Legislature(2003 - 2004)
03/18/2004 08:03 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 18, 2004
8:03 a.m.
MEMBERS PRESENT
Representative Bruce Weyhrauch, Chair
Representative Jim Holm, Vice Chair
Representative John Coghill
Representative Bob Lynn
Representative Paul Seaton
Representative Ethan Berkowitz
Representative Max Gruenberg
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 431
"An Act relating to the municipal dividend program; and
providing for an effective date."
- MOVED CSHB 431(STA) OUT OF COMMITTEE
HOUSE BILL NO. 459
"An Act requiring an auditable paper trail for electronic voting
machines; and providing for an effective date."
- HEARD AND HELD
HOUSE BILL NO. 439
"An Act relating to the authority to take oaths, affirmations,
and acknowledgments in the state; relating to notaries public;
relating to fees for issuing certificates with the seal of the
state affixed; and providing for an effective date."
- SCHEDULED BUT NOT HEARD
PREVIOUS COMMITTEE ACTION
BILL: HB 431
SHORT TITLE: MUNICIPAL DIVIDEND PROGRAM
SPONSOR(S): REPRESENTATIVE(S) MOSES
02/04/04 (H) READ THE FIRST TIME - REFERRALS
02/04/04 (H) CRA, STA, FIN
02/26/04 (H) CRA RPT 3DP 2NR
02/26/04 (H) DP: KOTT, CISSNA, MORGAN;
02/26/04 (H) NR: SAMUELS, WOLF
02/26/04 (H) CRA AT 8:00 AM CAPITOL 124
02/26/04 (H) Moved Out of Committee
02/26/04 (H) MINUTE(CRA)
03/09/04 (H) STA AT 8:00 AM CAPITOL 102
03/09/04 (H) Heard & Held
03/09/04 (H) MINUTE(STA)
03/18/04 (H) STA AT 8:00 AM CAPITOL 102
BILL: HB 459
SHORT TITLE: PAPER TRAIL FOR ELECTRONIC VOTING MACHINE
SPONSOR(S): REPRESENTATIVE(S) GARA
02/16/04 (H) READ THE FIRST TIME - REFERRALS
02/16/04 (H) STA
03/09/04 (H) STA AT 8:00 AM CAPITOL 102
03/09/04 (H) Heard & Held
03/09/04 (H) MINUTE(STA)
03/18/04 (H) STA AT 8:00 AM CAPITOL 102
WITNESS REGISTER
ADAM BERG, Staff
to Representative Carl Moses
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Answered questions and discussed the
sectional for HB 431, on behalf of Representative Moses,
sponsor.
JIM COOPER, Mayor
for the City of Palmer;
President, Alaska Municipal League
Palmer, Alaska
POSITION STATEMENT: Testified in support of HB 431.
KEVIN RITCHIE, Executive Director
Alaska Municipal League and Alaska Conference of Mayors
Juneau, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
431.
JACK SHAY, Member
Alaska Municipal League (AML) board of directors
Ketchikan, Alaska
POSITION STATEMENT: Testified on behalf of AML in support of HB
431.
WALTER HICKEL
Anchorage, Alaska
POSITION STATEMENT: Related his past involvement in regard to
the issues surrounding HB 431.
BOB BARTHOLOMEW, Chief Operating Officer
Alaska Permanent Fund Corporation
Department of Revenue
Juneau, Alaska
POSITION STATEMENT: Answered questions on behalf of the
corporation during the hearing on HB 431.
BILL ROLFZEN
State Revenue Sharing, Municipal Assistance, National Forest
Receipts, Fish Tax, PILT
Juneau Office
Division Of Community Advocacy
Department of Community & Economic Development (DCED)
Juneau, Alaska
POSITION STATEMENT: Answered questions on behalf of DCED during
the hearing on HB 431.
REPRESENTATIVE CARL MOSES
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Encouraged the committee to pass HB 431.
REPRESENTATIVE LES GARA
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: As sponsor of HB 459, discussed the purpose
of the bill.
WILLIAM COLE, M.D.
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of himself in support
of the basic aspects of HB 459.
MARILYN RUSSELL
Fairbanks, Alaska
POSITION STATEMENT: Testified on behalf of herself to discuss
Alaska's voting system, during the hearing on HB 459.
SANDRA ZIRNHELD
Fairbanks, Alaska
POSITION STATEMENT: Testified on behalf of herself to cite five
examples of recent malfunctions in voting machine software,
during the hearing on HB 459.
LUKE HOPKINS
Fairbanks, Alaska
POSITION STATEMENT: Testified on behalf of himself in support
of HB 459.
DORIS PFALMER
Fairbanks, Alaska
POSITION STATEMENT: Testified on behalf of herself in support
of HB 459.
JENNIFER RUDINGER, Executive Director
Alaska Civil Liberties Union (AkCLU)
Anchorage, Alaska
POSITION STATEMENT: Testified that AkCLU cautiously endorses HB
459.
JOHN DUNKER
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of himself in support
of HB 459 and mandatory testing and random recounts.
ACTION NARRATIVE
TAPE 04-38, SIDE A
Number 0001
CHAIR BRUCE WEYHRAUCH called the House State Affairs Standing
Committee meeting to order at 8:03 a.m. Representatives Holm,
Seaton, Coghill, Lynn, and Weyhrauch were present at the call to
order. Representatives Berkowitz and Gruenberg arrived as the
meeting was in progress.
HB 431-MUNICIPAL DIVIDEND PROGRAM
Number 0100
CHAIR WEYHRAUCH announced that the first order of business was
HOUSE BILL NO. 431, "An Act relating to the municipal dividend
program; and providing for an effective date."
Number 0130
ADAM BERG, Staff to Representative Carl Moses, Alaska State
Legislature, testifying on behalf of Representative Moses,
sponsor, offered the committee a brief sectional analysis on the
bill. Section 1, he said, establishes the municipal dividend;
it sets the amount given to each municipality at $250 per
person.
Number 0162
REPRESENTATIVE SEATON, in response to a request from Chair
Weyhrauch, moved to adopt HB 431 for discussion purposes.
Number 0179
CHAIR WEYHRAUCH objected "for discussion purposes."
MR. BERG said that [the bill] would give the borough "the
dividend," based on the total population of the borough, minus
the population of all the incorporated cities within the
borough. He explained that it gives the boroughs the chance to
apply some of their funding to their unincorporated communities.
In response to a question from Chair Weyhrauch, he confirmed
that [HB 431] is a scaled-down "resurrection" of a bill
introduced formerly in the legislature. He explained that [HB
431, as opposed to the formerly proposed legislation] does not
give any direction to the municipalities regarding how to spend
the money.
CHAIR WEYHRAUCH said one of the questions people always seem to
have regarding [changes to] the permanent fund is how it will
affect their individual permanent fund dividend (PFD). He asked
if the sponsor might have discussed how the bill might effect
the PFD.
MR. BERG answered yes. He pointed to [a page entitled "Analysis
of current statutory payout versus HB 431," by the Alaska
Permanent Fund Corporation], which is included in the committee
packet. He noted that the bottom two lines show the difference
in the PFD with and without HB 431.
Number 0293
CHAIR WEYHRAUCH asked how the bill would affect the inflation-
proofing of the permanent fund.
