Legislature(1997 - 1998)
01/24/1997 03:05 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
January 24, 1997
3:05 p.m.
MEMBERS PRESENT
Representative Norman Rokeberg, Chairman
Representative John Cowdery
Representative Bill Hudson
Representative Jerry Sanders
Representative Joe Ryan
MEMBERS ABSENT
Representative Eric Croft
Representative Gene Kubina
COMMITTEE CALENDAR
OVERVIEW: Department of Commerce & Economic
Development
HOUSE BILL NO. 18
*"An Act extending to certain partnerships and corporations the 10
percent procurement preference currently given to certain sole
proprietorships who are Alaska bidders and owned by persons with
disabilities."
- MOVED HB 18 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 18
SHORT TITLE: STATE PROCUREMENT DISABILITY PREFERENCES
SPONSOR(S): REPRESENTATIVE(S) JAMES
JRN-DATE JRN-PG ACTION
01/13/97 31 (H) PREFILE RELEASED 1/3/97
01/13/97 32 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 32 (H) LABOR & COMMERCE, FINANCE
01/24/97 (H) L&C AT 3:00 PM CAPITOL 17
WITNESS REGISTER
MARIANNE BURKE, Director
Division of Insurance
Department of Commerce & Economic
Development
P.O. Box 110805
Juneau, Alaska 99811-0805
Telephone: (907) 465-2515
POSITION STATEMENT: Presented an overview of the
Division of Insurance
WILLIAM L. HENSLEY, Commissioner
Department of Commerce & Economic
Development
P.O. Box 110800
Juneau, Alaska 99811-0800
Telephone: (907) 465-5442
POSITION STATEMENT: Presented an overview of the
Department of Commerce & Economic Development
CATHERINE REARDON, Director
Division of Occupational Licensing
Department of Commerce & Economic
Development
P.O. Box 110806
Juneau, Alaska 99811-0806
Telephone: (907) 465-2534
POSITION STATEMENT: Presented an overview of the
Division of Occupational Licensing
JEANNETTE JAMES, Representative
Alaska State Legislature
P.O. Box 56622
Juneau, Alaska 99801-1182
Telephone: (907) 465-3743
POSITION STATEMENT: Testified on HB 18
DUGAN PETTY, Director
Division of General Services
Department of Administration
P.O. Box 110210
Juneau, Alaska 99811-0210
Telephone: (907) 465-2250
POSITION STATEMENT: Testified on HB 18
DUANE M. FRENCH, Director
Division of Vocational Rehabilitation
Department of Education
801 West Tenth Street, Suite 200
Juneau, Alaska 99801-1894
Telephone: (907) 465-2814
POSITION STATEMENT: Testified on HB 18
ACTION NARRATIVE
TAPE 97-2, SIDE A
Number 001
CHAIRMAN NORMAN ROKEBERG called the House Labor and Commerce
Standing Committee to order at 3:05 p.m. Members present at the
call to order were Vice-Chairman Cowdery, Representatives Sanders,
Ryan and Hudson.
Number 069
MARIANNE BURKE, Director, Division of Insurance, Department of
Commerce and Economic Development, came forward to testify. She
stated that one of the most important activities which the division
will address this year is the implementation of the provisions of
the Kassebaum-Kennedy Act. This Act has been widely publicized and
related legislation regarding the same will be brought before this
committee. This Act is in response to long-standing complaints by
employees, especially those who felt as though they were trapped in
a job. If some employees leave their jobs they lose medical
coverage. If someone in a family for example, has an on-going
medical problem and the employee takes a different job, the new
employer could exclude coverage for this family member under a pre-
exiting condition.
MS. BURKE stated that the Kassebaum-Kennedy Act was the most far-
reaching health care legislation on the national level since
medicare. The state of Alaska will have two options for
implementing the provisions of this federal legislation. Alaska
can either take a proactive approach by amending existing statutes
to incorporate all the provisions of the Kassebaum-Kennedy Act or
do nothing. In the latter event the federal agency, under the
Secretary of Health & Human Services, will enforce this Act on
Alaska. Alaska's laws are more closely aligned with the federal
laws than many other states, but this is highly technical
legislation with a very important time line.
