04/13/2005 01:00 PM House JUDICIARY
| Audio | Topic |
|---|---|
| Start | |
| HB183 | |
| HB260 | |
| HB53 | |
| HB257 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 257 | TELECONFERENCED | |
| += | HB 183 | TELECONFERENCED | |
| *+ | HB 260 | TELECONFERENCED | |
| + | HB 133 | TELECONFERENCED | |
| = | HB 53 | ||
ALASKA STATE LEGISLATURE
HOUSE JUDICIARY STANDING COMMITTEE
April 13, 2005
1:11 p.m.
MEMBERS PRESENT
Representative Lesil McGuire, Chair
Representative Tom Anderson
Representative John Coghill
Representative Nancy Dahlstrom
Representative Pete Kott
Representative Les Gara
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 183
"An Act relating to the use of campaign contributions for shared
campaign activity expenses and to reimbursement of those
expenses."
- MOVED CSHB 183(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 260
"An Act relating to purchase and possession of cigarettes or
tobacco products by a person under 19 years of age, to licenses
for persons engaged in activities involving tobacco products, to
taxes on cigarettes and tobacco products, and to the amount of
the bond required to stay execution of a judgment in civil
litigation involving a signatory, a successor of a signatory, or
an affiliate of a signatory to the tobacco product Master
Settlement Agreement during an appeal; amending Rules 204, 205,
and 603, Alaska Rules of Appellate Procedure; and providing for
an effective date."
- MOVED CSHB 260(JUD) OUT OF COMMITTEE
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 53
"An Act relating to child-in-need-of-aid proceedings; amending
the construction of statutes pertaining to children in need of
aid; relating to a duty and standard of care for services to
children and families, to the confidentiality of investigations,
court hearings, and public agency records and information in
child-in-need-of-aid matters and certain child protection
matters, to immunity regarding disclosure of information in
child-in- need-of-aid matters and certain child protection
matters, to the retention of certain privileges of a parent in a
relinquishment and termination of a parent and child
relationship proceeding, to eligibility for permanent fund
dividends for certain children in the custody of the state, and
to juvenile delinquency proceedings and placements; establishing
a right to a trial by jury in termination of parental rights
proceedings; reestablishing and relating to state citizens'
review panels for certain child protection and custody matters;
amending the duty to disclose information pertaining to a child
in need of aid; authorizing additional family members to consent
to disclosure of confidential or privileged information about
children and families involved with children's services within
the Department of Health and Social Services to officials for
review or use in official capacities; relating to reports of
harm and to adoptions and foster care; mandating reporting of
the medication of children in state custody; prescribing the
rights of grandparents related to child-in-need-of-aid cases and
establishing a grandparent priority for adoption in certain
child-in-need-of-aid cases; modifying adoption and placement
procedures in certain child-in-need-of-aid cases; amending
treatment service requirements for parents involved in child-in-
need-of-aid proceedings; amending Rules 9 and 13, Alaska
Adoption Rules; amending Rules 3, 18, and 22, Alaska Child in
Need of Aid Rules of Procedure; and providing for an effective
date."
- MOVED CSSSHB 53(JUD) OUT OF COMMITTEE
HOUSE BILL NO. 257
"An Act relating to a procurement and electronic commerce tools
program for state departments and instrumentalities of the
state; and providing for an effective date."
- HEARD AND HELD
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 133
"An Act relating to incorporation of boroughs and to regulations
of the Local Boundary Commission to provide standards and
procedures for municipal incorporation, reclassification,
dissolution, and certain municipal boundary changes; and
providing for an effective date."
- BILL HEARING POSTPONED TO 4/18/05
PREVIOUS COMMITTEE ACTION
BILL: HB 183
SHORT TITLE: CAMPAIGN FINANCE: SHARED EXPENSES
SPONSOR(S): REPRESENTATIVE(S) HAWKER
02/28/05 (H) READ THE FIRST TIME - REFERRALS
02/28/05 (H) STA, JUD
03/29/05 (H) STA AT 8:00 AM CAPITOL 106
03/29/05 (H) Moved CSHB 183(STA) Out of Committee
03/29/05 (H) MINUTE(STA)
03/30/05 (H) STA RPT CS(STA) 2DP 2NR
03/30/05 (H) DP: ELKINS, SEATON;
03/30/05 (H) NR: GARDNER, RAMRAS
04/06/05 (H) JUD AT 1:00 PM CAPITOL 120
04/06/05 (H) <Bill Hearing Postponed>
04/13/05 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 260
SHORT TITLE: TOBACCO: BONDS; TAX; POSSESSION BY MINORS
SPONSOR(S): FINANCE
04/07/05 (H) READ THE FIRST TIME - REFERRALS
04/07/05 (H) JUD, FIN
04/13/05 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 53
SHORT TITLE: CHILDREN IN NEED OF AID/REVIEW PANELS
SPONSOR(S): REPRESENTATIVE(S) COGHILL
01/10/05 (H) PREFILE RELEASED 1/7/05
01/10/05 (H) READ THE FIRST TIME - REFERRALS
01/10/05 (H) HES, JUD, FIN
03/02/05 (H) SPONSOR SUBSTITUTE INTRODUCED
03/02/05 (H) READ THE FIRST TIME - REFERRALS
03/02/05 (H) HES, JUD, FIN
03/15/05 (H) HES AT 3:00 PM CAPITOL 106
03/15/05 (H) Heard & Held
03/15/05 (H) MINUTE(HES)
03/22/05 (H) HES AT 3:00 PM CAPITOL 106
03/22/05 (H) <subcommittee meeting>
03/31/05 (H) HES AT 3:00 PM CAPITOL 106
03/31/05 (H) Moved CSSSHB 53(HES) Out of Committee
03/31/05 (H) MINUTE(HES)
04/04/05 (H) HES RPT CS(HES) NT 5DP
04/04/05 (H) DP: ANDERSON, KOHRING, MCGUIRE, SEATON,
WILSON
04/11/05 (H) JUD AT 1:00 PM CAPITOL 120
04/11/05 (H) <Bill Hearing Rescheduled to 4/12>
04/12/05 (H) JUD AT 8:00 AM CAPITOL 120
04/12/05 (H) Heard & Held
04/12/05 (H) MINUTE(JUD)
04/13/05 (H) JUD AT 1:00 PM CAPITOL 120
BILL: HB 257
SHORT TITLE: STATE PROCUREMENT ELECTRONIC TOOLS
SPONSOR(S): JUDICIARY
04/06/05 (H) READ THE FIRST TIME - REFERRALS
04/06/05 (H) JUD, FIN
04/11/05 (H) JUD AT 1:00 PM CAPITOL 120
04/11/05 (H) <Bill Hearing Rescheduled to 4/13>
04/13/05 (H) JUD AT 1:00 PM CAPITOL 120
WITNESS REGISTER
REPRESENTATIVE MIKE HAWKER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Sponsor of HB 183.
BROOKE MILES, Executive Director
Alaska Public Offices Commission (APOC)
Department of Administration (DOA)
Anchorage, Alaska
POSITION STATEMENT: Provided comments and responded to
questions during discussion of HB 183.
REPRESENTATIVE KEVIN MEYER
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As chair of the House Finance Committee,
sponsor of HB 260, presented the bill and responded to
questions.
MICHAEL PATTERSON, President
Lucky Raven, Inc.
Soldotna, Alaska
POSITION STATEMENT: Provided comments during discussion of
HB 260.
DALE FOX, Executive Director
Alaska Cabaret Hotel Restaurant & Retailer's Association (Alaska
CHARR)
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of
HB 260.
PETE ROBERTS
Homer, Alaska
POSITION STATEMENT: Provided comments during discussion of
HB 260.
JAMES N. GARDNER, Attorney at Law
Gardner & Gardner, P.C.
Portland, Oregon
POSITION STATEMENT: During discussion of HB 260, provided
comments on behalf of Philip Morris USA and responded to
questions.
JOHANNA BALES, Excise Audit Manager
Central office
Tax Division
Department of Revenue (DOR)
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 260, and
responded to a question regarding a proposed amendment.
DAVID PARISH, Lobbyist
for the American Heart Association (AHA)
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of
HB 260, and responded to a question.
MIKE ELERDING, President
Northern Sales Company of Alaska, Inc.
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 260, responded to a
question and suggested, via written remarks provided to the
committee, a change to current statute.
CHRISTOPHER C. POAG, Assistant Attorney General
Commercial/Fair Business Section
Civil Division (Juneau)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 260, responded to
questions regarding proposed amendments.
SUZANNE CUNNINGHAM, Staff
to Representative Kevin Meyer
House Finance Committee
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 260, provided an
explanation of proposed Amendment 5 on behalf of the House
Finance Committee, sponsor.
RYNNIEVA MOSS, Staff
to Representative Coghill
Alaska State Legislature
POSITION STATEMENT: Presented the proposed CS for SSHB 53,
Version P, on behalf of Representative Coghill, sponsor.
JOHN McKAY
Anchorage Daily News
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of
SSHB 53 and suggested a change.
CHERYL TRAIL
Lincoln, Nebraska
POSITION STATEMENT: During discussion of SSHB 53, shared her
personal experiences with adoption procedures and the Department
of Health and Social Services (DHSS).
