The AFL-CIO liked the
idea of the program because it helped educate more workers
and more workers were needed all of the time. He stated the
entity was fully supportive of the TVEP program. He relayed
that it would be unfair to remove the funding from the
recipients without notice. The organization supported the
program extension for one or more years. The program had
started as a grant program and different legislators had
started adding to it. He explained that over time everyone
"was holding it hostage to get what they wanted into it."
He stated that the desire had been to keep the training
going because many of the programs could not afford to
purchase new equipment or keep up with current operations
without the funding. He concluded that AFL-CIO was in full
support of the bill and believed TVEP was a great program
to keep alive. He thanked the committee.
5:01:18 PM
Co-Chair Foster CLOSED public testimony. He provided
details for individuals who may want to provide written
testimony.
Co-Chair Foster asked for a review of the fiscal notes.
PALMONA HARBOUR, DIRECTOR, DIVISION OF EMPLOYMENT AND
TRAINING SERVICES, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT, began with OMB component number 2761. The
fiscal note was zero and it had been submitted because the
there had been a fiscal impact to workforce services under
the last version of the bill. She moved to the second
fiscal note was OMB component number 2276 pertaining to
unemployment insurance. The note had not changed since the
original version of the bill and reflected the cost to
collect the revenue into the TVEP account. She explained
that the department could not cover the cost with UI
administrative funds, it had to cover the cost with TVEP
funding. She elaborated that the cost would exist as long
as the TVEP account was in statute for collecting the
revenue (with or without the allocation in HB 55).
5:03:58 PM
Representative Tomaszewski asked why it cost so much to
collect [the revenue]. He thought it appeared to be a
simple calculation.
Ms. Harbour answered it was based on a federal approved
allocation of the department's overall tax unit costs. She
elaborated that all of the costs associated with the tax
system (including collections and auditing staff and IT
support) that DLWD used to collect the UI program, the
State Training Employment Program (STEP), and TVEP, were
spread across the three programs in an equitable fashion
reviewed and approved by the federal government. The cost
in the fiscal note was based on the federal analysis of the
level of effort related to the accounting for STEP and TVEP
as opposed to the UI program. She expounded that it was 8.5
percent of costs each fiscal year.
Representative Galvin asked if the fiscal note reflected
one-third of the total cost since three entities were
sharing in the cost.
Ms. Harbour answered that the amount in the fiscal note was
much less than one-third. She relayed that it was 8.5
percent of the total collections cost for UI. Of the total
cost for the tax section, tax system, and IT support, 19
percent was split evenly between STEP and TVEP.
Representative Galvin asked what $83,800 in services
represented.
Ms. Harbour answered it covered IT support and core
services (e.g., lease costs and human resources costs).
Representative Galvin asked about the $375,300 for personal
services. She asked if it was a shared number of PCNs
[position control numbers] doing the work.
Ms. Harbour agreed. She detailed that the personal services
line reflected a share of the costs for the tax unit
including collections staff and auditors.
Representative Galvin asked if the work of taking in the
funds had been modernized. She asked if the work was done
by hand or computerized.
Ms. Harbour answered that DLWD had built in as much
automation into the process as possible (e.g., employers
filed online). The department had found since the COVID-19
pandemic it had been necessary to return to more paper and
pencil due to a significant increase in fraud. She noted
that the department was catching the fraud and it had not
been getting through.
5:08:14 PM
DIRK CRAFT, EXECUTIVE DIRECTOR, ALASKA WORKFORCE INVESTMENT
BOARD (via teleconference), reviewed OMB component number
2659. He relayed that the fiscal note remained largely
unchanged since the governor authorized the amount
necessary for 7 of the 10 TVEP recipients administered by
AWIB, and the personal services associated with the
administration.
Ms. Harbour reviewed the last fiscal note OMB component
number 2686 pertaining to TVEP. The fiscal note showed the
allocation to TVEP in Seward if it were reauthorized as
proposed in the bill.
Co-Chair Foster thanked the department.
Co-Chair Foster asked if Mr. Hutchison wanted to testify.
CHAD HUTCHINSON, DIRECTOR OF GOVERNMENT RELATIONS,
UNIVERSITY OF ALASKA, deferred to a colleague to review the
fiscal note.