MS. BURKE continued that the Governor or Chief Executive Officer of
each state must submit a plan of action to the Secretary of Health
& Human Services by April 1, 1997 or the assumption will be made
that a state accepts federal oversight. Alaska must have
legislation in progress, drafted, written, introduced, or however
the federal government chooses to define "in progress," which will
bring Alaska into compliance January 1, 1998. The division is
presently working on drafts of this legislation.
MS. BURKE stated that the division has enough answers from the
federal government to introduce legislation which will keep state
regulation in the state's hands, rather than default to the federal
government. She added that this was a wonderful opportunity for
the citizens of Alaska. Under this legislation, if an employee
chooses to leave their job to take another job, they will not be
forced to satisfy some period of time before they are covered by
insurance. It's also an opportunity for the state of Alaska to
adopt the self-insured plan which would mean that an individual can
switch from an insured plan to a self-insured plan or visa versa.
This gives Alaskan citizens more options, as well as mobility, and
takes the economic decision out of the arena as to whether or not
an employee will lose coverage for themselves or their family.
MS. BURKE further stated that Senator Kelly would introduce an old
bill which basically does three different things. It will bring
about efficiencies in existing regulations and get rid of barriers
which have been created. (Ms. Burke did not specify which
legislation she was referring to.) For example, in Alaska
presently, an insurance company from Germany cannot be admitted as
an insurer of surplus "lines" because in an obscure portion of a
statute it says that a certificate of solvency from their country
would be required. Great Britain is the only country which issues
these.
MS. BURKE noted compliance problems with some Alaska statutes as a
result of welfare legislation passed last year. There are other
provisions, none of which she felt would be controversial, but they
are very important to the efficient business of insurance and
regulation in the state of Alaska, as well as to protect the buying
public when they deal with insurance companies.
Number 614
CHAIRMAN ROKEBERG asked if a policy issue needed to be made in
relation to letting the federal government intercede or for Alaska
to take the initiative to institute the Kassebaum-Kennedy Act
legislation themselves.
MS. BURKE stated that they referred this to the administration for
a decision. After having met with her counterparts of other states
she noted that there isn't a state in the nation that wants the
federal government to take over this program. She felt safe in
saying that the administration will choose to maintain regulation
on the state level.
CHAIRMAN ROKEBERG suggested a work session with the committee on
these various issues or to meet with Ms. Burke individually on this
legislation.
Number 702
REPRESENTATIVE JOHN COWDERY asked about a person, for example, who
has a job and is injured. As a result of this injury the employee
is laid up for quite a while. In the meantime, one of their
children has a medical problem. In Representative Cowdery's
experience this child would not be covered. He asked what has been
done in regards to this situation presently.
MS. BURKE responded that she thought Representative Cowdery
referred to the provision of the Comprehensive Omnibus Budget
Reform Act (COBRA) which allows a person to continue their
coverage. Children have this right under an employee who was
previously covered by a policy, they have the right of continual
coverage by payment of the premium themselves.
REPRESENTATIVE COWDERY said he understood this, but used the
example of someone who is in a body cast for two years. It may be
difficult for them to pay this premium.
MS. BURKE said this situation is not addressed in the Kassebaum-
Kennedy Act at all.
Number 830
REPRESENTATIVE BILL HUDSON asked if there was a cost analysis
attached to this legislation.
MS. BURKE answered that the ability to assess potential cost is
beyond the data which they have access to since self-insured plans
are exempt by federal law from any reporting or regulation by the
division. There have been numerous studies done on the national
level on the impact of this legislation. The impact is considered
to be minimal in relation to an individual who is not covered
through the employer, but if they are going to, they would fall
back to a high risk group. The costs don't go away, they just get
shifted. The state, as a purchaser of insurance, receives its
portion of the allocated cost of the high risk group. The state
would absorb a portion as any other employer would.
Number 920
REPRESENTATIVE HUDSON noted that there would probably be additional
state costs for the implementation of the Kassebaum-Kennedy Act,
but he clarified again that Ms. Burke could not presently assess
this cost.
MS. BURKE answered yes, but she added that the state may be paying
these costs already whether through medicaid because the individual
is unable to pay.