JAN RUTHERDALE, Assistant Attorney General
Human Services Section
Civil Division (Juneau)
Department of Law (DOL)
Juneau, Alaska
POSITION STATEMENT: Provided comments during discussion of
SSHB 53.
TAMMY SANDOVAL, Acting Deputy Commissioner
Office of Children's Services (OCS)
Department of Health and Social Services (DHSS)
Juneau, Alaska
POSITION STATEMENT: During discussion of SSHB 53, provided
comments and responded to questions.
VERN JONES, Chief Procurement Officer
Central Office
Division of General Services (DGS)
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 257, provided
comments, recommended changes, and responded to questions.
BRUCE LUDWIG, Business Manager
Alaska Public Employees Association/American Federation of
Teachers (APEA/AFT);
Secretary/Treasurer
Alaska State
American Federation of Labor and Congress of Industrial
Organizations (AFL-CIO)
Juneau, Alaska
POSITION STATEMENT: During discussion of HB 257, provided
comments and asked that the bill be held over.
JIM DUNCAN, Business Manager
Alaska State Employees Association (ASEA)
Anchorage, Alaska
POSITION STATEMENT: Testified in opposition to HB 257 and asked
that the bill be held over.
BEN MILAM
Palmer, Alaska
POSITION STATEMENT: His testimony regarding HB 257 was read by
Ken Brown.
BARRY JACKSON, Procurement Analyst; Project Manager; Programmer
Analyst
Resource Data, Inc. (RDI)
Anchorage, Alaska
POSITION STATEMENT: Provided comments during discussion of HB
257.
ACTION NARRATIVE
CHAIR LESIL McGUIRE called the House Judiciary Standing
Committee meeting to order at 1:11:56 PM. Representatives
McGuire, Dahlstrom, Gruenberg, and Gara were present at the call
to order. Representatives Anderson, Coghill, and Kott arrived
as the meeting was in progress.
HB 183 - CAMPAIGN FINANCE: SHARED EXPENSES
1:12:47 PM
CHAIR McGUIRE announced that the first order of business would
be HOUSE BILL NO. 183, "An Act relating to the use of campaign
contributions for shared campaign activity expenses and to
reimbursement of those expenses." [Before the committee was
CSHB 183(STA).]
REPRESENTATIVE MIKE HAWKER, Alaska State Legislature, sponsor,
relayed that while Alaska has some of the strongest campaign
finance laws in the nation, there is an ambiguity regarding, for
example, two candidates participating in the same activity, such
as a fundraiser, in which one candidate writes the check for the
caterer and the other candidate reimburses him/her. This
legislation inserts language specifying that one candidate may
reimburse another candidate for shared campaign expenses, as
long as the reimbursement occurs within three working days after
the original expense is paid. He highlighted that the main
intent is to shift the burden for compliance with campaign laws
from vendors to candidates.
CHAIR McGUIRE inquired as to the rationale for the three-day
requirement.
REPRESENTATIVE HAWKER relayed that he wanted there to be a tight
window, and after extensive discussion in the House State
Affairs Standing Committee, reimbursement within three working
days was deemed a reasonable length of time.
1:15:46 PM
REPRESENTATIVE GARA said that he would like to include language
in HB 183 to allow one [candidate] to provide another
[candidate] with his/her fundraising list.
REPRESENTATIVE HAWKER indicated that his only reservation with
regard to adding such language is that he is not familiar with
[current law] on that issue.
REPRESENTATIVE GARA suggested that the committee could either
address this now with a conceptual amendment or [a committee
substitute] could be drafted before the legislation gets to the
House floor.
CHAIR McGUIRE suggested instead that the committee move HB 183
out of committee today and then draft appropriate language with
help from the Alaska Public Offices Commission (APOC). She said
that she would agree to help obtain support for [Representative
Gara's] suggested change.
REPRESENTATIVE HAWKER said he would be willing to co-sponsor
[such an amendment] on the House floor or in the House Rules
Standing Committee.
1:18:48 PM
REPRESENTATIVE GRUENBERG opined that the requirement to repay a
candidate within three working days could be too short for
candidates from the Bush who have a fundraiser in Anchorage.
Therefore, he asked whether the sponsor would view changing that
requirement to a week as a friendly amendment.
REPRESENTATIVE HAWKER indicated his preference for having the
shortest, tightest time period possible.
REPRESENTATIVE GRUENBERG reiterated the potential problems those
in the Bush could face with the three-day requirement.
REPRESENTATIVE GRUENBERG made a motion to adopt Amendment 1, to
delete "three working days" from page 2, line 18, and insert
"five working days". There being no objection, Amendment 1 was
adopted.
1:20:47 PM
REPRESENTATIVE HAWKER, in response to comments, specified that
the intent of HB 183 is to merely cleanup areas of the campaign
finance laws that are universally supported by both Republicans
and Democrats.
1:22:17 PM
BROOKE MILES, Executive Director, Alaska Public Offices
Commission (APOC), Department of Administration (DOA), informed
the committee that the APOC has reviewed HB 183 and didn't
believe there would [be an issue] with the repayment happening
within three working days. However, changing it to five working
days or one working day might be cause concern because of the
possibility of the well-funded candidate virtually supporting
the non-funded [candidate] pending the outcome of the
fundraising event. Furthermore, there may be some confusion if
the repayment crosses reporting periods. Ms. Miles opined that
the APOC would favor the shorter time period. However, if the
committee believes additional time is necessary, the APOC will
administer whatever the law specifies.
MS. MILES, in response to earlier comments, noted that the law
does permit candidates to make contributions to the party for
events. With regard to Representative Gara's request regarding
the sharing of fundraising lists, Ms. Miles pointed out that
there is some value to those lists, but characterized that value
as de minimis. Ms. Miles concluded by saying that these
aforementioned issues are matters of policy and thus the APOC
will support whatever laws the legislature.
1:25:12 PM
REPRESENTATIVE GRUENBERG said he doesn't see that there would be
a problem changing the repayment time period from three days to
five days.
REPRESENTATIVE DAHLSTROM, noting Ms. Miles's comments on the
issue, moved that the committee rescind its action in adopting
Amendment 1.
REPRESENTATIVE GRUENBERG offered changing the three-day
requirement to a five-day requirement within a reporting period.
He relayed his understanding that Ms. Miles's concern was in
regard to the disclosures being reported within the same
[reporting] period.
MS. MILES said such [language] would completely address her
concern.
CHAIR McGUIRE inquired as to how the individual [candidate]
would know [when a reporting period change].
REPRESENTATIVE GRUENBERG offered his belief that that
information would be shared between candidates who know their
reporting periods.
REPRESENTATIVE HAWKER opined that there is little to no
difference between three days overlapping the end of a reporting
period and five days overlapping the end of a reporting period.
He relayed his understanding that the current statute is
intended to prevent one candidate from making a loan to another,
and so if statute authorizes the reimbursement of a shared
campaign expense, the [date] specified on the campaign
disclosure form would apply.
1:27:43 PM
REPRESENTATIVE GRUENBERG offered his understanding that a
candidate who has been reimbursed would show receipt of the
check, otherwise it would appear to be a loan and need to be
reported.
REPRESENTATIVE GARA explained that technically, if a candidate
receives something and pays for it three days later, the
candidate's books would have to refer to those [funds] as a loan
or a contribution during that period. Therefore, he suggested
that the legislation specify that as long as [the candidate]
pays for [the shared expenses] within [a certain period of]
days, then it doesn't have to be reported as something else in
the meantime.
REPRESENTATIVE HAWKER specified that the trigger mechanism is
when one candidate writes a check and gives cash [to another
candidate]. He opined that [Representative Gara's suggestion]
adds an unnecessary level of complication. Until a check is
actually written, both candidates could decide to split the
payment.
CHAIR McGUIRE clarified that there is no intention for there to
be any additional reporting than there [currently is]. She
indicated her agreement that the three-day requirement may be
difficult for those in the Bush and thus the change to a five-
day requirement makes sense.
REPRESENTATIVE DAHLSTROM withdrew her motion.
MS. MILES, in response to a question, reiterated that if the
[compensation is received] during the same reporting period, it
would be fine; however, if one candidate owes another for costs
paid in advance of a shared fundraising event and the reporting
period is closed, then the other candidate would need to show it
as a debt.
CHAIR McGUIRE surmised that what Ms. Miles is describing is no
different than if the candidate owed it to the vendor and there
were no shared expenses.
MS. MILES agreed.
1:31:35 PM
REPRESENTATIVE DAHLSTROM moved to report CSHB 183(STA), as
amended, out of committee with individual recommendations and
the accompanying fiscal notes. There being no objection, CSHB
183(JUD) was reported from the House Judiciary Standing
Committee.
HB 260 - TOBACCO: BONDS; TAX; POSSESSION BY MINORS
1:31:51 PM
CHAIR McGUIRE announced that the next order of business would be
HOUSE BILL NO. 260, "An Act relating to purchase and possession
of cigarettes or tobacco products by a person under 19 years of
age, to licenses for persons engaged in activities involving
tobacco products, to taxes on cigarettes and tobacco products,
and to the amount of the bond required to stay execution of a
judgment in civil litigation involving a signatory, a successor
of a signatory, or an affiliate of a signatory to the tobacco
product Master Settlement Agreement during an appeal; amending
Rules 204, 205, and 603, Alaska Rules of Appellate Procedure;
and providing for an effective date."