MR. BERG said it does not affect [it]. He turned to Section 2
of the bill, which he explained [ensures] that the transfer of
money from the earnings reserve account happens only after PFDs
and inflation-proofing have been "taken care of."
CHAIR WEYHRAUCH asked how [HB 431] would affect the growth of
the corpus of the permanent fund.
MR. BERG turned again to the handout and pointed out that the
two lines above the bottom two lines show "the difference and
how it affects the total value of the permanent fund." He noted
the amounts on those lines of $45,644 and $48,165.
Number 0416
REPRESENTATIVE HOLM asked if the sponsor has given any thought
to the fact that the population is going to grow.
MR. BERG indicated that some consideration had been given to
that issue; however, he stated that the main intent of the bill
is to attempt to help municipalities.
REPRESENTATIVE HOLM noted that since the first PFD in 1982, the
state of Alaska has grown by 200,000 people. He asked what
would happen to "this program" when the population grows by
another 200,000 people in the next 20 years.
MR. BERG replied that the amounts can be changed by statute.
Furthermore, if the municipal dividend fund grew to the point
that it was "getting huge," Section 2 [ensures] that the amount
that can be transferred can never be more than the balance of
the earnings reserve account after dividends and inflation-
proofing have taken place.
Number 0512
REPRESENTATIVE HOLM opined that population growth isn't factored
in well, which doesn't give a fair analysis of what will truly
happen. He said, "I know it's all theoretical anyway, but it
gives us a little better idea of what the true picture is." He
questioned whether the huge growth pattern over the last 20
years has been based upon the fact that [the state] provides
"these services" or upon the fact that "we have the right reason
for people to move to Alaska."
MR. BERG responded, "Actually, ... the people know it's coming
from the permanent fund." He noted that "they" do estimate an
annual municipal population growth of approximately 1.15
percent. He said the fiscal note does reflect the population
growth.
REPRESENTATIVE HOLM stated that he realizes what the number is,
but he suggests that that number is "not even close to being
reality." He said, "If you go back the last 20 years, 1.15
percent doesn't get us there."
Number 0618
REPRESENTATIVE SEATON said:
As I look at this ... your projections are that ... in
... fiscal year 2015, the permanent fund itself would
be $2.52 billion less with this program, and that if
the ... personal dividends were still calculated the
same, there'd be basically a $250 per person dividend
given to the communities and $90 of that would come
out of each person's personal dividend. Is that the
way I interpret this?
MR. BERG answered yes; the estimated effect on people's dividend
would be $90 [less]. In response to a follow-up question from
Representative Seaton, he confirmed, "Our numbers aren't based
on performance of the fund, except for in the event [that] the
fund wasn't paying dividends - obviously there would be no
municipal dividends going out either."
Number 0868
REPRESENTATIVE SEATON turned to the last page of the five-page
handout entitled "HB 431 Municipal Dividend Estimates,"
[included in the committee packet], which shows a yearly
municipal dividend [payment] of $157,195,000. He also turned
attention to a graph [entitled "Funding History for State
Revenue Sharing and Safe Communities Program," included in the
committee packet]. He said, "I'm just wanting to make sure that
that's what the proposal is, is to have the ... revenue sharing
in safe communities - not only [to] reinstate some of that, but
[to] expand it by three times what it's been in the last eight
years." He referred to the back page of the previously
mentioned handout with the chart on it and noted that it shows a
total for 1998 of $50 million [comprised of] "revenue sharing"
and "safe communities."
MR. BERG said he doesn't have that copy.
CHAIR WEYHRAUCH said copies would be made available.
Number 0918
JIM COOPER, Mayor for the City of Palmer; President, Alaska
Municipal League, testified in support of HB 431. He stated
that without this type of legislation, communities will be
facing serious consequences. He said HB 431 would provide money
where it is actually needed at the local level where it can be
used to the best advantage of the people, while bypassing the
red tape associated with the monies typically received as grants
from the state or the federal government.
MR. COOPER told the committee that "we" performed a survey in
February, which was based on 73 communities. At that point, he
said, more than half of the communities said that they didn't
have the financial resources to provide the minimum, basic
public services. Three of the four communities reported facing
economic downturn, which Mr. Cooper said is obviously made more
difficult due to the elimination of state revenue-sharing
payments. He stated his belief that in the mid 80s the revenue
sharing safe communities [total] was $136 million, which then
declined to $50 million, and now is rising to $157 million. He
said, "So, we're basically in the ball park if we had continued
to raise the monies from the 1986 time frame."
MR. COOPER revealed that five of the six communities said that
they anticipate significant revenue shortfall this year, while
two of the municipalities will be making cuts in public
services. Half [of the municipalities] report that they have
already laid off workers, while two out of three report that
they need to raise fees, such as the rates for water and sewage,
harbor fees, and land fills, to counteract the loss of money.
He posited that it's obvious that [the proposed legislation] is
a necessary step because doing nothing could result in a strong
potential that 30 communities will be phased out this next year,
which would have a compounding effect on other communities.
MR. COOPER noted, "Approximately one in three jobs in the urban
areas depend on providing goods, services, and transportation in
the rural communities." If the smaller communities close, then
the onus will fall to the larger communities to provide services
to all the people who will have moved to the larger communities.
He stated, "I think we have to remember that the municipal
government is the best deal in the state; we're the ones that
provide, typically, a lot of the essential services which are:
revenue collection, grants administration, ... elections, ...
road maintenance, [and] property liability insurance." He
concluded, "I think that we need to look at what we want to do
and what we're trying to do for our communities, and this is
definitely a step in the right direction."
Number 1111
CHAIR WEYHRAUCH asked Mr. Cooper to clarify what "closure of
communities" means.
MR. COOPER explained that communities without revenue sharing
will not have monies with which to be able to function and will
literally "turn the key, turn off the lights, shut off the
water, and walk away." He said the revenue sharing of last year
ranged from 4 percent of some of the communities' budgets up to
90-plus percent.
Number 1150
REPRESENTATIVE SEATON turned to a handout [showing the revenue
sharing totals of Alaska municipalities for fiscal year 2003].
He noted that the total for Anchorage was [$10,403,815]. He
then turned back to the previously cited ["HB 431 Municipal
Dividend Estimates"] page and pointed to where it shows that
Anchorage would receive $67,267,500. He noted other examples.
He asked, "Is that your estimate of how this would go, as well?"
MR. BERG surmised that he is "speaking in general to the
program, per se." He said he is not certain he agrees with the
figures. He said he thinks the Alaska Municipal League has said
that it would like to have revenue sharing and safe communities
at a level not to go below "what we had three years ago."
Number 1230
CHAIR WEYHRAUCH said he has a question about one of the terms in
the bill. He stated, "It says the amount transferred to the
fund shall be distributed to the department as dividends to the
municipalities." He asked how municipalities would be defined.
Number 1258
KEVIN RITCHIE, Executive Director, Alaska Municipal League and
Alaska Conference of Mayors, defined a municipality as "any
municipal political subdivision, be it a city, a borough, a
unified municipality."
CHAIR WEYHRAUCH asked if Elfin Cove, as a community association,
[would be a municipality].
MR. RITCHIE answered that unless it is specifically chartered as
a municipality under state law, it would not be considered one.
