Legislature(1995 - 1996)

04/18/1996 08:08 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             HOUSE STATE AFFAIRS STANDING COMMITTEE                            
                         April 18, 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. 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. 485                                                          
 "An Act relating to interference with the distribution or reading             
 of free newspapers or other free periodicals."                                
      - PASSED OUT OF COMMITTEE                                                
 SENATE BILL NO. 89                                                            
 "An Act relating to the members of the board and staff of the                 
 Alaska Permanent Fund Corporation."                                           
      - PASSED HCS HB 89(STA) OUT OF COMMITTEE                                 
 HOUSE BILL NO. 383                                                            
 "An Act relating to reimbursement by the state to municipalities              
 and certain established villages for services provided to                     
 individuals incapacitated by alcohol; and providing for an                    
 effective date."                                                              
      - SCHEDULED BUT NOT HEARD                                                
 HOUSE BILL NO. 136                                                            
 "An Act mandating the sale of the Alaska Railroad; and providing              
 for an effective date."                                                       
      - SCHEDULED BUT NOT HEARD                                                
 HOUSE BILL NO. 371                                                            
 "An Act relating to the rights of terminally ill persons."                    
      - SCHEDULED BUT NOT HEARD                                                
 (* First public notice)                                                       
 PREVIOUS ACTION                                                               
 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                       
 04/11/96              (H)   MINUTE(STA)                                       
 04/16/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 04/16/96              (H)   MINUTE(STA)                                       
 04/18/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 BILL:  HB 485                                                               
 SPONSOR(S): REPRESENTATIVE(S) MARTIN, Elton                                   
 JRN-DATE      JRN-PG            ACTION                                        
 02/09/96      2692    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 02/09/96      2692    (H)   STATE AFFAIRS, JUDICIARY                          
 03/28/96              (H)   STA AT  8:15 AM CAPITOL 102                       
 03/28/96              (H)   MINUTE(STA)                                       
 03/30/96              (H)   STA AT 10:00 AM CAPITOL 102                       
 03/30/96              (H)   MINUTE(STA)                                       
 04/18/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 BILL:  SB  89                                                               
 SPONSOR(S): SENATOR(S) RIEGER, Frank, Green, Halford, Kelly, Leman,           
 Miller, Pearce, R.Phillips, Sharp, Taylor, Torgerson                          
 JRN-DATE      JRN-PG            ACTION                                        
 02/15/95       289    (S)   READ THE FIRST TIME - REFERRAL(S)                 
 02/15/95       289    (S)   STA, FIN                                          
 03/09/95              (S)   STA AT  3:30 PM BELTZ ROOM 211                    
 03/09/95              (S)   MINUTE(STA)                                       
 03/10/95       576    (S)   STA RPT  ENCS  2DP 1NR      SAME TITLE            
 03/10/95       576    (S)   FISCAL NOTE (REV)                                 
 02/01/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 02/01/96              (S)   MINUTE(FIN)                                       
 02/01/96              (S)   MINUTE(FIN)                                       
 02/07/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 02/13/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 03/07/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 03/08/96              (S)   FIN AT  9:00 AM SENATE FINANCE 532                
 03/08/96              (S)   MINUTE(FIN)                                       
 03/08/96      2654    (S)   FIN RPT  CS  5DP 1NR                              
 03/08/96      2654    (S)   FISCAL NOTE TO CS (REV)                           
 03/13/96              (S)   RLS AT 11:00 AM FAHRENKAMP RM 203                 
 03/13/96              (S)   MINUTE(RLS)                                       
 03/22/96      2834    (S)   RULES RPT  2CAL 2NR     3/22/96                   
 03/22/96      2839    (S)   READ THE SECOND TIME                              
 03/22/96      2839    (S)   FIN  CS ADOPTED UNAN CONSENT                      
 03/22/96      2839    (S)   AM NO  1     OFFERED BY ADAMS                     
 03/22/96      2839    (S)   AM NO  1     ADOPTED UNAN CONSENT                 
 03/22/96      2840    (S)   ADVANCE TO THIRD RDG FAILED Y11 N7E1 A1           
 03/22/96      2840    (S)   THIRD READING 3/25 CALENDAR                       
 03/25/96      2868    (S)   READ THE THIRD TIME  CSSB 89(FIN) AM              
 03/25/96      2868    (S)   PASSED Y16 N4                                     
 03/25/96      2868    (S)   LINCOLN NOTICE OF RECONSIDERATION                 
 03/26/96      2911    (S)   RECON TAKEN UP - IN THIRD READING                 
 03/26/96      2911    (S)   PASSED ON RECONSIDERATION Y14 N6                  
 03/26/96      2912    (S)   TRANSMITTED TO (H)                                
 03/27/96      3386    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 03/27/96      3386    (H)   STATE AFFAIRS, FINANCE                            
 04/18/96              (H)   STA AT  8:00 AM CAPITOL 102                       
 WITNESS REGISTER                                                              
 CHRISTOPHER KNIGHT, Researcher                                                
    to Representative Terry Martin                                             
 State Capitol, Room 502                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3783                                                    
  POSITION STATEMENT:   Provided sponsor statement for HB 485.                 
 BROOKE ROHWEDER, Editor                                                       
 Whalesong Student Newspaper                                                 
 University of Alaska Southeast                                                
 11120 Glacier Highway                                                         
 Juneau, Alaska 99801                                                          
 Telephone:  (907) 465-6434                                                    
  POSITION STATEMENT:   Provided testimony on HB 485.                          
