Legislature(1995 - 1996)
04/24/1995 01:12 PM House JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE JUDICIARY STANDING COMMITTEE April 24, 1995 1:12 p.m. MEMBERS PRESENT Representative Brian Porter, Chairman Representative Joe Green, Vice Chairman Representative Con Bunde Representative Bettye Davis Representative Al Vezey Representative Cynthia Toohey Representative David Finkelstein MEMBERS ABSENT None COMMITTEE CALENDAR HB 226: "An Act permitting the provision of different retirement and health benefits to employees based on marital status." PASSED OUT OF COMMITTEE SB 3: "An Act relating to an antitrust exemption for persons engaged in the fishing industry." PASSED OUT OF COMMITTEE HJR 40: Proposing an amendment to the Constitution of the State of Alaska repealing provisions establishing and relating to the budget reserve fund. PASSED OUT OF COMMITTEE HB 35: "An Act relating to sexual misconduct as grounds for imposing disciplinary sanctions on persons licensed by the State Medical Board." PASSED OUT OF COMMITTEE HB 307: "An Act prohibiting the sale of pull-tabs; and providing for an effective date." SCHEDULED BUT NOT HEARD WITNESS REGISTER REPRESENTATIVE PETE KELLY Alaska State Legislature State Capitol, Room 513 Juneau, AK 99801-1182 Telephone: (907) 465-2327 POSITION STATEMENT: Sponsored HB 226 MARSHA BUCK, President Parents, Families and Friends of Lesbians and Gays (PFLAG) 8445 Kimberly Street Juneau, AK 99801 Telephone: (907) 789-6167 POSITION STATEMENT: Testified in favor of CSHB 226 PATRICIA DOUGLAS, Member Pharmacy Board Chugiak, AK 99567 Telephone: (907) 688-6933 POSITION STATEMENT: Testified in favor of HB 226 TYSON NEVIL P.O. Box 82176 Fairbanks, AK 99708 Telephone: (907) 474-4655 POSITION STATEMENT: Testified in favor of CSHB 226 MARGARET BERCK, Attorney Alaska Chapter, American Civil Liberties Union 227 7th Street Juneau, AK 99801 Telephone: (907) 586-3309 POSITION STATEMENT: Testified in favor of CSHB 226 MARK TUMEO 1324 Summit Fairbanks, AK 99712 Telephone: (907) 474-6090 POSITION STATEMENT: Testified in favor of CSHB 226 JAN SIEBERTS Alaska Bankers Association P.O. Box 100600 Anchorage, AK 99510 Telephone: (907) 265-2991 POSITION STATEMENT: Opposed HB 226 ANNE CARPENETI, Committee Aide House Judiciary Committee State Capitol, Room 120 Juneau, AK 99801-1182 Telephone: (907) 465-4990 POSITION STATEMENT: Provided information on HB 226 PAM NEAL, President Alaska State Chamber of Commerce 217 - 2nd Street, Suite 201 Juneau, AK 99801 Telephone: (907) 586-2323 POSITION STATEMENT: Opposed HB 226 THOMAS OWENS 1500 West 33rd, No. 200 Anchorage, AK 99503 Telephone: (907) 276-3963 POSITION STATEMENT: Provided information on HB 226 FRANK DILLON, Executive Director Alaska Trucking Association 3443 Minnesota Drive Anchorage, AK 99501 Telephone: (907) 276-1149 POSITION STATEMENT: Testified in favor of HB 226 DANIEL COLLISON, Vice President Southeast Alaska Gay and Lesbian Association P.O. Box 21466 Juneau, AK 99803 Telephone: (907) 789-5001 POSITION STATEMENT: Opposed CSHB 226 KATE WATTUM, Professor University of Alaska Fairbanks P.O. Box 84397 Fairbanks, AK 99708 Telephone: (907) 455-6639 POSITION STATEMENT: Testified in favor of HB 226 MARK NEUMAYR, Attorney University of Fairbanks P.O. Box 82876 Fairbanks, AK 99708 Telephone: (907) 474-7259 POSITION STATEMENT: Testified in favor of HB 226 SCHOEN PARNELL, Director Christian Coalition 3142 Princeton Anchorage, AK 99508 Telephone; (907) 562-1776 POSITION STATEMENT: Testified in favor of HB 226 BEVERLY MCCLENDON P.O. Box 84397 Fairbanks, AK 99708 Telephone: (907) 455-6639 POSITION STATEMENT: Testified in favor of CSHB 226 SARAH BOESSER, Representative Committee for Equality P.O. Box 34202 Juneau, AK 99803 Telephone: (907) 789-9604 POSITION STATEMENT: Testified in favor of CSHB 226 TALMADGE BAILEY P.O. Box 34542 Juneau, AK 99803 Telephone: (907) 790-2519 POSITION STATEMENT: Testified in favor of CSHB 226 SENATOR JIM DUNCAN Alaska State Legislature State Capitol, Room 119 Juneau, AK 99801-1182 Telephone: (907) 465-4767 POSITION STATEMENT: Introduced SB 3 KRIS NOROSZ, Executive Director Southeast Alaska Seiners Association P.O. Box 805 Petersburg, AK 99833 Telephone: (907) 772-4446 POSITION STATEMENT: Testified in favor of SB 3 ED CRANE, President Commercial Fishing Agriculture Bank 2550 Denali Street, Number 1201 Anchorage, AK 99503 Telephone: (907) 276-2007 POSITION STATEMENT: Testified in favor of SB 3 RICHARD W. ISETT, Commercial Fisherman P.O. Box 33773 Juneau, AK 99803 Telephone: (907) 789-5714 POSITION STATEMENT: Testified on SB 3 DONNA PARKER, Fisheries Specialist Department of Commerce and Economic Development P.O. Box 110800 Juneau, AK 99811-0800 Telephone; (907) 465-5464 POSITION STATEMENT: Testified in favor of SB 3 JERRY MCCUNE, President United Fishermen of Alaska 211 4th Street, No. 112 Juneau, AK 99801 Telephone: (907) 586-2820 POSITION STATEMENT: Testified in favor of SB 3 DWIGHT PERKINS, Special Assistant Office of the Commissioner Department of Labor P. O. Box 110700 Juneau, AK 99811-0700 Telephone: (907) 465-2700 POSITION STATEMENT: Testified in support of SB 3 JOHN BITNEY, Legislative Assistant to Representative Terry Martin Alaska State Legislature State Capitol, Room 502 Juneau, AK 99801-1182 Telephone: (907) 465-3783 POSITION STATEMENT: Introduced HJR 40 JACK FARGNOLI, Senior Policy Analyst Office of Management and Budget Office of the Governor P.O. Box 110001 Juneau, AK 99811-0001 Telephone: (907) 465-4678 POSITION STATEMENT: Opposed HJR 40 NEIL SLOTNICK Department of Law P.O. Box 110300 Juneau, AK 99811-0300 Telephone: (907) 465-6735 POSITION STATEMENT: Provided information on HJR 40 REPRESENTATIVE SEAN PARNELL Alaska State Legislature State Capitol, Room 515 Juneau, AK 99801-1182 Telephone: (907) 465-2995 POSITION STATEMENT: Sponsor of HB 35 CATHERINE REARDON, Director Division of Occupational Licensing Department of Commerce P.O. Box 110800 Juneau, AK 99811-0800 Telephone: (907) 465-2538 POSITION STATEMENT: Provided information on HB 35 JAYNE ANDREEN, Executive Director Council on Domestic Violence & Sexual Assault Department of Public Safety P.O. Box 111200 Juneau, AK 99801 Telephone: (907) 465-4356 POSITION STATEMENT: Testified in favor of HB 35 PREVIOUS ACTION BILL: HB 226 SHORT TITLE: MARITAL STATUS AND RETIREMENT BENEFITS SPONSOR(S): REPRESENTATIVE(S) KELLY,Rokeberg JRN-DATE JRN-PG ACTION 03/03/95 565 (H) READ THE FIRST TIME - REFERRAL(S) 03/03/95 565 (H) STATE AFFAIRS, HES, JUDICIARY 03/18/95 (H) STA AT 10:00 AM CAPITOL 102 03/18/95 (H) MINUTE(STA) 03/20/95 808 (H) STA RPT 4DP 1AM 03/20/95 808 (H) DP: JAMES, PORTER, GREEN, IVAN 03/20/95 808 (H) AM: ROBINSON 03/20/95 808 (H) ZERO FISCAL NOTE (ADMIN/ALL DEPTS) 03/28/95 (H) HES AT 02:00 PM CAPITOL 106 03/28/95 (H) MINUTE(HES) 04/06/95 (H) HES AT 02:00 PM CAPITOL 106 04/11/95 (H) HES AT 02:00 PM CAPITOL 106 04/18/95 (H) HES AT 10:00 AM CAPITOL 106 04/18/95 (H) MINUTE(HES) 04/21/95 1422 (H) HES RPT CS(HES) NT 1DP 4NR 1AM 04/21/95 1422 (H) DP: TOOHEY 04/21/95 1422 (H) NR: G.DAVIS,BUNDE,ROBINSON,BRICE 04/21/95 1422 (H) AM: VEZEY 04/21/95 1423 (H) ZERO FISCAL NOTE (ADM) 3/20/95 04/24/95 (H) JUD AT 01:00 PM CAPITOL 120 BILL: SB 3 SHORT TITLE: ANTITRUST EXEMPTION FOR FISHERMEN SPONSOR(S): SENATOR(S)DUNCAN, Zharoff, Hoffman, Taylor, Halford, Lincoln, Pearce, Donley, Salo, Leman; REPRESENTATIVE(S) Ivan, Grussendorf JRN-DATE JRN-PG ACTION 01/06/95 13 (S) PREFILE RELEASED - 1/6/95 01/16/95 13 (S) READ THE FIRST TIME - REFERRAL(S) 01/16/95 13 (S) RES, JUD 01/17/95 35 (S) COSPONSOR: ZHAROFF 01/25/95 (S) RES AT 03:30 PM BUTROVICH ROOM 205 01/25/95 (S) MINUTE(RES) 01/27/95 (S) RES AT 03:30 PM BUTROVICH ROOM 205 01/27/95 (S) MINUTE(RES) 02/01/95 133 (S) COSPONSOR: HOFFMAN 02/03/95 (S) RES AT 03:30 PM BUTROVICH ROOM 205 02/03/95 (S) MINUTE(RES) 02/06/95 180 (S) RES RPT 5DP 02/06/95 180 (S) ZERO FISCAL NOTE (LABOR #1) 02/22/95 (S) JUD AT 01:30 PM BELTZ ROOM 211 02/27/95 (S) JUD AT 01:30 PM BELTZ ROOM 211 02/27/95 (S) MINUTE(JUD) 02/28/95 417 (S) JUD RPT 3DP 2NR 02/28/95 417 (S) ZERO FN (LABOR #1) 02/28/95 425 (S) COSPONSOR(S): TAYLOR 03/02/95 (S) RLS AT 11:25 AM FAHRENKAMP ROOM 203 03/02/95 (S) MINUTE(RLS) 03/07/95 516 (S) RULES TO CALENDAR 3/7/95 03/07/95 521 (S) READ THE SECOND TIME 03/07/95 522 (S) COSPONSOR(S):HALFORD,LINCOLN,PEARCE, 03/07/95 522 (S) DONLEY, SALO, LEMAN 03/07/95 521 (S) ADVANCED TO THIRD READING UNAN CONSENT 03/07/95 522 (S) READ THE THIRD TIME SB 3 03/07/95 522 (S) PASSED Y18 E2 03/07/95 525 (S) TRANSMITTED TO (H) 03/08/95 632 (H) READ THE FIRST TIME - REFERRAL(S) 03/08/95 632 (H) FISHERIES, RESOURCES, JUDICIARY 03/08/95 666 (H) CROSS SPONSOR(S): GRUSSENDORF, IVAN 03/20/95 (H) FSH AT 05:00 PM CAPITOL 124 03/20/95 (H) MINUTE(FSH) 03/22/95 851 (H) FSH RPT 2DP 1NR 03/22/95 851 (H) DP: ELTON, MOSES 03/22/95 851 (H) NR: AUSTERMAN 03/22/95 851 (H) SENATE ZERO FISCAL NOTE (LABOR) 2/6/95 04/12/95 (H) RES AT 08:00 AM CAPITOL 124 04/12/95 (H) MINUTE(RES) 04/13/95 1315 (H) RES RPT 6DP 1NR 04/13/95 1316 (H) DP: NICHOLIA,DAVIES,OGAN,AUSTERMAN 04/13/95 1316 (H) DP: GREEN, WILLIAMS 04/13/95 1316 (H) NR: KOTT 04/13/95 1316 (H) SENATE ZERO FISCAL NOTE (LABOR) 2/6/95 04/24/95 (H) JUD AT 01:00 PM CAPITOL 120 BILL: HJR 40 SHORT TITLE: REPEAL BUDGET RESERVE FUND(ART IX SEC 17) SPONSOR(S): REPRESENTATIVE(S) MARTIN JRN-DATE JRN-PG ACTION 04/05/95 1025 (H) READ THE FIRST TIME - REFERRAL(S) 04/05/95 1025 (H) STATE AFFAIRS, JUDICIARY, FINANCE 04/18/95 1341 (H) STA RPT 3DP 4NR 04/18/95 1341 (H) DP: JAMES, PORTER, GREEN 04/18/95 1341 (H) NR: IVAN, ROBINSON, WILLIS, OGAN 04/18/95 1341 (H) FISCAL NOTE (GOV) 04/18/95 (H) STA AT 08:00 AM CAPITOL 102 04/18/95 (H) MINUTE(STA) 04/24/95 (H) JUD AT 01:00 PM CAPITOL 120 BILL: HB 35 SHORT TITLE: SEXUAL MISCONDUCT BY MEDICAL PROFESSIONAL SPONSOR(S): REPRESENTATIVE(S) PARNELL,Bunde,Robinson,Toohey JRN-DATE JRN-PG ACTION 01/06/95 29 (H) PREFILE RELEASED 01/16/95 29 (H) READ THE FIRST TIME - REFERRAL(S) 01/16/95 29 (H) HES, JUD, FIN 01/19/95 90 (H) COSPONSOR(S): BUNDE 02/06/95 256 (H) COSPONSOR(S): ROBINSON 04/13/95 (H) HES AT 02:00 PM CAPITOL 106 04/13/95 (H) MINUTE(HES) 04/18/95 1342 (H) HES RPT CS(HES) NEW TITLE 4DP 04/18/95 1343 (H) DP: G.DAVIS,BUNDE,TOOHEY,ROBINSON 04/18/95 1343 (H) ZERO FISCAL NOTE (DCED) 04/24/95 1485 (H) COSPONSOR(S): TOOHEY 04/24/95 (H) JUD AT 01:00 PM CAPITOL 120 BILL: HB 307 SHORT TITLE: PULL-TABS PROHIBITED SPONSOR(S): REPRESENTATIVE(S) TOOHEY,Phillips,James,Martin JRN-DATE JRN-PG ACTION 04/12/95 1284 (H) READ THE FIRST TIME - REFERRAL(S) 04/12/95 1284 (H) JUDICIARY, FINANCE 04/19/95 1391 (H) COSPONSOR(S): MARTIN 04/24/95 (H) JUD AT 01:00 PM CAPITOL 120 ACTION NARRATIVE TAPE 95-50, SIDE A Number 000 The House Judiciary Standing Committee was called to order at 1:12 p.m. on Monday, April 24, 1995. All members were present. The hearing was teleconferenced to Petersburg, Anchorage, Fairbanks and Chugiak. CHAIRMAN BRIAN PORTER stated that the following bills would be heard: CSHB 226(HES), SB 3, HJR 40, and CSHB 35. CSHB 226(HES) - MARITAL STATUS AND RETIREMENT BENEFITS REPRESENTATIVE PETE KELLY, bill sponsor, introduced HB 226. The superior court has recently decided that unmarried couples are entitled to the same employment benefits as married couples. This decision was a result of a broad interpretation of the language found in the Human Rights Act which prohibits discrimination based on marital status. The court concluded the human rights directive was violated when the University of Alaska refused health benefits to the unmarried partners of university employees. It is feared this decision will have a far-reaching impact, and that the trickle of grievances at the University of Alaska will become a flood in other state agencies and finally to private industry as well. It is not a stretch to imagine Alascom, NBA and AFL-CIO, being sued in the near future for failing to recognize domestic partners in their benefits packages. Because of the definition of "domestic partner" it is not grounded in contract and tradition, as is marriage. It is a moving target and therefore impossible to predict what future relationships would qualify under this umbrella. The superior court decision targets worker benefits to an unknown panoply of partners who are able to attach themselves to state employees. HB 226 intends to reduce the uncertainty employees face as a result of a decision in planning their compensation packages, and to pre-empt the possible onslaught of domestic partner relationships, created solely to gain potential benefits. He added that this is a fairly typical change throughout statute. What HB 226 in its original form attempted to do is found throughout statute. A judge said there was lacking legislative intent in a particular case. Because of that lack of legislative intent, the plaintiff was forced to assume that the prohibition on discrimination based on marital status was absolute. In fact, there are plenty of other examples, placed in the packets, five that we could find immediately. REPRESENTATIVE KELLY said the other thing is that he has had a lot of comments about this bill. A lot of people consider it a hate bill. The fact is if discrimination exists, he is not necessarily convinced, but maybe that is something we need to address. It cannot be done in this fashion, as the judge has done it, because of the broad sweeping impact it will have on businesses and state employees. We are setting up businesses to put a big target on them that says, "sue me." It will be a lawyer's dream and an administrator's nightmare, as lawyers take companies and state agencies to task, based on perceived discrimination, and an administrator's nightmare as they decide which domestic partner relationship they should cover, and which they should not - basically whose boyfriend or girlfriend gets to come in under the umbrella. If they do not do it just right, they are going to be sued big time. Some lawyers have said they could go back six years because of the statute of limitations and pull class action suits out of the hat because of this bill. He felt it was important not to address discrimination against domestic partners in this manner, and that we should adopt the original HB 226 before it was amended in the HESS Committee. That was his request. MARCIA BUCK, President, Parents, Families and Friends of Lesbians and Gays (PFLAG), testified in favor of the CS for HB 226. PFLAG, Juneau, was opposed to the original HB 226 because we believe it discriminated against our sons and daughters, and friends on the basis of marital status. At that time, we felt that to have proceeded in this legislature with that bill that was openly discriminatory and flew in the face of the Alaska Constitution, appeared to us to be unthinkable and reminiscent of governments in some other countries, past and present, where there was discrimination against the people that the government intended to serve. We are pleased with the CS which removes that discriminator language, and allows our sons and daughters and family members who enter into committed long term relationships and domestic partnerships to accept benefits equal to those for other partnerships such as marriage. We would not come to you for PFLAG, asking for special rights for our family members, but we would come to you for equal rights for family members who are gay and lesbian. MS. BUCK said the sponsors of the bill have stated that it was financially motivated, but we believe the CS as it now reads, defines and places reasonable parameters on the couples for whom benefits would be available, and does so in a manner that does not discriminate against people simply because they are homosexual. We believe the CS limits frivolous partnerships. MS. BUCK explained that her daughter lives near Corvalis, and her partner is employed by Oregon State University. She is covered under her partner's health insurance. When they first moved to Corvalis, they had no other health coverage, and it became crucial that this coverage was crucial for her since she had severe allergy problems when they first moved there. The criteria in Oregon is less stringent than the criteria proposed in this CS. Even though Oregon has financial difficulties, they have not found that to be a burden on the state of Oregon. In summary, PFLAG would like to go on the record of being in support of the HESS CS for HB 226, and in opposition to HB 226, as originally written. PATRICIA DOUGLAS, Member, Pharmacy Board, said this bill, working with HB 227, will ensure that there is no misunderstanding on what the law is in reference to health care for spouses only. The impact is not fiscally sound for businesses in the private or public sectors. She urged passage of these bills as originally presented. If we allow these to be forgotten, simply because it is an uncomfortable issue, Alaskan voters will see that you are drawing a line as a political statement. We need to address all issues that affect the traditional family. We need people in Juneau that are not afraid to stand up for all that is right, supporting traditional family values. She urged the committee's support of the original version of HB 226. TYSON NEVIL spoke in support of HB 226 via teleconference. He urged this protection of families that would otherwise be denied health benefits. Representative Kelly is asking that the bill be changed to eliminate the partnership clauses added in the HESS committee. If the partnership clause is dropped, the bill will be an attempt to economically punish individuals who choose not to marry into traditional families. Economically and emotionally committed families come in all shapes and sizes in today's culturally diverse America. He believed the current CS for HB 226 reflects that diversity. He urged the committee to support the CS. The original version is an effort to impose moral values and prejudices on all of us. The CS includes Alaskans who only want equal protection under the law. MARGARET BERCK, Attorney, Alaska Chapter of the American Civil Liberties Union, spoke in support of the CS adopted by the House HESS Committee. We believe the definition of domestic partnership as set out in that bill, would fair it out, frivolous relationships, and at the same time, would meet the constitutional concerns that we believe were at issue in this bill. From listening to other testimony that was presented before the House HESS Committee, there was a considerable concern regarding some of the impact that the legislation might have on private employers. The bill will not impact private employers. There is a federal law that essentially deals with private employers, and the state provisions in this legislation would not turn that federal law