Legislature(1995 - 1996)
03/14/1996 08:08 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE March 14, 1996 8:08 a.m. MEMBERS PRESENT Representative Jeannette James, Chair Representative Scott Ogan, Vice Chair Representative Joe Green Representative Ivan Ivan Representative Brian Porter Representative Caren Robinson Representative Ed Willis MEMBERS ABSENT All members present. COMMITTEE CALENDAR HOUSE BILL NO. 110 "An Act relating to the confidentiality of certain information in motor vehicle records; and providing for an effective date." - PASSED CSHB 110(STA) OUT OF COMMITTEE * HOUSE BILL NO. 415 "An Act streamlining the functions of state government, including authorizing the commissioner of fish and game to award grants for certain resource activities; allowing agents selling fish and game licenses and tags to retain certain compensation; authorizing the Department of Health and Social Services to award grants for certain services for developmentally delayed or disabled children; relating to rabies control and administration of flour and bread standards by the Department of Environmental Conservation; repealing the Athletic Commission, the regulation of boxing and wrestling, the certification of professional geologists, and the Water Resources Board; repealing certain filing statements and bonds for enforcement and collection of certain taxes; and providing for an effective date." - PASSED CSHB 415(STA) OUT OF COMMITTEE HOUSE BILL NO. 443 "An Act relating to the tax on transfers or consumption of motor fuel, and repealing the exemption from that tax for motor fuel which is at least 10 percent alcohol by volume; and providing for an effective date." - PASSED CSHB 443(STA) OUT OF COMMITTEE (*First public hearing) PREVIOUS ACTION BILL: HB 110 SHORT TITLE: CONFIDENTIALITY OF MOTOR VEHICLE RECORDS SPONSOR(S): REPRESENTATIVE(S) BARNES, Green JRN-DATE JRN-PG ACTION 01/23/95 116 (H) READ THE FIRST TIME - REFERRAL(S) 01/23/95 116 (H) STATE AFFAIRS, FINANCE 01/25/95 136 (H) COSPONSOR(S): GREEN 03/10/95 701 (H) SPONSOR SUBSTITUTE INTRODUCED-REFERRALS 03/10/95 701 (H) READ THE FIRST TIME - REFERRAL(S) 03/10/95 701 (H) STATE AFFAIRS, FINANCE 03/07/96 (H) STA AT 8:00 AM CAPITOL 102 03/12/96 (H) STA AT 8:00 AM CAPITOL 102 03/14/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 415 SHORT TITLE: OMNIBUS STATE AGENCY OPERATIONS & PROGRAM SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 01/12/96 2429 (H) READ THE FIRST TIME - REFERRAL(S) 01/12/96 2429 (H) STATE AFFAIRS, HES, RESOURCES, FINANCE 01/12/96 2429 (H) 2 FISCAL NOTES (F&G, DCED) 01/12/96 2429 (H) 5 ZERO FNS (REV, DNR, 2-DHSS, DEC) 01/12/96 2429 (H) GOVERNOR'S TRANSMITTAL LETTER 03/14/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 443 SHORT TITLE: INCREASE MOTOR FUEL TAX SPONSOR(S): RULES BY REQUEST OF LONG RANGE FINANCIAL PLAN CMSN JRN-DATE JRN-PG ACTION 01/22/96 2508 (H) READ THE FIRST TIME - REFERRAL(S) 01/22/96 2508 (H) STATE AFFAIRS, JUDICIARY, FINANCE 03/12/96 (H) STA AT 8:00 AM CAPITOL 102 WITNESS REGISTER ELEANOR ROSER, Legislative Administrative Assistant to Representative Ramona Barnes State Capitol, Room 403 Juneau, Alaska 99801-1182 Telephone: (907) 465-3438 POSITION STATEMENT: Provided committee substitute for HB 110. JUANITA HENSLEY, Chief Driver Services Division of Motor Vehicles Department of Public Safety P.O. Box 20020 Juneau, Alaska 99811-0020 Telephone: (907) 465-4361 POSITION STATEMENT: Provided testimony on HB 110. EDWARD DAUGHERTY, Vice President Alaska Archives, IMS Inc. 165 East 56th Avenue, Suite 1 Anchorage, Alaska 99578 Telephone: (907) 561-8000 POSITION STATEMENT: Provided testimony on HB 110. NANCY SLAGLE, Director Budget Review Office of Management and Budget Office of the Governor P.O. Box 110020 Juneau, Alaska 99811-0020 Telephone: (907) 465-4699 POSITION STATEMENT: Provided testimony on HB 415. GERON BRUCE, Legislative Liaison Office of the Commissioner Department of Fish and Game P.O. Box 25526 Juneau, Alaska 99811-5526 Telephone: (907) 465-6143 POSITION STATEMENT: Provided testimony on HB 415. BOB BARTHOLOMEW, Deputy Director Central Office Income and Excise Audit Division Department of Revenue P.O. Box 110420 Juneau, Alaska 99811-0420 Telephone: (907) 2320 POSITION STATEMENT: Provided testimony on HB 415. JANICE ADAIR, Director Division of Environmental Health Department of Environmental Conservation 555 Cordova Street Anchorage, Alaska 99501 Telephone: (907) 269-7644 POSITION STATEMENT: Provided testimony on HB 415. JEFFREY W. BUSH, Deputy Commissioner Office of the Commissioner Department of Commerce and Economic Development P.O. Box 110800 Juneau, Alaska 99811-0800 Telephone: (907) 465-2500 POSITION STATEMENT: Provided testimony on HB 415. NICO BUS, Acting Director Central Office Division of Support Services Department of Natural Resources 400 Willoughby Avenue Juneau, Alaska 99801-1724 Telephone: (907) 465-2406 POSITION STATEMENT: Provided testimony on HB 415. JOE THOMAS, State Accountant