REPRESENTATIVE KEVIN MEYER, Alaska State Legislature, as chair
of the House Finance Committee, sponsor, presented HB 260. He
said that HB 260 addresses the issues of tobacco taxation,
possession and purchase of tobacco products by minors, and
limits on the supersedeas bond that signatories of the Master
Settlement Agreement (MSA) must post to stay an execution of
judgment in civil tobacco-related litigation. He said his main
goal in carrying the bill is to further the efforts being made
to prevent children from starting to smoke in the first place.
Studies indicate that if a person doesn't start smoking before
the age of 19, there is a 90 percent chance that he/she will
never start smoking. The bill increases the tax on "smokeless"
tobacco products from 75 percent to 100 percent of the wholesale
cost, and accelerates the currently instituted increase on
cigarettes.
REPRESENTATIVE MEYER relayed that under HB 260, individuals who
import tobacco products for their own personal consumption will
be required to purchase a buyer's license from the Department of
Revenue (DOR) for a fee of $25; such licensure will enable the
DOR to collect the required taxes from the buyer. The bill also
proposes to set the supersedeas bond limit at $100 million. He
offered his understanding that this bond limit will not change
any other aspect of the law, will not change the rules by which
a trial is conducted, will not affect who ultimately wins the
lawsuit, and will not affect the rights of plaintiffs to fully
recover damages. Placing a limit on such bonds will ensure that
the state will continue to receive its MSA payments, he posited,
and predicted that because Alaska is such a small state, it is
doubtful that the proposed bond limit would ever be reached
anyway.
REPRESENTATIVE MEYER said it is important to keep the MSA
payments coming into the state, because that money goes toward
the state's education/cessation programs. Currently 26 other
states have established supersedeas bond limits, and it would be
appropriate for Alaska to do the same, he concluded.
1:37:30 PM
MICHAEL PATTERSON, President, Lucky Raven, Inc., said he would
like to see improvements made to the enforcement provisions of
the bill. Currently, for a first offense, a business will lose
its license. So for some businesses, such as his, that type of
penalty would in essence shut the business down, whereas for
other businesses, such as those that are not primarily in the
business of selling tobacco, that type of penalty wouldn't have
that great an impact. He suggested that substantial financial
penalties - both on the individual that performs the illegal
sale, and on the business itself - would be a greater deterrent;
for example, a financial penalty of $5000 for a first offense,
and $10,000 for a second offense. "I believe ... making the
clerk also liable for the offense ... will help clear up part of
the difficulties," he remarked.
MR. PATTERSON said he would also like to see more done in the
way of education regarding tobacco sales; for example, currently
the alcohol industry is benefiting from the "techniques in
alcohol management" (TAM) program, and he would like to see
similar educational efforts made in the tobacco industry. Also
of concern to him is the enforcement of the tax on other tobacco
products. Currently there isn't any state-to-state reporting
and it is very difficult to track Internet sales of cigars, for
example, and so trying to collect the tax on such sales will
also be very difficult, he concluded, and predicted that this
gap in enforcement will leave the door wide open for most
consumers to look out of state when purchasing their tobacco
products, and could actually discourage people from doing
business in Alaska.
CHAIR McGUIRE next ascertained that a representative from the
Department of Health and Social Services (DHSS), Tobacco
Prevention and Control Unit, was available to answer questions.
1:41:14 PM
DALE FOX, Executive Director, Alaska Cabaret Hotel Restaurant &
Retailer's Association (Alaska CHARR), relayed that because of
the bill's recent introduction, CHARR has not yet formally taken
the issue up. Notwithstanding this, he offered:
It's a mixed bag. We think there's some really good
provisions in this bill, and some that probably would
not be supported by our group. First let's talk about
the positives. Obviously, as the folks who run the
TAM program in the alcohol industry, we believe that
strengthening the efforts to make sure that everyone
... who is trying to get tobacco [is carded] and that
there's adequate education for the frontline employees
is critically important. The "We Card" program, which
is in the state now and [is] something we hope to
expand, we think is a good step in the right
direction. And so, yes, we should do everything that
we can to prevent youth from getting access to tobacco
prior to reaching the age [of 19].
The second provision we think is a very good pro-
business stance is the bond cap. ... The tobacco
companies [have] ... shown good faith with the Master
Settlement Agreement, they're making their payments,
and we think that anything that has the potential of
putting somebody out of business is bad legislation,
and so a bond cap provision that allows people to move
forward through the courts equitably is a very
positive effort.
In terms of the taxes, accelerating the taxes on
tobacco and on smokeless tobacco, in general the
Alaska CHARR group has come out against singling out
specific products in the marketplace for special
taxes, and I would suspect that they would do that on
this as well. ... Those are general comments that I
think are reflective or our industry. Thank you very
much.
1:44:05 PM
PETE ROBERTS opined that the bond limitation being proposed in
the bill is a good idea, but that the rest of the bill should be
tossed. He elaborated:
We just raised our taxes on tobacco products; [they]
were to be phased in. We haven't even gotten through
that period and here somebody wants to do good and
raise them some more. I think that the idea of trying
to keep teens from smoking is a good idea. On the
other hand, I think that most of the tobacco is bought
by adults, and this is punitive and it's social
engineering. And I think it's bad state policy and
not very consistent with the republican ideals, so I'm
against it. Thanks.
1:45:21 PM
JAMES N. GARDNER, Attorney at Law, Gardner & Gardner, P.C., said
he would be speaking on behalf of Philip Morris USA (PA USA)
regarding the bond provisions in HB 260. He characterized the
MSA as being very important to Alaska because it delivers
millions of dollars in revenues to the state annually; however,
the continued receipt of these funds is threatened by the huge
judgments that have been awarded against the tobacco companies
that are funding the settlement. Although defendants in such
cases almost always have the right to appeal, and although in
many instances such appeals have been successful - either in
reducing the judgment or in overturning the judgment entirely -
in order to stay the execution of judgment on appeal, defendants
must post a supersedeas bond.
MR. GARDNER said that in the states that do not already have a
limit on that type of bond, the amount of the bond usually
equals the amount of the judgment itself, and if a company that
is a defendant in such a case cannot afford to post a bond in
the amount set by the court, the company may be forced to file
for bankruptcy in order to stop the plaintiff from taking the
companies assets during the appeal process. That kind of a stay
could disrupt payments by the company to Alaska and all the
other states that receive MSA payments. He used a Florida case
as an example wherein if there hadn't been a supersedeas bond
limit, the company - the defendant - would have gone bankrupt,
adding that 33 states thus far have recognized the possibility
of risk from large supersedeas bond requirements and that
another 5 states do not require supersedeas bonds at all. He,
too, offered his belief that passage of HB 260 would not affect
either the substantive rights of the litigants or the ultimate
right of recovery if the plaintiff prevails following the
appeal.
1:48:57 PM
MR. GARDNER, in response to questions, said that he is not aware
of any cases in Alaska in which a required bond has threatened
to put a company out of business; opined that either paying a
huge judgment outright or putting up the same amount for a
supersedeas bond would be impossible, from a financial
standpoint, and therefore the company would be forced to file
bankruptcy, which would in turn impede the flow of MSA funds to
the states; and offered his belief that although the trial court
in Alaska does have some degree of discretion regarding what
amount an appeal bond should be set at, as a practical matter,
that kind of discretion simply can't cope with the massive
reduction that would be necessary to avoid disruption of MSA
payments should a "mega verdict" ever be awarded in Alaska.
REPRESENTATIVE GARA asked Mr. Gardner whether he would be
amenable to a provision that would make it a class C felony to
dissipate assets in order to avoid a judgment.
MR. GARDNER said he wouldn't agree to such a provision. He
noted, though, that Section 12, subsection (b), of HB 260
contains language which says that if an appellee proves by a
preponderance of the evidence that an appellant is dissipating
assets to avoid the payment of a judgment, a court may require
the appellant to post a bond in an amount up to the full amount
of the judgment. He opined that such language addresses
Representative Gara's concern.
REPRESENTATIVE GARA pointed out, however, that that language is
merely saying that if a company dissipates assets in order to
avoid payment of the judgment, the company then really does have
to post the bond, the bond that's automatically required up
front in all other cases. His suggestion, he reiterated, is to
make it a crime, a class C felony, to dissipate assets in order
to avoid paying a judgment; he characterized this as an
appropriate penalty particularly if the proposed bond limit is
adopted.
MR. GARDNER reiterated his belief that the language in
subsection (b) of Section 12, specifically the language
requiring that a preponderance of the evidence be shown, offers
full protection to an appellee.
1:54:01 PM
JOHANNA BALES, Excise Audit Manager, Central office, Tax
Division, Department of Revenue (DOR), after relaying that she
is also the program manager of the division's Tobacco Tax
Program, noted that retailers support the proposed taxes on
"other tobacco products" that are being purchased through the
mail by individuals for personal consumption. With regard to a
comment made by Mr. Patterson, she explained that currently
there are state-to-state reporting requirements in place, but
acknowledged that currently no tax is levied when products are
imported by individuals for personal consumption; so although
the division is able to identify some such individuals,
enforcement of Internet purchases is somewhat problematic.
