Legislature(1995 - 1996)
04/11/1996 08:10 AM House STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE STATE AFFAIRS STANDING COMMITTEE April 11, 1996 8:10 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 MEMBERS ABSENT Representative Ed Willis COMMITTEE CALENDAR HOUSE BILL NO. 416 "An Act relating to fees or assessment of costs for certain services provided by state government, including hearing costs related to the real estate surety fund; fees for authorization to operate a postsecondary educational institution or for an agent's permit to perform services for a postsecondary educational institution; administrative fees for self-insurers in workers' compensation; business license fees; fees for activities related to coastal zone management, training relating to emergency management response, regulation of pesticides and broadcast chemicals, and subdivision plans for sewage waste disposal or treatment; and providing for an effective date." - PASSED CSHB 416(STA) OUT OF COMMITTEE HOUSE BILL NO. 482 "An Act relating to state procurement practices and procedures; and providing for an effective date." - HEARD AND HELD HOUSE BILL NO. 136 "An Act mandating the sale of the Alaska Railroad; and providing for an effective date." - WAIVED OUT OF COMMITTEE HOUSE BILL NO. 198 "An Act relating to absences from the state and eligibility for permanent fund dividends; and providing for an effective date." - PASSED CSHB 198(STA) OUT OF COMMITTEE HOUSE BILL NO. 546 "An Act providing for and relating to the issuance of general obligation bonds in the amount of $600,211,000 for the purpose of paying the cost of acquiring, constructing, reconstructing, and equipping public schools and of repair and major maintenance of public school and University of Alaska facilities; and providing for an effective date." - HEARD AND HELD * HOUSE BILL NO. 545 "An Act relating to the cost-of-living differential for certain public employees residing in the state and the criteria for determining eligibility for the differential; and providing for an effective date." - SCHEDULED BUT NOT HEARD HOUSE JOINT RESOLUTION NO. 34 Proposing an amendment to the Constitution of the State of Alaska relating to the duration of a regular session. - SCHEDULED BUT NOT HEARD (* First public hearing) PREVIOUS ACTION BILL: HB 416 SHORT TITLE: OMNIBUS STATE FEES & COST ASSESSMENTS SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 01/12/96 2432 (H) READ THE FIRST TIME - REFERRAL(S) 01/12/96 2432 (H) STATE AFFAIRS, L&C, RESOURCES, FINANCE 01/12/96 2432 (H) 7 FNS (DCED, 2-DEC, 2-GOV, LABOR, MLV) 01/12/96 2432 (H) FISCAL NOTE (REV) 01/12/96 2433 (H) GOVERNOR'S TRANSMITTAL LETTER 04/09/96 (H) STA AT 8:00 AM CAPITOL 102 04/09/96 (H) MINUTE(STA) 04/11/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 482 SHORT TITLE: STATE PROCUREMENT PRACTICES & PROCEDURES SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR JRN-DATE JRN-PG ACTION 02/09/96 2686 (H) READ THE FIRST TIME - REFERRAL(S) 02/09/96 2686 (H) L&C, STATE AFFAIRS, FINANCE 02/09/96 2687 (H) 2 FISCAL NOTES (ADM, DOT) 02/09/96 2687 (H) 5 ZERO FNS (2-ADM, DCED, DCRA, CORR) 02/09/96 2687 (H) 5 ZERO FNS (DOE, DEC, F&G, GOV, DHSS) 02/09/96 2687 (H) 5 ZERO FNS (LABOR, LAW, DMVA, DNR, DPS) 02/09/96 2687 (H) 2 ZERO FNS (REV, UA) 02/09/96 2687 (H) GOVERNOR'S TRANSMITTAL LETTER 03/18/96 (H) L&C AT 3:00 PM CAPITOL 17 03/20/96 (H) L&C AT 3:00 PM CAPITOL 17 03/20/96 (H) MINUTE(L&C) 03/22/96 (H) L&C AT 3:00 PM CAPITOL 17 03/28/96 3429 (H) L&C RPT CS(L&C) 1DP 5NR 1AM 03/28/96 3429 (H) DP: KUBINA 03/28/96 3429 (H) NR: KOTT, SANDERS, MASEK, PORTER 03/28/96 3429 (H) NR: ROKEBERG 03/28/96 3429 (H) AM: ELTON 03/28/96 3429 (H) 2 FISCAL NOTES (ADM, DOT) 2/9/96 03/28/96 3430 (H) 4 ZERO FNS (2-ADM, DCED, DCRA) 2/9/96 03/28/96 3430 (H) 4 ZERO FNS (COR, ED, DEC, F&G) 2/9/96 03/28/96 3430 (H) 3 ZERO FNS (GOV, DHSS, LABOR) 2/9/96 03/28/96 3430 (H) 4 ZERO FNS (LAW, MVA, DNR, DPS) 2/9/96 03/28/96 3430 (H) 2 ZERO FNS (REV, UA) 2/9/96 03/28/96 3430 (H) REFERRED TO STA 04/09/96 (H) STA AT 8:00 AM CAPITOL 102 04/09/96 (H) MINUTE(STA) 04/11/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 136 SHORT TITLE: MANDATE SALE OF ALASKA RAILROAD SPONSOR(S): REPRESENTATIVE(S) MARTIN JRN-DATE JRN-PG ACTION 01/30/95 174 (H) READ THE FIRST TIME - REFERRAL(S) 01/30/95 174 (H) TRA, STA, FIN 04/03/96 (H) TRA AT 1:00 PM CAPITOL 17 04/03/96 (H) MINUTE(TRA) 04/10/96 (H) TRA AT 1:00 PM CAPITOL 17 04/11/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 198 SHORT TITLE: PFD ALLOWABLE ABSENCES SPONSOR(S): REPRESENTATIVE(S) ELTON, Robinson, Davies JRN-DATE JRN-PG ACTION 02/27/95 487 (H) READ THE FIRST TIME - REFERRAL(S) 02/27/95 487 (H) STATE AFFAIRS, JUDICIARY, FINANCE 03/28/96 (H) STA AT 8:15 AM CAPITOL 102 03/28/96 (H) MINUTE(STA) 04/04/96 (H) STA AT 8:00 AM CAPITOL 102 04/04/96 (H) MINUTE(STA) 04/09/96 (H) STA AT 8:00 AM CAPITOL 102 04/09/96 (H) MINUTE(STA) 04/11/96 (H) STA AT 8:00 AM CAPITOL 102 BILL: HB 546 SHORT TITLE: G.O. BONDS: SCHOOLS & UNIV. SPONSOR(S): STATE AFFAIRS JRN-DATE JRN-PG ACTION 03/22/96 3270 (H) READ THE FIRST TIME - REFERRAL(S) 03/22/96 3270 (H) STA, HES, FINANCE 03/26/96 (H) STA AT 8:00 AM CAPITOL 102 03/26/96 (H) MINUTE(STA) 04/04/96 (H) STA AT 8:00 AM CAPITOL 102 04/04/96 (H) MINUTE(STA) 04/09/96 (H) STA AT 8:00 AM CAPITOL 102 04/09/96 (H) MINUTE(STA) 04/11/96 (H) STA AT 8:00 AM CAPITOL 102 WITNESS REGISTER 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: Presented HB 416. PAUL GROSSI, Director Central Office Division of Workers' Compensation Department of Labor P.O. Box 25512 Juneau, Alaska 99802-5512 Telephone: (907) 465-2790 POSITION STATEMENT: Provided testimony on HB 416. 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 416. JULES TILESTON, Director Central Office Division of Mining and Water Management Department of Natural Resources 3601 "C" Street, Suite 800 Anchorage, Alaska 99503-5935 Telephone: (907) 762-2163 POSITION STATEMENT: Provided testimony on HB 416. 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 416. CATHERINE REARDON, Director Central Office Division of Occupational Licensing Department of Commerce and Economic Development P.O. Box 110806 Juneau, Alaska 99811-0806 Telephone: (907) 465-2534 POSITION STATEMENT: Provided testimony on HB 416. RICK BROWN, Platting Officer Matanuska-Susitna Borough 350 Dahlia Palmer, Alaska 99645 Telephone: (907) 745-4801 POSITION STATEMENT: Provided testimony on HB 416. DUGAN PETTY, Director Central Office Division of General Services Department of Administration P.O. Box 110210 Juneau, Alaska 99811-0210 Telephone: (907) 465-2250 POSITION STATEMENT: Presented HB 482. DAVE GERKE 1265 Norman Street, Number 2 Anchorage, Alaska 99504 Telephone: (907) 337-4657 POSITION STATEMENT: Provided testimony on HB 482. REPRESENTATIVE KIM ELTON Alaska State Legislature State Capitol, Room 112 Juneau, Alaska 99801-1182 Telephone: (907) 465-4947 POSITION STATEMENT: Presented committee substitute for HB 198. ROSS PERRINE P.O. Box 4031 Palmer, Alaska 99645 Telephone: (907) 746-6443 POSITION STATEMENT: Provided testimony on HB 198. NANCI JONES, Director Central Office Permanent Fund Dividend Program Department of Revenue P.O. Box 110460 Juneau, Alaska 99811-0460 Telephone: (907) 465-2323 POSITION STATEMENT: Provided testimony on HB 198. GEORGE REICHMAN P.O. Box 403 Glennallen, Alaska 99588 Telephone: (907) 822-3528 POSITION STATEMENT: Provided testimony on HB 198. DONALD EVANS, Superintendent Southwest Region School District P.O. Box 90 Dillingham, Alaska 99576 Telephone: (907) 842-5287 POSITION STATEMENT: Provided testimony on HB 546. ACTION NARRATIVE TAPE 96-49, SIDE A Number 0015 The House State Affairs Committee was called to order by Chair Jeannette James at 8:10 a.m. Members present at the call to order were Representatives Ivan, Ogan, Robinson and James. Members absent were Representatives Green, Porter and Willis. The record reflected the arrival of Representative Joe Green at 8:12 a.m. The record reflected the arrival of Representative Brian Porter at 8:15 a.m. HB 416 - OMNIBUS STATE FEES & COST ASSESSMENTS The first order of business to come before the House State Affairs Committee was HB 416. CHAIR JEANNETTE JAMES called on Nancy Slagle, Office of the Governor, to present the bill. Number 0081 NANCY SLAGLE, Director, Budget Review, Office of Management and Budget, Office of the Governor, thanked the committee members for hearing HB 416 again. She stated it was an intricate part of the Governor's budget plan. The bill provided for the charging of fees for certain services within state government. She said she would explain the various sections of the bill and representatives