and the requirements that are set out in it. MS. BERCK understood that when you are an employee at the university, and you choose to cover your partner, that money comes out of your paycheck. You get less money, and that virtually the cost to the university is an administrative cost for adding on those individual people. The employee also bears the cost with respect to adding these individuals to the pool of insured individuals that are related to or somehow associated with employees at the university. CHAIRMAN PORTER did not think that was correct, that the employee was the one bearing the cost to add another person to the insurance policy. He understood that while the employee would contribute to this cost, there is an equal contribution by the employer, so that costs proportionately go up with the amount of people covered, but such a cost is above and beyond the administrative cost. MS. BERCK mentioned that studies have been done in other states where domestic partnerships are recognized and the affects that has had on insurance costs. She felt that on the larger scheme, the affect has not been significant. Number 400 MARK TUMEO, Professor, University of Alaska Fairbanks, testified via teleconference in favor of the CS. He is a litigant in the case mentioned about the cost of health care. The expense to a university per employee for health care insurance is approximately $100 to $150 per month. He urged passage of the CS. The CS will save the state money by allowing benefits for long term domestic partners. It will allow currently uninsured individuals to access insurance. The state will save money when uninsured individuals get injured in public facilities. For example, an uninsured woman who miscarries, can run up over $100,000 in medical bills. These costs will end up being paid by Medicaid. This bill will not affect private companies. It is clear from a recent United States Supreme Court ruling that the Employment Retirement Income Security Act passed in 1974, pre-empts state law as the court ruled on benefit issues. JAN SIEBERTS, National Bankers Association (NBA), was confused about the language on the second page, "Not withstanding the prohibition against employment discrimination on the basis of marital status under (a) of this section, an employer may refuse to provide benefits to a person because the person is not legally married to an employee of the employer without violating this chapter;" Does that mean we have to apply these insurance benefits to married people just because they are married to an employee? That is what it sounds like. CHAIRMAN PORTER thought that on line 30, "the employer may" is the operative provision. In other words, we are not saying that the employer provision is saying that an employer may not provide insurance for a traditional spouse, without violating this chapter, unless ... no, you are right. REPRESENTATIVE GREEN said you can refuse it unless it is (a) or (b). CHAIRMAN PORTER said you may have hit on something. He did not know if it was the original intent, but we do have the Co-Chairs of HESS here. One could read this, very strongly, that this says, "employers will provide insurance to spouses or domestic partners." He thought that was a contract that is within the power of the employer to provide it or not to provide it, based on their own agreement with their own employees. REPRESENTATIVE TOOHEY asked if we have an attorney present. CHAIRMAN PORTER answered that yes, we do. ANNE CARPENETI, Committee Aide, House Judiciary Committee, stated that the language was awkwardly drafted, but thought the purpose of it was to say that an employer may make a choice for giving employee benefits based on marital status if there is a marriage or domestic partnership. CHAIRMAN PORTER understood the law right now to allow an employer to engage in negotiations, and not get any insurance benefits, if that is the case. MS. CARPENETI added that at a certain point when an employer gives spousal benefits, then you run into the problem of the Title 18.80, which prohibits discrimination based on marital status. This is kind of an exception to that, the way it is drafted. It follows the way the statute is drafted, which is a little bit awkward to understand. Number 525 CHAIRMAN PORTER said this then would provide that if that decision is made, that you are going to provide health care benefits to an employee that has a family package with it, that you are not violating the statutory provisions of this chapter against marital or sex discrimination, unless you say we will not provide them to a legally married person, which is obviously contrary to the agreement was that you already established. Also, you won't refuse to provide them for a domestic partner as defined throughout this section. So it does not take away the ability of an employer to negotiate a health package. Basically, what the court decision says is that if you give benefits to a spouse, you must give benefits to a nonspouse. What we are saying is that a nonspouse means a domestic partner as defined by this, so that if you have a nonmarried relationship other than this domestic partnership, you may discriminate against them, and not provide them with health insurance, and you would not be violating the anti-discrimination statute. MR. SIEBERTS clarified that the way he understands it is that if we give insurance to our employees under this bill, we are not required to give the benefits to their spouses or their families. CHAIRMAN PORTER said that is correct. MR. SIEBERTS said they feel this will increase insurance rates to the banks. Our institution has 1,200 employees and provides insurance for spouses and families. Even though the employee has to contribute partially to that additional expense, our institution contributes substantially. If it substantially increased the cost of providing this benefit to our employees, we will likely eliminate the benefit to all of our employees, which, in our case would mean an additional 2,500 people that would be uninsured. Even for us, it is a pretty competitive world out there, and we have to keep our pencils sharp to compete with much larger and tougher institutions than we are, and he thought that little businesses throughout the state would be in the same boat. You should be aware that this could have negative repercussions on people who are insured today. We do not want to kick those people out of our plan; that is not the purpose. Number 600 REPRESENTATIVE BUNDE asked how substantial the increase would be. Would it be 15 percent, or 5 percent? MR. SIEBERTS said he did not know an exact amount. PAM NEAL, President, Alaska State Chamber of Commerce, stated that the cost to expanding benefits would increase the cost to the state of Alaska, and we have a concern considering that our number one priority as an organization is that state spending be reduced, not expanded. Therefore, she felt this could be a problem in that arena. Secondly, there is confusion coming from the hearing in HESS. We heard testimony from an attorney that said private employers would be impacted, and yet we have testimony saying that they will not be. We fear that private employers would be impacted, because even if they were not affected initially, as usually follows, there is a court case where someone sues because the state employees would be discriminated against if they were not covered, but private employees are not. There would be a debate about that in court, and eventually the private employers would come under it. But even if private employers do not come under it, and even if we are able to continue the practice of not offering benefits to anyone but our employee, and of course we do not even have to offer benefits to our employees. But those reasons that you offer benefits are all still there. You certainly like to have employees who are enjoying the benefits of good health care, because they are going to be better, healthier employees, and the other factor is the loyalty that offering good benefits provides. In this regard, we feel that the private sector is already handicapped by the benefits that are offered by the state of Alaska. It is quite difficult to keep employees in the private sector here in Juneau, if there is a state job open. They are gone to that state job immediately because we cannot compete with the state on the benefits that they already provide. With this expansion of benefits, it just creates a wider gap, and a greater disparity. We are concerned that the only pool to draw private sector employees from will become the group of those who cannot get state jobs. She felt it would be too costly for private employers if they tried to participate, and it is too costly for the state. Number 740 THOMAS OWENS, Attorney, testified via teleconference. He thought it would be worth checking to see if this legislation would be pre- empted by (indiscernible). He said they represent some of the workers at the University of Alaska. Judge Greene's analysis was very straight forward. She simply said that 18.80 prohibits discrimination based on marital status, change in marital status, or parenthood status, in providing health care benefits. If nothing changes, at least all state employees who are childless, for example, could use the law to say that because the state is paying for