MR. RITCHIE confirmed that revenue sharing is proposed for
elimination in "this budget," and there are a number of small
communities around the state that will not be able to provide
services without some base of revenue sharing. He echoed Mr.
Cooper's estimation that municipalities really are a good deal.
He said a municipality can exist with a municipal budget of
$150,000 to $300,000 - a small amount of money. Beyond that, he
stated, even though there is limited tax authority in
communities, the ability was created to provide services, apply
for and administer grants, and administer utility systems, for
example. He explained that there really is no other money for
providing the base services.
CHAIR WEYHRAUCH observed that so far, the testimony has shown
that this [proposed legislation] is critical to small
communities. He turned to larger communities, such as Anchorage
and Fairbanks, and he asked how much revenue sharing those two
large municipalities receive and what they would receive under
[HB 431].
Number 1349
MR. RITCHIE said he thinks that the last revenue sharing number
was about $30 million. He added, "And also, municipal capital
matching grants were also proposed for elimination - so about
$45 million." He said, "This is looking at about $150 million,
so approximately three times the amount of money." In terms of
what that means to a large community, he said huge things are
happening every day, for example, the issues surrounding the
retirement for public employees and teachers. He continued as
follows:
It's not entirely -- I mean I couldn't say that this
is a direct offset to local taxes and local taxes
would go down, because there [are] so many things
happening in the world; but, in fact, this would
create the kind of stabilization ... of taxation that
will really benefit communities. And in some
communities they may decide to lower taxes and, in
fact, in all reality the state may decide to have
municipalities do more in some cases. For example,
the governor is recommending municipalities handle all
of the match for [the Department of Transportation and
Public Facilities (DOT&PF)] projects. You know, those
types of things -- obviously there's a sorting out
process that has to happen, because the state and the
municipalities are partners in all of this.
Number 1418
REPRESENTATIVE LYNN asked how this would relate to maintaining
the senior property tax exemption throughout the state.
MR. RITCHIE responded that the Alaska Municipal League's long-
held position has been that it's a good program, which it wants
funded. He said, "This would be an avenue for permanently
funding the senior citizen property tax exemption; you wouldn't
hear from us again on that."
Number 1443
REPRESENTATIVE HOLM asked Mr. Ritchie if he would consider that
all municipalities have a reason to exist.
MR. RITCHIE noted that yesterday, in the House Special Committee
on Ways and Means, the issue was raised that 50 years ago,
before there was revenue sharing, there were still communities
throughout Alaska. Many of these are viable communities that
have been in existence for thousands of years. However, 50 to
100 years ago, infant mortality was at an unacceptable rate,
access to doctors was unacceptable, education was not good,
health facilities were basically nonexistent, and electricity
[was not available]. "In today's world," he said, "it's not
fair, and people probably won't accept those same types of
conditions, even though that's the way it was a hundred years
ago." Without the services that are currently available, people
in smaller communities would start moving away to urban areas
and the small communities would probably collapse. Mr. Ritchie
asked, "Can all communities be saved?" He answered no, there's
probably economic pressures that will make people move away from
communities. However, he opined that many of the small
communities that don't have much of a tax base but have existed
on the same site for years are certainly viable and deserve to
exist.
Number 1529
REPRESENTATIVE HOLM pointed out that after the gold rush some
towns didn't exist any more. He questioned whether [HB 431]
would artificially extend the length and duration of a
municipality's lifetime.
MR. RITCHIE characterized that that as an excellent question.
He said, "This program alone will take a community that might
have to close out as a municipal government, lower the quality
of life for its citizens, not be able to provide the services
that are required, and [have] that cause people to move away."
However, if there is a major industry in a community, such as a
mine that closes down, and the only reason the people are there
is for mining, then the people will move away because they don't
have jobs, not because the programming exists or doesn't exist.
He told Representative Holm, "I don't think - in the sense that
you're talking about - that it's going to significantly extend
the lives of communities where their employment base moves away.
But, especially in communities that have ... a viable
subsistence base, this will allow them to operate a municipal
government and continue to exist."
REPRESENTATIVE HOLM said he is trying to find the balance here.
Number 1637
REPRESENTATIVE BERKOWITZ asked if the Alaska Municipal League
has done any analysis regarding what the impact of [HB 431] on
local property tax or local sales tax rates across the state.
MR. RITCHIE answered no, adding there are "so many unknowns out
there." He said this year there are issues regarding economies;
most of the communities around the state are in trouble as well
as the fishing, mining, and timber industries. In addition to
that economic struggle, Mr. Ritchie listed the following state
cuts: the proposed elimination of revenue sharing; municipal
capital matching grants; assumption of greater responsibility
for "DOT match"; and a five-percent salary increase mandated by
the state for funding a state retirement system, which most of
the municipalities are in and cannot avoid. He said, "If this
were to be adopted, I could say with somewhat great certainty
that it would ... at least stabilize the increase of taxes, and
in some cases could either reduce taxes or, again, if this were
to pass it's very possible the state would say, 'Well, now that
you've got all this money, we'd like you to do a few extra
things.'"
REPRESENTATIVE BERKOWITZ stated:
This is one of the things that is really intriguing to
me about the notion of a community dividend. And
we're in a transitional period in Alaska's history.
When we created the state and when we devised the
system we have now, it was done with the idea that you
needed to do things through Juneau, because most of
the communities didn't have the ability to be
sufficient, and that the state would provide a lot of
the services and take over a lot of the
responsibilities.
It seems that we've reached the point where many of
the communities now are in a position to take care of
themselves to a greater degree than was possible in
the past - not all the communities, but particularly
the major communities. And that there should be, as
companion to this type of legislation, some
investigation as to [which] state services are being
provided could be provided better at the local level.
And if there's any analysis that's been done on that,
I'd be really interested to see it.
MR. RITCHIE replied that "we've" actually proposed that study a
number of times and would gladly participate with the state in
it. He said "we" feel that on a local level in government,
people in communities can - without a state program and state
administration - decide what things are really needed to make
the community better. He stated the reality is that taxes are
not really that low around the state. Most of the larger
communities are above $1,000 per capita in local tax generation.
MR. RITCHIE said former Governor Walter Hickel would speak to an
issue regarding a concept of the PFD that he said the public may
think is "really good." For example, when services are needed
at the local level, one possibility is to give people a higher
dividend. The federal government would take a portion of it and
then the municipal government would tax, as well. He said, "And
so, by taking the federal government out of the tax loop by
providing some assistance directly to a municipality - which is
not taxed by the government and would be a good public purpose -
you've ... given your local taxpayers sort of a tax break from
federal taxes on providing local services." He opined that that
concept is probably pretty viable and sellable to the public.
Number 1818
REPRESENTATIVE SEATON noted that the proposed program would
provide basically 38 percent of the budget of the Municipality
of Anchorage. He asked if that revenue sharing would affect the
municipal tax cap.
MR. RITCHIE stated his understanding that the answer to that is
no. He noted that one of the things that has been a significant
problem to a number of communities with locally imposed tax caps
is that they did not anticipate or count reductions in state
funding. Therefore, when the state takes services away that has
to be replaced, or takes revenue sharing away, there is no
mechanism within the tax cap to adjust for that.