MS. BALES offered her belief that if this provision is adopted,
most people will comply with the law, and that its adoption will
help protect instate retailers; this is particularly important
for the DOR and instate retailers given that an increase in
taxes might entice people to buy their tobacco products through
the Internet. She concluded by saying that both the DOR and the
governor's office supports HB 260.
1:56:56 PM
DAVID PARISH, Lobbyist for the American Heart Association (AHA),
mentioned that the AHA is an active member of the Alaska Tobacco
Control Alliance (ATCA), which is a coalition working closely
with the national Campaign For Tobacco-Free Kids. He said that
the AHA is still looking at the individual sections of HB 260,
especially the "criteria of what is the maximum public-health
benefit particularly relative to reducing tobacco consumption
among Alaska's youth," and that although the AHA currently has
no official position on HB 260, in general the organizations he
represents do not support the provision pertaining to a limit on
supersedeas bonds, but they do support the provisions regarding
the taxation of other tobacco products and the acceleration of
the current cigarette tax.
2:00:02 PM
REPRESENTATIVE KOTT surmised that everyone there has the
children's best interest at heart and wants to ensure that
tobacco does not fall into their hands. He asked whether enough
time has elapsed to allow an evaluation of whether either of the
most recent cigarette tax increases have decreased usage by
those who are underage.
MR. PARISH said that most of the data that the AHA has only
reflects what has occurred since 1997, adding that he would be
willing to research the issue further and get that information
to the committee. In response to another question, he provided
the committee with a copy of the Campaign For Tobacco-Free Kids'
position statement.
CHAIR McGUIRE, after ascertaining that no one else wished to
testify, closed public testimony on HB 260.
2:03:03 PM
REPRESENTATIVE GARA made a motion to adopt Amendment 1, to
delete Section 12 of the bill, the section that proposes to set
a limit of $100 million on supersedeas bonds pertaining to
tobacco litigation.
REPRESENTATIVE ANDERSON objected.
REPRESENTATIVE GARA predicted that the moment that tobacco
companies get a special bond amount, [ExxonMobil Corporation]
will want a special bond amount. He opined that there is no
need to remove the bond amount, particularly given that there
has never been a case in Alaska where "the bond amount has been
abused by a court" and given that the court has the discretion
to lower the bond amount if the amount originally set threatens
to put a company out of business or force it to declare
bankruptcy. He concluded his argument in favor of Amendment 1
by stating that he did not think the proposed bond limit is
needed.
REPRESENTATIVE ANDERSON disagreed, and urged members to keep
Section 12 in the bill.
REPRESENTATIVE KOTT noted other sections of the bill would be
affected by the adoption of Amendment 1.
2:06:55 PM
REPRESENTATIVE GARA withdrew Amendment 1 for the purpose of
restating it.
REPRESENTATIVE GARA made a motion to adopt Conceptual Amendment
1, "to delete all provisions that change any of the bond laws or
bond rules, either in statutes or in court rules; so delete
Section 12 and then all related sections."
CHAIR McGUIRE added, "And including in the title."
REPRESENTATIVE GARA said, "Yep."
2:07:25 PM
A roll call vote was taken. Representatives Kott, Dahlstrom,
and Gara voted in favor of Conceptual Amendment 1.
Representatives McGuire, Anderson, Coghill, and Gruenberg voted
against it. Therefore, Conceptual Amendment 1 failed by a vote
of 3-4.
2:07:58 PM
REPRESENTATIVE GARA, referring to page 4 [lines 16-18], made a
motion to adopt Conceptual Amendment 2, to make it a class C
felony to intentionally dissipate assets to avoid payment of a
judgment.
REPRESENTATIVE ANDERSON objected.
REPRESENTATIVE GARA offered his belief that any attempt by a
tobacco company to dissipate assets to avoid payment of a
judgment should be considered fraud and such a company should
therefore be charged with a class C felony, especially if the
proposed bond limit is adopted.
REPRESENTATIVE GRUENBERG suggested that Conceptual Amendment 2
merely needs to add language specifying that violation of "this
subsection" is also a class C felony.
REPRESENTATIVE GARA noted that the amendment is conceptual, and
said that as long as the drafters specify that the conduct has
to be intentional, he will be satisfied with whatever language
the drafters choose.
2:10:33 PM
A roll call vote was taken. Representatives Dahlstrom,
Gruenberg, and Gara voted in favor of Conceptual Amendment 2.
Representatives McGuire, Anderson, Coghill, and Kott voted
against it. Therefore, Conceptual Amendment 2 failed by a vote
of 3-4.
REPRESENTATIVE GRUENBERG asked members to look at an e-mail sent
by Mike Elerding - President, Northern Sales Company of Alaska,
Inc. - specifically at the language referring to statutory
language signed into law in 2003:
Section 43.50.510 of [Senate Bill 168] stipulated that
"for purposes of this section, a stamp is considered
affixed only if more than 80 [percent] of the stamp is
attached to the individual package" ... "in
accordance" with regulations adopted by the Department
of Revenue. Subsequent to the passage of this measure
it has been demonstrated that the current state of tax
stamping technology has not been able to produce an 80
[percent] affixment standard. Based on our actual
experience the best estimate for the performance
standard of affixing a tobacco stamp on each pack of
cigarettes is somewhere in the 55 [percent] range.
Only through the collaborative efforts of the state
Department of Revenue and industry have we avoided an
unmitigated disaster regarding the enforcement of the
80 [percent] performance requirement. Section
43.50.510 needs to be amended to reduce the affixment
standard from 80 [percent] down to 55 [percent].
MIKE ELERDING, President, Northern Sales Company of Alaska,
Inc., confirmed that his letter referenced statutory language
currently in effect.
CHRISTOPHER C. POAG, Assistant Attorney General, Commercial/Fair
Business Section, Civil Division (Juneau), Department of Law
(DOL), relayed that the regulations referred to in AS
43.50.510(d) have not yet been adopted.
REPRESENTATIVE GRUENBERG said he would be willing to offer an
amendment to reduce the affixment standard currently stipulated
in AS 43.50.510(d) down to 55 percent.
MS. BALES said that Mr. Elerding is correct in that the
cigarette tax stamping machines are incapable of affixing 80
percent of the stamp 100 percent of the time. Because of this,
the DOR has drafted an amendment that would lower the affixment
standard to 55 percent while also requiring that either four of
the letters of the state name or three of the serial numbers be
legible. She offered her belief that this amendment would
address the problems encountered by the "stampers" and protect
state revenues. She mentioned that this amendment has been
given to sponsor.
REPRESENTATIVE GRUENBERG made a motion to adopt the DOR's
suggested amendment as Conceptual Amendment 3, which read
[original punctuation provided]:
* Section ?. AS 43.50.510(d) is amended to read:
(d) For purposes of this section, a stamp is
considered affixed only if more than 55 [80] percent
of the stamp is attached to the individual package in
accordance with (c) of this section and regulations
adopted by the department, and
(1) four of the letters of the state name
printed on the stamp are legible; or
(2) three of the serial numbers printed on
the stamp are legible.
REPRESENTATIVE MEYER said that although he'd intended to offer
that amendment in the House Finance Committee, it would be
acceptable to him to adopt it in the House Judiciary Standing
Committee instead.
CHAIR McGUIRE asked whether there were any objections to
Conceptual Amendment 3. There being none, Conceptual Amendment
3 was adopted.
2:17:51 PM
REPRESENTATIVE GRUENBERG asked whether the issue of training and
licensing, perhaps via a program similar to the TAM program, has
been addressed.
REPRESENTATIVE MEYER indicated a preference for addressing that
issue via a separate bill.
REPRESENTATIVE KOTT made a motion to adopt [Conceptual]
Amendment 4, to delete Section 2; to delete the proposed
language change in Section 3, page 2, line 17; and to delete
Section 14. He offered his belief that adoption of Conceptual
Amendment 4 "essentially takes us back to the bill that was
passed by the house last year," and went on to say: "It seems
to me, to have this particular issue before us is somewhat
disingenuous, since a group of members came to me and asked me
to work out a compromise with industry; the compromise that we
worked out was in fact the one that passed the House." He
offered his belief that adopting the language that Conceptual
Amendment 4 proposes to delete would be premature.
CHAIR McGUIRE, in response to a question, offered her
understanding that Conceptual Amendment 4 would delete the
language that deals with acceleration of the tax rate.
2:20:46 PM
REPRESENTATIVE MEYER said that the bill seeks a balance, since
in order to garner enough votes to pass a supersedeas bond
limit, the other provisions were necessary.
REPRESENTATIVE KOTT, in response to a question, offered his
belief that Conceptual Amendment 4 also addresses the issue of
smokeless tobacco.
REPRESENTATIVE GARA said he agrees with Representative Kott
regarding the compromise reached last year. He asked whether
members would be amenable to amending Conceptual Amendment 4,
"to add the bond part," thereby also deleting the proposed bond
limit.
2:24:04 PM
REPRESENTATIVE ANDERSON indicated that he supports the bond
limit.
REPRESENTATIVE MEYER opined that the provisions being deleted by
Conceptual Amendment 4 ought to remain in the bill.
REPRESENTATIVE GARA objected to [Conceptual] Amendment 4.