from the departments were here to answer any questions. Number 0145 MS. SLAGLE explained Section 1 addressed the real estate surety fund. It allowed the Department of Commerce and Economic Development (DCED) to charge for the cost of a claim hearing for the real estate surety fund. It also allowed the state to free some general fund dollars. It was a small amount, however. The section was also supported by the industry. Number 0197 REPRESENTATIVE JOE GREEN asked Ms. Slagle if Section 1 impacted the problems with the dedicated funds adversely? Number 0206 MS. SLAGLE replied, "no." Section 1 allowed the DCED to charge the cost of the hearing against the surety fund. It was not dedicated for a specific purpose. In the past the ability did not exist for the department. Number 0247 REPRESENTATIVE GREEN said other revenue enhancing fees could not be dedicated. The money was put into the general fund and then budgeted back out. Section 1 sounded like a specific dedicated fund. Number 0286 MS. SLAGLE replied Section 1 actually broadened the purpose of the fund. REPRESENTATIVE GREEN asked Ms. Slagle if the fund would have to be budgeted annually? MS. SLAGLE replied, "yes." Number 0299 CHAIR JAMES asked Ms. Slagle where the fund came from? Number 0305 MS. SLAGLE replied a representative from the department was here to answer that question. CHAIR JAMES suggested moving forward instead. She would ask the question again later. Number 0316 MS. SLAGLE moving forward, explained Section 2 allowed the Alaska Commission on Postsecondary Education (ACPE) to charge fees for processing educational institutions' applications for authorization to operate, along with application fees for the institutions' agent permits. Number 0393 CHAIR JAMES asked Ms. Slagle where the money for the ACPE came from? Number 0410 MS. SLAGLE replied a large portion of its' budget came from the loan processing, the student loan portion of the corporation. The principle interest that was generated from the revolving loan funds was used to support the corporation. Section 2 would allow the commission to charge a fee for the other portion of its responsibility so that a corporate receipt would not be used. Number 0466 CHAIR JAMES asked Ms. Slagle if the ACPE would collect fees from the University of Alaska? Number 0476 MS. SLAGLE replied, "no." It would collect fees from other private types of institutions, such as, vocational schools. It did not affect postsecondary education. Number 0511 CHAIR JAMES said she was concerned about moving the money from one hand to the other. She stated, if a fee was going to be charged, it should generate new money. MS. SLAGLE agreed with Chair James. She explained Section 2 would be a new fee for the state. Number 0539 MS. SLAGLE moving forward, explained Section 3 would authorize the State Commission for Human Rights to establish and charge fees for education, training services, information, and materials the commission provided to the public. Number 0592 CHAIR JAMES asked Ms. Slagle if this was new money? MS. SLAGLE replied, "yes." CHAIR JAMES wondered if the fee for a training service would apply to a state agency. Number 0618 MS. SLAGLE replied the section did not apply to services provided to another state agency. This applied to the private industry only. Number 0632 REPRESENTATIVE CAREN ROBINSON said the State Commission for Human Rights just came to Juneau for a two day training for the Juneau Economic Development Council that brought together several private businesses. She further stated she knew the commission provided several weeks of training for the Marine Highway System employees. She was not sure if the commission should not charge state agencies. She understood, however, it was directed at the private industry that demanded days of training, when at this point the only expense covered was travel. Number 0677 CHAIR JAMES replied the transfer of money from one account to another did not help the state gain anything. Number 0709 REPRESENTATIVE ROBINSON replied she agreed with Chair James. However, she also believed it was fair to help support the cost of the staff person absent for long training periods. Number 0744 CHAIR JAMES said she understood the transfer of authority across state agency lines. However, HB 416 was intended to produce revenue. Furthermore, it was also a budget decision. The legislature needed to determine if it wanted to fund agencies that provided these types of services. MS. SLAGLE said the budget process did allow for transfers between agencies. CHAIR JAMES said she understood the concept of the transfer between agencies. She reiterated it was part of the budget process and should be dealt with there and not in HB 416. Number 0862 MS. SLAGLE moving forward, explained Section 4 would establish an administrative fee for self-insured employers under the Alaska Workers' Compensation Act. Most employers currently paid a portion of the cost of running the state workers' compensation program through their insurance premium tax. Self-insured employers, however, were receiving the same state services but were not currently contributing to the cost of running the system. The section would provide for a share in that cost. Number 0921 REPRESENTATIVE BRIAN PORTER asked Ms. Slagle if Section 4 would include municipalities? Number 0930 MS. SLAGLE replied, as written, "yes." It would also include private firms and school districts. Number 0949 REPRESENTATIVE PORTER asked Ms. Slagle if she had a figure amount for the municipalities? Number 0958 MS. SLAGLE replied it dropped approximately $300,000. She called on Paul Grossi, Department of Labor, to address the issue further. Number 0991 PAUL GROSSI, Director, Central Office, Division of Workers' Compensation, Department of Labor, referred the committee members to a handout titled, "1994 Self-insured WC Payments at 4% by Year." He explained the companies would have paid the amount in the second column. Number 1050 REPRESENTATIVE PORTER said, therefore, the budget for the Municipality of Anchorage would be affected by about $86,000. Number 1055 MR. GROSSI replied, "right." It would fluctuate from year to year, however, because it depended on the amount of claims processed. Number 1066 CHAIR JAMES said these are big numbers. She asked Ms. Slagle to continue. Number 1074 MS. SLAGLE moving forward, explained Section 5 would change the biennial fee for a business license from $50 to $75. This would mark the first fee increase since statehood. Number 1112 CHAIR JAMES said that was a narrow increase. Furthermore, the House State Affairs Committee discussed earlier surrounding another piece of legislation the Department of Commerce and Economic Development should provide more information to individuals that applied for a business license. She suggested thinking about the amount further. She was not sure if $75 was enough. It depended on the services provided, however. Number 1192 MS. SLAGLE moving forward, explained Section 6 would provide the Division of Governmental Coordination in the Office of the Governor to adopt regulations to charge for services related to federal consistency determinations and certifications under the Coastal Zone Management Act. The fees charged were intended to speed up the process. Number 1261 REPRESENTATIVE GREEN said any industry in an effort to help move that would favor Section 6. He asked Ms. Slagle, if the language on page 3, line 15, "may adopt regulations to charge fees for services provided," would go beyond the cost of the permit? For example, if there were 10 permits, could the division divide its total operating cost by one-tenth, and charge that amount. Number 1311 MS. SLAGLE replied, "I guess if you were really stretching it, you probably could." It was not the intent of HB 416, however. MS. SLAGLE moving forward, explained Section 7 would authorize the Department of Military and Veterans' Affairs to adopt regulations setting reasonable fees for classes and seminars on emergency response procedures. The department right now could charge fees for spill response training only. She explained the fee charged would be small. It would only cover the cost of transportation or meeting facilities, for example. Number 1368 MS. SLAGLE moving forward, explained Section 8 would authorize the Department of Environmental Conservation (DEC) to adopt regulations setting fees for the regulation of pesticides and broad case chemicals and for the review of subdivision plans for sewage waste disposal or treatment. The fees would provide funding for the technical staff employed to provide those services. Number 1405 REPRESENTATIVE IVAN IVAN asked