ALESIA KRUCKENBERG, DIRECTOR OF STRATEGY PLANNING AND
BUDGET, UNIVERSITY OF ALASKA (via teleconference), reviewed
OMB component number 1296. The fiscal note included a
calculation provided to the University by DLWD based on the
funds DLWD would have to distribute. The proposed amount
for the University for FY 25 was $6,746,900, which
reflected a $510,400 increase over FY 24 base funding. The
University had also received a supplemental of $370,300 in
FY 24.
5:11:58 PM
DEBORAH RIDDLE, DIVISION OPERATIONS MANAGER, INNOVATION AND
EDUCATION EXCELLENCE, DEPARTMENT OF EDUCATION AND EARLY
DEVELOPMENT (via teleconference), reviewed OMB component
number 2796. The note reflected the amount allocated for
the Galena Interior Learning Academy.
Co-Chair Foster set an amendment deadline for Thursday, May
2 at 5:00 p.m.
HB 55 was HEARD and HELD in committee for further
consideration.
HOUSE BILL NO. 145
"An Act relating to loans in an amount of $25,000 or
less; relating to deferred deposit advances; and
providing for an effective date."
5:14:38 PM
Co-Chair Foster noted that public testimony had been left
open at a previous hearing on the bill. He moved to public
testimony.
5:15:32 PM
PATRICK BRENNER, PRESIDENT, SOUTHWEST POLICY INSTITUTE, LAS
CRUCES, NEW MEXICO (via teleconference), relayed that in
2023, New Mexico adopted a rate cap law intended to
eliminate predatory lending. Despite the intentions, the
results had been disappointing. He stated that the
anticipated market adjustment did not materialize and
traditional banks and credit unions had not filled the
void. He had tested the accessibility of emergency credit
under the current conditions by applying for small dollar
loans from major banks and credit unions in New Mexico.
Despite applying at institutions like Wells Fargo, U.S.
Bank, and Bank of America, as well as 16 credit unions, he
had faced rejections from all of the banks and only
conditional approval from two credit unions after
substantial time and effort. He stated that the application
process was excessively complex involving numerous
requirements, the opening of new accounts, considerable
financial commitments, and extensive paperwork. He relayed
that he had spent about 20 hours over 2 months attempting
to secure one emergency loan. He stated it was a task that
would be nearly impossible for most consumers, especially
during financial emergencies. He added that the effort
significantly harmed his credit score, which dropped over
100 points due to multiple hard credit enquiries by
institutions, which had subsequently increased his
borrowing costs. He urged the committee to recognize the
practical shortcomings of the bill. He stated that in New
Mexico, the expectation that banks and credit unions would
replace alternative lenders had not occurred. He reiterated
other impacts he believed the bill would have. He asked the
committee to consider the real world impacts and need for
balanced regulations that assure accessible credit for all,
particularly those in precarious financial situations.
5:17:55 PM
SCOTT PEARSON, SELF, LOS ANGELES, CALIFORNIA (via
teleconference), shared that he is a financial services
lawyer located in Los Angeles. He hoped to help the
committee understand the regulatory environment in the
particular space. He referenced the term rent-a-bank, which
had become popular in the press. He stated that the term
did not accurately reflect the level of protection for
consumers that existed in programs where a non-bank company
partnered with a bank in order to expand credit
availability for average consumers. He explained that banks
were typically heavily regulated and exercised considerable
oversight over the lending programs. He added that
regulators also exercised oversight over the programs. He
elaborated on the oversight process. He remarked that banks
audited service providers to banks and those partners
frequently needed to obtain various state licenses to
engage in loan servicing. He disputed the idea that banks
let lenders put their names on loan documents and then
merely walked away.
Mr. Pearson relayed that the company he worked for
represented numerous start-ups that wanted to extend credit
to people who had difficulty getting credit. He noted that
the costs of entering the market were substantial.
Typically, companies had to obtain state licenses, which
was burdensome and expensive. They also needed to build a
system to deal with periodic examinations from regulators.
He explained that banks had considerable expertise in
lending and complying with all of the laws that apply to
lending. He detailed that the lending companies frequently
wanted to partner with banks in order to get into the
market more quickly. He stated that the bill would create
significant barriers to entry and its ultimate impact would
be to constrain credit.
Representative Stapp referenced the mention of the
regulatory burden and difficulty of getting state licenses.
He asked how difficult it was for one of the clients to get
a license in the State of Alaska.
Mr. Pearson replied that he could not answer the question
directly. He relayed that a for a nationwide licensing
program normally the cost was well into six figures, and it
took about a year to get all of the licenses.