Number 1867
JACK SHAY, Member, Alaska Municipal League (AML) board of
directors, testifying on behalf of AML, told the committee that
the AML represents approximately 60 percent of the organized
municipalities in the state, and probably over 98 percent of the
population. He admonished the committee to listen carefully to
former Governor Walter Hickel, who he said, "planted the seeds
that have resulted in this plan." Mr. Shay said [HB 431]
addresses some important elements. He said the municipalities
are in trouble. He stated that [Version D before the committee]
is simplified and excellent, because it protects the PFD and
protects the inflation-proofing of the fund in very bad times,
in case of extreme growth and falling markets.
MR. SHAY said every state gives fiscal aide to cities, towns,
and counties, "and so forth," and it is a well-recognized
principle of our republic that [Alaska] does this. He
emphasized that [AML] endorses and urges passage of [HB 431].
CHAIR WEYHRAUCH called upon former Governor Walter Hickel to
testify.
Number 2000
WALTER HICKEL, former Governor of Alaska, testifying on behalf
of himself, commended the committee for working on HB 431. He
offered his background regarding the issue: Mr. Hickel said he
came up with "this idea" many years ago and presented it in many
places throughout the state, and "people were really for it."
He expressed that Alaska is a different state with a government
structure, rather than the private structure of many of the
Lower 48 states. He indicated his involvement over 50 years
ago. The resources, he said, were not given to the people
directly, but were given to the future state, so that it could
pay the bills the federal government had been paying.
MR. HICKEL said he thinks the state has paid out about $5 or $6
billion in dividends. He opined, "If half of that [had] gone to
the villages and cities ..., we'd probably have the greatest
public system on earth; we'd have the finest schools, the finest
roads, the finest public buildings." Consequently, he observed,
it isn't the individual's obligation to do a lot of things; it's
the collective obligation, which is why Alaska is called the
"owners' state." He continued as follows:
I was trying to keep it quite simple. The dividend
would [have] just kept on going, but half of that
dividend would have gone to the area in which the
person lived, even if it wasn't an organized
municipality. And I was thinking that the money that
went to those villages or those cities, that it would
be -- at least 90 percent of it had to go to capital,
because pioneering countries need capital. And once
they get capital, the local economy moves up and does
different things. And so, ... your program is a start
in the right direction, but I think somehow, some day,
it should be tied to what the individual gets: [If he
gets] $100 dividend a year, the area in which he lives
gets $50; if he gets $1,000, they get $500. They just
split it, whatever it is. And so, it's just not tied
into something.
Do whatever you want to do. I think the state
supports you. I know the [Alaska] Municipal League,
the times I took it to them - even the last time about
a year ago in Valdez - they voted unanimously for a
community dividend.
MR. HICKEL said he knows a lot of people say that the government
isn't efficient, for example, but he reiterated that [in
Alaska], the government has an obligation of ownership, and has
a responsibility to do things that other state governments do
not. He concluded, "I'd like to invite all Alaskans to
participate because it's for their benefit." He offered to
answer questions from the committee.
REPRESENTATIVE BERKOWITZ noted his appreciation of Mr. Hickel's'
presentation of his ideas.
Number 2284
BOB BARTHOLOMEW, Chief Operating Officer, Alaska Permanent Fund
Corporation, Department of Revenue, in response to a question by
Chair Weyhrauch, explained what "(b) and (c)" refer to [from
page 2, line 10 of HB 431], as follows: "'(b)' is the amount
transferred for the dividend, and '(c)' is the amount
transferred for inflation-proofing." He explained that half of
the amount available goes to the dividend, while the amount
designated to offset the effects of inflation is transferred
from the earnings reserve to principle. Whatever money is left
in the earnings reserve would be used to "make the transfer
under (e)" [in Section 2 of the bill]. In response to a
question from Chair Weyhrauch, he revealed that the calculations
are all based on the financial statements and are estimated up
until June 30, and it's usually some time in July that the
accounting records are closed and the final numbers are
available. The amount of the dividend is announced in
September.
CHAIR WEYHRAUCH asked what timing would be on the announcement
of the municipal dividend. He added, "Because you could
calculate backwards, then, and people could figure out the
dividend ...."
MR. BARTHOLOMEW responded, "Yes, and the Permanent Fund usually
announces in July what the amount of the transfer to the
Permanent Fund Division will be. So, we've already made our
decision in July if you're going to get "x" dollars. They have
to complete the application process, determine how many people
are going to be eligible, [and] do the actual math." In
response to a follow-up question from Chair Weyhrauch, he
confirmed that it would be July when the municipalities would
know "what the actual amount would be."
CHAIR WEYHRAUCH asked when the transfers would take place.
TAPE 04-38, SIDE B
Number 2358
MR. BARTHOLOMEW indicated it could take place any time after
"our" agreement with the Department of Revenue, which he said he
thinks is the 20th business day of July.
CHAIR WEYHRAUCH asked if the time that the transfers under
[subsections] (b) and (c) take place is defined in statute.
MR. BARTHOLOMEW answered no. He explained as follows:
What they'd say is at the end of the year, and we have
taken that to be June 30th. And then, we did just go
through with the attorney general's office last year,
to [ask], ... "What's a defensible position for us to
take on when we should make that transfer?" And
that's what led us to adopt that approximately 20th
business day.
CHAIR WEYHRAUCH asked Mr. Bartholomew, "If we were to adopt
this, there would be no reason to put a date certain as to when
these transfers would occur under the municipal dividend
program?"
MR. BARTHOLOMEW replied that if there wasn't a date certain,
then "we" would probably follow what has been done regarding the
transfer to the dividend fund. Unless a later date was given,
he added, "we" probably would be ready to make the transfer in
late July.
CHAIR WEYHRAUCH offered his understanding that if there was a
situation where the municipality was facing a dire financial
situation and potential bankruptcy, it wouldn't file an
injunction to get "this money" in advance, because it would be
distributed in a normal course and the state would have to
bridge any fiscal impact to that municipality. He asked if that
was Mr. Bartholomew's position.
MR. BARTHOLOMEW answered that's right. He said he thinks "we"
have good legal ground to say that, based on how the statutes
are currently written, "we" have the obligation of the 20th
business day. He said, "I think if you were trying to get it
sooner, we would just say, 'We don't have any authority to make
that transfer.'"
CHAIR WEYHRAUCH said this is what would be called, in a
"fisheries' situation," an allocated decision by the
legislature. He stated his assumption that the corporation has
no position on the bill.
MR. BARTHOLOMEW answered that's correct. He said [the
corporation] tries to provide information regarding amounts, but
stays neutral in regard to the allocation or use of what's
available.
Number 2274
REPRESENTATIVE SEATON noted, "All of our other transfers are
based on the earnings and the success of the fund and this is a
flat $250 per person." He asked Mr. Bartholomew if he could
offer any insight regarding whether there would be "any
positives or any negatives to that proposed allocation method."
MR. BARTHOLOMEW said he thinks the only difference is that "we"
would have to rely on external sources for determining "that
population amount, or whatever the calculation was going to be."
He opined, "As long as it's clearly defined who's responsible to
determine population and then help us come up with a dollar
amount, I think we can make it work just as well as a formula or
a set dollar amount."
Number 2232
REPRESENTATIVE BERKOWITZ asked if it would be easier, from an
administrative perspective were the state to adopt a percent of
market value (POMV), and then, perhaps, through some percentage
on that POMV, make an allocation to the municipalities.