Division of Finance Department of Administration P.O. Box 110204 Juneau, Alaska 99811-0204 Telephone: (907) 465-5616 POSITION STATEMENT: Provided testimony on HB 415. MIKE MCMULLEN, Merit System Personnel Manager Central Office Division of Personnel Department of Administration P.O. Box 110201 Juneau, Alaska 99811-0201 Telephone: (907) 465-4431 POSITION STATEMENT: Provided testimony on HB 415. MARIANNE K. BURKE, Director Central Office Division of Insurance Department of Commerce and Economic Development P.O. Box 110805 Juneau, Alaska 99811-0805 Telephone: (907) 465-2515 POSITION STATEMENT: Provided testimony on HB 415. JOHN GEORGE, Lobbyist American Council of Life Insurance National Association of Independent Insurers 3328 Fritz Cove Drive Juneau, Alaska 99801 Telephone: (907) 789-0172 POSITION STATEMENT: Provided testimony on HB 415. SAM KITO III, Legislative Liaison/Special Assistant Office of the Commissioner Department of Transportation and Public Facilities 3132 Channel Drive Juneau, Alaska 99801-7898 Telephone: (907) 465-3904 POSITION STATEMENT: Provided testimony on HB 443. ACTION NARRATIVE TAPE 96-35, SIDE A Number 0000 The House State Affairs Committee was called to order by Chair Jeannette James at 8:08 a.m. Members present at the call to order were Representatives Ogan, Green, Porter, Willis and James. Members absent were Representatives Ivan and Robinson. HB 110 - CONFIDENTIALITY OF MOTOR VEHICLE RECORDS The first order of business to come before the House State Affairs Committee was HB 110. CHAIR JEANNETTE JAMES called on Eleanor Roser, Legislative Administrative Assistant to Representative Ramona Barnes, to present the committee substitute (9-LS0490/G). Number 0080 ELEANOR ROSER, Legislative Administrative Assistant to Representative Ramona Barnes, explained the provisions of the federal law were included at the request of the House State Affairs Committee in the committee substitute. The provisions described the circumstances for disclosure by the Division of Motor Vehicle (DMV). CHAIR JAMES called on Juanita Hensley, Department of Public Safety. The record reflected the arrival of Representative Caren Robinson at 8:09 a.m. Number 0121 JUANITA HENSLEY, Chief, Driver Services, Division of Motor Vehicles, Department of Public Safety, stated the committee substitute met the requirements of the federal act. It also met the requirements of the model law drafted by the American Association of Motor Vehicle Administrators. It was not over extensive and was in compliance with the Privacy Act. Number 0195 CHAIR JAMES thanked Ms. Hensley for her work on the committee substitute. Number 242 MS. HENSLEY stated the committee substitute did not include drivers license information that was required in the federal act. The drivers license information was already prohibited in statute. Number 0278 REPRESENTATIVE CAREN ROBINSON asked if the committee substitute clarified what was required to meet the federal standards? Number 0288 MS. HENSLEY replied, "yes it does." Number 0302 REPRESENTATIVE GREEN moved to adopt CSHB 110(STA) (9-LS0490/G) as a working document. Hearing no objection, it was so adopted. Number 0376 REPRESENTATIVE ROBINSON moved that CSHB 110(STA) move from the committee with individual recommendation and attached fiscal notes. CHAIR JAMES explained there were witnesses to testify. REPRESENTATIVE ROBINSON held her motion. CHAIR JAMES called on the first witness via teleconference in Anchorage, Edward Daugherty. Number 0437 EDWARD DAUGHERTY, Alaska Archives, explained his company provided DMV information on microfiche and CDROM. The information was generally sold to banks, collection agencies, and private investigators, for example. He was concerned about the individuals with a legitimate need for the information. The bill did not provide the infrastructure to acquire that information from the DMV. Number 0521 CHAIR JAMES commented DMV could provide that information through a conduit agreement. Number 0554 MR. DAUGHERTY replied his company was comfortable with that. He was not as comfortable, however, because a provision was not included in the bill to ensure that. He complemented Ms. Hensley for her cooperation. However, other offices within the DMV were not always as cooperative by restricting information. He reiterated he wanted further assurance that he would be able to access the information. The record reflected the arrival of Representative Ivan Ivan and 8:13 a.m. Number 0644 REPRESENTATIVE PORTER asked, if the business of Mr. Daugherty would be perceived as giving information to the public, or to someone who had a legitimate need? Number 0662 MS. HENSLEY wondered if Mr. Daugherty was looking at the committee substitute. The committee substitute allowed the DMV to release information to him, however, there were restrictions on how he could release the information to the public. Number 0688 CHAIR JAMES asked Mr. Daugherty if he had committee substitute version 9-LS0490/G? MR. DAUGHERTY