CHAIR McGUIRE said she understands Representative Kott's
position, but mentioned that she'd already made a commitment to
try to keep all of the provisions in the bill.
2:26:14 PM
A roll call vote was taken. Representatives Anderson, Coghill,
Kott, and Dahlstrom voted in favor of Conceptual Amendment 4.
Representatives McGuire, Gruenberg, and Gara voted against it.
Therefore, Conceptual Amendment 4 was adopted by a vote of 4-3.
CHAIR McGUIRE made a motion to adopt Amendment 5, which read
[original punctuation provided]:
Page 2, line 2:
Following "facility":
Insert ","
Following "assisting":
Insert "an agent or employee of the
Department of Health and Social Services under
AS 44.29.092 or"
Page 2, line 3:
Delete "this section"
Insert "AS 11.76.100, 11.76.106, or 11.76.107"
SUZANNE CUNNINGHAM, Staff to Representative Kevin Meyer, House
Finance Committee, Alaska State Legislature, relayed that
Amendment 5, which she characterized as a technical
clarification amendment, was brought to the sponsor's attention
by the DOL. Amendment 5 addresses the issue of minors who
participate with law enforcement or the DHSS in "sting"
operations.
REPRESENTATIVE GRUENBERG objected for the purpose of discussion.
He asked why Amendment 5 proposes to delete the words, "this
section" from AS 11.76.105.
MR. POAG explained that "this section" refers to the possession
statute, and the DOL is not trying to enforce that statute via
sting operations; it makes more sense to simply list the
provisions of law that are being enforced through sting
operations, those provisions pertaining to youth access.
REPRESENTATIVE GRUENBERG suggested that perhaps the specific
sections listed in Amendment 5 should simply be added to
proposed AS 11.76.105 rather than using them in place of the
words, "this section".
MR. POAG suggested that the Department of Health and Social
Services could better address that issue, but added that he did
not think that the possession provision of current statute
needed the exemption pertaining to those involved in sting
operations.
REPRESENTATIVE GRUENBERG made a motion to amend Amendment 5, to
strike the words, "Delete 'this section'". There being no
objection, Amendment 5 was amended.
CHAIR McGUIRE asked whether there were any objections to
Amendment 5, as amended. There being none, Amendment 5, as
amended, was adopted.
2:31:36 PM
REPRESENTATIVE ANDERSON moved to report HB 260, as amended, out
of committee with individual recommendations and the
accompanying fiscal notes.
REPRESENTATIVE GARA objected.
2:31:48 PM
A roll call vote was taken. Representatives McGuire, Anderson,
Coghill, Kott, Dahlstrom, and Gruenberg voted in favor of
reporting HB 260, as amended, from committee. Representative
Gara voted against it. Therefore, CSHB 260(JUD) was reported
from the House Judiciary Standing Committee by a vote of 6-1.
HB 53 - CHILDREN IN NEED OF AID/REVIEW PANELS
2:32:41 PM
CHAIR McGUIRE announced that the next order of business would be
SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 53, "An Act relating to
child-in-need-of-aid proceedings; amending the construction of
statutes pertaining to children in need of aid; relating to a
duty and standard of care for services to children and families,
to the confidentiality of investigations, court hearings, and
public agency records and information in child-in-need-of-aid
matters and certain child protection matters, to immunity
regarding disclosure of information in child-in- need-of-aid
matters and certain child protection matters, to the retention
of certain privileges of a parent in a relinquishment and
termination of a parent and child relationship proceeding, to
eligibility for permanent fund dividends for certain children in
the custody of the state, and to juvenile delinquency
proceedings and placements; establishing a right to a trial by
jury in termination of parental rights proceedings;
reestablishing and relating to state citizens' review panels for
certain child protection and custody matters; amending the duty
to disclose information pertaining to a child in need of aid;
authorizing additional family members to consent to disclosure
of confidential or privileged information about children and
families involved with children's services within the Department
of Health and Social Services to officials for review or use in
official capacities; relating to reports of harm and to
adoptions and foster care; mandating reporting of the medication
of children in state custody; prescribing the rights of
grandparents related to child-in-need-of-aid cases and
establishing a grandparent priority for adoption in certain
child-in-need-of-aid cases; modifying adoption and placement
procedures in certain child-in-need-of-aid cases; amending
treatment service requirements for parents involved in child-in-
need-of-aid proceedings; amending Rules 9 and 13, Alaska
Adoption Rules; amending Rules 3, 18, and 22, Alaska Child in
Need of Aid Rules of Procedure; and providing for an effective
date." [Before the committee was CSSSHB 53(STA).]
REPRESENTATIVE COGHILL, speaking as the sponsor of SSHB 53, said
that he has prepared a proposed committee substitute (CS). He
opined that there is need for a jury trial whenever a parental
right is terminated. He relayed that members' packets contain
information about the 1982 U.S. Supreme Court case, Santosky v.
Kramer, which discussed "the process and the evidence levels."
He offered his belief that severing the relationship between a
parent and child is a big issue, and although sometimes the
process works well, sometimes it doesn't, particularly when
departmental employees have either not been diligent, or have
had an ax to grind, or have gotten into personality conflicts
with [parents].
REPRESENTATIVE COGHILL relayed that he is willing to go forth
with the proposed CS because the department has been agreeable
to the provisions that will "open up the process"; however, he
is not comforted by the "huge timeline issues," which can result
in parents having as little as 120 days before going from one
court proceeding to the final determination regarding parental
rights. He stated his concern that "if there is a doubt that
that family should be forever severed from that child, that
there should be one more look." He expressed his belief that
there should be one more level to reach "beyond a reasonable
doubt," adding that he had hoped this would be an issue that the
committee could work on. He opined that many times the
compelling interest for the safety of the child has ignored the
importance of the family even those that are dysfunctional.
2:39:17 PM
REPRESENTATIVE ANDERSON moved to adopt the proposed committee
substitute (CS) for SSHB 53, Version 24-LS0251\P,
Mischel/Chenoweth, 4/11/05, as the work draft.
REPRESENTATIVE GRUENBERG objected for the purpose of discussion.
REPRESENTATIVE COGHILL explained that in Version P, every
reference to a jury trial has been removed.
REPRESENTATIVE GRUENBERG removed his objection.
CHAIR McGUIRE announced that Version P was before the committee.
2:39:51 PM
RYNNIEVA MOSS, Staff to Representative Coghill, Alaska State
Legislature, concurred that [Version P] no longer contains
reference to a jury trial.
REPRESENTATIVE COGHILL turned the committee's attention to
Section 13 on page 21 regarding civil liability.
MS. MOSS explained that the original bill said that there was a
duty or standard of care for children in state custody, while
[the current Section 47.10.960] said that there is not. She
said that the Department of Law objected to the language in the
original bill because it would create a very expensive fiscal
note for civil suits.
REPRESENTATIVE COGHILL read Section 47.10.960 in its current
form:
Nothing in this title creates a duty or standard of
care for services to children and their families being
served under AS 47.10.
REPRESENTATIVE COGHILL stated that he strongly objects to this
language because it could be misinterpreted.
REPRESENTATIVE GRUENBERG stated he would like to offer an
amendment that would keep that language in and add a clause that
says that failure to comply does not create a civil liability.
He said he agrees with Representative Coghill, adding that there
can be a duty or standard of care that's essential for dealing
with the adjudication and disposition phase.
2:43:59 PM
JOHN McKAY, Anchorage Daily News, opined that the bill is "good
as far as it goes, but it needs to go a bit further in terms of
presumptions of openness." He noted that when other states have
opened these proceedings up, everyone seems to be glad that they
did it. He commented that he would like to supplement his
remarks with articles, including a particular newspaper series
that looked at the effect of opening these proceedings up. He
said that he would either fax or email these articles to the
committee within the next day.
2:47:28 PM
MR. McKAY stated that he felt it was important for [the
committee] to also look at opening the records that relate to
the proceedings, which he thought were not adequately addressed
in the bill. He pointed out that some comments were filed by a
man named Mr. Wexler from the Coalition for Child Protection and
Reform; Mr. McKay commented that he agreed with those comments,
and recommended that the committee review them. Mr. McKay also
asked that the committee look at some language that would help
create a stronger presumption of openness. He offered to work
with the committee to determine language that everyone would be
satisfied with.
CHAIR McGUIRE suggested that Mr. McKay forward his suggestions
on to Representative Coghill. She noted that she too was
concerned about maintaining the balance between confidentiality
and public access to information.
MR. McKAY remarked:
I think it enhances the awareness that the public is
interested in this, that there's an extra dimension to
what they're doing every day, even though somebody's
not sitting there [observing]. ... I think it's really
helpful to know that there is experience in other
states that have tried this and have found not only
that there weren't bad effects, ... but [that] the
experience is so universally the opposite.
2:51:18 PM
CHERYL TRAIL relayed that she lives in Nebraska and has cared
for her granddaughter from infancy until the age of two and a
half years old. She said that her granddaughter is a ward of
the State of Alaska who was placed with her on a "foster adopt"
basis on an interstate compact. She shared with the committee
her experiences with Alaska's Department of Health and Social
Services (DHSS), Office of Children's Services (OCS), and
charged that the OCS took her granddaughter from her by
subterfuge and under pretext.