MR. BARTHOLOMEW said the [Alaska Permanent Fund Corporation
Board of Trustees] definitely has recommended its preference to
get away from the current way of accounting for realized income
and having a volatile payment stream that is high some years and
low others. The board recommends that the way all payouts from
the permanent fund are determined is changed. He noted that HB
431 uses the current formula. He said he thinks the board would
recommend any distribution plan - to the extent that it can -
work toward adopting a POMV approach, and then, through the
legislative decision-making, decide how the money is to be
allocated.
REPRESENTATIVE BERKOWITZ asked what the differences are between
taking a portion from the permanent fund and allocating it "this
way," as opposed to, for example, taxing that portion back,
which he said he thinks would allow the taxation of nonresident
workers. He clarified as follows:
So, here we're talking about $250 per person. If we
were to allocate the full amount, tax $250 back per
person, would that have individual tax consequences,
and [if we] have $250 back per Alaskan, would that
allow us to tax $250 to nonresident workers?
MR. BARTHOLOMEW answered he doesn't know.
Number 2128
CHAIR WEYHRAUCH turned to Amendment 1, which read as follows:
On page 1, line 11
Between "Amount of" and "dividends"
Insert "municipal"
Change "dividends" to "dividend"
Number 2114
REPRESENTATIVE GRUENBERG objected. He opined that dividends
should still be plural, because otherwise it would be considered
just one dividend, when it really will be a number of dividends
to the various municipalities.
CHAIR WEYHRAUCH asked if there was objection to just inserting
the word "municipal". There being none, Amendment 1 [as
amended] was adopted.
Number 2080
CHAIR WEYHRAUCH turned to Amendment 2, which read as follows:
From page 1, line 14
Through page 2, line 1
Delete "or other population data that, in the judgment
of the department, is reliable"
Insert "that reside in the boundaries of that
municipality"
CHAIR WEYHRAUCH stated his reasons for Amendment 2: First, he
said he wants the legislature to be specific that "we" rely on
the permanent fund recipient. Second, he said he wants to
specify that those recipients would reside in the boundaries of
the municipality. He opined, "If we're going to address
community impacts and impacts in [the] municipality, it should
be contingent on the people living there." He noted that almost
$17 million in dividends is sent out of state. He indicated
that if people aren't residing in the state, then the
municipalities won't experience the impact of that resident and
"they should not be increased by that amount of money for that
municipal dividend."
Number 2025
REPRESENTATIVE BERKOWITZ suggested that everything after line 12
[on page 1] be deleted.
CHAIR WEYHRAUCH concurred with that suggestion, "because that
does get to the person residing in the municipality."
Number 2001
REPRESENTATIVE SEATON mentioned permanent fund dividend
applications and asked, "How does the nexus of ... that other
data set occur?"
REPRESENTATIVE BERKOWITZ said he doesn't think "we" should be
the ones to figure it out. He said if [the legislature] were to
specify in statute how the department or division "figures it
out," that might tie their hands in some way that could
conceivably be constitutionally impermissible. He mentioned
that U.S. Census data is available, as well as tax information.
He said, "At a basic level, you get down to a certain point and
it's guess work, but in the smaller communities, it's not guess
work. I think you can probably just have a pretty straight-
forward knowledge of how many people are living there."
CHAIR WEYHRAUCH proffered that there's a rational basis from
which to draw between a person residing in a municipality and
one who does not reside there. He noted that the resident uses
roads, medical services, schools, and water and sewer. He said,
"You probably could even discriminate on that basis."
Number 1928
REPRESENTATIVE SEATON expressed the need to clarify the
definition of resident.
CHAIR WEYHRAUCH responded that his use of the word resident
refers to one who is "domiciled in and living in the community,
using the municipal services and affecting that community
directly."
Number 1884
REPRESENTATIVE HOLM asked if it is to be anticipated that "all
municipalities will give us the straight scoop." He asked if
there would be some specific oversight by the State of Alaska to
make sure that it isn't "getting duped" by certain
municipalities.
CHAIR WEYHRAUCH said, "I would hope there would be."
REPRESENTATIVE HOLM questioned whether the result would be
another audit function. He mentioned the fiscal note.
Number 1843
BILL ROLFZEN, State Revenue Sharing, Municipal Assistance,
National Forest Receipts, Fish Tax, PILT; Juneau Office;
Division Of Community Advocacy; Department of Community &
Economic Development (DCED), testified as follows:
This language was pulled out of our existing statutory
language for the revenue sharing program. For the
past, at least, 30 or 40 years now, it's been the
department's responsibility to come up with an annual
municipal population determination. We work closely
with the state demographer and the Department of
Labor, who annually comes up with the statewide
population for all the communities, using permanent
fund dividend applications. In fact, several years
ago, we had the application amended so that applicants
had to put their physical address on their application
versus their [post office box] or mailing address.
Annually, we receive ... that data from the state
demographer in the fall. On January 15th, we send out
municipal populations to all the municipalities. They
have until April 1 to appeal that determination, based
on a local head count census. We've found, over the
last few years, based on this change in the
application, that very few municipalities appeal our
numbers, because they're very reliable. But we do
allow them that opportunity, but it has to be based on
local counts. And the requirement is that a resident
has to live in that municipality at least six months
out of that calendar year.
MR. ROLFZEN noted that currently the department is in the middle
of a population appeal process, which will conclude on April 1.
The numbers will be certified on June 1.
CHAIR WEYHRAUCH asked Mr. Rolfzen, "When you said 'this
language,' what language did you refer to?"
MR. ROLFZEN answered, "Population data that, in the judgment of
the department, is reliable."
CHAIR WEYHRAUCH asked, "The state already has some experience
with this language and its applicability in the state?"
MR. ROLFZEN answered, "Exactly."
Number 1742
CHAIR WEYHRAUCH suggested adding the word "physically" between
the words "residing" and "in", on page 1, line 12 of the bill.
MR. ROLFZEN responded that that would work for [DCED].
CHAIR WEYHRAUCH said, "I'm going to move that as [a new]
Amendment 2, to add the word physically."
REPRESENTATIVE GRUENBERG referred to the original Amendment 2
[text provided previously] and asked if the committee was going
to adopt it.
CHAIR WEYHRAUCH responded, "No, I withdrew that amendment."
Number 1729
CHAIR WEYHRAUCH asked if there was any objection to [the new]
Amendment 2. There being none, [the new] Amendment 2 was
adopted.
Number 1719
REPRESENTATIVE SEATON asked if "with that" there is a full
enough definition of six months. He said, "I mean, that's
accepted now, and ... you don't see any problems if this
definition's here (indisc. - coughing) testifying that in
(indisc. - coughing) leaving that up to determination?"
MR. ROLFZEN responded, "That's correct. We have regulations in
place to implement population determinations on an annual basis,
and our requirement is six months out of the year."
Number 1700
CHAIR WEYHRAUCH noted the language on page 2, [lines 6-8], which
read:
(c) If the amount appropriated is not sufficient
to fully fund municipal dividends for a fiscal year,
the amount of each dividend shall be reduced on a pro-
rata basis.