health care benefits for employees who have children, that discrimination against single employees or childless employees are entitled to the thought that the state would have to pay compensation to these people who do not have children so that they would be treated the same as the state is treating people who do have children. The implications of this decision, and the path that is before you are enormous regardless of whether it applies to the private sector or not. REPRESENTATIVE GREEN asked Mr. Owens what the affect would be on private employers under the CS version. MR. OWENS answered that the change to the bill literally creates a married-like status for those people who are not married, as regards health care benefits. There are over 100 provisions in state law that allow or require discrimination based on marital status, and the minute the bill passes, you are going to have to go and change all of those other state laws that require discrimination based on marital status. For example, the statutory provisions concerning the teachers' retirement system provides that an employee who is a participant in the teachers' retirement system is allowed to amend their beneficiary designations to designate, as a beneficiary, a dependent or a spouse, and it specifically uses the term "spouse." If you have this bill creating a "contract spouse" then you are going to have to go through the rest of the law and create that same opportunity for contract spouses, for example, under the teachers' retirement system. There are also provisions that limit benefits to spouses. If you eliminate those provisions for spouses in one statute, you will have to go through and eliminate the provision in other related statutes. Number 830 FRANK DILLON, Executive Director, Alaska Trucking Association, testified via teleconference. He stated the original intent of the association's board of directors was to support this legislation with the idea that this piece of legislation would limit the ability for nonmarried couples to enjoy the benefits of that employee's benefit relationship with the state. We certainly had not envisioned this analysis of the law being applied to the private sector and quite frankly it has been frightening. Our position has been to encourage the legislature not to give people who are not married the benefits of a marriage contract. The idea of a domestic partner further dilutes the importance of the marriage status. We would continue with opposition to this. It seems to be that the intent of this bill has changed a little. REPRESENTATIVE FINKELSTEIN thought that it was intended to NOT include private employers, and if the language was not clear enough, it could be amended to that effect. DANIEL COLLISON, Vice President, Southeast Alaska Gay and Lesbian Association, responded to some of the comments that were raised by Mr. Owens. First of all, Mr. Owens suggested that if this bill is adopted as it is, an unmarried, childless employee of the university could come in and justify the same type of reimbursement equivalent to those benefits provided for those employees who are married or who have children. That is not what the issue would ... TAPE 95-50, SIDE B Number 000 MR. COLLISON continued...the domestic partner status as a marriage- like status. He would dispute that. This domestic partner bill, though it provides for access to health care benefits does not allow for a whole host of other benefits that is automatically assumed when someone is married. An example of that is if he entered into a domestic partner arrangement with somebody else, that does not immediately assume that he has responsibility for their children. It does not automatically assume that given that individual guise, that he has the same access to a third of that individual's estate that a spouse does. So a domestic partner status is not the equivalency of marriage. MR. COLLISON stated that in the continuing discussion of HB 226, it is troubling to note how suppositions and allegations, rather than recent discourse have played in this debate. Supporters of the original bill, which denies domestic partner benefits to university employees, speculate that such benefits will be a financial burden to the university health care plan, and also put undue pressure on the private sector to adopt domestic partner benefits. Supporters of the original bill offer no empirical evidence for their ominous predictions. When he or his friends present studies which refute their positions, the opposition dismisses them as mere statistics tailored to fit a preconceived conclusion. But these studies are based, not on pie in the sky ideas of a rosy future, but on the concrete experience of actual employers. For example, prior to the adoption of the domestic partner benefits at the University of Iowa, researchers speculated that enrollment in the university health care plan would increase from a low of 2.6 percent to a high of 8.3 percent. However, the actual experience of the university, four years after it implemented its domestic partner benefits plan, has been an increase in enrollment of only .2 percent. In 1985, the city of Berkeley extended domestic partner benefits to its employees. At that time, the Kaiser Health Maintenance Organization with whom the city contracted for employee health benefits, imposed a monthly surcharge. This surcharge was based on estimates that the plan would result in more costly claims of domestic partners. After three years of experience it was established that the claims of domestic partners did not burden the city's health plan. This monthly surcharge was first reduced, and then eliminated. The experience of both the University of Iowa, and the city of Berkeley is consistent with nearly 200 other private businesses, public universities, and governmental employers who have adopted domestic care benefits. These employers typically find that enrollment edges up by only 2 percent to 5 percent. The employers see trifling cost increases in their health plans of between 1 percent and 3 percent. In most cases, health insurance premiums remain the same. Representative Kelly may continue with his dire warnings that domestic benefits burden health care plans, but the burden of proof remains with him to present this committee with the names of actual businesses, universities, and public agencies who have thus suffered. Representatives from the Alaska business community may yet warn of the pernicious influence of domestic partner benefits on private employers, but the CS does not even address the private sector. Even if it did, the task remains for them to present the names of employers who have discontinued their health plans, laid off employees, or closed their doors rather than front the extra cost of domestic partner benefits. MR. COLLISON mentioned that in Massachusetts and Virginia states which have extended domestic partner benefits to public employees, he knows of no instance where employers have restricted their health care benefits only to employees. If proponents of this amendment are content to cry dire warnings of a calamitous future, they would be better to focus not on domestic partner benefits but on state Medicaid costs. For if ours is to be a debate of speculation and supposition, the one area of mystery is how this amendment impacts state Medicaid costs. When an employer is refused health care coverage for his or her domestic partner, that partner often goes without insurance. When the same partner incurs catastrophic health care bills and cannot cover them, the state of Alaska steps in to foot the bill. Who among you can estimate when such a partner will incur such bills and for how much? He urged adoption of the HESS CS. KATE WATTUM, Professor, University of Alaska Fairbanks, testified via teleconference in support of HB 226 as currently written. MARK NEUMAYR, Attorney, University of Alaska Fairbanks, said the university prefers the original bill as opposed to the CS. The university's position on provisions of the original bill are consistent with the university's practice and the position taken in the Judge Greene's superior court decision. SCHOEN PARNELL, Director, Christian Coalition of Alaska in Anchorage, testified via teleconference. We support Representative Kelly's original wording for HB 226. He asked if there were any people in the hearing with a legal background, and wondered about Judge Greene's decision on creating a like-marital status for domestic partners. Can that allow a class action lawsuit against the state of Alaska or against other employers who offer benefits? Would they be able to go after back benefits? CHAIRMAN PORTER said we do have an attorney as an aide to the Judiciary Committee, but the question you are asking is in a specific body of law that we have not been able to look at in the last half hour. There is not anyone here right now who could give you an exact answer, but in his experience, an exact answer would be suspicious in any event, as this is obviously a question that could be argued from either side. MR. PARNELL thought that with the original language, a lawsuit of that nature could not be made, so passing the original version of the bill would alleviate the possibility of a lawsuit. Number 300 BEVERLY MCCLENDON testified via teleconference in support of the CS for HB 