if the DEC currently had technical staff on board, or did it contract those services? Number 1425 MS. SLAGLE said Janice Adair, Department of Environmental Conservation, was available via teleconference to answer that question. Number 1436 JANICE ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation, said Section 8 would provide funds for existing staff and services. It would replace general fund money as indicated in the fiscal note. Number 1451 REPRESENTATIVE SCOTT OGAN said HB 416 allowed taxation through regulation. He suggested reducing regulations and called for a vote of the people. Number 1517 MS. SLAGLE replied regulations were adopted to respond to and to implement laws. Furthermore, the Administration was looking at streamlining regulations. She cited the bill that recently passed out of the House State Affairs Committee that addressed this issue. Number 1557 CHAIR JAMES said she agreed with the concerns of Representative Ogan. The legislature also played a part in this concern as the law making body of the government. Regulations were used to implement statutes, and statutes needed to be changed. The budget process was also a big concern of hers. She agreed with reducing state spending, but suggested looking at the services first to determine which ones werereally needed. CHAIR JAMES announced she was disappointed that no one from the public or the industry was here to testify today on HB 416. She was concerned about the reaction of the public. She wondered if anybody even knew about the bill. Number 1654 REPRESENTATIVE IVAN said he concurred with Representative Ogan's view of HB 416 as taxation by regulation. He was further concerned about the consumers not having an opportunity to question the amount. There was a public hearing process, if the fees were adopted by statute. He believed that was a better process. Number 1684 CHAIR JAMES replied there was a public process outlined in the Administrative Procedures Act (APA). However, the public was not aware usually until after they "paid the bill." Therefore, it was a responsibility of the legislature to help "tune in the public." She was thankful for Gavel-to-Gavel and the exposure it provided to inform more people. Number 1728 REPRESENTATIVE ROBINSON said, if this was an issue for everybody, she suggested notifying the different groups that would be affected through the House State Affairs Committee. Furthermore, she also believed this issue was a policy decision that the legislature needed to address. The legislature needed to decide if a business license was necessary, for example. If it decided that a license was necessary, then it needed to ensure that the cost of providing that service was funded through the license fee. Number 1789 REPRESENTATIVE OGAN said he was not willing to make a policy decision to give the authority to regulators to tax. He felt it was inappropriate. If a tax was needed, he suggested letting the people vote on it. He reiterated he did not want to give a regulatory agency the authority to tax. He said, "I think we all know what will happen." Number 1818 MS. SLAGLE stated several of the provisions in the bill were set by statute at a specific amount. Furthermore, the bill was trying to cover the cost of providing a service. In most instances the consumer was willing to pay more to insure that he received the services expected from the state. This was especially true of the boards and commissions. Number 1878 CHAIR JAMES said there was a difference, however, for the municipalities as their municipal assistance and revenue sharing were cut and their fees were increased. That was where the most complaints would come from. She cited the coastal zone management issue. She believed the users would be willing to give some money to get it done. The performance would have to match the fee, however. Number 1930 MS. SLAGLE explained there were two amendments that needed to be presented. The first dealt with the Department of Natural Resources (DNR). The second dealt with the Department of Transportation and Public Facilities. She announced there were representatives from each department to answer any questions. MS. SLAGLE explained Amendment 1 allowed the DNR to charge a fee for the direct cost of evaluating or auditing an application for the exploration credits for mine development. Number 2032 CHAIR JAMES said a fee that was established by DNR in 1993 or 1994 was very distressing to her constituents. She explained her constituents wanted to fill a ditch on wetlands. They could not fill it without a $500 application fee. The ditch still existed because they believed the application fee was too much. It was not worth it. This was what made people hate government. Number 2125 JULES TILESTON, Director, Central Office, Division of Mining and Water Management, Department of Natural Resources, said the proposed amendment had the support of the industry including the fees. Furthermore, the amendment would allow the Commissioner to review and approve applications. Number 2221 REPRESENTATIVE ROBINSON asked if this was the same amendment that Representative Richard Foster proposed for the underground mining bill on the floor of the House of Representatives? Number 2231 MR. TILESTON replied, "that's affirmative." Number 2234 REPRESENTATIVE OGAN said he wanted to hear directly from the industry that it supported the amendment and the fees. He suggested another hearing. Number 2266 MS. SLAGLE explained Amendment 2 allowed the Department of Transportation and Public Facilities to charge for the use of state marine or harbor facilities, and required municipalities that lease them to charge a comparable fee. It would not generate money for the state, but it would generate more money for the municipalities. Number 2296 SAM KITO III, Legislative Liaison/Special Assistant, Office of the Commissioner, Department of Transportation and Public Facilities, stated the proposed amendment was part of a bill the department introduced several years ago. He explained the state of Alaska owned close to 100 harbors and had operating agreements with 84 of those harbors and residing municipalities. The agreements required the municipalities to recover the cost associated with the operation of the harbor while the state of Alaska was responsible for the deferred maintenance. The deferred maintenance responsibility was approaching $26 million, however. Therefore, the amendment would permit the department to require a municipality to take into account the replacement cost when charging a user fee, and to direct that money into a separate account to allow the municipalities to take care of the deferred maintenance themselves. The department did not see another method without an increase in the fuel tax or a dedication of the fuel tax to take care of this deferred maintenance problem. Number 2354 REPRESENTATIVE GREEN said he had a problem with the language. He read, "At minimum, the fees may not be less than...." He called it a blank check. Number 2372 MR. KITO III replied there was a minimum charge per lineal foot of moorage space, about $2 per foot, per year. However, some municipalities had not reached that level. The department encouraged them to reach that level in order to recover some of their operating costs. Otherwise, they were subsidized by the local municipality to operate that harbor. Furthermore, the department did not have the authority to ask a municipality to charge more to take care of the deferred maintenance. Therefore, the amendment would help alleviate some of the deferred maintenance concerns of the department. There were many facilities that were in dire need of work to adequately perform for the public. Number 2419 REPRESENTATIVE GREEN wondered if the minimum would be enough to offset the deferred maintenance. Number 2448 MR. KITO III replied a minimum existed now that was not enough to take care of the deferred maintenance needs. The amendment would give the department the authority to request that the municipalities charge more for the moorage rate so that they could recover the maintenance and replacement cost of the harbor facility. Number 2464 REPRESENTATIVE PORTER wondered if the state was responsible for the deferred maintenance. MR. KITO III replied, "yes." The state was responsible through contract for the deferred maintenance of the facilities. Number 2474 REPRESENTATIVE PORTER said he wondered what mechanism would shift the responsibility from the state to the municipality. He realized it would be through the contract based on Mr. Kito's response. Number 2477 CHAIR JAMES said the deferred maintenance problem for the Department of