Number 950
REPRESENTATIVE HUDSON stated that this would be an interesting
examination of the whole issue of portability and prior injuries
related to insurance coverage, etc.
Number 1002
COMMISSIONER WILLIAM HENSLEY, Commissioner, Department of Commerce
& Economic Development came forward to present an overview of the
department. He noted that this department was relatively small,
but very diverse. There are under 400 employees in this department
and they perform functions such as corporate licensing services for
businesses, professions and corporations. They insure the
financial solvency of the state's financial institutions. They
also regulate, through the Alaska Public Utilities Commission
(APUC), utilities and they also provide service loans to commercial
fisherman, as well as to non-profit hatcheries. They work with
marketing of tourism and seafood. They also promote and finance
economic development in a broad variety of sectors through various
institutions.
COMMISSIONER HENSLEY continued that in the budget overview
distributed to the committee was an organizational chart on page 19
to show how the department is structured. From a budgetary
standpoint their operating budget requested for 1998 is $60.8
million and of that amount $23 million is non-general fund money
and consists mainly of corporate and endowment funds, also federal
funds and loan receipts. Twenty six million dollars is designated
in other program receipts from fees for service. The general
fund's unrestricted request is $11.7 million which shows that the
department has about one-half of one percent of its unrestricted
general fund as the total state general fund request.
COMMISSIONER HENSLEY noted that the pie chart on page 16 indicates
the overall state general fund monies which are literally a sliver
of this funding. One other instructive graph which shows what's
been happening in the department since fiscal year 1990 is that its
general fund unrestricted request has gone down at a 45 degree
angle and its program receipts have grown, yet in the course of all
this time its unrestricted revenue for the state treasury has
continued to grow. These revenues come into the state from
activities generated within the department.
COMMISSIONER HENSLEY stated that the department more than pays its
way. He noted a few changes which the department plans to present
including a $200,000 increase in tourism marketing for enhanced
television advertizing which will be matched by $66,000 of industry
contributions. This will enable the tourism council to increase
television advertizing from 9 weeks to 14 weeks which will generate
72 million "gross impressions" to the American public. The
department feels as though this is an important addition in view of
the tremendous competition for tourism around the country. Also,
the Division of Trade and Development budget is being reduced by
$82,700 through the elimination of one Minerals Development
Specialist in Juneau. Furthermore, there is one Minerals
Development Specialist in Fairbanks. This means they will also
have a Development Specialist in Fisheries, one in Forest Products
and one in Minerals Development.
COMMISSIONER HENSLEY continued that in the film office they
eliminated one Development Specialist position for $157,000 leaving
$14,000 in travel and $50,000 in contractual services for the film
program. It is not the intent to stop promoting this area. The
tourism staff will assume responsibilities and the activities which
they will engage in are trade publication advertizing,
participating in some film location expositions, hosting some in-
state location scouts and some product development trips for
producers. When the department receive calls for location
assistance from outside production companies they pass these on to
local destination marketing organizations much as they do with tour
operator calls which they receive.
COMMISSIONER HENSLEY noted that several of the department's
entities are up for sunsetting. The licensing boards which are up
for extensions this session are: architects, engineers and land
surveyors; barbers and hairdressers; physical and occupational
therapists; dental; accountancy; and veterinary. Also, the
department's been informed that the budget and audit committee will
sponsor the extension legislation. Some legislative revisions may
be based on audit findings.
COMMISSIONER HENSLEY stated that the license fees have been lowered
for over 15,000 license holders this year. During fiscal year 1996
the number of occupational licenses increased by over 4,000 for a
total of 35,402 in the state. This fall the division has also
implemented welfare reform in the licensing area with provisions
requiring license denial if applicants are behind on child support.
COMMISSIONER HENSLEY added that the governor has submitted an
executive order to transfer the Division of Measurement Standards
from the Department of Commerce and Economic Development to the
Department of Transportation and Public Facilities. This division
operates the commercial vehicle weigh stations, the oversize and
overweight permits and it also monitors commercial weighing and
measuring devices. This transfer, which would become effective
July 1, would consolidate the state's commercial vehicle safety
programs under one agency.