replied, "no." Number 0698 CHAIR JAMES announced her staff would fax one to him immediately in Anchorage. Furthermore, although she was supportive of a sufficient statute so that regulations were not needed, the Division of Motor Vehicles needed to subsume some of the responsibilities. She did not want to include a conduit relationship in the bill. Number 0748 MR. DAUGHERTY replied he welcomed the bill. It was needed, as- long-as there was a provision that allowed equal access for those that had a compelling need, he supported the bill and was happy with it. Number 0789 CHAIR JAMES felt some of her rights were being taken away. She wanted to be able to identify someone on the road. She reiterated it was an intrusion of our freedoms. Number 0855 REPRESENTATIVE ROBINSON reiterated her motion. Hearing no objection, it was so moved from the House State Affairs Committee. HB 415 - OMNIBUS STATE AGENCY OPERATIONS & PROGRAM The next order of business to come before the House State Affairs Committee was HB 415. CHAIR JAMES called on Nancy Slagle, Office of the Governor, to introduce the bill. Number 0934 NANCY SLAGLE, Director, Budget Review, Office of Management and Budget, Office of the Governor, thanked the House State Affairs Committee members for the hearing today. The intent of HB 415 was to identify inefficient areas within state government and to correct them. She referred the committee members to a spreadsheet prepared summarizing a sectional analysis of the bill. MS. SLAGLE explained Section 1 related to the Department of Fish and Game. It allowed the Department to award grants related to its functions. Currently, it had to use another state agency that had the authority to award a grant. Number 1060 MS. SLAGLE explained Sections 2 - 4 also related to the Department of Fish and Game. It allowed vendors of sport fishing and hunting licenses and tags to retain the full 5 percent of their compensation for their services. Number 1109 CHAIR JAMES cited the Alaska Visitor Association (AVA) turned over their net proceeds to the Alaska Marketing Council. An auditor indicated that could be a violation because there was not an appropriation back to the Association. She wondered if it was a violation due to retaining the money as a result of a state item being sold. Number 1173 MS. SLAGLE replied the amount being retained by the vendors was not identified in the appropriations. She stated any money spent from the state treasury must have an appropriation. It did not fall under the requirements of the law, but there was a need for the legislature to look at the full cost of a program that might offset the constitutional appropriation requirements. The Governor's bill would give the appropriation authority for the amounts being retained by the vendors. Number 1286 CHAIR JAMES was also concerned about the individuals selling the hunting and fishing licenses. She wondered if the compensation was sufficient to cover their costs. She was also concerned about the varying prices for the licenses. She asked the Department of Fish and Game if the 5 percent compensation was sufficient? CHAIR JAMES called on Geron Bruce, Department of Fish and Game, to answer her concerns. Number 1348 GERON BRUCE, Legislative Liaison, Office of the Commissioner, Department of Fish and Game, replied no one had done an analysis of her concerns. He stated, of the 1,400 vendors in Alaska, most appeared satisfied. The Department had not received any complaints. He stated there was a close working relationship between the Department and the vendors. The Department often sought their advise on how to improve the program. He reiterated the anecdotal evidence indicated they were satisfied with the program. Furthermore, the licensing process was difficult to simplify because of the resident and nonresident structures. Within the nonresident structure there were a number of short-term licenses. It was designed to aide the visitor industry. There was also the tag system. He said the Department could look at simplifying the licensing programs, however. He explained the fee structure was set by the legislature. Therefore, the Department was trying to implement the program the legislature set forth. Number 1473 CHAIR JAMES responded the cost of the licenses were imputed on the public. She did not have a solution, but was happy to hear the Department recognized it was complicated. It would probably need to be corrected in the future, however. Number 1520 REPRESENTATIVE ED WILLIS asked Ms. Slagle to explain the proposed amendment that calculated terminal leave payments based on an annualized rate of pay. CHAIR JAMES replied it would be better to discuss the bill first before discussing the amendments. REPRESENTATIVE WILLIS held his question. Number 1548 REPRESENTATIVE PORTER stated the concerns of a dedicated fund were complex. It was more complex than requiring an appropriation for the general fund, for example. The issue was still out