MS. TRAIL pointed out that when her granddaughter was removed
from her care by the OCS, she was not told why this action was
taken, but was instead told by the OCS that she wasn't a party
to the case and therefore did not have a right to the
information. She said that it took six months for her attorney
to get a hearing, and only at the time of discovery did she find
out that the OCS had a lot of erroneous information.
MS. TRAIL stated that because of her experience, she strongly
supports the strengthening of the rights of grandparents who
have been involved in rearing their grandchildren. She remarked
that in her experience, the OCS did not follow many of its own
policies and procedures, and "actually lied under oath during
the hearing in front of a judge"; therefore, she supports the
establishment of an opportunity for a trial by jury in cases of
parental rights determination. She also stated that she
supports the establishment of the citizens' review board, and
commented, "I think this bill will go a long way in changing an
agency that's known by the citizens of their state to be
corrupt."
CHAIR McGUIRE asked Ms. Trail if she has any information about
where her [granddaughter] is now.
MS. TRAIL replied that her granddaughter was placed in a foster
home and that the OCS is pushing through an adoption.
2:57:12 PM
MS. TRAIL, in response to further questioning by Representative
Dahlstrom, explained the circumstances under which the OCS took
custody of her granddaughter, her granddaughter's diagnosis and
medication prescriptions, and her own personal background.
3:06:22 PM
CHAIR McGUIRE, after ascertaining that no one else wished to
testify, closed public testimony on SSHB 53.
REPRESENTATIVE COGHILL made a motion to adopt Amendment 1, which
read [original punctuation provided]:
Page 5, Line 18
Delete: Lines 18 through line 24
Insert:
(2) follow the findings set out in AS 47.05.65.
REPRESENTATIVE KOTT objected for the purpose of discussion.
REPRESENTATIVE COGHILL explained that he'd wanted to assert
family primacy in the bill, but then he learned that AS 47.05.65
covered his concerns.
REPRESENTATIVE KOTT removed his objection.
REPRESENTATIVE GARA asked if he could make a friendly amendment
to Amendment 1, as follows:
Page 5, Line 17:
After "child"
Insert ", when in the child's best interests"
REPRESENTATIVE COGHILL objected, stating that AS 47.05.65 is
"replete with that whole discussion."
3:10:20 PM
JAN RUTHERDALE, Assistant Attorney General, Human Services
Section, Civil Division (Juneau), Department of Law (DOL), noted
that she has the same concern as Representative Gara. She
remarked that there are times when there's a conflict between
ensuring the safety of the child and ensuring the parents'
participation in the upbringing of the child.
REPRESENTATIVE COGHILL, agreeing that there can be such a
conflict, then stated:
But remember, this is a conflict. We're asking the
state to insert itself into a family for the child's
welfare. And in AS 47.05.65, which I'm asking us to
amend into here, it says, "It is the policy of the
state to strengthen families and to protect children
from child abuse and neglect." I have no problem that
that's the purpose of what I'm doing here. I'm just
asking that the parents' participation in the
upbringing of the child be included when we're talking
about promoting the child's welfare.
REPRESENTATIVE COGHILL maintained his objection to the amendment
to Amendment 1.
REPRESENTATIVE GARA commented that he certainly wanted to
advocate the concept that parents should be able to participate
throughout the process, but remarked that "you don't want to
tell the department that a parent who's a danger to the child
should keep participating, and if we just say, 'the parents
shall participate,' then I think we're taking away the
department's leeway to prevent that [participation] if a parent
is a danger to the child."
REPRESENTATIVE COGHILL replied that he didn't think this
"construction" language changes the intent regarding the best
interests of the child; rather it simply includes the family "At
a higher level." He said, "To me, this is one of the key
reasons for me doing this bill."
REPRESENTATIVE GARA withdrew his suggestion to amend
Amendment 1.
3:14:55 PM
REPRESENTATIVE COGHILL reiterated that one of the main reasons
he sponsored this bill is for family protection.
CHAIR McGUIRE asked whether there were any further objections to
Amendment 1. There being none, Amendment 1 was adopted.
3:15:39 PM
REPRESENTATIVE DAHLSTROM made a motion to adopt Amendment 2, to
remove subsection (n) from Section 5 on page 4, lines 19-26,
regarding adoption. She pointed out that this was not in the
original governor's bill that was introduced, but was added in
by the House State Affairs Standing Committee. She offered her
understanding that during the House State Affairs Standing
Committee meeting, the Department of Law testified that it knew
this was a potential issue, but it didn't think this would
affect OCS adoptions. However, she said, "We heard in the
testimony yesterday that it will affect many other permanent
adoptions."
CHAIR McGUIRE asked whether there were any objections to
Amendment 2. There being none, Amendment 2 was adopted.
REPRESENTATIVE COGHILL made a motion to adopt Amendment 3, which
read [original punctuation provided]:
Page 17, line 7, after the word "capacities.":
Delete: the remainder of Line 7 through line 20.
MS. MOSS noted that the language contained in the aforementioned
lines would require certain departments to disclose confidential
information to family members other than parents, and explained
that Legislative Legal Services had pointed out that the federal
government would have a problem with that language and it could
cost the state $29 million per year.
REPRESENTATIVE GARA asked for clarification that "we're just
deleting the changes ... starting at line 7, and so we're not
deleting the rest of the statutory language."
CHAIR McGUIRE concurred.
MS. MOSS suggested that Amendment 3 be a conceptual amendment
such that it would merely delete the proposed new language on
page 17, lines 7-20.
REPRESENTATIVE COGHILL restated Conceptual Amendment 3 as taking
out the proposed new language on lines 7-20 of page 17.
CHAIR McGUIRE asked whether there were any objections to
Conceptual Amendment 3. There being none, Conceptual Amendment
3 was adopted.
3:18:52 PM
REPRESENTATIVE COGHILL made a motion to adopt Amendment 4, which
read [original punctuation provided]:
Page 27, line 5:
Delete:
"may"
Insert:
"shall"
REPRESENTATIVE COGHILL explained that Amendment 4 would ensure
that the initial interviews are audiotaped always and vidoetaped
when possible.
MS. RUTHERDALE said that the Department of Health and Social
Services objects to Amendment 4.
TAMMY SANDOVAL, Acting Deputy Commissioner, Office of Children's
Services (OCS), Department of Health and Social Services (DHSS),
elaborated:
In working through this bill, ... it changed to "may"
and then today it's back to "shall", and we're not
sure how that happened because we'd had conversations
about that. And we just have some concerns about the
logistics of that: what it means to children in the
interview process. While I agree that it does protect
..., I think it raises so many other issues.
REPRESENTATIVE COGHILL suggested that the issue of the cost
incurred by the requirements of Amendment 4 be discussed in the
House Finance Committee.
CHAIR McGUIRE asked whether there were any objections to
Amendment 4. There being none, Amendment 4 was adopted.
3:21:03 PM
REPRESENTATIVE ANDERSON moved to report the proposed committee
substitute (CS) for SSHB 53, Version 24-LS0251\P,
Mischel/Chenoweth, 4/11/05, as amended, out of committee with
individual recommendations and the accompanying fiscal notes.
REPRESENTATIVE COGHILL relayed that he had one other issue to
address.
CHAIR McGUIRE expressed a preference that that issue be
addressed in the House Finance Committee.
REPRESENTATIVE COGHILL agreed to do so.
REPRESENTATIVE DAHLSTROM asked that Representative Coghill
consider the comments that she received from foster parents who
expressed concern about being mandated to have relationships
with the family.
3:23:12 PM
MS. MOSS noted that the language in the bill is permissive, and
said she'd been assured by the OCS that it wouldn't put foster
parents or the children in harm's way.
REPRESENTATIVE COGHILL offered his belief that [maintaining a
relationship with the family] is not mandated.
REPRESENTATIVE ANDERSON again moved to report the proposed CS
for SSHB 53, Version 24-LS0251\P, Mischel/Chenoweth, 4/11/05, as
amended, out of committee with individual recommendations and
the accompanying fiscal notes.
REPRESENTATIVE GARA objected for the purpose of discussion. He
said that he thinks generally the amendments are good changes to
the law. He stated his intention to keep working with the
sponsor on additional changes.
REPRESENTATIVE GARA then removed his objection.
CHAIR McGUIRE asked whether there were any further objections to
reporting the proposed CS for SSHB 53, Version 24-LS0251\P,
Mischel/Chenoweth, 4/11/05, as amended, from committee. There
being no objection, CSSSHB 53(JUD) was reported from the House
Judiciary Standing Committee.
HB 257 - STATE PROCUREMENT ELECTRONIC TOOLS
3:24:26 PM
CHAIR McGUIRE announced that the final order of business would
be HOUSE BILL NO. 257, "An Act relating to a procurement and
electronic commerce tools program for state departments and
instrumentalities of the state; and providing for an effective
date."
VERN JONES, Chief Procurement Officer, Central Office, Division
of General Services (DGS), Department of Administration (DOA),
explained that in 2003, House Bill 313 was passed by the
legislature and became law, thereby creating a state procurement
pilot program. He went on to say:
The [DOA] then prepared and issued an RFP [request for
proposals] for a contractor to outsource state
procurement functions in the Southeast Region of [the
Department of Transportation & Public Facilities
(DOT&PF)], and awarded a contract to [Alaska Supply
Chain Integrators, LLC (ASCI)] as envisioned in ...