Transportation and Public Facilities was an example of the deferred maintenance problem for the state. TAPE 96-49, SIDE B Number 0000 CHAIR JAMES further said everyone agreed and recognized that on- going maintenance and repairs were needed, but the cost was considered too high. In some cases something new was built instead of dealing with the deferred maintenance. The issue was not being addressed. She was not sure if the amendment would solve the problem, however. It would solve a little bit of the problem, but not the big problem. Number 0032 MR. KITO III said Chair James was correct. The deferred maintenance was increasing. The department had not been built a new facility since 1983, however. CHAIR JAMES said she understood that the department had not built a new facility while the old had not been taken care of. That was not the case statewide, however. Number 0049 REPRESENTATIVE GREEN said he was still concerned that the fee would not be confined to maintenance. He cited the University of Alaska included maintenance in its' budget but never actually used the money for maintenance. He wondered if there was any assurance that a municipality would use the fees accordingly. Number 0078 MR. KITO III replied he was not sure if the department could mandate a municipality to use the money for a certain purpose. It was a statutory requirement that the revenue collected be used for harbors. A provision would be included in the contract that the state of Alaska would no longer be responsible for the cost associated with the replacement of a facility. The municipality would then be responsible for the replacement cost. Therefore, if it used that money for something else, it could not rely on the state for money. Number 0110 REPRESENTATIVE GREEN replied he did no see that written anywhere in the bill. If that was the intent of the amendment, he agreed with it. Number 0116 MR. KITO III said it would be taken care of in the contract language between the state and the municipality. The department did not think it would be necessary to include it in the statute. REPRESENTATIVE GREEN said he did not want to leave it to chance. Number 0130 CHAIR JAMES stated the controversial bill that Representative Carl Moses introduced to raise the marine fuel tax was vetoed by the Governor last year. It was vetoed because it was only a small fix to the overall problem. She believed it was happening again this session. A piece-meal fix was not the solution to this problem. The state continued to make excuses. It needed to prioritize its assets before expanding or buying new services. Number 0200 CHAIR JAMES said she wanted to hear from the municipalities and the industry before taking any action on this bill. Number 0211 REPRESENTATIVE PORTER said he agreed with Chair James, but it was very late in the session. The bill had several committees of referral. Therefore, there was ample time to alert the municipalities and the industry through the rest of the legislative process. Number 0239 CHAIR JAMES agreed it was late in the session. However, if the issue was important enough, it could be waived from a committee, for example. CHAIR JAMES called on Catherine Reardon, Department of Commerce and Economic Development, to the table. She asked her what the attitude was regarding the cost of the business license. She further wanted to know what type of information was being sent to individuals that applied for a business license that explained their responsibilities as a license holder. Number 0271 CATHERINE REARDON, Director, Central Office, Division of Occupational Licensing, Department of Commerce and Economic Development, explained the business license fee generated revenue above and beyond the cost of administering the program. She called it a revenue generator for the state. The increase was not intended to offset increased cost, but to increase revenue. She cited the revenue for FY 95 was $1,873,000 while the cost for administering the program was $346,000. Therefore, the net gain to the general fund was $1,527,000. The state did provide services to businesses through other divisions that were funded from the general fund. She cited tourism as an example. Moreover, the division included a newsletter this time when it sent the business license renewal form. It was an opportunity to share information. Number 0446 CHAIR JAMES said she was concerned about the penalty for not having an additional business license for certain types of activities. Number 500 MS. REARDON replied that information was mentioned on the business license application form now. CHAIR JAMES said that information was especially needed for new applicants. Number 0513 REPRESENTATIVE ROBINSON said she liked the idea of moving from a one year to a two year process. Number 0523 MS. REARDON explained the division moved to a two year license process several years ago. Currently, the cost was $50 every two years of which one-half of the renewals were processed each year. Number 0539 REPRESENTATIVE ROBINSON wondered why a business license was needed every two years. She asked, why not five years, for example? Number 0548 MS. REARDON said that was a choice the legislature would have to make because it was a revenue generating program. The cost would be higher for a five year program to cover the longer time span. The fewer times the department had to process the paperwork, the less the administrative cost, however. Number 0587 CHAIR JAMES said many companies did not stay in business for five years. She envisioned the businesses would want a refund causing more problems for the division. CHAIR JAMES called on the first witness via teleconference in Mat- Su, Rick Brown. Number 0626 RICK BROWN, Platting Officer, Matanuska-Susitna Borough, said he was concerned about the ability of the DEC to continue to provide the services that seemed to get short funded every year. The Wasilla field office did a good job given the staff numbers. If it would not continue to be funded, it needed the ability to offset that loss through fees. He said he liked the wording in Sec. 8, provision (a), and as it pertained to provision (9), "subdivision plans for sewage waste disposal or treatment submitted under AS 46.03.090." He reiterated something needed to be done to help the department and the Wasilla field office. Number 0721 CHAIR JAMES asked Ms. Adair what were the expected charges for reviewing a subdivision? Number 0733 MS. ADAIR replied the fiscal note was based on $250 per subdivision. She said AS 37.10.050 required an agency to set a fee at a level that covered the cost, unless otherwise authorized by the legislature. Currently, the municipality fee was $350. Number 0774 CHAIR JAMES asked for a motion to adopt the amendments. Number 0781 REPRESENTATIVE PORTER moved to adopt Amendment 1 as Section 11. Hearing no objection, it was so adopted. Number 0825 REPRESENTATIVE GREEN moved to adopt Amendment 2 with changes. He moved to change the word "the" to "all" on page 1, line 3, Sec. 35.10.121. He wanted the fee to be used accordingly. The change was supported by the department. It still gave it flexibility. Hearing no objection, it was so adopted. Number 0922 REPRESENTATIVE PORTER moved to insert the language, "and political subdivisions of the state" after the language "except the State of Alaska," on page 2, line 25. Hearing no objection, it was so inserted. (Amendment 3) Number 0992 REPRESENTATIVE ROBINSON said she did not object to the amendment proposed by Representative Porter, but wanted to hear further from the state. She said not all municipalities were self-insured. Therefore, the ones that were self-insured were already paying. The bill would put everyone on an equal foot. Number 1045 REPRESENTATIVE PORTER replied self-insured municipalities were paying their own fees and claims. They were not avoiding a payment. The state, however, was not taking a portion of it. Number 1072 CHAIR JAMES said transferring money did not solve the overall problem for the state. Number 1155 REPRESENTATIVE OGAN asked Chair James if she was going to take any action on this bill today? Number 1166 CHAIR JAMES replied she was willing to move it out of the committee today. She did not know if she would vote in favor of the bill. She was willing to move it forward in the legislative process, however. Number 1176 REPRESENTATIVE OGAN said this was a policy issue as well. Furthermore, he believed there was a fourth power of government, the taxing authority of the agencies, and the bill further provided that power. The bureaucrats argued it was more efficient. He reiterated the bill further delegated the authority to let the