there, he stated, for the record. Number 1594 MS. SLAGLE moving forward explained Section 5 related to the Department of Commerce and Economic Development. It also related to Section 10. It allowed a notice of action or legal proceeding against a nonresident business owners for non-payment of taxes or fees to be sent to the last known address. Section 10 repealed a statute to eliminate the Nonresident Affidavit Tax Bond program. Number 1644 BOB BARTHOLOMEW, Deputy Director, Central Office, Income and Excise Audit Division, Department of Revenue, explained Section 10 referenced two state statutes - Title 16 and Title 43. Title 43 addressed the tax codes. He explained in 1955 a tax bond program was enacted so that the a nonresident business would pay its taxes. The Department of Revenue recommended that program be eliminated. He said it had out lived its useful life. Alaska was the only remaining state that still had a program like this. Furthermore, the State had never collected against the bond. Other avenues were used such as liens. Moreover, it required about 1,000 hours of staff time to process 4,000 affidavits. He reiterated the Department recommended the elimination of the program. He explained Section 5, pages 3 - 5 deleted the language relating to the Nonresident Affidavit Bond program. Number 1761 REPRESENTATIVE PORTER wondered where the fiscal note was that illustrated the money saved due to the elimination of the program. Number 1767 MR. BARTHOLOMEW replied the Department of Revenue included a $0 fiscal note. The staff time saved would be used to enhance the tax compliance programs. The compliance programs were reduced due to a $450,000 division budget reduction in the last two years. Number 1803 CHAIR JAMES wondered if that would produce a bigger positive fiscal note. MR. BARTHOLOMEW replied, "we feel it will." It was hard to estimate, however. REPRESENTATIVE PORTER said, "Bob, we're pulling your chain." Number 1810 REPRESENTATIVE GREEN asked Mr. Bartholomew if the bond program for residents had also been eliminated? Number 1820 MR. BARTHOLOMEW replied there was no requirement for the instate program. Furthermore, he explained the Anchorage Chamber of Commerce and the Small Business Development Program at the University of Alaska both supported the elimination of the Non- resident Affidavit Tax Bond program. Number 1834 MS. SLAGLE moving forward explained Sections 6 - 7 related to the Department of Health and Social Services. It allowed the Department to grant authority for the Infant Learning program within the Division of Public Health. The program provided services to children with developmental disabilities. Number 1883 CHAIR JAMES said she understood the need for granting authority. She wondered if it would interfere with individual granting authority. MS. SLAGLE replied, "no." Number 1911 MS. SLAGLE moving forward explained Section 8 related to the Department of Environmental Conservation. It repealed AS 03.05.070, eliminating the requirements that the department report and care for animals suspected of rabies and the disposal of rabid animals. It further repealed AS 17.07.010 - AS 17.07.200, eliminating the requirements that the department regulate the vitamin and mineral content of flour and bread sold in the state. It was now regulated by the federal government. Number 1947 REPRESENTATIVE WILLIS wondered what would happen if the rabies provision was repealed. CHAIR JAMES called on Janice Adair, Department of Environmental Conservation, to address his concern via teleconference in Anchorage. Number 1960 JANICE ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation, replied the Department rarely was involved in cases of rabid animals. Currently, the local government, or in the villages, the public safety officers or the public health officers, handled those cases. The DEC did not have the expertise or the training to handle these cases. Furthermore, the employees had not been vaccinated against rabies presenting a life threatening situation. Furthermore, if a local government did not have a program already, the Department would work with them to help develop one. Number 1998 CHAIR JAMES wondered what would happen to the regulations. Number 2012 MS. ADAIR replied there were not any regulations. Number 2028 MS. SLAGLE moving forward explained Section 9 related to the Department of Commerce and Economic Development (DCED). It repealed several statutes. Alaska Statute 05.05.010 eliminated the Athletic Commission, AS 05.10.010 eliminated the Boxing and Wrestling Commission, AS 08.02.011 eliminated the requirement to certify professional geologists by the DCED, and AS 46.15.190 eliminated the Water Resources Board. CHAIR JAMES called on Jeffrey W. Bush, Department of Commerce and Economic Development, to further explain Section 9. Number 2065 JEFFREY W. BUSH, Deputy Commissioner, Office of the Commissioner, Department of Commerce and Economic Development, announced he was here