COMMISSIONER HENSLEY continued that the governor, himself and other
members of the cabinet have carried a strong message to the
business community not only within the state, but also outside the
state that Alaska is open and ready for business. They have
visited with a variety of corporate leaders throughout the country
and overseas to solicit investment in Alaska. Two years ago he had
the good fortune to be part of the change in direction in dealing
with the oil industry. They felt it was important to sit down face
to face in order to talk about the future of the oil industry, to
see what the oil companies plans were and what the state could do
to assist maintaining production and exploration in Alaska. It's
been very productive and exciting especially since the smaller
companies are interested in exploration in Alaska. Furthermore, as
part of these visits the department tried to cross the industry
sectors as much as possible.
COMMISSIONER HENSLEY cited a visit with the RTZ Corporation in
London, a world-wide mining company. He also cited a visit with
P&O, the parent of the Princess Tours Company. In both visits,
Alaska was an important part of this company's business. He
mentioned a trip to Houston to visit a small coil tubing company
that provided a substantial amount of tubing that was used in
Alaska, which cut the cost of doing business on the North Slope.
He hoped that someday it would be practical to have a plant like
this in Alaska. Furthermore, he addressed the concept of Work
Star, which is related to welfare reform. He explained by fiscal
year 1999, 10,000 welfare recipients need to engage in productive
work. This will be a major challenge to the state. Therefore, the
business community needs to work with the state. Work star would
encourage businesses to assist the state by offering technical
assistance, work shops and financial assistance through partial
employee payments to help businesses achieve the standards set by
the welfare reform initiative.
COMMISSIONER HENSLEY continued that the department was also working
on a project called Marketing Alaska. Industries were broken down
into sectors including both the private and public. Each sector
came up with ideas on how to improve the economy with built-in
periodic updates. According to the periodic updates, a more
conservative initiative approach was taken in some cases. This was
especially true for the seafood sector. He stated there was a huge
potential for Alaska in several of the companies.
COMMISSIONER HENSLEY cited Sakhalin Island in Russia as a strong
potential for investment opportunities. The department intended to
work closely with those companies interested in this investment.
The governor also intended to visit this area in the near future.
Another area of interest for this program he noted was the Alaska
Seafood Center in Anchorage.
COMMISSIONER HENSLEY added that the governor also created a sub-
cabinet to deal with the salmon industry last spring. A meeting
was established in Juneau on January 27, 28 and 29, 1997 to
establish some ideas to present to the legislature. Furthermore,
the department had been providing staff to establish a business
plan for the timber industry in Southeast Alaska including
coordinating the state's response to the closure of the Ketchikan
Pulp Mill. Commissioner Hensley stated he would be happy to answer
any questions that the committee members might have.
Number 1995
REPRESENTATIVE ROKEBERG thanked the commissioner for his testimony.
He asked Commissioner Hensley to respond to the issue addressed in
the Governor's State of the State speech regarding the five point
plan for economic development. There was a pioneer incentive
mentioned. He asked if the department would be providing any
legislation surrounding that issue.
Number 2012
COMMISSIONER HENSLEY replied, "yes." The department initially was
focusing on the air service between Asia and Alaska. The
Department of Revenue was leading the effort to draft legislation,
however. The Commerce and Economic Development Department was also
concentrating on a more generic piece of legislation that was
practical.
Number 2052
REPRESENTATIVE COWDERY asked Commissioner Hensley how many
employees were in the department?
COMMISSIONER HENSLEY replied, "390 employees."
Number 2062
REPRESENTATIVE COWDERY asked Commissioner Hensley if the number of
employees would decline after the weight and measure transfer?
Number 2068
COMMISSIONER HENSLEY replied the department would be reduced by 45
people.
Number 2079
REPRESENTATIVE COWDERY asked Commissioner Hensley if a lobbyist had
been hired to help the state regarding the Sakhalin Island project?
Number 2085
COMMISSIONER HENSLEY replied there was an existing organization
called the American Business Center that was established on site
already. It was the intention of the department to engage in a
small business contract with them to provide data and contacts.
It was economically very reasonable for them to do this.
REPRESENTATIVE COWDERY asked if there would be a conflict of
interest if this organization was involved in other interests of
competition.
COMMISSIONER HENSLEY said that this wasn't their understanding and
it was the organization's responsibility to facilitate for any
business, particularly for oil field service work at Sakhalin
Island.