bureaucrats tax. He felt it was inappropriate. Number 1244 CHAIR JAMES said she agreed with most of what Representative Ogan said. She was willing to move the bill forward, however. Number 1253 REPRESENTATIVE PORTER moved that CSHB 416(STA) am move from the committee with individual recommendations and attached fiscal notes. Representative Ogan objected. A roll call vote was taken. Representatives James, Green, Ivan, and Porter voted in favor of the motion. Representative Ogan voted against the motion. The bill moved from the House State Affairs Committee. HB 482 - STATE PROCUREMENT PRACTICES & PROCEDURES The next order of business to come before the House State Affairs Committee was CSHB 482(L&C). CHAIR JAMES called on Dugan Petty, Department of Administration, to present the bill. Number 1370 DUGAN PETTY, Director, Central Office, Division of General Services, Department of Administration, explained at the end of the last session a federal law was passed, the Procurement Acquisition Streamlining Act of 1994. The Act incorporated a number of reforms that the federal government was making to streamline its procurement practices. The same was asked of the state. The business climate was changing and the procurement area needed to be changed as well. He said reform was "on the horizon." In Alaska, the state recognized it did not have the resources to continue doing business as in the past. Therefore, Commissioner Mark Boyer, Department of Administration asked that the state improve its procurement practices. A Procurement Advisory Council was formed. The council consisted of private practitioners, vendors, university members, stake holders and state practitioners. The council was an on-going initiative. The council would continue to look at the regulations, policies and practices. It also wanted to look at the procedures and practices on a situational basis to see if they could be re-engineered to work better. House Bill 482, therefore, was a result of the work of the council. He proceeded to explain the various sections of the bill. Number 1591 MR. PETTY explained Sections 3 and 37 allowed the Commissioner of Administration to remove a vender that had been disbarred or suspended from the current list of bidders. MR. PETTY moving forward, explained Sections 4 and 22 allowed for a more simplified acquisition process for small leases. Small leases were identified as those that were 3,000 square feet (s.f.) or less. Number 1639 MR. PETTY moving forward, explained Section 5 allowed for an extension of leases for up to 10 years provided that lease had at least 6 months remaining. It would also allow for a rent concession of at least 15 percent, or 10 percent with Americans with Disabilities Act (ADA) compliances. Number 1664 MR. PETTY moving forward, explained Sections 6 and 7 provided the state with the ability to perform a lease-purchase acquisition of real property without notifying the legislature in the event the total amount of the payment was $500,000 or less, or the total amount was under $2,500,000. Number 1698 MR. PETTY moving forward, explained Sections 8 and 12 allowed for the identification of the subcontractors within 5 days of the award for non-construction procurement. Number 1749 REPRESENTATIVE OGAN said based on personal experience as a contractor, general contractors "bid shop" amongst the subcontractors if they were not required to report within a short time frame. He questioned if this was a good practice. He said it opened the possibility for unscrupulous business practices amongst contractors. Number 1806 CHAIR JAMES asked Mr. Petty to explain if that provision addressed the concerns of Representative Ogan. Number 1810 MR. PETTY replied the section was not intended to change that provision as it related to construction contracts. The provision of the five day report requirement remained as such. The practice was not problematic for the service and supply industry. The council was concerned about the definition of a "supplier" and "subcontractor." Upon examination, there was not a bid shop problem amongst the service and supply industry, but it was a problem for the construction industry. REPRESENTATIVE OGAN said, "thank you. That clarified it." Number 1891 MR. PETTY moving forward, explained Section 9 allowed for a procurement officer to shorten the circulation period in a bid or proposal. Currently, only the chief procurement officer or the Commissioner of Transportation and Public Facilities for construction bids, could reduce the period. Number 1953 MR. PETTY moving forward, explained Section 10 required the bidder, if it was to maintain the Alaska bidders' preference, to maintain its place of business for at least six months. The section was to prevent the state from paying the difference upon review of a lower bidder and not receiving a value in return. The council determined that was not the intent of the bidders' preference and suggested the change. Number 2066 REPRESENTATIVE OGAN asked Mr. Petty to explain the six months provision in Section 10. He wondered if one year had been considered because that was the determinate for state residency. Number 2091 MR. PETTY said the companion bill to HB 482 in the Senate addressed this issue. He said it would take up to 12 months for a business to take advantage of the Alaska bidders' preference. Therefore, six months was reasonable. It was also written as six months in statute. Number 2165 MR. PETTY moving forward, explained Section 11 empowered the procurement officer to determine to use a request for proposal (RFP) in lieu of an invitation to bid (ITB) as opposed to the chief procurement officer. The council believed the more frequent use of an RFP provided better value. Number 2203 MR. PETTY moving forward, explained Section 13 was a housekeeping measure. The current law required that the contents of a proposal were not disclosed during the negotiations. Section 13 changed it so that they were not disclosed prior to the notice of intent to award period. Number 2265 MR. PETTY moving forward, explained Section 14 was also a housekeeping measure. He explained when an RFP was cancelled the proposals could be accessed under the Freedom of Information Act, thereby, exposing competitor proposals to one another. The section would require the state to maintain a list of proposals if an RFP was cancelled, and to return them back to the bidder. Number 2317 MR. PETTY moving forward, explained Section 15 allowed the contracting officer to state the amount on whatever page was appropriate in the contract instead of the current mandate requiring the amount on the first page. Number 2350 MR. PETTY moving forward, explained Section 16 was a significant change in statute. A single-source contract could be entered into when the chief procurement officer, or for construction, the Commissioner of the Department of Transportation and Public Facilities, determined in writing that an award through a bid of RFP was not practical. The officer could award it to a single- source if it was in the interest of the state. Number 2434 CHAIR JAMES said she had a problem with Section 16. She referred the committee members to page 9, line 1, and read, "competitive sealed bidding, competitive sealed proposals, or other competition in accordance with regulations adopted by the commissioner." She felt the language was too broad and loose. TAPE 96-50, SIDE A Number 0000 CHAIR JAMES announced the companion bill in the Senate added a subsection (e) to Section 16. She read, "except for procurement of supply services or professional services or construction that do not exceed the amount for small procurement under AS 36.30.320(a) that's applicable. The authority to make the determination required by this section may not be delegated even if the authority to contract is delegated under AS 36.30.015(a)." She explained it was a decision that would have to be made by the commissioner. The addition was an attempt to tighten the language. She was not comfortable with a single-source purchase because it distressed the public. She announced she would like to delete Section 16 altogether. Number 0192 MR. PETTY replied the companion bill in the Senate was amended to consider the concerns regarding the delegation, accountability and control to remain with the chief procurement officer, or the Commissioner of the Department of Transportation and Public Facilities. The added section to the Senate bill that Chair James read resolved those concerns. This area took a tremendous amount of time from the state and many of the requirements were an overkill. Therefore, the council wanted the chief procurement officer