[that] bill. [The] bill and subsequent contract were
limited to two departments and two instrumentalities
of the state, and had a June 2006 sunset date. [The]
procurement pilot contractor, as we're calling them,
has been operating [DOT&PF] Southeast Region
procurements for nine months now. [House Bill 257]
would remove the restrictions on the number of
departments and instrumentalities contained in the
current law, as well as eliminate the sunset
provisions that are there now. ... Yesterday I spoke
with committee staff and sent a message in which I
suggested a couple of amendments that would fix an
incorrect statutory reference and clean up some of the
preference language. I see that the version before
you does not have those amendments, and I would urge
you to consider them.
CHAIR McGUIRE, speaking as the chair of the House Judiciary
Standing Committee, sponsor of HB 257, noted that Mr. Jones's
suggested amendments are contained in an e-mail he provided; the
portion of his e-mail that explains his suggested amendments
read [original punctuation provided]:
1.Replace reference to AS.36.30.100-190 to AS
36.30.100-265 - this would allow for awarding of the
contract via RFP rather than just ITB, which would not
be appropriate for this type of contract.
2. "Cleans up" the preferences and makes them more
uniform and workable. The preferences as listed are
drawn from existing statute, which are complex,
confusing, poorly written, and have been subject to
protest.
MR. JONES clarified that the portion of his e-mail labeled "1"
proposes that language, "36.30.190" on page 1, line 10, be
replaced with, "30.36.265". He said that doing so would allow
the department to "award a contract of this type via an RFP
rather than just an ITB [invitation to bid]." With regard to
the portion of his e-mail labeled "2", he said:
This bill lifts preferences from existing statute, and
I can tell you from experience that the preferences we
now have in statute are complex, ... cumbersome, ...
hard to understand, and hard to apply - they are not
consistent, [and] they act in different ways. For
example, some preferences reduce an offeror's price
for comparison purposes, [while] other preferences
have you go through an analysis, find the lowest
price, take a percentage of that bidder's price, and
apply a discount to someone else's ... offer. My
suggestion and the language that I'd provided would
make these preferences, at least for this bill,
uniform and consistent. And I would recommend that
you would consider that.
3:30:41 PM
REPRESENTATIVE DAHLSTROM asked how the bill will affect the
transparency of the current procurement process.
MR. JONES relayed that under the bill, as is now the case under
the pilot program, the state would not be required to provide
formal public notice of either the opportunity to compete or the
awards that are made. In response to questions, he reiterated
that the pilot program was implemented by the DOA, which chose
to implement it in the DOT&PF's Southeast Region.
CHAIR McGUIRE mentioned that the administration didn't want to
institute a pilot project in areas where it might not be
successful, and so the bill gave the DOA the discretion to
utilize the pilot program in up to four different departments.
She offered her belief that the intent of the bill that
originally established the pilot program was not carried out.
She elaborated:
It was for four departments. We really wanted to see,
in four different departments, what are the measured
savings, how does it work, how is it changing - in a
good way or bad way - procurement. And what happened
was that ... people drug their feet, [and] it wasn't
until a year after the bill had been signed into law
that even any meaningful steps were made to identify
which department would then be under the pilot
[program]. And when it was done, I would argue that
it was done in a department that's very difficult:
... the [Alaska] Marine Highway Southeast
Transportation System. That's a difficult department
[in which] to employ the kind of success that I would
have liked to have seen. So ... as the [original]
bill's sponsor, I felt a little set up; I felt,
personally, as if the goal that I was trying to get
realized ... wasn't allowed to ... go forward. And so
that's a source of frustration, and it's part of the
reason that ... [HB 257] is before you today; ... I
want to give ... [the DOA] the discretion to expand it
to whatever departments they believe will be feasible.
...
CHAIR McGUIRE reiterated that the intent of the original bill
establishing the pilot program was to allow for the pilot
program to be instituted in up to four different departments,
and that the pilot program was only utilized in one department
and late at that.
3:36:27 PM
REPRESENTATIVE KOTT offered his understanding that under the
original legislation - House Bill 313 - the DOA could outsource
up to two departments and up to two other instrumentalities of
the state - for example, the Alaska Permanent Fund Corporation
(APFC) or the Alaska Housing Finance Corporation (AHFC). With
regard to the contract that was let, what period of time was it
for, he asked.
MR. JONES said that the contract aligns itself with the bill,
and thus goes through [June] of 2006; however, there is a
provision in the contract stipulating that if the bill were to
be amended, the contract could be extended another couple of
years through optional renewals. In response to the question of
what would happen if an RFP was offered and a different vendor
was the low bidder, he said that the contract which is in place
now would "stand on its own and would run its course, and we
would have two contracts up and running." He noted that all of
the DOA's professional services contracts typically have several
types of termination clauses that could be utilized if the state
so chose, either for cause or for convenience.
REPRESENTATIVE KOTT asked whether there are any annual reports
required which could show a savings from outsourcing or the
cost/benefit of outsourcing.
MR. JONES replied:
There's an understanding with that contract, and us,
to perform benchmarking audits. And we have done that
and continue to do that so we can get some sort of a
gauge for how they're doing compared to how the agency
was doing previously.
MR. JONES, in response to a further question, said that those
audits are performed quarterly; that the audit for the first
quarter has been completed; that the contractor is now operating
in the third quarter; and that the audit for the second quarter
is just now coming up and will be completed very soon. The
first quarter audit, he remarked, is for a time period in which
"there was a lot of transition going on," and so the results are
rather inconclusive, particularly given that it occurred so
early on in the process, before a lot of data was available.
REPRESENTATIVE KOTT surmised, then, that at this point, the
cost/benefit is not yet known.
MR. JONES concurred. He added that he hopes to have the second
quarter audit concluded and available for release to members
soon. In response to further questions, he relayed that
although the second quarter audit has not yet been released, it
does appear that Chair McGuire has possession of a letter from
Commissioner Barton to Commissioner Matiashowski commenting on
the first quarter audit, which was released some time ago, and
includes a fax from the DOT&PF, Administrative Services, that
pertains to first quarter findings.
3:44:14 PM
BRUCE LUDWIG, Business Manager, Alaska Public Employees
Association/American Federation of Teachers (APEA/AFT);
Secretary/Treasurer, Alaska State, American Federation of Labor
and Congress of Industrial Organizations (AFL-CIO), offered the
following comments:
The pilot program, two years ago, was rushed through
in the final days of the 2003 [legislative] session.
There were no measurements to success included in the
bill, no benchmarks for comparison, and nothing to
enable anyone to determine if it was a success or a
failure. There doesn't appear to have been a lot of
thought given to it. The bill title was misleading.
When we talked to [legislators] after it was passed,
we were told [that] it was a bill to enable e-
commerce. The bill does much, much more than that.
The [Alaska Supply Chain Integrators, LLC (ASCI)], who
brought ... [House Bill 313] forward, was the only
responsive bidder and was awarded the contract.
The state determined they could save $250,000 by
eliminating the warehouse and using fewer employees in
favor of e-commerce. [Alaska Supply Chain
Integrators] actually began work July 1, 2004, and 10
state employees were laid off. Since the pilot
project [began], only one quarter has been audited;
the second audit is in process, and the third should
be getting underway. They're actually working in the
fourth quarter at the moment. The pilot [program] has
until a year from next June to finish.
As the [DOA] testified in ... Senate [committee
hearings], the jury's still out on whether it's saving
money or not. It's too early to extend it; it still
has another year to run its course and determine if it
was a good pilot project or not. This bill should be
held over while a sufficient record is established to
be able to intelligently make a decision on whether it
has been a success or not. We've heard various rumors
from people out in the agencies about how successful
it's been. For one thing, we've heard that goods and
services cost 20 percent more when you buy them under
ASCI than what the state was purchasing at.
And if you extend that out for the life of the pilot
project, that's a cost to the state of [$2.5 million]
..., or it's [$2.5 million worth] of fewer goods that
you're going to have. We've heard that there's 1,500
invoices sitting out there, where the invoice can't be
matched up to the purchase order. Now, that means
that the state's vendors aren't getting paid. That
affects the state's reputation, but, more importantly,
it affects a lot of Alaska businesses that depend on
the money; they've already delivered the goods and
they're waiting on payment and aren't getting it.
We've heard [about] other problems. For instance, the
first audit points [out] that when the M/V Kennicott
was undergoing engine overhaul down in the yard in
Portland, ASCI ordered seven different orders of
engine parts [and] six of them got shipped to Juneau.
They had to be flown down - airfreighted down - to
Portland. ... That cost the state a lot of money. Of
the original $250,000 savings, about half of that was
the warehouse - closing the warehouse. On October 1
they reopened the warehouse. It doesn't work without
the warehouse; you have to have the warehouse to
transfer goods and store them. So the savings was no
longer $250,000.
We're also hearing that the ASCI employees are working
a lot of overtime. So who knows whether there's any
savings in personal services costs. But if we're
losing on the goods and services that we're
purchasing, we're not saving money. A far better
project would be to enable state agencies to use e-
commerce tools themselves. There's some, right now,
that are using them. There ought to be some kind of a
program that [the DOA] establishes to let all the
departments use them - one big e-commerce site. In
summary, we just ask that you hold the bill over;
let's see how the pilot project goes, let's give it a
fair run, and see if we save money or lose money.