Representative Stapp believed Mr. Pearson had stated the
cost was well into six figures. He thought Alaska's
licensing fee was pretty marginal, but if the average was
in the six figures it should be considered by the
committee.
Mr. Pearson clarified that he was not referring to the cost
of the fee charged by the licensing agency. He was
referencing, in addition to those fees, the expenses paid
to firms and consultants to help navigate the process. He
remarked that Alaska's process may be leaner than other
states. He explained that in terms of setting up a
nationwide lending program, the cost was in the low six
figures to mid six figures to get the program off the
ground. One of the benefits of bank partnerships was the
ability to get into the market faster and at a lower
expense.
Representative Stapp asked what the registration fee was in
California.
Mr. Pearson responded that he did not know the fee off the
top of his head. There was a team of people who handled
licensing work. He worked with clients on the overall
costs. He was happy to follow up with the information in
writing.
Representative Stapp would appreciate the information.
Co-Chair Foster provided the email address.
5:25:35 PM
ANDREW DUKE, CEO, ONLINE LENDERS ALLIANCE, ARLINGTON,
VIRGINIA (via teleconference), relayed that the Online
Lenders Alliance was a diverse group of lenders, service
providers, and vendors that used technology to increase
credit options for consumers. He referenced another
individual named Brendan Bolen who had been planning to
testify but was unavailable at present. He detailed that
the individual was an author of a key study on the impact
of a similar bill in Illinois on consumer credit. He
believed the information was available to the committee and
thought it was valuable for consideration on the bill. He
thought some of the comments and narratives around the bill
seemed to be a distorted picture of what happened with
consumers options and credit access when "these types" of
restrictions were imposed, especially when the primary
metric was an annual percentage rate (APR), which could
fluctuate greatly with the size and duration of a loan.
Mr. Duke relayed that relevant data pertaining to the bill
was in the organization's updated letter including data
from the Consumer Financial Protection Bureau showing that
like all Americans, Alaskans faced financial issues and
challenges, but small dollar lending hardly registered
among their concerns. He highlighted that in 2021 Illinois
enacted similar legislation. His trade association
conducted a survey of loan borrowers impacted by the law.
Of the 700 respondents, 56 percent reported they were
unable to access credit after the restrictions took effect.
When asked what happened when individuals were unable to
borrow money, the top answer was that they paid bills late,
which generated overdraft fees. Some reported that
utilities had been cut off. He reported that about 80
percent said they would go back to their previous lender if
possible. As a result of the legislation passed in
Illinois, many lenders had left the state and there was a
sharp decline in the number of lending licenses. The
alliance advocated for creating more credit options for
consumers.
Representative Galvin asked what the average APR charge
was.
Mr. Duke replied that using APR was as a measure of cost on
a small dollar short-term loan was misleading as the metric
was highly impacted by the duration. Ultimately banks were
in charge of their lending programs and his members were
acting as service providers to the bank. The banks were
often offering a consumer loan that was likely a
noncollateralized risk price installment. He relayed that
with a shorter duration risk price the APR calculation
would exceed 36 percent.
Representative Galvin referenced Mr. Duke's statement that
the APR calculation exceeded 36 percent. She asked about
the average APR to the consumer in Alaska based on any
clients Mr. Duke worked with in Alaska.
Mr. Duke offered to follow up with the information.
5:31:17 PM
Representative Ortiz was trying to get at the same answer
that Representative Galvin was seeking. He asked why the
particular type of lending service could not make money at
36 percent.
Mr. Duke replied that much of the reason was that the
duration of a loan had a tremendous impact on the APR
calculation. He began to discuss how to calculate APR.
Representative Ortiz understood how APR worked. He stated
that generally in the commercial lending field banks chose
to loan money at a much lower rate than 36 percent. He
reasoned that evidently they made money doing it, otherwise
they would not do it. He asked why that could not happen
with the type of lending service Mr. Duke worked with.
Mr. Duke believed banks typically served the prime customer
base. He believed a lot of the short-term loan products
were extended to the subprime customer base and the risk
profile was higher. He relayed that a risk priced loan
carried a higher rate, especially if it was
noncollateralized.
Representative Stapp considered that the loans under
discussion were high risk and directed at individuals
without much collateral. He asked Mr. Duke what the
appropriate percentage would be. He asked if it was not in
the 30s whether it should be 200 or 300 percent.