226. This bill allows for protection of employees and their family members. It is important to remember why the practice has been established for health benefits for dependents. This is to assist in the financial security of the family, thus allowing the employee to continue being a productive member of the work force. This security is important no matter how a family is defined. SARAH BOESSER, Representative, Committee for Equality, testified in support of the CS for HB 226. By incorporating financially interdependent domestic partners into the university's health benefit plan, this bill will no longer illegally discriminate on the basis of marital status. Including domestic partners is one of the recommendations made by superior court Judge Greene, and it is wise of this body to follow nondiscrimination law in this case. This bill will not cost the state a significant amount of money. In fact, it may save significant money, because by allowing employees to pay for the health care coverage of their financially interdependent partners, more Alaskans will be covered by private health care coverage, and there will be fewer citizens left to seek Medicaid at state expense. The bill would not increase premium costs to the university. There are a number of studies done by many businesses that were provided to the HESS Committee. All find that from 1 percent to 3 percent is the number of increase in enrollment, with no negligible premium increase. Aetna found only a 2 percent increase in the first year, and only a 1 percent increase for each year following. Aetna sees no increase in premiums as a result of domestic partners inclusion. TALMADGE BAILEY testified in support of the CS for HB 226. We have heard much talk about the cost of this bill. We have heard that people will turn to sham domestic partnerships and break the state treasury, yet studies do not support this position. CHAIRMAN PORTER concluded the public hearing on HB 226. REPRESENTATIVE FINKELSTEIN offered amendment one. It would change "employer" to "public employer" on page 2, line 30, so that it will be clear which employers this applies to. He would not mind extending this to private employers, but since that is not the intent of the bill, he chose to change the wording to "public employer." REPRESENTATIVE VEZEY objected. REPRESENTATIVE BUNDE asked if this was intended to include all public employers or only the University of Alaska. REPRESENTATIVE VEZEY felt the amendment makes it much worse, because we are setting up a standard which would make the university subject to nondiscrimination guidelines, while allowing other employers a different set of discrimination guidelines. We are setting up an exclusionary statute. REPRESENTATIVE FINKELSTEIN felt the only issue before us is public employers. CHAIRMAN PORTER said it is the intent of the amendment that whatever it is we are doing here is not meant to affect the private sector. Whether or not the private sector is vulnerable under that case decision is not clear. That is something that would have to be argued in court, so it is not reasonable for us to answer that question absolutely. REPRESENTATIVE KELLY mentioned that while he did not disagree with the amendment, in that it did protect private industry, he would only be satisfied with the original version of HB 226. A roll call vote was taken. Representative Finkelstein abstained. Representatives Vezey and Green voted no. Representatives Toohey, Davis, Bunde and Porter voted yes. Amendment one passed with a four to two vote. Number 640 REPRESENTATIVE GREEN said he would like to put his name on Representative Kelly's amendment and offer it as amendment two: Page 1, line 2: Delete "marital or domestic partners" Insert "spouses" Page 2, line 30, after "provide": Insert "health or retirement" Page 2, line 31, after "unless the person": Insert "is legally married to an employee; and" Page 3, lines 1 - 3: Delete all material. Page 3, line 5, after "provision of": Insert "a health or retirement" Page 3, line 7, through page 4, line 13: Delete all material. Insert "is legally married to an employee". REPRESENTATIVE TOOHEY objected. A roll call vote was taken. Representatives Vezey, Green and Porter voted yes. Representatives Bunde, Finkelstein, Toohey and Davis voted no. Amendment two failed on a four to three vote. REPRESENTATIVE BUNDE made a motion to move CSHB 226(HESS) from committee as amended with fiscal notes as attached. REPRESENTATIVE DAVIS objected. A roll call vote was taken. Representatives Vezey, Toohey, Bunde, Green and Porter voted yes. Representatives Finkelstein and Davis voted no. CSHB 226(JUD) passed, five to two. SB 3 - ANTITRUST EXEMPTION FOR FISHERMEN Number 850 SENATOR JIM DUNCAN, bill sponsor, introduced SB 3. This is the first step in stabilizing a very important industry in this state. It will allow fishermen to form associations to collectively negotiate fish prices with fish processors. It provides a measure of state anti-trust immunity for the processors when they negotiate with fishermen, in addition. It does not allow processors to agree among themselves on the prices they will pay fishermen. Fishermen must always be present during those discussions, so it cannot be one sided. In order to collectively bargain, fishermen must be allowed to ... TAPE 95-51, SIDE A Number 000 SENATOR DUNCAN continued...that first of all, this does not provide that fishermen can collectively sell a catch, or fish products, although the corresponding federal law does expressly permit this. SB 3 has a provision that would make state law consistent with the federal law. Due to the incongruities between state and federal law, some Alaska fishermen's organizations have found themselves in compliance with federal anti-trust law, yet they are breaking state law, or vice versa. SENATOR DUNCAN stated this is only the first step towards stabilizing the Alaska fishing industry. Section 2 changes existing law by allowing fishermen to discuss prices with more than one processor at the same meeting. After that is done, and while it is only a first step, it will take congressional approval for a federal anti-trust immunity. The state and the fishing industry together could request a federal exemption. A federal exemption would be favorable, and passage of SB 3 would put us in a position to request that exemption. SENATOR DUNCAN noted that the fishing industry is Alaska's largest private employer. It affects every segment of our economy from small coastal villages to the state's general fund. Long term price agreements, which would result from collective bargaining will help stabilize commercial fishing prices, bolstering local and state economies, as well as consumer prices for seafood. He had received many letters of support for this legislation, some of which came from the United Fishermen, Cordova District Fishermen United, the Bering Sea Fishermen's Association, the director of the Alaska Commercial Fishing Agricultural Bank, the state Department of Commerce and Economic Development and the Department of Labor. REPRESENTATIVE VEZEY asked why we would want to go to the trouble of making this a law if there is nothing that specifically precludes us from doing it in the first place. SENATOR DUNCAN answered that we cannot exempt ourselves from the federal anti-trust law, only from state anti-trust law. Number 150 KRIS NOROSZ, Executive Director, Southeast Alaska Seiners Association, testified via teleconference. She said they are in full support of SB 3. It clarifies ambiguities currently found in state law concerning the fishermen's ability to collectively bargain their catch. Secondly, the bill will move us closer to obtaining a most needed federal exemption so that fishermen and processors would be allowed to negotiate prices. Passage of SB 3 would put the state and fishing industry in a position to request such an exemption from the federal government. This type of progressive action is an important and very critical step towards stabilizing commercial fish processors. The result would be greater value for Alaska seafood products which will directly affect the state and local economies. We appreciate the forward thinking presented in this bill and urge support of it. ED CRANE, President, Commercial Fishing Agriculture Bank, (CFAB) testified via teleconference and also submitted written testimony: "I have noted and read Senate Bill 3. In my view, SB 3 serves a relevant and highly significant purpose. "I have been directly or indirectly involved with individual producers of food and fiber, and with both formal and informal associations of such producers, for nearly 30 years. That includes almost continuous and intense involvement with producers and marketers of agricultural commodities of all kinds from 1965 through 1981. "As contrasted with manufacturers, an individual producer of food and fiber commodities is greatly disadvantaged by his or her isolated status within what may be huge conformation of economic forces. The producer is further made vulnerable by the limited- life nature of most commodities and by the pressure to capture whatever value may exist on a timely basis. "There has probably been no more positive statutory force affecting commodities producers than the limited anti-trust exemptions in federal and most state statutes. While