to make a reasonable determination to prevent an overkill effort. Number 0357 MR. PETTY moving forward, explained Section 17 would allow for limited competition procurement without putting out an invitation to bid or an RFP. That determination would be made by the chief procurement officer, or the Attorney General for legal service contracts. Number 0439 MR. PETTY moving forward, explained Section 19 permitted the use of an innovative procurement as a method of source selection for new, unique requirements, new technology, or to achieve the best value after the chief procurement officer or the Commissioner of the Department of Transportation and Public Facilitates, determined the method was advantageous to the state and the Department of Law approved the procurement plan. He cited the Exxon Valdez Oil Spill Trustee Council typically wanted to use the RFP bid process by notifying the public. The RFP rules did not require that in statute. Therefore, the council was asking for the ability to use an innovative methodology subject to the public notice requirements. Number 0593 MR. PETTY moving forward, explained Section 21 expanded the requirement to independently examine the material facts to any state official when making a determination for an alternate procurement. The section gave the accountability to the person in authority. If a person knowing made a false statement, he or she would be guilty of a class A misdemeanor. Number 0648 MR. PETTY moving forward, explained Section 22 expanded the minimum threshold for a formal invitation to bid to $50,000 for services and supplies, to $100,000 for construction, and to 3,000 s.f. for leases. Number 0702 MR. PETTY moving forward, explained Section 27 required that records of innovative procurement be kept and be made available by the Department of Administration. Number 0723 MR. PETTY moving forward, explained Section 28 applied the two tiered protest process to all procurement except small ones. The Commissioner of the Department of Administration was permitted to establish a simplified procedure for protests of small procurement. Number 0774 MR. PETTY moving forward, explained Section 29 allowed for the protest of a solicitation to be filed 10 days before a bid or RFP opening, unless the bid or RFP provided for a shorter period. There was concern in the House Labor and Commerce Committee and the Senate that this could abridge a bidder from his right to protest. That was not the intent, however. If a pre-bid or pre-proposal conference was held within 12 days of a bid opening, a protest could only be filed only prior to the bid opening to prevent new information being presented without the ability to protest. Number 0875 MR. PETTY moving forward, explained Sections 30, 31, 33 and 34 affected the response to a protest days. The sections set the days at 10, 15 and 30. The sections clarified the current statutes. Number 0897 MR. PETTY moving forward, explained Section 32 limited a protestor's damage to reasonable bid or proposal preparation costs. Number 0924 MR. PETTY moving forward, explained Sections 35 and 36 established a statute of limitations to bring a claim against the state. The claim must be brought within 90 days after the contractor became aware of the claim or knew the basis of the claim. Lessors must also bring a claim regarding Consumer Price Index (CPI) rent adjustments within the terms of the lease. The restriction, however, did not limit a contractor's right under a disputed billing timely payment according to AS 36.05.285. Number 0962 MR. PETTY moving forward, explained Sections 38 and 39 added some exemptions. Section 38 exempted the operation and protection of assets or disposal of assets through the Agricultural Loan Program acquired by the Department of Natural Resources. Number 1009 CHAIR JAMES said she did not have a problem if the state did not operate under the procurement code when operating a facility. She did have a problem, however, if the state wanted to sell a facility. If the state wanted to sell a facility, it should operate under the principles of competitiveness. Number 1043 MR. PETTY replied as the bill read it would allow for the disposal of equipment and supplies acquired by the Department of Natural Resources to not be subject to the procurement code. Number 1058 CHAIR JAMES asked Mr. Petty if the disposal would be recognized as an on-going expense of a business or a liquidation? She believed an on-going expense would not have to go through this process. She was not willing to exempt a liquidation, however. Number 1093 MR. PETTY replied a liquidation would not be subject to the procurement code. The concern of Chair James was well founded . Number 1109 CHAIR JAMES suggested adding additional language to indicate the distinction between on-going business activity and liquidation. Number 1149 MR. PETTY wondered if Chair James was concerned about the liquidation of certain assets by the state and their subject to the procurement code. He stated the section would support her concerns. Number 1181 CHAIR JAMES said she would look at the provision further. She said it was hard to distinguish between a liquidation and an on-going business asset. She did not want to extend that provision, or it would defeat the leniency given. Number 1200 MR. PETTY said he understood the concerns of Chair James. He said the procurement code and the regulations for disposal were primarily aimed at personal property and acquisition of supplies and services which did not fit the picture of the disposal of an asset. Furthermore, the bill addressing the railroad disposal, for example, specifically made the disposal not subject to the procurement code. The reason was due to broad considerations that the procurement code had not focused on. He would talk to the Department of Natural Resources about this issue further. Number 1249 CHAIR JAMES said in the absence of following the procurement code, specific language should be included to explain the process. MR. PETTY said the public deserved an accountable process. CHAIR JAMES said she would consider the provisions further. She asked Mr. Petty to continue explaining the sections. Number 1277 MR. PETTY moving forward, explained Section 39 exempted the livestock purchased by the Alaska Correctional Industries from the procurement code. Number 1301 CHAIR JAMES said it did not work when conducting ordinary business. It only worked in the case of protecting the public from the government purchase of goods and services. MR. PETTY agreed with Chair James. Number 1315 MR. PETTY moving forward, explained Section 40 allowed for General Services Administration, Federal Supply Schedules (GSA) supply schedules to open to state and local governments in accordance with regulations established by the Commissioner of the Department of Administration and as provided for in the federal law. The schedules offered more favorable prices for the state. The current law provided for that, but the council wanted to clarify the intent in statute. Number 1358 CHAIR JAMES asked Mr. Petty the status of the companion bill in the Senate (SB 275)? Number 1367 MR. PETTY replied it passed out of the Senate State Affairs Committee and was now in the Senate Judiciary Committee. Number 1387 REPRESENTATIVE ROBINSON announced she had to leave to attend a caucus meeting. Number 1399 REPRESENTATIVE OGAN asked Mr. Petty, if the state was able to purchase through the GSA, would that eliminate instate businesses? Number 1413 MR. PETTY said it was not clear that this would happen at the federal level. There was a moratorium surrounding this provision in the statute. It was not clear if the moratorium would be lifted, however. If it was lifted, the department would act as the gatekeeper for the Division of General Services. The intent was to use the contracts within the state when a dealer could give GSA prices. Number 1469 REPRESENTATIVE GREEN asked Mr. Petty to further explain Sections 4 and 22, and Sections 6 and 7. He asked what was the current cost for rental space? Number 1499 MR. PETTY replied it was approximately $1.35 to $1.50 per s.f. There were rents as high as $5 to $6 per s.f. in Barrow, for example. At the other end there were rents as low as 70 cents to 80 cents per square foot. Number 1525 REPRESENTATIVE GREEN asked Mr. Petty how the 3,000 s.f. or the $500,000 was arrived at in Section 4 and Section 6? Number 1542 MR. PETTY replied the $500,000 was the current threshold requirement in AS 36.30.80 to bring an operating lease to the legislature for approval. The 3,000 s.f. made more sense than a dollar amount because of fluctuations. The council