Mr. Duke replied that with technology through alterative
data, the underwriting model was becoming increasingly
sophisticated and it was possible to better predict the
outcome of a loan and to drive down the cost of a loan to
consumers. The fee schedule for the deferred deposit model
was straightforward and in statute. Under the bank model,
banks were in charge of the process and it was ultimately
up to them to determine the proper rate. He stated that for
small-dollar short-term loans, especially under one year,
the APR would look much more outsized than a longer term
loan extending for something like two years. He stated that
with a 36 percent APR it meant the loan size needed to be
about $2,500 in order to break even. The rates would be
higher to properly price in risk if the loan was under
$2,500.
Representative Stapp understood collateralization and cost.
He clarified his question and noted that Mr. Duke had
talked about the underwriting model. He stated that if the
number was not in the 30 percent range he had asked if the
number was 300 percent. He wondered if the number was
supposed to be higher than that at 1,500 or 2,000 percent
given the short duration of the loan. He wanted a ballpark
number. He asked if it was 3,000 percent or less.
Mr. Duke did not believe anyone would say that. He stated
that even when considering the extreme calculation of an
overdraft product it calculated out to something like 1,700
percent. He stated that there were scenarios where short-
term small-dollar loans could get to three digits.
5:37:06 PM
Co-Chair Johnson stated the research she had received by
someone very familiar with the industry showed loan rates
over 500 percent for these loans. She asked if it was a
number Mr. Duke was familiar with.
Mr. Duke asked for clarification on what she meant by these
loans. He asked if she was talking about Alaska
specifically.
Co-Chair Johnson replied that she was talking about Alaska.
She was referencing payday loans taken out by 15,000
Alaskans in 2023.
Mr. Duke responded that the fee schedule was in statute. He
speculated that the scenario likely factored in some sort
of renewal that took place more than once. He clarified
that he did not know, but it was what it sounded like to
him if Co-Chair Johnson was talking about the deferred
deposit product.
5:38:40 PM
ANDREW KUSHNER, SENIOR POLICY COUNSEL, CENTER FOR
RESPONSIBLE LENDING, OAKLAND, CALIFORNIA (via
teleconference), shared that the organization was a
nonprofit, nonpartisan policy and research organization
dedicated to building family wealth through curbing abusive
financial practices. The organization was affiliated with
the Self Help Credit Union, a nationwide community
development financial institution providing access to safe
and affordable financial services to low income communities
and borrowers. The organization supported efforts like HB
145 to cap interest rates at around 36 percent or less in
states across the country. He stated that payday and other
predatory lenders claimed to provide consumers with quick
and easy cash for occasional needs, but in reality, they
snared many consumers in a debt trap, which only
exacerbated financial hardship. He relayed that payday
lenders in Alaska routinely charged APRs of up to 424
percent, made no real assessment of a borrower's ability to
repay the loan, and took money directly from borrowers'
bank accounts.
Mr. Kushner relayed that the industry's business model
depended on trapping consumers in a cycle of debt so that
lenders could charge further fees. He stated that
unaffordable credit was a feature, not a bug, of the
predatory lender business model. He addressed a couple of
the public testimony arguments by industry in opposition to
the bill. First, the committee had been told that APR was
an inappropriate metric for short-term loans. There was a
reason why federal law required payday and other short-term
lenders to disclose APR. He stated that the lenders hated
the disclosure law. He explained that the law enabled
borrowers to compare the relative cost of credit across
financial products, empowering them to make informed
choices. With respect to short-term loans, research showed
that many of the loans were refinanced and extended for
months or years. He elaborated that the Consumer Financial
Protection Bureau (CFPB) found that 75 percent of payday
loans went to borrowers who took out 10 or more of the
loans annually. He highlighted that by design, payday loans
created a cycle of long-term debt for borrowers and a high
cost of loans over the duration of the cycle.
Mr. Kushner remarked on the proposal to cap rates at 36
percent, which industry claimed would constrain access to
credit. He stated that 36 percent was a widely recognized
dividing line between responsible and irresponsible credit.
He explained that loans and interest rates above that
threshold did far more harm than good. He stressed that a
loan borrower could not afford put the individual further
behind. He stated there were many lenders whose business
model depended on making irresponsible loans
indiscriminately; however, there were other lenders
including credit unions that were more focused on community
development that could make responsible loans to borrowers
in financial need.