to answer any questions. Number 2075 REPRESENTATIVE GREEN asked Mr. Bush, if anyone could practice the field of Geology within the state, as a result of the repealed statute? Number 2082 MR. BUSH replied, "yes." However, there was no requirement for certification at the present time anyway. It was not a certification requirement, but an option that existed in the law. He called it an administrative function whereby an individual applied for a certificate stating he met the requirements upon which a certificate was handed to him. The certificates were not used for a purpose other than to hang on the wall. He cited many individuals applied from other parts of the country because it was well known and liked. Number 2120 REPRESENTATIVE GREEN said, "send in the box top and a quarter." MR. BUSH replied, "that's right." It was performed by the director. He just looked at the paperwork and upon receipt of the payment, a certificate was sent. Number 2138 REPRESENTATIVE PORTER asked Mr. Bush if there would be any state oversite if a promoter wanted to put on a boxing match in the state? MR. BUSH replied the reason for the elimination was due to a lack of funding for the Boxing and Wrestling Commission. The options were to either eliminate it or appropriate funds. The Department saw it as a state liability because the statute required somebody to attend the boxing matches, and, currently, there was not anybody on staff that could do it for free. Furthermore, the way the occupational licensing program worked, other programs could not be charged for that type of oversite. Number 2204 REPRESENTATIVE WILLIS wondered if there had been any reaction from the sports fans regarding the elimination of the Athletic Commission and the Boxing and Wrestling Commission. Number 2211 MR. BUSH replied, "no." There had not been any response regarding the bill. Number 2217 REPRESENTATIVE SCOTT OGAN mentioned the brutal sport of kick boxing. He wondered, if it were to come to Alaska, would the Commission regulate that type of sport. Number 2254 MR. BUSH replied that was the purpose of the Commission, to regulate the type of activity Representative Ogan referred to. However, he reiterated there was not any funding. The Department was generally notified of events such as roughhouse boxing, and the Department attempted to send a volunteer representative to the matches. That was the extent of the regulatory oversite of the state. He stated the program received approximately $1,400 per year. Number 2291 CHAIR JAMES wondered what would happen with the regulations associated with the repealed statutes. Number 2312 MR. BUSH replied the regulations would be repealed also. He said it was easy for the Division of Occupational Licensing to keep up with the repeal of regulations. He assured the committee members the necessary regulations would be repealed. Number 2340 REPRESENTATIVE ROBINSON wondered about the Athletic Commission. She stated it had not been around very long. Number 2347 MR. BUSH responded the Athletic Commission and the Boxing and Wrestling Commission were viewed as the same operation. Therefore, when he discussed the issues of the Boxing and Wresting Commission, he was also referring to the Athletic Commission. The last meeting of the Athletic Commission was in 1992. The funds did not exist. There had also not been any appointments made in several years. Number 2381 MS. SLAGLE moving forward explained Section 9 also eliminated the Water Resources Board. CHAIR JAMES called on Nico Bus, Department of Natural Resources, to discuss Section 9 further. Number 2402 REPRESENTATIVE OGAN asked Mr. Bus to explain the functions of the Water Resources Board. He wondered if the functions of the Board would be picked up by somebody else. Number 2410 NICO BUS, Acting Director, Central Office, Division of Support Services, Department of Natural Resources, explained the Water Resources Board was an advisory board to the Governor. It advised the Governor on the use and allocation of water. The Board had not met since 1993 due to a lack of funding. In 1993 the funding was deleted. It had been non-operational since that time. Number 2447 CHAIR JAMES wondered if the billing of water rights was a function of the Water Resources Board. MR. BUS said the billing of water rights was an administrative function performed through the Division of Mining and Water Management. TAPE 96-35, SIDE B Number 0000 MR. BUS further stated the division was in the process of permitting individuals with water rights. A fee would be introduced of which would go to the state treasury. Number 0023 MS. SLAGLE moving forward explained Section 10 related to the Department of Fish and Game. It repealed AS 16.05.390(c) and (d), eliminating the calculation required to transmit the remainder of vendor compensation for issuance of sport fishing and hunting licenses. She explained it was also tied to Sections 2 - 4. Moreover, Section 10 also repealed AS 43.10.160, and AS 