recommended 5,000 s.f. initially. It was reduced to 3,000 s.f. in the House Labor and Commerce Committee. Number 1589 REPRESENTATIVE GREEN said he was concerned that those two provisions together would give latitude for the state to enter into a "healthy" contract. Number 1602 CHAIR JAMES said she was not interested in the state entering into any lease-purchase agreement without legislative approval no matter how small. It was necessary to consider the obligation of the state in the future regarding maintenance, for example. Number 1634 MR. PETTY replied any decision made on a lease-purchase agreement needed to consider the cost of operation and maintenance of the facility. It was built into the formula. If it did not make sense to own a building considering the operation cost, then the state should be leasing it. Number 1663 CHAIR JAMES said she understood what Mr. Petty said. However, deferred maintenance had not been funded. Therefore, it behooved the legislature to consider the obligation by approving this provision. She reiterated that the legislature did not have a future plan to deal with the deferred maintenance of public facilities. She suggested as a solution that the state sell and lease back all of the public facilities. Number 1707 REPRESENTATIVE GREEN asked Mr. Petty to explain Section 9 further. He said it opened the avenue for the "good ole boy." He was concerned that the length of time could be shortened to favor someone. Number 1734 MR. PETTY replied that clearly was not the intend of Section 9. The current requirement was 21 days no matter what, unless the chief procurement office determined it needed to be changed. He said 10 days were the typical length of time needed, leaving 11 days left for the process. The language "advantageous to the state and adequate competition" was added to insure competition within the amount of time necessary. Number 1791 CHAIR JAMES called for a five minute break. Number 1801 CHAIR JAMES called the House State Affairs Committee meeting back to order. Representatives Ogan, Porter, Green and James were present. CHAIR JAMES called on the first witness via teleconference in Anchorage, Dave Gerke. Number 1829 The record reflected the testimony of Dave Gerke was inaudible at times due to interference. DAVE GERKE said he had been an Alaskan resident for over 20 years. He was disabled. He expressed his opposition to HB 482 because it would not be good for Alaska. He specifically opposed Section 10 addressing Alaska bidders' preference. He stated it would hinder a lot of people with disabilities and was discriminatory against those trying to get into procurement with the state. He further opposed Section 16 addressing a single-source contract. He reiterated the bill was bad for Alaskan companies except for a few bureaucrats in Juneau. He suggested the committee members take a look at the provisions further before taking any action. Number 2061 CHAIR JAMES explained to Mr. Gerke the six months requirement was added to prevent the establishment of a company to obtain the bid. That was unfair to established businesses. Number 2115 MR. GERKE replied Section 10 would not affect his business that much. He was concerned about future disabled companies, however. Number 2135 CHAIR JAMES thanked Mr. Gerke for his testimony. She called on further discussion from the committee members. CHAIR JAMES announced she did not plan to move the bill out of the committee today. Number 2144 REPRESENTATIVE OGAN said he was distressed last year to pass bills that exempted various quasi private organizations from the procurement process. He had stated many times that there was a problem with the procurement process. Therefore, he applauded the efforts of Mr. Petty and the council. The bill needed further work, but he agreed with the concept of it. Number 2197 CHAIR JAMES thanked Mr. Petty for his time and explanation of the bill today. HB 136 - MANDATE SALE OF ALASKA RAILROAD The next order of business to come before the House State Affairs Committee was HB 136. CHAIR JAMES announced she wanted to waive the bill forward to the next committee of referral - the House Finance Committee. CHAIR JAMES explained there was an identical bill moving forward in the Senate. The Senate bill would probably be the bill that House of Representatives would consider. CHAIR JAMES asked if there was an objection to waive the bill from the committee. Hearing no objection, it was so waived from the House State Affairs Committee. HB 198 - PFD ALLOWABLE ABSENCES The next order of business to come before the House State Affairs Committee was CSHB 198(STA) (9-LS0745/C). CHAIR JAMES called on Representative Kim Elton, to present the committee substitute. Number 2349 REPRESENTATIVE KIM ELTON explained the changes to the committee substitute. He referred the committee members to page 2, line 20, and explained item (J) was added. The item was added to allow an absence for the care of a parent, spouse, sibling, child, or stepchild with a critical life-threatening illness whose treatment required travel outside of the state. The language was also included in the title to avoid the "christmas tree" effect. He thanked the staff members and the committee members for their time spent on the bill. CHAIR JAMES announced she was ready to move the bill forward. Number 2408 REPRESENTATIVE PORTER explained the committee substitute precluded a resident from taking care of a relative who resided outside of Alaska. Number 2424 REPRESENTATIVE PORTER moved that CSHB 198(STA) move from the committee with individual recommendations and attached fiscal notes. Representative Ogan objected for further testimony from the public and to offer an amendment. CHAIR JAMES called on the first witness via teleconference in Mat- Su, Ross Perrine. Number 2439 ROSS PERRINE said he was a merchant seaman and had lived in Alaska for the past 10 years. He had been consistently denied the permanent fund dividend (PFD). He felt his work as a merchant seaman should be considered an allowable absence. It was not a question of residency. TAPE 96-50, SIDE B Number 0000 MR. PERRINE further said his work was vital to Alaska as a direct participant in the moving of Alaskan Northslope Oil. He reiterated he felt he was being excluded from the PFD program because of his occupation. He said it was not intentional on the part of the program, but an accidental result when defining the allowable absences. The majority of Alaskans he had talked to also felt his situation was unfair. Number 0033 CHAIR JAMES asked Mr. Perrine how long at a time was he gone? Number 0037 MR. PERRINE replied anywhere from two to three months. He also received six weeks of leave when he was at home before returning to the sea. CHAIR JAMES called on Nanci Jones, Department of Revenue, to address the concerns of Mr. Perrine. Number 0062 NANCI JONES, Director, Central Office, Permanent Fund Dividend Division, Department of Revenue, stated there were many inequities in the allowable absences for the PFD. She said, "I am asking the legislature to deal with the inequities regarding the absences." The program did not recognize the private industry. The current allowable absences were for congressional delegation, and state employees, for example. She reiterated there were no provisions for the private industry. She called it a discrimination and an inequity against the other half of the Alaskan residents that had careers that required them to be outside of the state. She was trying to bring more balance and equity between the allowable absences. She asked the committee members to recall her previous testimony warning them that when considering this issue there were many areas to consider. Number 0121 REPRESENTATIVE GREEN said he knew of a constituent that was an airline pilot that was out of the state for approximately 190 days. There were inequities, but he did not know if the legislature should continue to make exceptions. "Sooner or later, we say it doesn't matter anymore. If you want the Alaska Permanent Fund, just come here and stay for a little while." Number 0143 CHAIR JAMES explained she asked Representative Elton to keep the title tight to prevent the christmas tree effect. She believed the serious considerations of a terminally ill family members needed to be addressed. Therefore, she was willing to consider the bill in the House State Affairs Committee. She agreed with the concerns of Ms. Jones regarding the inequities for allowable absences. She said she would yield to the department for suggestions. She suggested a bill next session to clean up the problems. The current program did not designate the difference