Mr. Kushner remarked that the 36 percent interest rate cap
that was before the committee currently applied to all
active duty military and dependents under the Military
Lending Act. Currently, 20 states and the District of
Columbia capped interest rates on consumer loans at an
affordable level of 36 percent or less. He noted that the
states ranged from politically progressive to conservative.
He highlighted that in 2023, a group of military and
veterans groups submitted a letter to the CFPB praising the
Military Lending Act and urging the bureau to strengthen
its protections. He stated that borrowers were protected
from predatory interest rates and health credit markets
still existed where borrowers could get access to safe,
responsible credit. He stated that the most effective way
for Alaska to simplify its lending law and address the
predatory debt trap was to follow the lead with the
military and the 21 other jurisdictions to cap the interest
rate at a responsible level. He thanked the committee for
its time.
Co-Chair Foster CLOSED public testimony.
5:43:37 PM
Co-Chair Foster asked the sponsor to provide a brief recap
the bill if desired.
REPRESENTATIVE STANLEY WRIGHT, SPONSOR, thanked the
committee for hearing the bill. He explained that the bill
would cap APR interest rates on small loans at a more than
reasonable 36 percent. The percentage would be profitable
for current systems and competitive with the innovative
financial technology products emerging daily. The
percentage level would also allow Alaska to keep the $29
million generated by the industry in-state. He was ready to
hear the amendment.
Co-Chair Foster thanked the sponsor.
Co-Chair Foster noted that one amendment had been received.
Representative Coulombe MOVED to ADOPT Amendment 1,
33-LS0508\U.3 (Dunmire 3/22/24) (copy on file):
Page 4, line 30:
Delete "AS 06.20.260(a)(1) - (5)"
Insert "AS 06.20.260(a)(1) and (3) - (5)"
Page 5, following line 11:
Insert a new bill section to read:
* Sec. 12. AS 06.20.330(b) is amended to read:
(b) This chapter does not apply to a financial
institution chartered under 12 U.S.C. 38 (National
Bank Act) or 12 U.S.C. 1751 - 1795k (Federal Credit
Union Act) [INDIVIDUAL LOANS BY
(1) PAWNBROKERS WHERE SEPARATE AND INDIVIDUAL LOANS
DO NOT EXCEED $750; IN THIS PARAGRAPH, "PAWNBROKER"
MEANS A PERSON WHO IS REGULATED UNDER AS 08.76.100 -
08.76.590;
OR
(2) LOAN SHOPS WHERE SEPARATE AND INDIVIDUAL LOANS DO
NOT EXCEED $500]."
Renumber the following bill sections accordingly.
Page 5, line 31:
Delete ", 06.20.330"
Page 6, line 7:
Delete "2024"
Insert "2025"
Co-Chair Foster OBJECTED for discussion.
Representative Coulombe explained the amendment was brought
to her by the sponsor. She asked for the sponsor to speak
to it.
RACHAEL GUNN, STAFF, REPRESENTATIVE STANLEY WRIGHT, relayed
that they had worked closely with industry when crafting
the bill to ensure federally and state chartered banks were
happy in addition to financial institutions and the fintech
market. She noted the fintech market was robust and
included numerous products. She explained that they had
come up with amending the bill by deleting AS
06.20.260(a)(1) - (5) and reinserting AS 06.20.260(a)(1)
and (3) - (5) separately. She detailed that the bill worked
hard to calculate the true cost of a loan. She highlighted
the importance of cost transparency. She noted that the
exemption to the true cost of the loan would include some
fees such as credit insurance, premiums paid out for
insurance, and taxable costs and expenses during the debt
collection process (Alaska had a 7 percent interest on
collections). She noted that in Alaska loans were
guaranteed because the state had the unique ability garnish
the Permanent Fund Dividend (PFD). The other exemption was
for a loan of $10,000 or less, which did not apply to
payday loans, secured by an interest in real estate, any
cost in fees for appraisals, surveys, and title insurance
were not included in the APR figure. She explained they
were going for full transparency and the number had been
arrived at with the approval of industry across the board
including fintech, banks, and credit unions. She added that
military members also had access to the loans through USAA
and other programs.
5:47:27 PM
Co-Chair Johnson asked about something one of the
testifiers had said, which she found a bit concerning. She
detailed that one of the testifiers shared that they had
applied for a lot of credit, which had negatively impacted
their credit score. She asked if the sponsor's office had
thoughts on the mechanism of applying for credit. She
believed the bill would put a mechanism in place that was
already somewhat in place in Alaska that would make the
process more streamlined.