CHAIR WEYHRAUCH introduced Conceptual Amendment 3, which would
make the following changes:
On page 2, line 6
Between "amount" and "appropriated"
Insert "that would be"
Between "appropriated" and "is"
Insert "under subsections (a) and (b) of this section"
CHAIR WEYHRAUCH, in response to a question from Representative
Seaton, clarified that (a) and (b) refer to [Section 2] and not
to "the transfers."
Number 1635
CHAIR WEYHRAUCH asked if there was any objection to Conceptual
Amendment 3. There being none, Conceptual Amendment 3 was
adopted.
Number 1628
CHAIR WEYHRAUCH turned to Amendment 4, which read as follows:
On page 2, line 12
Delete "fully"
CHAIR WEYHRAUCH explained that the word "fully" may be a matter
of argument.
Number 1583
CHAIR WEYHRAUCH asked if there was any objection to Amendment 4.
There being none, Amendment 4 was adopted.
Number 1565
REPRESENTATIVE GRUENBERG asked if it is constitutional for money
to be transferred from the corporation to the department without
an appropriation.
Number 1512
MR. BARTHOLOMEW answered that he does not believe so. He stated
his belief that all money remains in the earnings reserve of the
permanent fund, until appropriated by the legislature.
REPRESENTATIVE GRUENBERG suggested that to make "this"
constitutional, the committee would need to offer an amendment.
He noted that the language on page 2 looks like an appropriation
would not be required. He asked if language should be added to
say, "Subject to an appropriation for that purpose."
MR. BARTHOLOMEW replied that the new subsection (e) that is
being added in AS 37.13.145 is in the same section that deals
with inflation-proofing and dividends, and those are based on
appropriations that are in the annual operating budget, "or some
appropriation bill." He said, "I believe by having it within
that subsection, you're going to have it subject to the same
requirements, and I think there is AG work stating it will not
transfer without an appropriation."
REPRESENTATIVE GRUENBERG said he doesn't want to draw a lawsuit;
therefore, he asked Mr. Bartholomew if it would increase his
comfort level or eliminate a possible question if the committee
put a technical amendment in "to that effect."
Number 1449
REPRESENTATIVE BERKOWITZ stated that Section 1 "says it
clearly." He noted that the language in Section 1 specifies,
"Subject to appropriations".
MR. BARTHOLOMEW said, "And that would be in Title 29." In
response to a comment by Representative Gruenberg, he said,
"Having it stated in Title 29 and then following the legal
guidance we have for 37.13.145, I think you have a clear record
requiring appropriations."
REPRESENTATIVE GRUENBERG explained that he had thought the
phrase "Subject to appropriations" referred to the second
transfer of money from the department to the municipalities.
MR. BARTHOLOMEW, in response to a question from Representative
Gruenberg, said he is comfortable that there will be good
guidance.
Number 1354
CHAIR WEYHRAUCH closed public testimony.
Number 1342
REPRESENTATIVE CARL MOSES, Alaska State Legislature, as sponsor
of HB 431, stated that this legislation is badly needed by the
communities in Alaska. He said the health of the state depends
upon the health of communities. He opined that HB 431 is a
politically correct way to use the PFDs. He said, "It's the
people's money, as far as I'm concerned, and this gives the
money back to the local level where it can be administered and
spent as they see fit." He stated that he thinks this will go a
long way in improving the quality of life in Alaska. He
encouraged the committee to move [HB 431].
CHAIR WEYHRAUCH said that no matter what happens with the bill,
Representative Moses' service to the state is appreciated.
Number 1279
REPRESENTATIVE SEATON referred to previous discussion regarding
the $67 million that would go to Anchorage, whose current budget
is [roughly] $248 [million]. He said he wanted to correct for
the record that it's 27 percent, not 38 percent.
Number 1260
CHAIR WEYHRAUCH removed his previous objection to [the original
bill version].
Number 1248
REPRESENTATIVE GRUENBERG moved to report HB 431 [as amended,
with individual recommendations and the accompanying fiscal
notes]. There being no objection, CSHB 431(STA) was reported
out of the House State Affairs Standing Committee.
HB 459-PAPER TRAIL FOR ELECTRONIC VOTING MACHINE
Number 1199
CHAIR WEYHRAUCH announced that the next order of business was
HOUSE BILL NO. 459, "An Act requiring an auditable paper trail
for electronic voting machines; and providing for an effective
date."
Number 1180
REPRESENTATIVE LES GARA, Alaska State Legislature, as sponsor of
HB 459, stated that the one cross check that the United States
has had for 200 years is that, after somebody votes, there is a
paper record of how that person voted. He said that machines
are now being used - the State of Alaska having recently
purchased 55 of them - that leave no paper record of votes. He
called it a radical departure from anything the state has ever
done. He emphasized the importance of having a paper record.
Representative Gara reported that in Alaska, many elections have
been close.
REPRESENTATIVE GARA offered an example of an election where a
candidate lost by 16 percent of the vote and someone asked for a
recount, but the Division of Elections said no. The reason the
recount couldn't be made was because there was no available
paper trail. At that point, he explained, the only way to tell
whether the vote was accurate would be to check the computer
code that was used to calculate and tally the vote. However,
across the country, when people ask to look at the computer
code, they are being told by the computer companies that the
code is a trade secret. The outcome is that the [true] result
[of the election] is never known.
REPRESENTATIVE GARA stated that these [voting] machines are
needed for people with certain handicaps. He said HB 459 will
require that when Alaska starts using the machines, those
machines must produce a paper trail. He noted that in
California, that requirement is going to go into effect in 2005.
He said the Division of Elections in Alaska reports that the
technology to make the new machines produce a paper trail will
be available by "the 2006 election."
Number 1048
CHAIR WEYHRAUCH opened public testimony.
Number 1000
WILLIAM COLE, M.D., testifying on behalf of himself, opined that
a reliable voting system is essential to a democratic process.
Furthermore, confidence in the system is also essential. He
noted that many have cited that electronic systems have been
easily hacked into and outcomes have been changed. Dr. Cole
related an article in The New York Times, dated January 31,
2004, which reported that the State of Maryland contracted with
a computer security firm to check out a [voting] system, and
"they" easily were able to hack into the machine, change votes,
and "take over the process."
Number 0952
DR. COLE stated that obviously this issue is nonpartisan.
Notwithstanding that, he said it didn't aide his confidence in
the system when he heard that the manufacturer named Diebold
[Election Systems ("Diebold")] said that the Maryland security
study validates the Diebold election systems equipment for the
north's primary. He added that it also didn't help that the
head of the company has been "quoted to be able to deliver Ohio
to the current sitting President in the next election."
DR. COLE stated he would support the basic aspects of [HB 459],
that any system must have a physically verifiable paper trail -
verifiable by the voter at the time of the vote and later at a
recount. He stated his belief that a public process, "such as
this," should have access to the proprietary software involved
in the machines proposed by the private companies. He said he
thinks a generous recount requirement "is involved." He
remarked that it does no good to have a paper trail if it
prohibits having a count to a mere 1 percent difference. Dr.
Cole also stated his belief that this issue is so important that
it must go into effect immediately as opposed to some date in
the future.
Number 0869
DR. COLE concluded that he has been proud of the system that
Alaska has had [to date], and he said he feels that helping
handicapped [voters] would certainly not be insurmountable with
the present system.
Number 0851
CHAIR WEYHRAUCH asked Dr. Cole if he has any knowledge in regard
to the current accessibility to voting available to handicapped
individuals.