a superficial glance may suggest they are merely the extension of privilege to a few, such exemptions are in actuality the cornerstones of the stability which is critical to any food production and distribution system and which provides immeasurable benefits to each of us as consumers. "Senate Bill 3 establishes and clarifies this important exemption for harvesters, producers, and marketers of Alaska's seafood resources. While it will solve no problems by itself, its enactment will provide significant opportunities for the creation of stabilizing forces which will benefit all of Alaska as well as seafood industry participants. "I would be most interested in knowing of any opportunities to express support for Senate Bill 3." Number 250 RICHARD W. ISETT, Commercial Fisherman, said he fishes in Bristol Bay out of his drift/gillnet boat. He has fished there since 1986 and gave the committee a little background from an individual fisherman's point of view. Nobody has time to sit down and negotiate fish prices in June or July. We have about 1,700 boats fishing in five districts in Bristol Bay and we sell to a market that is dominated, arguably by less than ten buyers. We do not have any way of preserving these fish past the 12 hours that we catch them, and so when we deliver these fish, we prepare nets and gear and wait for tenders to deliver these fish to processors. These processors in Bristol Bay will head and gut the fish, take the eggs, freeze them, and often deliver them in very short order to tramp steamers that are tied up next to the processing facility. Most of these fish go to Japan. In Japan the fish are reprocessed since they are not in retail ready condition when they leave Bristol Bay. Prices range from about 60 cents per pound to about $1.20. MR. ISETT said their relationship to processors is interesting. He does not hold any particular allegiance, since he does not owe them any money, but a lot of fishermen owe processors money, and he has owed them money in the past. You can receive financial aid from processors in the form of in-season advances, or if you have a break down, and a new engine is a $15,000 - $20,000 event, you can write this up on a purchase order. You do not call your banker, you tell the processor you have broken down and need a new engine and they help you get a new engine. He does not know many fishermen that are not dependent upon processors during the season. They provide net barges, logistics, helicopters, and it is quite an operation. There are just not people running around being independent of processors, so we are all tied to processors to one degree or another. Furthermore, the processors increase the market for fish, and they may put you on a limit if they cannot process any more fish during a big season when the processors processing capacity is taxed. Still you want a processor who has an adequate capacity and does not put you on limit during the height of the season. MR. ISETT explained that there is a fishermen's meeting around June 20 in which the processors tell them how terrible the market is. We will have a big carry over on inventory from the prior year. That will not be the case this year, but the dollar is expensive in relation to the yen. There are other sources of fish that are barely attractive to the buyers, and it goes on and on. What is established is a price that is a posted price that is put on their fish tickets under law. Typically it is going to be a low price that nobody worries about meeting. We are assured every year by these processors. Every year it is the same script. They are going to be competitive. He does not know what competition means to them, but it does not mean the same thing to them that it means to us. They are going to be competitive. They want the supply of fish, and they will pay us the least amount that they think is required to keep us fishing for them. That is basically the way this works. When we leave Bristol Bay, we will have a settlement at a price that is probably above the posted price, but we are all assured that there is more money coming, maybe. We just do not really know. This year, we have had a couple of adjustments from Icicle Seafoods after their preliminary settlement at the time we left the bay. We need that preliminary settlement because we pay crew shares out of that, boat payments, and so forth. So we have an investment of maybe a half million dollars in a boat, and it all has to happen within a month. We have essentially no leverage in this process. We can either fish or not fish. If we fish, we have to deliver the fish or we cannot keep them. Another thing that processors do is have a loyalty bonus. Loyalty bonuses discourage competition. They tell you that if you deliver all your fish to us, we will give you a bonus. It may be ten cents a pound. They do not tell you in addition to what. And there may be some breaks if you catch more than 100,000 pounds, but the so-called loyalty bonus is part of this scheme, that they have, and it seems to work very well. We do not negotiate with processors. They say we will give you all of these services. We have barges, helicopters, and all of that, but they do not talk about prices to individual fishermen, because we need them, when we are talking about one fisherman to processor. The closest thing he has seen to even coming close to negotiating prices is when they had a strike in 1991 in Bristol Bay. DONNA PARKER, Fisheries Specialist, Department of Commerce and Economic Development, testified in support of SB 3. She stated that the commodity markets stabilize the prices of salmon, by doing all of the buying and selling. The Japanese would like to do this, as they have with shrimp. What this bill helps solve is to expand marketing, product development, consistency of price, supply and quality. JERRY MCCUNE, President, United Fishermen of Alaska, testified in support of SB 3. Back in 1935, the Cordova District Fishermen United was a union. Then the federal government told them they could not be a union so they had to collective bargain, because they were a group of individual business people. This section just gives you the opportunity to bargain, it does not mean anybody is going to bargain with you. The federal law says that you can only talk to one processor at a time, so in order to collectively bargain, you have to go talk to individual processors one at a time. Section 2 would allow us under state law, to go to the federal government and see if we can get this exemption lifted, and the key thing is that it will allow us to talk to more than one processor at a time in the same room, and maybe come up with some kind of agreement. DWIGHT PERKINS, Special Assistant, Office of the Commissioner, Department of Labor, testified in support of SB 3. He mentioned that under AS 16.10.280, it provides that the Department of Labor serve as a mediator of disputes between fishers and fish processors on the price to be paid for salmon. The department's experience has revealed that the inability of fishers to form associations to negotiate with processors has been a primary factor in such disputes. This legislation would provide a mechanism to stabilize raw fish prices, thereby protecting Alaskan fishers and processors from the debilitating and fluctuating fish prices. A stable fishing industry will have a direct and positive affect on Alaska's economy. It is only reasonable that Alaska fishers and processors have the legal ability to protect themselves in this important resource from the price setting by outside interest. REPRESENTATIVE BUNDE moved to pass SB 3 on with fiscal notes as attached and individual recommendations. Hearing no objection, SB 3 passed out of committee. HJR 40 - REPEAL BUDGET RESERVE FUND (ART IX SEC 17) Number 700 JOHN BITNEY, Legislative Assistant, Representative Terry Martin, sponsor of HJR 40, introduced the resolution. This started off in the Senate as a major fiscal reform package that included other changes to the Constitution as well as various amendments to statute. As the package was moving through the body, and through discussions on all facets of the package as a whole, some of the portions became amended and some of them dropped off. What finally went through the last night of the legislative session in 1990, was the language that we have now in the Constitution which creates the constitutional budget reserve (CBR). That concept was placed on the ballot last year and was passed by the voters. Once we actually tried to apply the language that was in the constitutional budget reserve, it quickly became apparent that there was a lot of ambiguity in the language in terms of how it was to be applied. Immediately, the question came up over Section (a) of the amendment which described which proceeds were to go into the constitutional budget reserve. There was a key phrase in there called "all proceeds from an administrative proceeding." The question immediately came up as to what exactly an administrative proceeding meant. This became a matter of contention until we received an Attorney General's Opinion from Charlie Cole which said that we did not take the proceeds from any administrative proceeding until it got to the point of adjudication, where we had to go in front of a hearing officer or the court system to resolve a dispute