Thank you.
3:48:54 PM
JIM DUNCAN, Business Manager, Alaska State Employees Association
(ASEA), said that the ASEA opposes HB 257 and recommends that it
be held over. He offered his belief that it is very clear that
the pilot project has not been completed, and that the
legislature should evaluate the success or failure of that
project before expanding it. Referring to page 2 of the
aforementioned letter regarding the first quarter audit, he
noted that it says in part: "It is clear from the audit
conclusions under ASCI management there has been no improvement
in service and the cost of goods to the state have actually
increased. Based on these findings we recommend that there be
no expansion of the pilot until ASCI's performance demonstrates
significant benefit to the state." He said he's been hearing
that there has been no improvement shown in the second quarter,
but acknowledged that such has yet to be substantiated.
MR. DUNCAN urged the committee to hold HB 257 over until the
aforementioned results are provided and until the legislature
has a chance to understand what has really happened with the
pilot project. He indicated that there is also a constitutional
question, which has been provided to members in the form of a
memorandum, regarding denying Alaska businesses and individuals
equal protection [under] the law. He suggested that the
committee review the memorandum, and that the committee
carefully consider what the result will be of allowing a private
contractor to completely bypass Title 36, the procurement code,
as is proposed in HB 257.
MR. DUNCAN pointed out that Alaska's procurement laws were put
into place after careful consideration, are based on model
legislation, and have been updated. At the time that those laws
were established, the legislature worked to ensure that Alaska's
procurement process was open and transparent, and that the
public's trust would be maintained. Passage of HB 257 will
allow the rules of procurement to be set by [the DOA] and the
contractor, he remarked, adding his belief that "those who set
the rules will control the game." He acknowledged that he's
heard that there is a lot of interest in streamlining the
process, but opined that such should not be done at the expense
of the public's trust.
MR. DUNCAN noted that as a former commissioner of the DOA, he
had similar goals, and therefore worked with the chief
procurement officer and others towards that end. The statutes
do not prohibit e-procurement at this time, he pointed out, but
such does require the proper tools. He urged the committee to
evaluate what those tools actually are and then given them to
the administration. He then asked the committee to consider the
issue of privatization by reviewing the federal government's
"OMB Circular No. A-76", which gives direction to the heads of
departments and establishments to be very careful with regard to
what gets privatized, and which also indicates that some
activities are inherently governmental.
MR. DUNCAN relayed that the aforementioned document says in
part:
An inherently governmental activity is an activity
that is so intimately related to the public interest
as to mandate performance by government personnel. ...
An inherently governmental activity involves ...
[e]xerting ultimate control over the acquisition, use,
or disposition of United States property (real or
personal, tangible or intangible), including
establishing policies or procedures for the
collection, control, or disbursement of appropriated
and other federal funds.
MR. DUNCAN noted that these directions are currently being
applied at the federal level, under an administration that is
known to favor privatization, and suggested that similar
direction should apply in the state of Alaska. In conclusion,
he offered his belief that there are numerous, important reasons
to hold the bill over for further careful consideration by the
committee.
3:54:44 PM
BEN MILAM had his testimony read by Ken Brown as follows:
I have almost 30 years experience in logistics and
purchasing, and have attended more formal classes on
purchasing than anyone in the state, including upper-
graduate level classes. I only mention this to
emphasize that formal purchasing for government is a
science. It is often complicated and very different
from buying groceries at the local grocery store. In
large corporations, professional buyers are viewed in
the income category, rather than as expense, because
of the value they add to the purchasing process. In
government agencies, those professional buyers save
thousands of dollars that can be then used to support
programs.
These profits and savings are possible because
professional buyers are dedicated to their company or
agency mission. The buyers in the proposed program
will follow this same philosophy. They are dedicated
to making money for their company. They are not
dedicated to the government mission and cannot be if
they are loyal to their company. This is a very bad
program. I am also very active with the National
Association of Purchasing Management. At a recent
meeting we discussed the whole concept of contracting
out. Where private industry has contracted out the
purchasing function, however, all those that I'm aware
of retained signature authority over purchases, had
documents distributed on their own forms, and enforced
their own corporation rules. In all of those cases
the contractor provided only transactional work and
was hidden from view on purchasing documents.
Even though these private corporations maintained very
strict control over their contractors and even though
the programs were successful for them, contracting out
purchasing of a government agency and spending public
money is quite different. In government purchasing,
public trust is essential. I belong to a newspaper
clipping service that collects newspaper articles
nationwide. I have a stack currently over an inch
thick. Most of the articles collected in the past
year concerned corruption in government contracts.
There are two points here. One, contracts are
vulnerable to corruption because of the extremely
large dollar volume involved. Two, most of us would
agree that all of these actions are wrong and that
those involved should be punished; however, most of
these offenses are not against the law in private
contracts. [A] private contractor can give contracts
to his friends if he wants to. It is his money. He
can spend it where and how he likes. We can't do that
with public money. Citizens of Alaska deserve strict
accountability for their money and we have a
procurement code that makes that possible. This is a
very bad contract and very poor public policy. Thank
you.
3:58:07 PM
BARRY JACKSON, Procurement Analyst; Project Manager; Programmer
Analyst, Resource Data, Inc. (RDI), relayed that he is a retired
DOA Division of General Services (DGS) employee, having served
as Contracting Manager, Deputy Director, and Acting Director.
While working for the DOA, he remarked, he attempted to bring
automation and improved productivity to the DOA's procurement
systems, and in pursuit of those goals visited other states to
examine their automation systems. However, he noted, the State
of Alaska never adopted any of the procurement systems used by
other states, and so frustrated by the state's inability to
bring automation to the DOA's DGS, he taught himself to program
and then created applications that have since been used for
nearly 15 years.
MR. JACKSON went on to say:
When I first saw the RFP for this pilot program for e-
commerce tools and web tools ..., I knew I wanted to
be a part of this effort to improve the state's
procurement system, and [so] I convinced my company to
offer my services to Alaska Supply Chain Integrators
in support of their RFP response. I assisted [ASCI]
in winning the contract and have since developed most
of the internal procurement policies used in the pilot
project. I've also conducted training of [DOT&PF]
employees on "ASCI Smart Tool Applications" and
assisted in performance reviews internally. The ASCI
tools, as they currently exist, are uniquely suited
and fitted to the State of Alaska; they've been highly
customized for the State's systems, and are better
than anything I've encountered in any other state. ...
MR. JACKSON added:
In 1969, when I was hired, agencies of the state were
... limited to being able to make $25 purchases
without coming back through the Division of General
Services. In other words, the State of Alaska's
procurement systems were highly centralized at that
time. Over the years, because this [was] a very
paper-oriented system, the more demand that was placed
upon it, the longer things took, and there was a trend
towards decentralization, which was strongly
accelerated in the mid-80s. Subsequent to ... [some]
scandals that [occurred], ... a procurement code was
adopted which mandates a centralized procurement
system.
However, decentralization kept apace to the point
where, now, I think it's fair to characterize the
State's procurement system as strongly decentralized.
And that brings with it the attendant difficulties of
failure to consolidate repetitive procurements, [of]
increases in personnel because the services are being
performed over and over again in various departments,
and [of] ... enforcing the rules and procedures that
are required. Today, I think we have an opportunity
... to recentralize a lot of the procurement through
the use of web tools and an automated system such as
the one that ASCI has. [It will] ... provide for a
better service, better accountability, better
productivity.
Business rules that the state now uses and tries to
enforce through paper processes can be enforced
through electronic means, and I believe all-around
better efficiency and productivity can be realized.
As a manager, my judgment is that these tools are well
tailored to the job - they create efficiencies, which
increase the productivity of the users. That increase
in productivity can be put to use in several ways.
The people that are doing the daily ordering have more
time to do other things. In the centralized portion
of the current system, the persons that are now doing
the buying are far more efficient and productive in
doing their jobs and producing the work that comes in.
Right now we are in a period of transition; these are
dramatic changes that are being made, and there will
be challenges, which are due to the complexity and due
to the resistance to change or just plain resistance
due to potential for job loss. My estimation, given
the "sea change" in the way the systems operate, is
that the transition has been going pretty well so far,
even given the resistance that's been encountered.
Regarding the subject of these quarterly audits, I
don't remember, in my 30 years of State service as a
contracting official, ever doing quarterly audits on
any contractor.
MR. JACKSON concluded:
This level of scrutiny, were it applied to a state
agency, looking ... at the same issues, would
undoubtedly reveal various issues of overspending and
such as [has] been alleged by others providing
testimony here today. I guarantee that were I able to
spend that level of activity in scrutiny in
investigating another agency quarterly, ... I would
find purchasing violations and overspending. I'm not
offering that as an excuse, I'm simply saying that
this level of scrutiny is unprecedented in my
experience, and I don't believe that any state agency
could withstand that level of scrutiny ... either.
CHAIR McGUIRE said she would leave public testimony open and
hold HB 257 over.
ADJOURNMENT
4:06:31 PM
There being no further business before the committee, the House
Judiciary Standing Committee meeting was adjourned at 4:06 p.m.
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