Number 2150
REPRESENTATIVE HUDSON said he had been asked by the local area
Kensington miners how they could find such good timing to eliminate
the one and only major contact they have with the mining industry
(in reference to the elimination of a Minerals Development
Specialist position). Kensington is trying to open up a mine and
generate 400 jobs. If the department wants to save $82,000 he said
he would suggest other places to save it. He felt that this was
short sighted since they're on the cutting edge of opening this
mine. He asked for the Commissioner to seriously think about this.
COMMISSIONER HENSLEY said he had a soft spot in his heart for
mining since he had tried at one time to get a mining operation off
the ground up north. The department has spent a fair amount of
time interacting with the mining industry this past year. They are
trying to respond to the administration's effort to scale down the
budgets, but still be able to do the job. Mining is a growth area
and they have high hopes for a wide range of mining opportunities
in the mill right now.
Number 2232
CATHERINE REARDON, Director, Division of Occupational Licensing,
Department of Commerce and Economic Development, made a statement
from the gallery. She stated that she would assist with licensing
type legislation this session and offered to talk with any of the
representatives at any time about concerns, etc. Ms. Reardon said
that the representatives would probably hear about occupational
licensing frequently this session because of the large number of
licenses it regulates. She also noted that the division's annual
report was out which lists the 35 programs under their auspice.
HB - 18 STATE PROCUREMENT DISABILITY PREFERENCES
Number 2406
REPRESENTATIVE JEANNETTE JAMES came forward to present testimony on
HB 18. She stated that current law for the disabled gives them a
preference as an entity. When this original legislation was
written there was a provision which required qualifying disabled
people to operate as sole proprietors. She guessed that the
drafters never visualized that two or more disabled people would
want to do business together. What this current legislation does
is to allow 100 percent disabled corporations and partnerships to
be eligible for disabled preferences.
TAPE 97-2, SIDE B
Number 000
REPRESENTATIVE JAMES stated that the administration does support
this bill. It has a zero fiscal note and she offered to answer any
questions.
Number 046
REPRESENTATIVE COWDERY referred to the zero fiscal note and noted
that if they do allow a preference wouldn't this mean an expense to
the state.
REPRESENTATIVE JAMES noted that a fiscal note is required when
additional costs would have been included initially or not covered
already in some other existing way. She suspected that this
wouldn't cause an additional charge to allow these people into the
system. When the original preference was given a fiscal note was
already included.
Number 097
REPRESENTATIVE HUDSON referenced a letter in the bill packet dated
April 10, 1995 from Ms. Bannister and asked if all legal problems
had been cleared up in this final draft.
REPRESENTATIVE JAMES responded affirmatively.
Number 131
CHAIRMAN ROKEBERG interjected that the letter which Representative
Hudson noted had referred to an entire global issue of six months
as a matter of residence. He believed that legislative counsel
referred to this in the context of the entire statute, not
particularly this provision brought forward by Representative
James. Ms. Bannister took the liberty of bringing this up as a
potential constitutional issue as it relates to the six months
issue and the equal protection clause. It was a letter drafted to
put the bill sponsor on notice that there could be potential
ramifications of the statute, but not certainly Representative
James' requested amendment to this statute itself.
REPRESENTATIVE SANDERS asked about the fiscal note issue. He added
that there is an extra cost to the state when a contract is let
under this legislation. "If you pay an extra 10 percent for a
contract that's an extra expense to the state, right?" If the
legislation is broadened so that other individuals get this
preference then there will be a bigger expense, even if this was
factored into the previous legislation.
Number 228
REPRESENTATIVE JAMES responded that when the original bill went
through with a preference and they visualized what the potential
was for severally disabled people who might be in business and
qualify, more people have not been added to this list. What has
been added is a different way of doing business. She's not sure
what the previous fiscal note was, but because of the known numbers
of disabled individuals who might be in business within Alaska, a
fiscal note would have been prepared.
Number 298
DUGAN PETTY, Director, Division of General Services, Department of
Administration came forward to testify. He noted that this bill
was essentially the same as the one supported in this committee
last year. The Department of Administration supports this bill.