 SENATOR STEVE RIEGER                                                          
 Alaska State Legislature                                                      
 State Capitol, Room 516                                                       
 Juneau, Alaska 99801-1182                                                     
 Telephone:  (907) 465-3879                                                    
  POSITION STATEMENT:   Sponsor of SB 89.                                      
 JAMES BALDWIN, Assistant Attorney General                                     
 Governmental Affairs Section                                                  
 Civil Division                                                                
 Department of Law                                                             
 P.O. Box 110300                                                               
 Juneau, Alaska 99811-0300                                                     
 Telephone:  (907) 465-3600                                                    
  POSITION STATEMENT:   Provided testimony in opposition to SB 89.             
 DWIGHT PERKINS, Special Assistant                                             
 Office of the Commissioner                                                    
 Department of Labor                                                           
 P.O. Box  21149                                                               
 Juneau, Alaska 99802-1149                                                     
 Telephone:  (907) 465-2700                                                    
  POSITION STATEMENT:   Provided testimony on CSHB 483(L&C) and asked          
 for it to be waived from the House State Affairs Committee.                   
 ACTION NARRATIVE                                                              
 TAPE 96-55, SIDE A                                                            
 Number 0015                                                                   
 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 Porter, Willis, Ogan, Robinson, Ivan and                 
 James.  Member absent was Representative Green.                               
 CHAIR JEANNETTE JAMES announced this was the last weak to hear              
 house bills in the committees unless given other instructions from            
 the leadership.                                                               
 The record reflected the arrival of Representative Joe Green at               
 8:10 a.m.                                                                     
 HB 546 - G.O. BONDS: SCHOOLS & UNIV.                                        
 The first order of business to come before the House State Affairs            
 Committee was HB 546.                                                         
 CHAIR JAMES announced she did not have any new information                    
 regarding HB 546.  She wanted to share and to hear from the                   
 committee members one more time before putting this issue "to bed"            
 how to establish an equitable distribution of the funds.  She                 
 explained rural schools were owned by the state, and urban schools            
 were owned by the school district.  Therefore, there was the                  
 possibility to divide the program into two different programs to              
 service the entire state.  The general obligation bonds would apply           
 only to the state owned facilities, while the facilities owned by             
 the school districts would establish their own bonds with a 70                
 percent contribution from the state, for example.                             
 CHAIR JAMES further explained the bill was dead.  It was not a                
 priority amongst the majority leadership.  Consequently, today was            
 the last hearing on this bill.  She was prepared to deal with it              
 again next year, however.                                                     
 Number 0398                                                                   
 REPRESENTATIVE BRIAN PORTER congratulated Chair James for taking on           
 the issue.  However, given the remaining time left in the session,            
 he agreed it would not move forward in the legislative process.  He           
 said the committee had discussed the issue thoroughly.  He would be           
 interested in reviewing it further during the interim.                        
 Number 0448                                                                   
 CHAIR JAMES said she was interested in reviewing it further during            
 the interim also.  She particularly wanted to review the priority             
 application process.  The current system was flawed.  It was based            
 on legislative priority and not need.                                         
 Number 0485                                                                   
 REPRESENTATIVE PORTER suggested a task force approach combining the           
 efforts of the House State Affairs Committee and the House Health,            
 Education and Social Services Committee.                                      
 CHAIR JAMES agreed that was a good idea.                                      
 Number 0516                                                                   
 REPRESENTATIVE CAREN ROBINSON said she did not want to see the bill           
 die.  The idea was long over due.  She agreed with the concept of             
 an interim task force.  She suggested including members on the task           
 force from the private industry and school boards as well.                    
 Number 0575                                                                   
 CHAIR JAMES said this was a very important issue to her.  She                 
 suggested dedicating the tobacco tax to a fund for school                     
 construction and rehabilitation.  She cited the tax would bring in            
 about $40 million to $50 million a year.                                      
 Number 0637                                                                   
 REPRESENTATIVE PORTER said it was a great thought.  He was not sure           
 if the tobacco tax could be dedicated, however.                               
 Number 0646                                                                   
 CHAIR JAMES replied the Legislative Legal Department said it would            
 not be a problem.  There was not an Attorney General opinion,                 
 however.  There was evidence from the Alaska State Constitutional             
 Convention that the tax could not be changed or the use of the fund           
 could not be changed.  The tax could be increased or decreased,               
 Number 0706                                                                   
 REPRESENTATIVE PORTER asked if it was a tobacco tax that originally           
 funded school construction and rehabilitation?                                
 CHAIR JAMES replied, "yes."  Currently, 5 cents of the tobacco tax            
 went to a dedicated fund.                                                     
 Number 0753                                                                   
 REPRESENTATIVE ED WILLIS said he hoped that children would not                
 smoke more to get a better school.                                            
 Number 0770                                                                   
 CHAIR JAMES reiterated this was a very important issue that needed            
 to be addressed somehow.                                                      
 Number 0786                                                                   
 REPRESENTATIVE IVAN IVAN invited the interim committee to look at             
 the hub centers, such as Dillingham, Bethel or Nome.                          
 CHAIR JAMES said she would discuss his suggestion with the Speaker            
 of the House, Gail Phillips, to determine if that was possible.               
 Number 0827                                                                   
 REPRESENTATIVE JOE GREEN said he would also like to be a part of an           
 interim committee to address this issue further.                              
 Number 0844                                                                   
 REPRESENTATIVE SCOTT OGAN said he would also like to be a part of             
 an interim committee to address this issue further.                           