between long-time Alaskans and those that have been here a short time. The courts, however, had ruled that it was not legal to consider the tenure of a long-time Alaskan resident. She suggested as a solution to take away all the exceptions. That would be fair, she said, rather than including only a few exceptions for some. She reiterated she empathized with Mr. Perrine's concerns. She was not willing to consider his profession as an exemption in the bill, however. Number 0255 REPRESENTATIVE OGAN moved to include "U.S. Merchant Marines" to page 2, line 24, item (K), and to amend the title accordingly. Representative Green objected. Discussion followed. Number 0279 REPRESENTATIVE OGAN said he understood the concerns of the christmas tree effect. He said it was late in the game to consider this issue and would consider working on it further next session. He said a disqualification based on a person's career was not fair. Number 0305 CHAIR JAMES replied she agreed with Representative Ogan. However, she did not think this was the correct piece of legislation to include that amendment. The bill would never pass. Number 0315 REPRESENTATIVE GREEN said he could not pass the bill in good conscience without including "Airline Pilot" as an allowable absence. Number 0319 CHAIR JAMES reiterated she wanted to maintain the integrity of the bill and to only address the concerns of terminally ill family members. CHAIR JAMES called for a roll call vote. Representatives James, Green, Ivan and Porter voted against the motion. Representative Ogan voted in favor of the motion. The amendment failed. CHAIR JAMES called on the next witness via teleconference in Glennallen, George Reichman. Number 0354 GEORGE REICHMAN said he had been a missionary worker in Alaska since 1975. As a result of his job he was required to leave Alaska every four years to meet with individuals and churches that financially supported his work. He wondered why it was not included as an allowable absence since it was a requirement of his job. His family could use the money because his children were about ready to go to college. He said it would be easy to document his time away from Alaska and show the intent of his family to return. He felt he and his family were being excluded unfairly. Number 0426 CHAIR JAMES thanked Mr. Reichman for his testimony. She reiterated a serious look at the allowable absences was needed. CHAIR JAMES called on a motion to move the bill from the committee. Number 0443 REPRESENTATIVE OGAN moved that CSHB 198(STA) (9-LS0745/F) be adopted for consideration. Hearing no objection, it was so adopted. Number 0462 REPRESENTATIVE GREEN moved that the word "or" be deleted from page 2, line 14. Hearing no objection, it was so deleted. (Amendment 1) Number 0528 REPRESENTATIVE PORTER moved that CSHB 198(STA) am move from the committee with individual recommendations and attached fiscal notes. Hearing no objection, it was so moved from the House State Affairs Committee. HB 546 - G.O. BONDS: SCHOOLS & UNIV. The next order of business to come before the House State Affairs Committee was HB 546. The record reflected the return of Representative Robinson at 10:45 a.m. CHAIR JAMES announced she wanted to form a subcommittee to further address HB 546. CHAIR JAMES called on the first witness via teleconference in Dillingham, Donald Evans. Number 0586 DONALD EVANS, Superintendent, Southwest Region School District, read the following statement into the record. "I would like to thank the committee for the opportunity to speak in support of HB 546. "I believe that it is imperative that the Alaska State Legislature, together with the Governor's administration, take responsible, and timely action to address the overwhelming and growing need for school facility maintenance and construction within our state. That need, while it is not limited to, is no more evident nor is the need greater, than in unorganized areas of the state served by REAA school districts. "HB 546, proposes the use of G.O. Bonds to address those needs. HB 546 represents a viable and practical method for the State and the Alaska State Legislature to meet their responsibility. "For several years, the Southwest Region School District has been in need of, and has requested the support of the state in replacement, or remodel of three facilities. The District has annually placed the Togiak School Replacement as its highest capital improvement priority. "The existing Togiak School serves 197 elementary and high school students. The original structure was constructed in 1958 by Bureau of Indian Affairs and later transferred to the State of Alaska. A permanent addition to the structure was added in the 1970's. Since that time, several portable classrooms have been added. In fact more than 60% of the student population of the Togiak School are served in portable classrooms. For years now, the children and parents of Togiak have trusted that this was only temporary, and that the capital improvement process would correct the unhoused student conditions. The Southwest Region School District had applied and continues to apply through the Department of Education's CIP process. "The School District and the Community of Togiak have worked together to prepare for the funding, when it is made available. The Togiak Natives Ltd. corporation along with the city of Togiak has donated 40 acres of land for a new school site. The Southwest Region School District has completed initial site survey and educational specification work. "For the 1995-96 school year, the Togiak School is ranked number 7 on the Department of Education CIP priority list. The Departments recognition of the need in Togiak sprank hope, but only until the Governor's Budget called for funding of the number 1 construction priority. "Also for the 1995-96 school year, the Southwest Region School District initiated a major maintenance request for the Koliganek School. As a result of continuing structural problems the District sought and received engineering reports on the building. Repeated roof & wall separations, building shifts, and ground water flooding experienced annually at the school was found to be from an improper foundation, design and construction. The engineering solution calls for repairs and corrections that will cost approximately $800,000. Just this month, in the Koliganek School snow drifted 15 inches deep in one room, due to a wall separation that has occurred just since summer. I wonder how the State could not find the $800,000 to save a $6,000,000 school before it is not able to be saved. This project is currently ranked number 20 on the major maintenance list and is not scheduled for funding this year. "I am aware that the needs of the Southwest Region School District are not unique throughout the State, but this merely makes the current situation more critical. To suffer under the belief and practice that by taking care of a few needs at the top of an (at best) arbitrary list, and carrying on with business as usual, constitutes burying the State head in the sand. Inadequately addressing the capitol needs of schools in Alaska, is ignoring the real and growing State responsibility to the children. Not acting on HB 546, and continually resting on the rhetoric that there isn't the money, and therefore there are no solutions, is a cop out. "HB 546 offers a solution and I believe that failure to pursue this solution would be irresponsible management of the States existing property, and an extreme injustice to the children of Alaska. "I ask that you support HB 546, and pass it out of committee today. "Thank you for your time and the opportunity to speak." Number 0821 CHAIR JAMES thanked Mr. Evans for his testimony. She announced the bill would pass out of the House State Affairs Committee today. She reiterated a subcommittee had been formed to draft additional language. Number 0837 REPRESENTATIVE OGAN suggested the committee look at the legal opinion of Tamara Cook, Legislative Legal and Research Services. He explained the opinion indicated the bill was possibly unconstitutional. Number 0865 CHAIR JAMES said the opinion suggested contacting the Bond Council to verify the constitutionality. She contacted the council and it indicated it was not a problem. Number 0884 REPRESENTATIVE IVAN asked Chair James what her intention was for HB 546. CHAIR JAMES explained the subcommittee would draft some changes to accept the new division by senate districts. The subcommittee members consisted of Representatives Ivan, Robinson, Green, Ogan and James. Number 1060 ADJOURNMENT CHAIR JAMES adjourned the House State Affairs Committee meeting at 11:05 a.m.