Ms. Gunn answered that because the committee had heard an
anecdotal experience from an out of state testifier, she
offered her own personal anecdotal experience. She had
grown up in a foster care situation and had not emerged at
the age of 18 with good financial sense. She had tanked her
own credit score through irresponsible financial habits.
She put herself through college with zero student loans and
when she entered the working world, she had worked to
rebuild her credit score. She shared that it had been the
previous year when she began her current job and used some
of the fintech products including a payday loan that fell
under the 36 percent [APR] and a couple of credit builder
payday loan advances. She shared it had been amazing and
cost $6.99, $9.99, or $30.00 per month for people to help
her dispute charges on her credit report while offering
small loans she could repay on time to rebuild her credit.
She was very happy that at the age of 36 the products were
available. She noted nothing like that had been available
to her 15 years back.
5:50:14 PM
Co-Chair Foster WITHDREW the OBJECTION.
There being NO further OBJECTION, Amendment 1 was ADOPTED.
Representative Coulombe noted that most people who had
called into public testimony had called in from out of
state. She asked why.
Ms. Gunn answered that no opposition to the bill had been
encountered until the past week or so. She shared that in
her research trying to get to the bottom of the rebuttals
it appeared there was significant financial interest in the
$29 million that leaves the state. The funds were a result
of credit borrowed by the state's most vulnerable
population. Her personal credit was on the up and up and
the worst credit card she personally had carried an
interest rate of 26.99 percent APR. She believed the 36
percent APR in the bill seemed ethical.
Representative Coulombe thought it seemed like the people
benefitting were from out of state. She asked if the people
calling in were directly benefitting from the payday
industry.
Ms. Gunn answered that it sounded like the early testifiers
had some clients involved in the industry and the online
lenders association was heavily vested in the industry. She
relayed that 67 percent of payday loans taken out in Alaska
were done online, none of which had licenses in Alaska. She
detailed that mom and pop loan shops did not exist in the
state. The bill would not put any homegrown Alaskan
businesses or pawn brokers out of businesses. She stated
that if a person wanted to sell a gold ring and get a very
bad loan rate, but it took more foresight than taking
advantage of people in desperate circumstances.
5:53:32 PM
Representative Stapp referenced public testimony by Mr.
Duke who stated the appropriate APR number might be around
1,700 percent. He remarked there was a big difference
between the 30s and 1,700. He asked for comment.
Ms. Gunn answered that the average loan in Alaska was 421
percent, but the payday loans were in the 500 percent
range. She detailed that if a person took out a payday loan
for $400 because their transmission was going out and the
transmission repair cost $900, it was unlikely they would
be able to make rent or afford groceries that week and very
unlikely they would be able to pay the $400 back within two
weeks. She considered the higher APR loans and used the
purchase of a house as an example. She detailed that 421
percent interest on a $250,000 loan would mean paying tens
of millions yearly for the house over the lifetime of a 30-
year loan. She recognized the bill was not addressing long-
term loans. She explained that if a person paid a $400 loan
back on time at an interest rate of 420 percent, they would
pay up to $1,200. She believed a loan with a 1,700 percent
APR would be unaffordable for anyone.
Co-Chair Johnson stated that the average loan was $440 and
the average payback was $1,890, which was significant in a
short period of time. She referenced the $29 million and
did not believe any of the lenders were based in Alaska.
She noted that the money was all leaving the state. She
stated there were institutions in Alaska that would provide
the service, but the market had not really been there for
them. She elaborated that the bill would encourage the
market to happen at a much more reasonable rate as well as
keeping the $29 million in Alaska for in-state businesses.
5:57:13 PM
Representative Cronk thanked the bill sponsor for bringing
the bill forward. He believed in making money but not at
the extent or at the expense of people trying to make ends
meet. He appreciated the examples provided and believed
there needed to be a limit on how much [could be charged].
Co-Chair Johnson MOVED to REPORT CSHB 145(FIN) out of
committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, it was so ordered.
CSHB 145(FIN) was REPORTED out of committee with nine "do
pass" recommendations and with one new fiscal impact note
from the Department of Commerce, Community and Economic
Development.
Representative Wright thanked the committee. He thoroughly
appreciated all of the meaningful input.
Co-Chair Foster discussed the schedule for the next
meeting.
ADJOURNMENT
5:59:59 PM
The meeting was adjourned at 5:59 p.m.