 CHAIR JAMES said it was exciting to see all the committee members             
 supportive of this issue.                                                     
 HB 485 - INTERFERENCE WITH DISTRIB. OF FREE PAPERS                          
 The next order of business to come before the House State Affairs             
 Committee was HB 485.                                                         
 CHAIR JAMES called on Christopher Knight, Researcher to                       
 Representative Terry Martin, to present the bill to the committee             
 Number 0888                                                                   
 CHRISTOPHER KNIGHT, Researcher to Representative Terry Martin,                
 explained Representative Martin introduced HB 485 to address a                
 problem that was present on the college campuses across the nation.           
 Individuals that disagreed with the contents of a periodical were             
 disposing of them in large numbers.  He cited there had been                  
 similar instances in Fairbanks, Anchorage and Juneau.  House Bill             
 485 tried to address this issue by amending AS 11.46.484.  The bill           
 turned the action into a crime of criminal mischief in the third              
 degree.  Furthermore, although it was a "free" paper, there were              
 production, editor, staff, and printing cost that went into                   
 producing a free periodical.                                                  
 Number 1000                                                                   
 REPRESENTATIVE PORTER asked Mr. Knight, if according to the                   
 prosecutor, did the action of interfering with the distribution of            
 a free paper not constitute a crime, or was it not considered a               
 Number 1023                                                                   
 MR. KNIGHT replied that was a good question.  He was told directly            
 by the Juneau Police Department that it was not a crime because it            
 was hard to determine the worth of a "free" newspaper.                        
 Number 1063                                                                   
 REPRESENTATIVE PORTER suggested asking the Office of the                      
 Prosecutor.  He explained just because it was free to the customer            
 that did not mean it was a value-less item.  It was at the least              
 vandalism, destruction of private property, or criminal mischief.             
 Number 1103                                                                   
 REPRESENTATIVE GREEN explained his staff pursued this issue also.             
 They were told there was not enough person power to prosecute                 
 because it was a low priority crime.                                          
 Number 1138                                                                   
 MR. KNIGHT replied there were criminal actions, such as, writing a            
 bad check that were not given priority.  However, it did give                 
 the banking institutions the opportunity to seek a civil suit                 
 through the law.  That was the intent of HB 485.                              
 Number 1169                                                                   
 REPRESENTATIVE ROBINSON asked Mr. Knight when he researched this              
 issue did he look at other states before setting the penalty at               
 $5,000?  She agreed with hitting somebody in the pocket book to               
 enforce this law.                                                             
 Number 1212                                                                   
 MR. KNIGHT replied many versions of the bill were drafted and other           
 states were looked at.  However, the current bill was considered by           
 the sponsor the best place to start.  The court would probably                
 recommend community service or paying a fine to the institution               
 rather than fining the individual $5,000 or sending him to jail.              
 The sponsor would be open to amendments to move the bill forward.             
 Number 1269                                                                   
 REPRESENTATIVE ROBINSON asked Mr. Knight what would happen to a               
 person if the Juneau Empire or the Anchorage Daily News, for              
 example, were stolen?                                                         
 Number 1277                                                                   
 MR. KNIGHT replied because those newspapers were paid for it                  
 automatically was a theft.                                                    
 Number 1305                                                                   
 REPRESENTATIVE OGAN wondered if stealing a car was considered the             
 same as stealing a few newspapers.  He cited AS 11.46.484 addressed           
 both actions.                                                                 
 Number 1341                                                                   
 CHAIR JAMES said this was a cloudy issue.  She wondered if the                
 action of removing a few newspapers because of its contents was an            
 expression of free speech.  She did not support vandalistic                   
 behavior, however.  She further commented about the vulnerability             
 of a stack of free periodicals and wondered if it invited that type           
 of behavior.                                                                  
 Number 1449                                                                   
 REPRESENTATIVE PORTER agreed that stacking free periodicals so that           
 they could be accessed easily was a common sense mistake.  However,           
 he did not doubt that the behavior was theft and at a minimum                 
 criminal mischief.  Therefore, another crime in statute was not               
 needed, but rather inspiring law enforcement and prosection to take           
 the cases.  He further suggested distributing the periodicals                 
 individually or including a sign that read "one per customer" as              
 possible solutions.                                                           
 Number 1505                                                                   
 REPRESENTATIVE OGAN said the bill could be amended to include                 
 campaign literature to pass the bill forward in the legislative               
 Number 1513                                                                   
 REPRESENTATIVE GREEN wondered how a case like this would ever be              
 Number 1528                                                                   
 CHAIR JAMES said many questions were involved, such as, where was             
 the stack of periodicals or was it a private area or a public area.           
 She agreed with Representative Porter that the behavior could be              
 considered criminal mischief.  Prosecuting the behavior would be              
 very difficult, however.  Furthermore, actions were sometimes put             
 in statute to announce the illegal activity.                                  
 Number 1603                                                                   
 MR. KNIGHT replied society was such today that newspaper stands and           
 stacks were more viable to distribute the periodicals.  That did              
 not invite criminal behavior, however.  There had been hundreds of            
 cases of this type of behavior.  He cited one case was taken to               
 court in Florida of which fines were assessed.  It was an issue               
 that needed to be addressed in Alaska.  The states of Vermont and             
 Maryland were also working on a law to address this issue.                    
 Moreover, the bill was drafted with intent language to prove the              
 Number 1691                                                                   
 REPRESENTATIVE GREEN said he was not a lawyer or a law enforcement            
 person, but he believed intent was the toughest behavior to prove.            