between the state and a company. However, within statute, we have a process by which most claims are settled between the state and a company, called an informal conference. This was, by far, where most of the settlements that come to the state actually occur. Under the Attorney General's Opinion at the time, he decided that the informal procedures could go into the general fund. Shortly afterward, we had a lawsuit on that matter, and they construed that term "administrative proceeding" a little bit more liberally than the attorney general had. The result was that last session, the legislature was faced with returning some substantial sums that had come into the state's treasury under that informal process. MR. BITNEY said we had a bill last year that attempted to define some of the terms in subsection (b) of the constitutional reserve in regards to what is available for appropriation, and how we access the CBR under subsection (b) with a majority vote. The legislature passed a vote trying to define those terms. Again we were taken to court, and then now we have another decision from the Alaska Supreme Court. Section (c) of the CBR states that the legislature may appropriate from the constitutional budget reserve with a three quarters vote for any public purpose. Subsection (d) states that you have to pay it back. MR. BITNEY said that what he was getting at is that Representative Martin feels that we basically have a section of our Constitution that is unworkable, and that what was given to the voters turned out not to be entirely true, in practice. It is his hope, realizing that this resolution would require a two thirds vote in both the House and the Senate, as well as approval by the voters. We realize this is an interim project, and will probably take a lot of discussion with the public to present what has happened and what we would like to do. It is his hope to work on it in the House Finance Committee over the interim to discuss what steps need to be taken to clear up the language within the constitutional budget reserve, and perhaps look at taking a measure to the voters in next fall's election. JACK FARGNOLI, Senior Policy Analyst, Office of Management and Budget, Office of the Governor, opposed HJR 40. Part of our concern about the bill is that it would tend to pre-empt a Fiscal Planning Commission which is going to be looking at long-range reserve funds and policies, and this one in particular. That, of course, would be mitigated by holding it over with the commission trying to complete its charge. The second concern we have is that a simple repeal would leave us, in the absence of any such mechanism -- if you recall, the whole intent that is universally accepted about what this fund was supposed to do is to, in some sense, take money off the table to help avoid the shock of putting it on the table in lumps as it came in. If we were to remove it, we would have that situation again. That is the other part of our concern about it. REPRESENTATIVE FINKELSTEIN asked Mr. Fargnoli if in his opinion has this resulted in money being taken off the table that is coming in from settlements and making it harder to get at that money for use in a current budget. Have those two goals that were explained to the public been met? MR. FARGNOLI answered that in general those goals have been met. Selective litigation has created complication, but in general, it has kept money off the table and has made it harder to get money out of the fund and make it useful. To some degree that was the purpose of it, and that has happened. TAPE 95-51, SIDE B Number 000 REPRESENTATIVE TOOHEY asked if basically our costs are over and above last year, and we do not have the funds. MR. FARGNOLI answered basically that is correct. REPRESENTATIVE TOOHEY asked what would happen if we could not pay this money back and the fund goes away. MR. FARGNOLI answered that if this were repealed, there would need to be language saying that prior obligations would become void, and that money in the fund would lapse to the general fund. That would be their proposal. REPRESENTATIVE TOOHEY asked if Mr. Fargnoli had a crystal ball telling him how much money would be coming into this account in the next ten years, in terms of future settlement money. MR. FARGNOLI had no idea. REPRESENTATIVE FINKELSTEIN stated that prior to this previous settlement, it was up to $4,000,000,000, and now it is around $3,000,000,000. MR. FARGNOLI said the reason he says he has absolutely no idea is because that number has gone up and down more than one or two billion a year, in the last couple of years, so it is not like we do not know what settlements are out there, but it is difficult to tell how much there will be from time to time. The Department of Law also has confidentiality restraints. CHAIRMAN PORTER asked Mr. Fargnoli if in order to get into this constitutional budget reserve fund, without a three quarters vote, with just a majority vote, would we have to spend the earnings reserve, the permanent fund, and all of those other funds first. MR. FARGNOLI said yes, that is what would be required. NEIL SLOTNICK, Department of Law, stated he had been asked to come to the hearing in case there were questions for him. He was also asked to comment on whether they saw any legal problems with this resolution. The Department of Law does not see any legal problems with this resolution, and that it would do what it purports to do. There are a couple of potential ambiguities that could be clarified by transitional language. For example, the question of where does the money that is now in the constitutional budget reserve go if this repeal is adopted by the voters. He would argue that it would lapse into the general fund; that could be stated specifically in a transitional statement. A similar question is, what happens to the repayment obligation that is specified in Section 17(d)? In his view, that repayment obligation would be extinguished, and it could be specified in a transitional statement. CHAIRMAN PORTER closed the public hearing on HJR 40. He asked John Bitney if the motion of more clear transitional language might be something that the Finance Committee would want to look at. MR. BITNEY answered that in introducing the bill, the sponsor had preferred not to put that in at this time just for the sake of not trying to get the discussion focused on that at this point. It is his intent in introducing it, to try to focus in on the CBR language and the amendment itself, and then, yes, to actually do transitional language as we go through the process. The question remains out there as to what to do with the general funds and the permanent funds. Number 400 REPRESENTATIVE TOOHEY moved to pass the resolution out of committee with the zero fiscal note and individual recommendations. REPRESENTATIVE FINKELSTEIN objected. A roll call vote was taken. Representative Finkelstein voted no. Representatives Toohey, Green and Porter voted yes. HJR 40 passed out of committee with a three to one vote. REPRESENTATIVE FINKELSTEIN moved to rescind the vote. CHAIRMAN PORTER stated that when we have a full committee, we will move to rescind the motion and take another vote. CSHB 35 - SEXUAL MISCONDUCT BY MEDICAL PROFESSIONALS Number 450 REPRESENTATIVE SEAN PARNELL, bill sponsor, introduced CSHB 35. He stated that HB 35 is an act relating to sexual misconduct as grounds for imposing disciplinary sanctions on persons licensed by the State Medical Board. Sexual misconduct is not addressed expressly in statute, but current law permits the Alaska State Medical Board to impose sanctions for medical professionals engaged in unprofessional conduct, or lewd or immoral conduct in connection to the delivery of professional services. Most of us would categorize sexual misconduct by a doctor as unprofessional, or lewd or immoral. These broad categorizations do not send the message that we, as a society, do not want physicians engaging in sexual relations with patients who are under their care and control. The Alaska State Medical Board shares this sentiment, and according to their representative in a previous committee, doctors should be held to the highest standard in this area. We all know the physician/patient relationship is established on mutual trust. Sexual misconduct, in his view, is a breach of that trust. REPRESENTATIVE PARNELL mentioned that HB 35 would authorize the Medical Board to sanction doctors who engage in sexual misconduct and the bill briefly defines sexual misconduct on page 2. Granting the Medical Board express authority to sanction doctors who engage in sexual misconduct is critical for several reasons. The patient is extremely vulnerable, the doctor can use their status as a medical professional in over-reaching the bounds of professional conduct. Most importantly, the doctor's objective medical judgment is compromised if that doctor is engaged in sexual misconduct. Both the Alaska State Medical Association and the Network on Domestic Violence and Sexual Assault support HB 35. Number 500 CATHERINE REARDON, Director, Division of Occupational Licensing, Department of Commerce and Economic Development, shared the department's neutral position on this bill. They feel it will encourage the process that the Medical Board has been going through in trying to develop regulations defining