This bill corrects an oversight with the initial legislation where
it's allowed for a bidder who employs persons with disabilities as
long as they are a sole proprietor, and qualified through the
Alaska's bidder preference to receive a 10 percent preference.
What the present legislation effectively does is discriminates in
those same situations where a sole proprietor, partnership or a
corporation exists under the same circumstances.
MR. PETTY continued with respect to the division's fiscal note and
stated that there was no additional cost per se. No additional
people will be hired to administer this law if passed.
MR. PETTY continued that Representative Sanders did have a point as
to the preferences on the books, that there was some financial
consequences to administering them in the overall cost to the
contract. The legislature has deemed that from a policy standpoint
the benefits of those preferences and fostering certain types of
Alaska businesses are worth this additional incremental cost. The
division doesn't show this in its fiscal note because the cost of
awarding this bid is simply not a cost which comes back to the
division. The division has seen in this particular preference a
bit more activity over the last couple of years and some
circumstances where the costs have been demonstrably different than
what the cost would have been without it, but it is their job to
administer the division in accordance with the law. There is not
a significant amount of additional cost associated with this, but
they haven't done any projections.
Number 425
REPRESENTATIVE HUDSON stated that he doesn't see how they can
attribute any additional costs because they don't know what's going
to come up. It may mean simply trading off a sole proprietor for
a 100 percent owned corporation which means an expanding of the pie
of those who can seek and qualify for the 10 percent disabled
bidder's preference.
Number 515
CHAIRMAN ROKEBERG stated that he has looked at the statute AS
36.31.70, and subsection (e) specifically. When this new
legislation goes into effect it seemed that in reading the entire
statute there could already be a 5 percent state residency bid
preference. He confirmed that this was correct. He also
referenced under subsection (c) a provision which calls for
offering services through an employment program which offers a 15
percent bidders preference. He asked what this program was.
MR. PETTY responded that an employment program is a successor to
terminology which they used to call a sheltered workshop. An
employment program is a program that has been certified by either
the Division of Vocational Rehabilitation or the Division of
Developmental Disabilities Program. This bill doesn't allow for an
employer to receive both the preference for an employer who employs
someone with a disability and the employment program preference.
It would be one or the other. This 10 percent disabled bidder
preference is added to the 5 percent Alaska bidder preference. In
order to qualify for this someone must first qualify for the 5
percent Alaska bidder preference.
MR. PETTY went on to note his understanding that someone can't have
the 15 percent employment program preference in addition to the 10
percent disabled bidder or an employer who employs disabled bidder
preference. These two can never be connected. The maximum benefit
anyone can receive is 20 percent.
Number 681
DUANE FRENCH, Director, Alaska Division of Vocational
Rehabilitation, Department of Education, testified by
teleconference. Mr. French stated that he supports this bill
because it will expand opportunities for businesses that are wholly
owned by individuals with disabilities to qualify under the bidders
preference and for individuals with disabilities who have formed a
partnership to qualify under the bidders preference. This
legislation will expand vocational opportunities for people with
disabilities. He wishes he could tell the committee that there are
a lot of businesses owned by people with disabilities which are
operating successfully and would qualify under the bidders
preference, but unfortunately that's not the case. There are only
a few businesses and he didn't think they needed to be overly
concerned about there being a flood of businesses wholly owned by
people with disabilities who would qualify under this preference,
but it will make it possible for those few businesses which are
fully owned by people with disabilities.
MR. FRENCH stated that there are businesses which would qualify,
but not very many. He knew of two or three specifically right now,
but he said this didn't mean there weren't more which they were not
aware of. He added that the partnership provision only applies to
partners who each have a disability and would not apply to a
husband and wife team where one or the other has a disability.
Number 954
MR. FRENCH continued to address subsections 1 and 2 in relation to
what defines disability. The same definition used by the Americans
with Disabilities Act would apply to this legislation and would
include persons with HIV.
Number 1032
REPRESENTATIVE HUDSON made a motion to move HB 18 out of committee
with individual recommendations with an accompanied zero fiscal
note and asked for unanimous consent. Hearing no objections, it
was so moved.
ADJOURNMENT
CHAIRMAN ROKEBERG adjourned the House Labor & Commerce Committee at
4:17 p.m.
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