 He championed the idea of the bill but believed it would be another           
 law that would not be enforced.                                               
 Number 1725                                                                   
 CHAIR JAMES stated that common law was based on intent which had              
 been forgotten over the years.  She understood intent was hard to             
 litigate, however.  It was more an issue now if one did it rather             
 than if one intended to do it.                                                
 Number 1746                                                                   
 REPRESENTATIVE PORTER stated there was a requirement to establish             
 intent for crimes of this nature.  Furthermore, each crime had                
 specific elements and each element needed to be established that              
 they occurred.  Evidence was then needed to support the criminal              
 elements.  After the evidence was collected, the case needed to be            
 sold to the prosecutor.  That process would continue whether or not           
 the crime was in statute or not.  Moreover, he explained intent               
 could be implied by the actions.                                              
 Number 1834                                                                   
 REPRESENTATIVE ROBINSON suggested the concept of a violation rather           
 than a criminal act in statute.  This would circumvent the                    
 prosecutor's office and use a judge instead.                                  
 Number 1907                                                                   
 REPRESENTATIVE PORTER replied a police officer now could write a              
 misdemeanor citation for this offense.  He said it was a good idea            
 to reduce the offense to a violation to circumvent the prosecutor's           
 office.  The campus security office would then be more motivated to           
 enforce the violation.  He called it a viable approach.                       
 Number 1949                                                                   
 CHAIR JAMES wondered if there were campus rules and regulations               
 that were being violated now.  Furthermore, she wondered if the               
 person that handed out the free literature was responsible for the            
 litter that was produced.                                                     
 Number 2036                                                                   
 REPRESENTATIVE GREEN wondered if the consequence of a misdemeanor             
 was really intended.  He further wondered, if the last two                    
 periodicals, for example, taken by somebody would constitute a                
 crime.  He wondered again if that was the intent of HB 485.                   
 Number 2070                                                                   
 CHAIR JAMES said this issue needed more thought.  She was willing             
 to move the bill forward to the House Judiciary Committee, however.           
 Number 2105                                                                   
 REPRESENTATIVE ROBINSON said it was more appropriate for the House            
 Judiciary Committee to review this issue further.  She was willing            
 to move the bill forward today.                                               
 Number 2122                                                                   
 REPRESENTATIVE ROBINSON moved that HB 485 move from the committee             
 with individual recommendations and attached fiscal notes.                    
 CHAIR JAMES announced there were witnesses present to testify.                
 REPRESENTATIVE ROBINSON withdrew her motion.                                  
 CHAIR JAMES called on the first witness in Juneau, Brooke Rohweder,           
 Editor, Whalesong Student Newspaper, University of Alaska                   
 Number 2151                                                                   
 BROOKE ROHWEDER, Editor, Whalesong Student Newspaper, University of         
 Alaska Southeast, explained stacks of the Whalesong were found in           
 the local dumpster.  The act was witnessed but no consequence was             
 ever imposed.  She strongly felt that something needed to be done.            
 She said a person stole more than a free newspaper, he stole the              
 written work of students and tuition dollars.  Every student paid             
 an activity fee of which a few dollars went to the production of              
 the Whalesong which was about $10,000 per year.  That money was             
 also being thrown away.  Advertising was also being thrown away               
 which was worth about $1,000.  Furthermore, it was a violation of             
 the right to free speech.  Moreover, because the person at the                
 university never felt any repercussions, he could get away with it            
 again.  She announced it was a faculty member.                                
 Number 2261                                                                   
 CHAIR JAMES said she understood the passion of Ms. Rohweder.  She             
 reiterated it was a subject that needed further attention.                    
 MS. ROHWEDER replied she was glad that it would receive further               
 attention.  She did not want the bill to die.                                 
 Number 2278                                                                   
 REPRESENTATIVE PORTER stated to Ms. Rohweder the violation that               
 occurred was criminal mischief in the fourth degree.                          
 Number 2288                                                                   
 MS. ROHWEDER replied the idea of using campus security was good               
 because if a ticket was issued the person had to go to court.                 
 Number 2297                                                                   
 REPRESENTATIVE ROBINSON asked Ms. Rohweder if the chancellor                  
 reprimanded the faculty member?                                               
 MS. ROHWEDER replied it was an internal matter.  She did not know.            
 Number 2311                                                                   
 REPRESENTATIVE ROBINSON asked Ms. Rohweder if the concept of a                
 violation was a direction that she would support?                             
 MS. ROHWEDER replied, "absolutely."                                           
 Number 2329                                                                   
 REPRESENTATIVE ROBINSON moved that HB 485 move from the committee             
 with individual recommendations and attached fiscal notes.  Hearing           
 no objection, it was so moved from the House State Affairs                    
 Committee.  She asked that the concept of a violation be looked at            
 in the next committee of referral - the House Judiciary Committee.            