43.10.180 - AS 43.10.200, eliminating the Nonresident Affidavit Tax Bond program Mr. Bartholomew addressed earlier. MS. SLAGLE moving forward explained Section 11 addressed transitional language. MS. SLAGLE explained Sections 12 - 14 addressed the effective dates. Number 0052 MS. SLAGLE explained Amendment 1 related to the Department of Administration. It shortened the time limit on payments of warrants from "2 years" to "1 year." She called on Joe Thomas, Department of Administration, to explain the amendment. Number 0070 JOE THOMAS, State Accountant, Division of Finance, Department of Administration, explained the time limit was the main issue. The unclaimed property statutes stated a payroll warrant and intangible property were considered unclaimed property at one year. Therefore, the amendment made the two consistent. Furthermore, it would allow the agencies to review the warrants earlier to prevent inadvertently turning one over to a fee finder. He reiterated the goal was to provide consistency between the statutes. Number 0112 REPRESENTATIVE PORTER moved to adopt Amendment 1. Hearing no objection, it was so adopted. Number 0122 MS. SLAGLE explained Amendment 2 related to the Department of Administration. It allowed the calculation of terminal leave payments to be based on an annualized rate of pay. She called on Mike McMullen, Department of Administration, to explain the amendment. Number 0132 MIKE MCMULLEN, Merit System Personnel Manager, Central Office, Division of Personnel, Department of Administration, explained Amendment 2 accomplished three things. It first changed the method by which terminal leave was paid off. The language it repealed had been around since statehood. It was interpreted to include a holiday paid during the period in question. Through the collective bargaining agreements, the holiday pay for termination had been eliminated. Therefore, the amendment would take care of those covered by statute. Number 0178 CHAIR JAMES wondered if there were any employees currently being paid this way. MR. MCMULLEN replied, "yes." The amendment covered the partially exempt service and exempt service employees. Number 0199 CHAIR JAMES wondered if there was a fiscal impact. MR. MCMULLEN replied there was a fiscal impact. He said it was about .4 percent of 1 percent of the payroll. The funds were collected as a surcharge on the payroll and placed in the reserve account. The terminal leave was then paid from the reserve account. The difference was 100 days of leave in one year compared to about 300,000 days of leave paid from the general payroll. The numbers were so small it would appear as a $0 fiscal note. MR. MCMULLEN said the second change affected the payment of the terminal leave. It deleted the installment over a period of time. MR. MCMULLEN said the third change included AS 39.20.250(b) as part of the repealer. Paragraph (b) required an employee to repay the balance of the leave pay, if an employee were to return to work. The option already existed so there was not a need for the provision to remain in statute. Number 0376 CHAIR JAMES wondered about the employees not part of the collective bargaining units. Number 0382 MR. MCMULLEN replied, for the employees outside of a collective bargaining unit, the leave regulation cash-in was provided. Number 0388 CHAIR JAMES asked if the division had been implementing whatever was in a collective bargaining agreement? Number 0392 MR. MCMULLEN replied many things in collective bargaining had been adopted as regulations for all employees. Number 0405 CHAIR JAMES stated even though it was in violation of statute. Number 0417 MR. MCMULLEN replied the Department of Law reviewed all regulations before adopting them. Number 0428 CHAIR JAMES commented a person could not take a terminal leave payment and return until it was used. MR. MCMULLEN stated, a person did have to repay a terminal leave balance, if it was a substantial amount, upon an employee returning to work. That payback requirement was being eliminated. CHAIR JAMES cited an example whereby an employee cashed a six week leave balance. She wondered what happened when an employee came back to work after three weeks, according to current policy. Number 0449 MR. MCMULLEN stated the employees covered by statute would be required to payback three weeks of that cashed out leave balance. The state would then return the three weeks of leave to the books. If the period crossed the calendar year, tax implications were involved. Number 0503 CHAIR JAMES stated an employee could cash the leave balance and remain working, therefore, being paid twice for the same time. MR. MCMULLEN replied, "yes." It was a correct statement as phrased. Am employee could be paid for working and accumulated leave during the same period of time. He further said it was an advantage to the state in the long-term to have a leave cash-in program at the current rate. Otherwise an increase or promotional amount would be calculated. Number 