sexual misconduct and unprofessional conduct. HB 35 will not greatly affect our disciplinary costs. The issue of regulating sexual contact outside of the work place is a policy call, and one that the legislature is the appropriate group to make. Although we have seen activities which involve sexual contact between physicians and patients outside the work place, which we would all feel inappropriate, however, the point that doctors also need to have opportunities to pursue their romantic lives has also been brought up. MS. REARDON pointed out that the Attorney General's Office contacted her indicating there is a definition for sexual contact in statute in Title 11. If the legislature does not want that definition to be applied to this bill, perhaps it would be helpful to clarify that definition. That appears in AS 11.81.900. It defines sexual contact in a more limited way than is intended by the legislature in this bill. MS. REARDON gave an example of the types of complaints they receive. A doctor sent a video tape of himself to one of his patients in which the doctor was nude. That was a pursuit which was going on outside of the work place, and yet, we would probably feel that was inappropriate. Number 550 JAYNE ANDREEN, Executive Director, Council on Domestic Violence and Sexual Assault, spoke in strong support of HB 35. They have become increasingly aware of cases where there is sexual misconduct on the part of physicians, both inside and outside of the treatment setting. This is a bill that they feel has to take place. There has to be some sanctions. The American Medical Association has this kind of standard, and the Medical Ethics Board is interested in doing this also. This is the type of standard that is place for psychiatrists and attorneys. We feel physicians need to be included in that. CHAIRMAN PORTER asked Representative Parnell if the definition of sexual contact in AS 11.81.900 is what he had in mind for this bill. REPRESENTATIVE PARNELL said different states have done it different ways. AS 11.81.900 gets pretty specific, but does not include penetration. That is defined elsewhere. He did not want the definition to be limited to AS 11.81.900. He felt the definition in HB 35 should be more expansive than that. He felt the Medical Board could address the specifics of the definition. REPRESENTATIVE FINKELSTEIN expressed concern over the hundreds of small towns we have in this state. Oftentimes doctors are in one- doctor towns. And oftentimes, the doctors who will go to these places are young and single. In a one-doctor town, everyone is your patient. They may have not been in that week or that month, but that is who they are going to go to, right? This would be for immunizations and everything. He could not imagine how a single doctor would go out and serve in a rural community, because they could not get involved with anyone. Certainly that was not the sponsor's intent. REPRESENTATIVE PARNELL feared the potential for abuse in a one- doctor town was even greater than in a city. That is an issue. He felt that if a doctor was involved with a patient, they ought to terminate the relationship and refer the patient to another doctor, because of the vulnerability aspect. The care of the patient is the highest priority, not the doctor's sexual necessities. He felt they should include language that specifies "during the physician/client relationship." That is the direction Rhode Island has taken on the issue. REPRESENTATIVE FINKELSTEIN felt that was also unreasonable for a small town, since it is unclear when your physician/client relationship ends. REPRESENTATIVE TOOHEY said we are not going to state that doctors in a one-doctor town remain celibate. There has got to be a way that the State Medical Board can look at these case-by-case. Otherwise, you are going to have to get very old, or asexual people to work in small towns. REPRESENTATIVE VEZEY felt this language about sexual contact outside the treatment center is totally out of line and applicable to a psychiatrist/patient relationship. The Medical Board is having extreme difficulty addressing this, and the thought that we could address it is ludicrous. If you want to write a statute that addresses the bizarre example that was given previously, you could, but people are people, they are sexual creatures. He felt it absolutely inappropriate that we try to regulate romantic relationships between adults. REPRESENTATIVE PARNELL said that is where we disagree, based upon his opening statement, and the vulnerabilities. TAPE 95-52, SIDE A Number 000 REPRESENTATIVE FINKELSTEIN offered amendment one which would clarify that on page 2, lines 25 and 26, this sexual contact would not be allowed "during the existence of the physician/client relationship, as defined by the Board." This replaces the current phrase, "during the course of treatment or outside the treatment setting." Hearing no objection, amendment one was adopted. REPRESENTATIVE FINKELSTEIN offered amendment two. This would clarify the definition of "sexual misconduct." This would include sexual contact or attempted sexual contact as defined by the Board, and regulations adopted under this section. ANNE CARPENETI, Committee Aide, House Judiciary Committee, mentioned that to define sexual misconduct, this amendment would have to be tinkered with, because she did not think this section would give regulatory power. You would have to define it as regulations adopted under this chapter in Title 8. CHAIRMAN PORTER asked if Representative Finkelstein would be willing to change "under this section" to "under this chapter." REPRESENTATIVE FINKELSTEIN answered that he would be willing to make this whole thing a conceptual amendment to avoid any of these problems. REPRESENTATIVE GREEN suggested having the bill drafter come up with the right language, because it is not just sexual contact; it is inappropriate sexual contact. It includes sexual contact, and sexual contact may be perfectly alright and still not be sexual misconduct; taking a vaginal examination, for example. This is sexual contact by a licensed physician, but it is not misconduct. REPRESENTATIVE PARNELL clarified that is why the language was provided on line 23 that adds, "outside the scope of generally accepted methods of examination or treatment." Presumably an obstetrician/gynecologist exam is within that scope. CHAIRMAN PORTER said he would feel better if they made it a conceptual amendment. He felt they were trying to say that the Board should define "sexual misconduct" and "sexual contact." REPRESENTATIVE FINKELSTEIN asked if he could offer this as a conceptual amendment that would require the Board to develop regulations related to sexual contact, and its limits in the physical realm. We have the rest of the definition of sexual misconduct here. It is only the degree to which contact ranges, that is what we are after here. REPRESENTATIVE TOOHEY asked him to say that again. REPRESENTATIVE FINKELSTEIN restated that they would somehow write in a way that implies the physical side of the limits of sexual contact. We are not talking here anymore about the term or the existence of the client relationship or the spouse. That is all in the later stuff. All we have left here is what is in the range of things starting from what could be determined as sexual contact. They need to have a definition of the physical range. This would just be a conceptual amendment. REPRESENTATIVE PARNELL said that was fine. CHAIRMAN PORTER clarified that amendment two is a conceptual amendment that will allow the Board to write regulations that extend the definition of sexual contact, as it is within sexual misconduct that they are now attempting to define in any event. REPRESENTATIVE VEZEY felt the area we are trying to address is actually much better covered in the tort liability these health care professionals have. He did not think the committee could succeed in codifying what our goal is here. CHAIRMAN PORTER asked if there was further discussion on the bill, or objection. Hearing no objection, amendment two was passed. REPRESENTATIVE FINKELSTEIN moved to pass the bill out of committee, as amended, with individual recommendations and zero fiscal notes. CHAIRMAN PORTER said we would draft a CS with these amendments incorporated, then meet with the sponsor and anyone else who wants to be in the loop. REPRESENTATIVE TOOHEY said she would like to be in the loop. CHAIRMAN PORTER said if anyone has objections to what they have crafted, then they can let him know, but the bill will be held until that is accomplished. He asked if there was objection to moving the bill under the conditions stated. Hearing no objection, under the conditions stated, CSHB 35(JUD) passed out of committee. HJR 40 - REPEAL BUDGET RESERVE FUND (ART IX SEC 17) (CONTINUED) CHAIRMAN PORTER announced they had a motion to rescind their action on failing to adopt HJR 40. Hearing no objection, that motion passed. REPRESENTATIVE GREEN moved to pass HJR 40 out of committee with individual recommendations and attached fiscal notes. REPRESENTATIVE FINKELSTEIN objected and a roll call vote was taken. Representatives Vezey, Toohey, Green and Porter voted yes. Representative Finkelstein voted no. HJR 40 moved with a four to one vote. ADJOURNMENT The House Judiciary Committee adjourned at 5:00 p.m.