 SB  89 - PERMANENT FUND BOARD MEMBERS & STAFF                               
 The next order of business to come before the House State Affairs             
 Committee was SB 89.                                                          
 CHAIR JAMES called on Senator Steve Rieger, sponsor of SB 89, to              
 present the bill.                                                             
 Number 2366                                                                   
 SENATOR STEVE RIEGER explained SB 89 was an act that was designed             
 to create continuity in the management of the Alaska Permanent Fund           
 Corporation.  The bill was prompted last year due to the 100                  
 percent turnover in the top management of the fund within the                 
 course of one year.  He called that an unhealthy situation for a              
 fund that was worth close to $19 billion.  The primary thrust of              
 the bill was aimed at the practice of dismissing the trustees when            
 there was a change in the Administration.  He cited Governors                 
 Hickel and Knowles both practiced the removal of the trustees                 
 during the transition.                                                        
 SENATOR RIEGER explained Section 1 changed the board from an even             
 to an odd number, from six to seven.  It changed it to one                    
 commissioner and six public members.  The Administration did not              
 support that change.                                                          
 Number 2467                                                                   
 SENATOR RIEGER moving forward, explained Section 2 added a small              
 qualification provision that at least one of the public members               
 should have recognized competence and wide experience in investment           
 portfolio management.                                                         
 Number 2479                                                                   
 SENATOR RIEGER moving forward, explained Section 3 was a staggered            
 term provision.                                                               
 Number 2482                                                                   
 SENATOR RIEGER moving forward, explained Section 4 was the heart of           
 the bill.                                                                     
 TAPE 96-55, SIDE B                                                            
 Number 0000                                                                   
 SENATOR RIEGER further explained Section 4 spelled out the cause              
 for the removal of a public member.  It addressed incompetency,               
 misfeasance and conviction of a crime.                                        
 Number 0027                                                                   
 SENATOR RIEGER moving forward, explained Section 5 strengthened the           
 fiduciary independence of the board by limiting the influence of              
 the Governor.                                                                 
 Number 0038                                                                   
 SENATOR RIEGER moving forward, explained Section 6 clarified that             
 the employees served at the pleasure of the board.  The                       
 Administration was opposed to this section also.                              
 Number 0071                                                                   
 SENATOR RIEGER moving forward, explained Section 7 also                       
 strengthened the fiduciary responsibilities of the board.                     
 Number 0077                                                                   
 REPRESENTATIVE GREEN wondered if the staggered terms would produce            
 an uneven number of members at a given time.                                  
 Number 0090                                                                   
 SENATOR RIEGER replied Section 3 stated that no more than two would           
 expire in one year compared to no more than one before.                       
 Number 0113                                                                   
 REPRESENTATIVE ROBINSON asked Senator Rieger to comment on the                
 other legislation that gave more power to the incoming Governor               
 regarding the appointment of boards and commissions.                          
 Number 0137                                                                   
 SENATOR RIEGER said SB 89 did not affect anybody in office now.  It           
 would affect future hypothetical situations.  He was concerned                
 about the rapid ability to take control of a $20 billion to $30               
 billion fund and do something to it that was not in the best long-            
 term interest of the state.  The best protection was staggered                
 terms for the members of the board.                                           
 Number 0193                                                                   
 REPRESENTATIVE WILLIS asked Senator Rieger if he had heard any                
 testimony from Dave Rose on this bill?                                        
 SENATOR RIEGER replied, "no."                                                 
 REPRESENTATIVE WILLIS said he was curious because Mr. Rose had been           
 so intimately connected with the program for so long.                         
 Number 0211                                                                   
 SENATOR RIEGER said he could not speak for Mr. Rose.  However, when           
 the Permanent Fund Corporation was established, Mr. Rose was part             
 of that organization.  The board of trustees at that time was very            
 emphatic about the staggered term provision.  He did not recall if            
 Mr. Rose opposed or supported that provision, however.                        
 Number 0243                                                                   
 REPRESENTATIVE ROBINSON asked Senator Rieger if the public members            
 on the board were increased to reach the uneven member number?                
 Number 0254                                                                   
 SENATOR RIEGER replied they were increased to reach the uneven                
 member level.  He said it was not a big deal to decrease the                  
 commissioner membership to one.  He was not sure why another                  
 commissioner was needed, however, other than the Commissioner of              
 the Department of Revenue.  Others believed that the commissioners            
 were appointed for their various expertise in other areas.  He                
 reiterated the Governor was concerned about reducing the appointed            
 commissioners from two to one.                                                
 Number 0286                                                                   
 REPRESENTATIVE OGAN asked Senator Rieger if the board members were            
 remunerated for their services?                                               
 Number 0292                                                                   
 SENATOR RIEGER replied they received an honorarium or daily payment           
 of $300 or $400.  He could not recall which amount was correct.               
 Number 0304                                                                   
 REPRESENTATIVE OGAN asked Senator Rieger how many days per year did           
 the board meet?                                                               
 Number 0308                                                                   
 SENATOR RIEGER replied approximately 20 to 30 days.                           
 CHAIR JAMES called on the first witness in Juneau, James Baldwin,             
 Department of Law.                                                            
 Number 0336                                                                   
 JAMES BALDWIN, Assistant Attorney General, Governmental Affairs               
 Section, Civil Division, Department of Law, explained the                     
 Governor's office asked him to come here today to let the committee           
 members know that it did not support the bill in its current form.            