0548 CHAIR JAMES said the cost of the program to provide leave would be more expensive. It became a benefit as apposed to a leave program. She said that did not happen in the private sector. Number 0572 MR. MCMULLEN replied there were programs where an employee could buy leave time or cash-out his leave and work. There were minimum requirements for time off the job in statute and in the collective bargaining agreements. He said they were minimal, however. Number 0603 REPRESENTATIVE PORTER moved to adopt Amendment 2. Hearing no objection, it was so adopted. Number 0615 MS. SLAGLE explained Amendment 3 related to the Department of Commerce and Economic Development and the Department of Revenue. It allowed the department to collect taxes on insurance premiums more frequently than on an annual basis. A quarterly basis was suggested. It would generate more money for the state because the payments would be received more frequently. She called on Marianne K. Burke, Department of Commerce and Economic Development. Number 0652 MARIANNE K. BURKE, Director, Central Office, Division of Insurance, Department of Commerce and Economic Development, explained Amendment 3 provided for the more frequent collection of insurance premiums. The dollar amount was approximately $26 million to $27 million, money that went directly to the general fund. It would apply to all insurance companies in the state, 1,100. Alaska was one of the last states to still collect on an annual basis. Therefore, the insurance companies were set-up to pay the tax on a more frequent basis. Most states collected on a quarterly basis, while some states collected on a monthly basis. The amendment also provided for an electronic means to pay the tax, accelerating the receipt of the money into the state treasury. The insurance companies also recognized that Alaska was one of the last states to move in this direction. Number 0737 REPRESENTATIVE PORTER asked if Ms. Burke anticipated quarterly payments. MS. BURKE replied, "yes." Number 0744 REPRESENTATIVE PORTER moved to adopt Amendment 3. Hearing no objection, it was so adopted. Number 0766 CHAIR JAMES commented Representatives Ivan and Green had to leave early to attend another meeting. She explained Representative Ivan presented an amendment. She referred the committee members to page 4, line 6, and explained the amendment inserted "or repeal" after the word "adopt" in the provision. Number 0792 REPRESENTATIVE OGAN moved to adopt the conceptual amendment. Hearing no objection, it was so adopted. Number 0804 CHAIR JAMES explained Representative Ivan would like an analysis of all the repealer sections in the bill. Number 0818 REPRESENTATIVE OGAN suggested a copy be sent to all the committee members. Number 0840 JOHN GEORGE, Lobbyist, representing the American Council of Life Insurance and the National Association of Independent Insurers, stated the companies he represented were willing to "bite the bullet" on the taxes incurred due to Amendment 3. The wording, however, did not specifically state the filing time frame. He suggested including "not more than quarterly," for clarification. He would be concerned if it was more often than quarterly. Number 0892 CHAIR JAMES said she wanted to here from the Administration. Number 0915 MR. BARTHOLOMEW said the Department of Revenue worked with the Administration closely on this section. The evidence indicated a quarterly payment was the intent. He said he did not feel there would be an objection from the Administration. Number 0940 CHAIR JAMES commented Representative Porter did ask that question directly. Number 0950 REPRESENTATIVE PORTER moved to adopt a conceptual amendment to include a quarterly provision for the collection of taxes for clarification. Hearing no objection, it was so adopted. Number 0983 REPRESENTATIVE PORTER moved that CSHB 415(STA) move from committee with individual recommendations and attached fiscal notes. Hearing no objection, it was so moved from the House State Affairs Committee. HB 443 - INCREASE MOTOR FUEL TAX The next order of business to come before the House State Affairs Committee was HB 443. CHAIR JAMES called on Sam Kito III, Department of Transportation and Public Facilities, to present the committee substitute. Number 1062 SAM S. KITO III, Legislative Liaison/Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities, explained a brief summary of the harbor situation in the state of Alaska was before the committee members for review. It showed historical funding from 1989 to the present. He further explained the revised fiscal note tied the increase in tax to the dedicated fund allowing the Department to receive the revenue from the taxes. It was reflected under "maintenance" for the Department of Transportation and Public Facilities. Number 1124 CHAIR JAMES wondered how that related to the constitutional amendment in the House Finance Committee. Did the constitutional amendment allow the money to be spent on