DR. COLE answered he doesn't. He added, "It's yet to be shown
to me how you could use the electronic system without
assistance."
Number 0821
MARILYN RUSSELL, testifying on behalf of herself, stated that
her goal is to see that Alaska's voting system is competent and
reliable, as well as admired and respected, and that it maintain
that reputation. She said when many Americans think of Alaska,
they think of a beautiful, unique frontier with indigenous
people - [a place where people are] independent and think
outside the box. Ms. Russell encouraged setting up the voting
machines from the beginning to be accurate and dependable. She
stated that there should be no chance of possible wrong-doing:
no software glitch, no system hacker, no possible fraud, and not
even the least bit of doubt in a voter's mind that his/her vote
might be skewed.
MS. RUSSELL said she has done some homework and found that even
though systems have been checked out by many independent people,
the ultimate results of the votes have been dubious. She said,
"If there were ever a problem, I cringe to think of the amount
of time, effort, anguish, and money that would be needed to fix
the problem, let alone the credibility that would cause havoc.
We want to have a paper trail for these machines. Our state is
on the way up; let's not mar its progress."
Number 0722
REPRESENTATIVE HOLM thanked Ms. Russell for her testimony.
Number 0702
SANDRA ZIRNHELD, testifying on behalf of herself, stated that
while there are many assurances from manufacturers that their
software works, she would cite five examples out of many recent
malfunctions. She continued as follows:
[In] Broward County, Florida, this January, in a
single race election, there was only one thing to mark
on the ballot. A hundred and thirty four ballots
registered no vote. The winner won by only 12 votes
and, although Florida law requires a recount, a
recount was not possible because there was no paper
trail.
[In] Fairfax County, Virginia, November 2003, a
republican school board member lost her at-large seat
in a tight race. Voter complaints about suspicious
behavior of machines led to the testing of some
machines, which showed that one suspect machine
subtracted a vote from this candidate in about one of
every hundred tries.
[In] Miami, Dade County, Florida, November 2002,
several precincts - each with hundreds of voters
registered - tallied no votes cast.
[In] Boone County, Indiana, November 2003, in a
district with only 19,000 eligible voters, of which
only 5,352 voted, the tally came up with 140,000
votes.
[In] Muscogee County, [Georgia], November 4, 2003,
citizens who voted no on a referendum issue saw the
machine register yes. Officials ended up having to
take this machine out of service.
MS. ZIRNHELD stated that this is egregious, and she said she
wants to make certain that nothing like this happens in Alaska.
She encouraged the committee to look at a June 2003 report by
computer security researchers from Johns Hopkins and Rice
Universities, that showed that the software on the Diebold
machine lacked even the most basic of computer security
[capabilities]. She indicated that undergraduates in a computer
security class would have failed if they had written that code.
She called it, "blatantly inept." She revealed that it scares
her that machines are so easily prone to fraud and manipulation.
Number 0506
MS. ZIRNHELD stated that this issue is not and should not be a
partisan one. She stated that it is about the fundamental
principal which underlies democracy; it's about ensuring the
fact that individuals elect the people who serve in governing
positions. Those officials are put there by the will of the
people, not by random number generators. She indicated her
support of the bill, and opined that it should be strengthened
with a provision which requires a mandatory spot check on
precincts.
MS. ZIRNHELD, in addition to her forgone examples, indicated
that there are many examples where many people voting machines
have malfunctioned and voting officials had to improvise by
asking people to write their votes on slips of paper. She
stated she wants the upcoming Senate seat filled by the vote of
the people, not by faulty machines.
Number 0425
REPRESENTATIVE GRUENBERG told Ms. Zirnheld that her testimony is
causing him to wonder about whether the [electronic voting]
systems should be implemented without being thoroughly checked
out.
MS. ZIRNHELD responded that all the machines have been checked
out. She noted that it is scary, because it is the
manufacturers that are checking them out and giving assurances
[that the machines are in working order].
REPRESENTATIVE GRUENBERG said that is what is frightening to
him.
Number 0325
REPRESENTATIVE LYNN asked Ms. Zirnheld to clarify whether or not
the machines are checked out by a third "uninterested" party.
MS. ZIRNHELD offered her "impression" that the manufacturers
check out the code, while independent parties "have done other
kinds of testing." She added, "There have been other people who
have been testing, ... which has proved that there's ...
problems with these machines." She offered to do research to
further answer Representative Lynn's question.
Number 0233
REPRESENTATIVE GARA, on the same note, said California, for
example, requires that only approved software be used on its
machines. After making that requirement, the state did an audit
and found out that in 17 counties the approved software was not
being used. He described the situation as a regulatory
nightmare, where it is necessary to have state computer
consultants spend their time to ensure that each of the machines
is working properly. He said, "We know that that is also an
area that can be fraught with error like it was in California."
Number 0155
LUKE HOPKINS, testifying on behalf of himself, encouraged the
committee to move [HB 459] out of committee, which he said will
allow Alaska's excellent voting system to continue to have the
important paper documentation that it has currently. He stated
that Alaska's system of vote recording is one of the best in the
nation. He said the state has developed the system at great
expense and should continue to maintain its system of electronic
counting, transmitting data, and providing a paper record for
each vote.
MR. HOPKINS noted that there have been extremely important
recounts in Alaska. He indicated the importance of ensuring
that all parties are able to oversee a recount that has accurate
and valid information. He opined that the added cost to the
State of Alaska and, possibly, to the Division of Elections to
ensure that there is a paper trail is small, compared to what
the state has already spent in developing the AccuVote system
that it has [acquired].
TAPE 04-39, SIDE A
Number 0001
DORIS PFALMER, testifying on behalf of herself, opined, "In a
time when electronic wizardry is commonplace, ... it's
imperative that we have a receipt ... and a paper trail system
for these machines." She stated that many people have cited
reasons to [pass HB 459] and she cannot think of any reason "why
it wouldn't automatically be put in place." She said it seems
to be a "no-brainer." She said [the public] has seen "what they
can do with movies" and "just about anything electronically."
She concluded, "Paper rules, to me."
Number 0147
JENNIFER RUDINGER, Executive Director, Alaska Civil Liberties
Union (AkCLU), told the committee that AkCLU met recently and
spent a great deal of time deliberating this issue. She said
electronic voting and "direct recording equipment" are new
technologies. She said, "We are very wary of some of the
concerns you've already [heard] from folks who've testified, as
well as some of the actual problems that came up on 'super
Tuesday' and in previous elections where these machines were
implemented." She indicated that she would offer some points on
behalf of "a unanimous board of directors."
MS. RUDINGER stated that in 2002, Alaska was recognized as
number one in the nation for the best electoral system. She
said that begs the question, "If it ain't broke, why are we in
such a big hurry to fix it?" She said [AkCLU] shares the
concerns of Representative Gruenberg and others, who have
suggested that perhaps the machines should not be used until
more testing is done, better security is in place, and it is
certain that using the machines will not compromise the
integrity of the state's elections. She stated that the
integrity of the voting process is fundamental to the operation
of the democracy. She said a major component of a valid
electoral process is voting technology that honestly and
accurately counts every single ballot. She opined, "Because
voting technologies have always been susceptible to error, bias,
and corruption, we must remain vigilant about new technologies
and insist that before they're implemented, they maximize the
likelihood of recording what each voter intends, regardless of
the voter's race, economic status, or geographic location."