 Certain provisions caused great concern.  He explained when the               
 permanent fund was originally established there was concern that it           
 maintained a certain amount of independence, but no so much                   
 independence that it was not responsive to the voters.  The one way           
 to ensure that it was responsive to the voters was to make it                 
 responsive to someone that was elected by the voters statewide, the           
 Governor.  Furthermore, it was also important that the Governor had           
 the removal power.  According to Alaska Statute, a Governor had to            
 establish in writing the reasons to remove a board member.  It was            
 not like cause, it just had to be done publicly and stated in                 
 writing.  Governor's had used that power in a wholesale fashion,              
 while other had not.  It did preserve one important aspect that the           
 board of trustees was responsible to an officer who was responsible           
 to the voters.  The proposed senate bill called for the removal due           
 to cause.  That would require a trial like proceeding.  It would be           
 a long involved process.  Furthermore, there was a certain degree             
 of ambiguity within the provision.  He read, "the failure of a                
 trustee to exercise prudent judgement in the affairs of the                   
 corporation...."  A lawyer would have a field day with that clause            
 because it would be hard to prove.  He further read, "conviction of           
 a crime that would cause a significant number of reasonably prudent           
 members of the public to distrust the trustee's ability to                    
 discharge the duties of the trustee."  If the board member was                
 doing something that the voters did not agree with, it would                  
 behoove the Governor to remove the member to make it responsive to            
 the will of the people.  That was the initial belief of the First             
 Alaska State Legislature.                                                     
 MR. BALDWIN further said that the Governor appointed two principle            
 department heads to the board.  The Commissioners were directly               
 appointed by the Governor, therefore, responsive to him and to the            
 voters.  He called it a blow to the responsiveness to reduce that             
 number to one.  The Governor believed it should remain at two.  He            
 stated it was possible to take the position that the bill was                 
 perpetuating the appointments of the Governor because it would be             
 his appointees that would be covered by the protections in the                
 bill.  However, the Governor did not believe that was the                     
 appropriate approach.  Furthermore, the philosophy in another bill            
 that was passed out of the House State Affairs Committee, HB 359,             
 went the other direction.  He understood it was passed to the House           
 Judiciary Committee where it received most of its consideration,              
 MR. BALDWIN further explained the Governor had the appointment                
 power and Section 5 attempted to place limitations on that                    
 appointment power.  The provisions limited the Governor's decision            
 to be based solely on the financial best interest of the fund.  He            
 wondered about appointing a hard working or honest person to the              
 board.  These individuals made good board members also.                       
 MR. BALDWIN further explained the controversy surrounding the                 
 removal of a high ranking investment officer from the board in the            
 past.  There were legal implications and he recognized that the               
 provisions in the bill tried to resolve that problem.  He believed            
 that it went too far, however.  The bill called for the staff to              
 serve at the pleasure of the board to negate at-will employees.               
 The state of Alaska had not been successful at winning these types            
 of law suits.  The language "at the pleasure of the board" was not            
 going to help the clerks and the secretaries.  It might help the              
 higher ranking policy making employees.  Maybe that was all that              
 the language intended to apply to, but it was more broadly stated             
 than that.                                                                    
 Number 0677                                                                   
 CHAIR JAMES asked Mr. Baldwin if he gave the same testimony today             
 in the Senate?                                                                
 Number 0684                                                                   
 MR. BALDWIN explained the Administration testified on the bill in             
 the Senate Finance Committee.  Unfortunately, the bill was amended            
 and the Administration was not able to testify on the amended                 
 version.  He took responsibility for that.                                    
 Number 0693                                                                   
 CHAIR JAMES announced, for the record, that it distressed her a               
 bill could move through the committee process and the Senate                  
 without taking the concerns of the Administration into                        
 consideration.  She understood why the Administration was concerned           
 about some of the provisions.  She could not understand why                   
 staggered terms were bad, however.  Furthermore, she could not find           
 any part of the bill that the Administration supported.  She                  
 reiterated she wondered if the testimony was considered in the                
 Senate.  She recognized that a piece of legislation opposed by the            
 Administration could still progress through the system.  That was             
 a political decision.  She reiterated she was distressed to hear              
 the opposition today.                                                         
 Number 0762                                                                   
 MR. BALDWIN replied, "I feel properly chastised."  It was not                 
 intentional "lying in the grass," however.  It was more of being              
 divided between too many tasks.  Nonetheless, he still agreed with            
 the analysis given earlier.  He stated the Governor was not opposed           
 to staggered terms, contrary to the belief of Chair James.  The               
 Governor was opposed to taking away the removal of a board member             
 by stating the reasons in writing.  The Governor was also opposed             
 to removing the second Commissioner from the board.  The Governor             
 would be willing to work with the sponsor.  He recognized it would            
 be hard to agree on, however.                                                 
 Number 0827                                                                   
 CHAIR JAMES said she was glad to hear him focus on the major                  
 concerns.  She initially believed the Administration was opposed to           
 the entire bill.  She accepted his apology for being tardy.  She              
 was not trying to be harsh.  She just wanted to express how she               
 felt for the record.                                                          
 Number 0861                                                                   
 REPRESENTATIVE PORTER explained the same thing happened to HB 359.            
 The bill was heard in the committees in the House for one month to            
 learn afterwards that the Administration had a lot of problems with           
 it.  House Bill 359 allowed for the removal of a board member at              
 the time of expiration for cause.  Senate Bill 89 also allowed for            
 the removal of a board member for cause.  He stated he was                    
 surprised that the Governor would be opposed to removal for cause.            
 According to SB 89, and the staggered term provision, a Governor              
 could remove members every year as their terms expired.                       
 Number 0921                                                                   
 MR. BALDWIN replied, "yes."                                                   
 REPRESENTATIVE PORTER stated a Governor could remove a member not             
 for cause but for a position, for example.                                    
 MR. BALDWIN stated a vacancy would be created, and the Governor               
 would fill that vacancy.                                                      
 REPRESENTATIVE PORTER said the Governor would have a lot of                   
 latitude in four years to change the composition of the board, but            
 at the same time it would not want turmoil surrounding the                    
 management of a $19 billion fund.  He reiterated he was surprised             
 of the position of the Governor.  The basic foundation of SB 89 was           
 for staggered terms to prevent turmoil.  That was a very viable               
 Number 0970                                                                   
 REPRESENTATIVE OGAN said he was impressed by the list of                      
 cosponsors.  As a freshman legislature, he appreciated the                    
 corporate experience of the other legislators.  The amount of money           
 involved here alarmed him, therefore, he appreciated the concept of           
 SB 89.                                                                        
 Number 1023                                                                   
 CHAIR JAMES wondered if two commissioners were necessary.  Senator            
 Rieger stated he did not have a real problem including two                    
 commissioners, except that he did not understand why any other                
 commissioner besides the Commissioner of the Department of Revenue            
 was necessary.  She further stated the language in the bill did not           
 preclude the average citizen from becoming a member of the board.             