the maintenance of public facilities? Number 1132 MR. KITO III replied the constitutional amendment allowed the spending of revenue from the dedicated fund for maintenance of a highway system. A definition was offered recently in the House Finance Committee that stated "maintenance" included any associated facilities with the highway system. Number 1168 CHAIR JAMES announced she did not have a written amendment prepared today. Nonetheless, she suggested an amendment to divide the 14 cents of gas tax into two year implementations - 7 cents one year, 7 cents the next. She called on a committee member to support and move her amendment. Number 1218 REPRESENTATIVE PORTER stated previous testimony indicated there was concern about the jump to 14 cents. The amendment was one approach to "soften the blow." Number 1261 REPRESENTATIVE ROBINSON also supported the amendment. It was a major increase. She believed it was needed, however. She was confused about the constitutional amendment in the House Finance Committee and asked for an explanation. CHAIR JAMES replied the House Finance Committee was working on the constitutional amendment passed from the House State Affairs Committee earlier. It was amended to include a marine fuel tax in the House Transportation Committee. There was concern because the motor fuel tax would not cover the current cost ($75 million spent, $21 million brought in), while the marine fuel tax would cover the current cost ($1 million spent, $7 million brought in). Therefore, $6 million of existing taxes would be taken from the general fund to be used for harbors and docks. There was also discussion of transferring harbors and docks to the local municipalities for future maintenance. Consequently, CSHB 443(STA) was subject to the passage of the constitutional amendment. Number 1426 REPRESENTATIVE PORTER wondered what the mechanism would be to channel the tax money to the municipalities to maintain the ports. Number 1455 MR. KITO III replied the increase in the marine motor fuel tax would be used to offer capital appropriations to upgrade and transfer facilities. The Department was planning to implement a sharing program with the localities. The revenue collected by the legislature into the dedicated fund could be appropriated directly to the communities. If, at the end of the transfer program the state decided it was no longer interested in collecting taxes for the harbors, the tax rate could be lowered by a future legislature. The intent was to transfer state facilities out-of-state hands. Number 1525 REPRESENTATIVE PORTER wondered if the immediate intent was to upgrade the facilities so that they could not be transferred. Number 1530 MR. KITO III replied, "yes." Number 1535 CHAIR JAMES wondered if the purpose of the marine fuel tax was to only fix docks and harbors, or did it also have a general fund implication. Currently, it did have a general fund implication. Moreover, she aired her concern of the issue of the fishing vessels that did not buy their marine fuel tax from Alaska because it could be bought cheaper from Seattle. She suggested a use tax to help solve this issue. She announced it was possible to attach language to address the issue in CSHB 443(STA). She explained to the committee members that she was going in that direction. Number 1646 REPRESENTATIVE PORTER moved to adopt the conceptual amendment to include a two year implementation of the 14 cents gas tax of 7 cents the first year and 7 cents the next year. Hearing no objection, it was so adopted. Number 1660 REPRESENTATIVE ROBINSON commented the amendment would change the fiscal note. Number 1677 CHAIR JAMES also commented it would change the fiscal note. Number 1677 CHAIR JAMES suggested deleting Section 5, "TAX REFUND ADJUSTMENT." The legislature needed to follow the issue further to determine if more taxes or less taxes were needed. Number 1726 REPRESENTATIVE OGAN moved to delete Section 5, "TAX AND REFUND ADJUSTMENT." Hearing no objection, it was so deleted. CHAIR JAMES announced she was willing to move the bill forward to the next committee of referral before including the use tax amendment. Number 1780 REPRESENTATIVE WILLIS moved that CSHB 443(STA) move from the committee with individual recommendations and attached fiscal notes. Hearing no objection, it was so moved from the House State Affairs Committee. Number 1832 REPRESENTATIVE OGAN stated he did not object to moving the bill forward. It was tied to the constitutional amendment and to the people. He believed every chance should be given to the people to vote directly on tax issues. Number 1891 CHAIR JAMES asked the committee members to waive HCR 29 - contest to name the new ferry - from the House State Affairs Committee. No objections were voiced. Number 1990 CHAIR JAMES further announced a tentative presentation was scheduled for April 2, 1996 on HAARP. Number 2095 ADJOURNMENT CHAIR JAMES adjourned the House State Affairs Committee meeting at 9:35 a.m.