MS. RUDINGER said [the state] must require that voting machines
be accessible to all voters, by reducing barriers to
participation erected by language, physical disability, or the
complexity of the technology. She emphasized the importance of
protecting the confidence of the public in the results of
elections, by ensuring that voting technologies may not be
rigged in a way that would thwart the true will of the
electorate. She said [AkCLU] recognizes that touch-screen
voting systems do offer tremendous potential advantages. She
noted that, as Representative Gara had previously indicated,
electronic voting is helpful to people with disabilities who
can't operate a manual lever. Furthermore, for people with
visual impairment, there are cards that can be inserted into the
machines that will read the ballot to the voter.
Number 0415
MS. RUDINGER noted that the ballots can be made available in
other languages, which she said could be helpful to some of the
elders in the Native villages of Alaska, whose languages are not
even written. Conversely, she noted that an Alaska Native on
[the AkCLU's] board of directors raised the point that there is
not a familiarity with technology and "these computers" in many
of the villages, and people might be more wary of going to vote,
even if the machine is promoted as giving the ballot to the
voter in his/her language.
MS. RUDINGER pointed out that the existing statutes make using
the machine optional; therefore, the state could hold off from
their use to do further testing. Notwithstanding that, she
stated that if the legislature sees fit to authorize "going
ahead with these machines" and the Division of Elections sees
fit to use the machines in 2004, then [AkCLU] cautiously
endorses HB 459. She said [AkCLU] recognizes that HB 459 may
help people feel better about the integrity of the process by
giving the voters the opportunity to verify that what prints out
of the machine is the intended vote. However, she stated that
voter-verified paper balloting is also untested. She revealed
that computer experts have pointed out that "we may find out
voter-verified paper balloting doesn't ensure the integrity of
the election at all." She said [AkCLU] has serious reservations
regarding both the effectiveness and the practicality of the
proposal.
Number 0561
MS. RUDINGER continued as follows:
Elections would resort to using a voter-verified paper
trail only in the case of a recount or a contest,
which a hacker can prevent or deter. In most
jurisdictions, recounts are triggered only when an
election is close. So, anyone who is savvy enough to
hack into a digital system and alter the election
results could simply select a margin of victory big
enough to prevent a recount or discourage a contest.
And, in these jurisdictions, a competent hacker could
block the review of any paper ballot.
MS. RUDINGER noted that even in those few jurisdictions that
automatically do a recount of a small percentage of ballots as a
test, a sophisticated fraud could thwart detection by corrupting
the code for the paper printout. She said that brings her to
her second point:
The voter-verified paper trail could be used by a
sophisticated hacker to give voters a false sense of
security that their vote was correctly tallied. If
the computer code is genuinely vulnerable to attack, a
competent hacker could not only compromise it to make
the machined record a fraudulently vote, but could
also compromise the code that runs the printer,
causing the printer to display the voter's intent,
while the machine records something different than
what the voter intended.
MS. RUDINGER also pointed out that there's no reason to assume
that paper recounts are more accurate than machine tabulations.
Paper is notoriously difficult to handle and easy to manipulate.
Counting the paper ballots generated by [machine] would be
subject to all of the historical problems associated with paper
ballots, including human error, fraud, and mishandling.
Number 0672
MS. RUDINGER stated that [AkCLU] believes that voter-verified
paper ballots should not be employed until there has been
rigorous testing of their reliability. She added that it also
feels that way about the electronic voting machines. She
suggested that two years from now, everyone might realize that
[HB 459] did not protect the election [process] at all.
Number 0700
MS. RUDINGER offered recommendations as follows:
If DREs [Direct Recording Electronic voting machines]
are to be employed ... in 2004, ... the computer
source code for all security critical functions of the
machines should be subjected to thorough, independent
review. And when we say independent review, we
definitely mean not people who are selected ... by the
manufacturers of the machines. ... At a minimum, the
full code should be subjected to a review by an
independent body, and only open source codes ...
should be used for tabulating the results.
Number two, rigorous physical security measures need
to be instituted to ensure that the machines and any
associated paper ballots are not compromised. Third,
election officials need to be thoroughly trained in
their use, ... [as well as in] the physical
infrastructure necessary to ensure their use. For
example, sufficient electrical wiring needs to be
"assured." This could be challenging in some parts of
rural Alaska where the infrastructure doesn't
currently exist to implement these machines.
Fourth, the jurisdiction should have a permanent,
broad base security task force or oversight body
representing all interested segments of the community,
to evaluate the potential for fraud or error in voting
systems, and to address the new security challenges
that will inevitably arrive in the future. That task
force should have complete unrestricted access to the
DRE code, and [it] should conduct [its] own
independent testing.
Fifth, election officials should select technology
that gives them maximum flexibility in taking
advantage of emerging innovation. In other words,
whatever we buy today should be adaptable to what we
decide we really need to do tomorrow to ensure the
integrity of the election. If a jurisdiction chooses
to employ optical scan or a method other than DREs for
its balloting, it should be required to have a
sufficient number of electronic DRE machines available
to accommodate the needs of people with disabilities -
because we do recognize that that needs to happen -
and they should employ systems that can accommodate
the needs of language minorities.
Number 0564
CHAIR WEYHRAUCH asked Ms. Rudinger if she would submit the
remainder of her testimony in writing.
MS. RUDINGER explained that she was reading "from a white
paper," but she offered to create a summary of what her
testimony and send it to the committee.
Number 0897
JOHN DUNKER, testifying on behalf of himself, stated he supports
[HB 459]; however, he admitted that some of the testimony gives
him pause about "employing it rapidly." He said he had hoped it
would have an immediate effect and that might prevent the next
election cycle from being the only one in "our" history without
a paper trail. He added, "And I think that is still a good
thing."
MR. DUNKER said he would like to see the bill strengthened to
include mandatory testing, "similar to what [the] Division of
Elections has described in response to your 9 March questions."
He mentioned performing on the AccuVote process. He indicated
that he wants mandatory testing and random recounts, either by
district or precinct. He said, "I believe those should not
hinge on a percentage difference of vote outcomes, which may
make sense in a paper voting system. But I think it's evident
that that sort of a percentage difference threshold does not
make sense with electronic voting."
MR. DUNKER concluded by saying that the process isn't good
enough if it only satisfies technocrats. He said [the process]
must maintain the confidence of every citizen.
Number 1023
REPRESENTATIVE GRUENBERG reiterated that he is concerned about
implementing this system at all until these problems are
addressed.
Number 1049
CHAIR WEYHRAUCH told Representative Gruenberg that he would
eventually be offering quite a substantial amendment to the
bill.
[HB 459 was heard and held.]
Number 1181
CHAIR WEYHRAUCH invited Tony Malacas and his son, Josel Carillo
to come before the committee. He noted that Mr. Carillo had
recently returned from the war in Iraq, where he was wounded,
and that he had been awarded the Purple Heart. He asked Mr.
Carillo if there was anything he wished to say.
Number 1200
MR. CARILLO said, "It's great to be back."
CHAIR WEYHRAUCH emphasized that it is great to have Mr. Carillo
back alive.
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 9:59
a.m.
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