 Number 1090                                                                   
 MR. BALDWIN replied the law mandated that the Governor state a                
 reason for the removal of a board member publicly.  The mandate was           
 created during the establishment of the Alaska Permanent Fund                 
 Corporation.  He wondered how the voters would ever influence the             
 policy making of the board if the members could only be removed for           
 cause and were subject to reappointment on a staggered basis.  The            
 board was the policy maker.  Therefore, the Administration believed           
 the current law provided for the opportunity to remain responsive             
 to the voters.                                                                
 MR. BALDWIN referred the committee members to page 2, lines 1 - 2,            
 and read, "and at least one of the public members must have                  
 recognized competence and wide experience in investment portfolio             
 management."  He stated only a handful of people in the state met            
 that criteria.  A limited pool existed of which most were located             
 in San Francisco, Los Angeles, New York, and Chicago.                         
 Number 1250                                                                   
 CHAIR JAMES replied, if only one had to met that criteria and two             
 existed in Alaska, there were options.  She felt strongly that some           
 of the members of the board must have a financial background.  She            
 agreed that honest citizens should also be able to be a part of the           
 board.  She did not want to fill the entire board with honest                 
 citizens, however.  A mixture of experiences were necessary to                
 create a good and responsive board.  She asked Mr. Baldwin again              
 why two commissioners were necessary?                                         
 Number 1330                                                                   
 MR. BALDWIN replied it was another safeguard that was created when            
 the Alaska Permanent Fund Corporation was established.  A                     
 commissioner served as a direct link to the Governor.  He explained           
 the second commissioner varied between the Department of Commerce             
 and Economic Development and the Department of Law.  At present the           
 second commissioner was from the Department of Commerce and                   
 Economic Development, William L. Hensley.                                     
 Number 1379                                                                   
 CHAIR JAMES said she did not have a problem including two                     
 commissioners.  She just wanted to hear the arguments from Mr.                
 Baldwin why they were necessary.                                              
 Number 1384                                                                   
 REPRESENTATIVE PORTER stated according to statute, a Governor may             
 remove a member of the board from office of which the reason must             
 be stated in writing.  There was no criteria for the removal,                 
 however.  A Governor could remove a member for parting his hair on            
 the wrong side, for example.  Furthermore, a commissioner would               
 vote according to the wish of the Governor.  He said, "you can't              
 have it both ways."                                                           
 Number 1443                                                                   
 MR. BALDWIN replied a Governor that removed a person for parting              
 his hair on the wrong side would not remain the Governor for very             
 REPRESENTATIVE PORTER said he stated that example facetiously, but            
 it could be the reason stated more articulately.                              
 MR. BALDWIN said in essence it was a removal at pleasure.                     
 REPRESENTATIVE PORTER said, "that's what it is exactly."                      
 Number 1463                                                                   
 REPRESENTATIVE ROBINSON referred the committee members to page 2,             
 lines 1 - 2.  She asked Mr. Baldwin if he would consider language             
 indicating a level of financial background rather than wide                   
 experience in investment portfolio management.  She stated it was             
 hard at times to find the right people to serve on a board or                 
 Number 1546                                                                   
 MR. BALDWIN explained when the Administration first testified on              
 the bill, it was critical of the removal of a board member.  The              
 Administration was against the language on page 2, lines 15 - 23,             
 because it broke new ground.  The Administration had not spent a              
 lot of time finding additional language, however.  It liked the               
 existing law.  Furthermore, regarding the limited pool of people              
 with the expertise to serve on the board, he was concerned about a            
 conflict of interest for those in the financial industry in Alaska            
 because the board recently started contracting instate.                       
 Number 1672                                                                   
 REPRESENTATIVE IVAN asked Mr. Baldwin if there had been instances             
 where the two commissioners were appointed to look out for the                
 interest of the Governor, or where the Governor tried to influence            
 the investment procedures?                                                    
 Number 1718                                                                   
 MR. BALDWIN replied he was not aware of any such instances.  The              
 board had functioned very well within its sphere of activity.  The            
 testimony from Senator Rieger was concerned because in the past a             
 couple of Governors removed all of the members to reflect their               
 philosophy of government.  He reiterated it was good to have the              
 board responsive to the voters.                                               
 Number 1764                                                                   
 CHAIR JAMES said the board should be responsive to the voters.                
 However, financial issues usually were not politically motivated.             
 She said people were either knowledgeable or not surrounding                  
 financial issues.  There was a perception by the public that there            
 were political reasons that were not rationale.  Therefore, a plan            
 was necessary to protect the public.  She was concerned about the             
 conflict of interest that Mr. Baldwin mentioned.  She was amenable            
 to change the language on page 2, lines 1 - 2.                                
 Number 1926                                                                   
 CHAIR JAMES announced she wanted to take action on SB 89 today.               
 Number 1958                                                                   
 SENATOR RIEGER explained in the early 1980's there was a candidate            
 for Governor that included the Alaska Permanent Fund Corporation as           
 part of his platform.  Therefore, there was the potential for that            
 to happen again.  He agreed with Representative Porter that the               
 heart of the bill was staggered terms.  He would not object,                  
 therefore, if the committee members wanted to change Section 1,               
 Section 4 or Section 6.                                                       
 Number 2076                                                                   
 REPRESENTATIVE ROBINSON asked Senator Rieger if he would like to              
 stay at seven members?                                                        
 SENATOR RIEGER replied, "yes."                                                
 REPRESENTATIVE ROBINSON asked Senator Rieger if he would shift from           
 six public members and one commissioners, to five public members              
 and two commissioners?                                                        
 SENATOR RIEGER replied he would support that change, if it removed            
 one of the objections from the Governor.  It was not worth fighting           
 Number 2101                                                                   
 REPRESENTATIVE ROBINSON referred the committee members to page 2,             
 lines 1 - 2.  She asked Senator Rieger if there was the possibility           
 to broaden the language to reach out to more Alaskans?                        
 Number 2165                                                                   
 SENATOR RIEGER replied he did not think it would be hard to find              
 the qualified individuals to serve on the board according to the              
 language in the bill, therefore, it was not necessary to change the           
 language.  He explained there were plenty of banks and financial              
 institutions in Alaska.  Furthermore, it was an honor and                     
 attractive to individuals in the financial market to serve on the             
 Number 2271                                                                   
 REPRESENTATIVE ROBINSON asked Senator Rieger if the bill addressed            
 the conflict-of-interest issue raised earlier by Mr. Baldwin?                 
 Number 2309                                                                   
 SENATOR RIEGER replied Section 7 covered that issue.  He explained            
 fiduciary responsibility required that a person acted solely in the           
 best interest of a fund.                                                      
 Number 2309                                                                   
 CHAIR JAMES asked Senator Rieger if he would be willing to change             
 the language in Section 1 to reflect "five" members of the public             
 and "two" commissioners?                                                      
 Number 2410                                                                   
 SENATOR RIEGER replied "yes."                                                 
 CHAIR JAMES called for a motion.                                              
 Number 2426                                                                   
 REPRESENTATIVE PORTER moved that the language in Section 1, page 1,           
 line 6 delete the word "one" and on line 8 change the word "six" to           
 "five."  (Amendment 1)  Hearing no objection, Amendment 1 was                 
 TAPE 96-56, SIDE A                                                            
 Number 0000                                                                   
 CHAIR JAMES stated she agreed with the opinion of Senator Rieger              
 regarding the language on page 2, lines 1 - 2.                                
 Number 0079                                                                   
 REPRESENTATIVE GREEN said $20 billion was at stake here, therefore,           
 financial experience was necessary.  He supported the language.               
 Number 0108                                                                   
 REPRESENTATIVE ROBINSON asked Senator Rieger if the staff members             
 had this type of expertise?                                                   
 SENATOR RIEGER replied, "I'm sure the investment staff did."                  
 REPRESENTATIVE ROBINSON said she did not want the public to                   
 perceive that the expertise was not there.                                    
 Number 0148                                                                   
 CHAIR JAMES replied the staff members were not the decision makers.           
 The board members were the decision makers.                                   
 Number 0162                                                                   
 REPRESENTATIVE ROBINSON wondered if there was a difference between            
 the language "investment portfolio management" and "investment                
 management?"  The language "investment management" would be a way             
 to expand the qualified pool.                                                 
 Number 0210                                                                   
 REPRESENTATIVE GREEN replied there were restriction on how much               
 money could be invested in growth funds, for example.  Therefore,             
 an investment portfolio expert could help a great deal more than an           
 investment counsellor.                                                        
 Number 0248                                                                   
 CHAIR JAMES stated it was important to remember that each member of           
 the board had only one vote so the deliberation was important.                
 Therefore, it was necessary to have a person with that type of                
 expertise.  She was comfortable with the language.                            
 Number 0336                                                                   
 REPRESENTATIVE ROBINSON stated she was not against the intent of              
 the language in Section 2.  She wanted to broaden the ability to              
 seek out more Alaskans that had good investment management skills.            
 She did not have enough expertise to know if it was really a                  
 problem, however.                                                             
 Number 0381                                                                   
 SENATOR RIEGER replied the word "portfolio" was key because one of            
 the main duties of the board was asset allocation.  Professionals             
 were hired for the investments.  He reiterated he was not concerned           
 about finding a person to meet the qualifications.                            
 Number 0498                                                                   
 REPRESENTATIVE PORTER said he saw the language in Section 6 as                
 strengthening the notions of "serving at the pleasure of the                  
 board," and serving two year contracts.                                       
 Number 0566                                                                   
 CHAIR JAMES said it was difficult for her to understand how the               
 state got into this type of a problem because employees should                
 understand the terms of their hiring conditions.  A person hired              
 from the register should know that he was not subject to the whim             
 of anyone.  A person hired by an appointment should know that he              
 was subject to the whim of anyone.  She agreed with Representative            
 Porter that Section 6 clarified that issue.                                   
 Number 0621                                                                   
 REPRESENTATIVE GREEN said upon an appointment it usually indicated            
 in the contract that one "served at the pleasure."                            
 Number 0644                                                                   
 REPRESENTATIVE GREEN moved that CSSB 89(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.                                                            
 CHAIR JAMES called on Dwight Perkins, Department of Labor, to                 
 explain his concerns regarding CSHB 483(L&C) (9-GH2027/C).                    
 Number 0723                                                                   
 DWIGHT PERKINS, Special Assistant, Office of the Commissioner,                
 Department of Labor, asked the committee members to waive CSHB
 483(L&C) (9-GH2027/C) from the House State Affairs Committee once             
 it was assigned to it.  He explained it increased the weekly                  
 benefit amount for unemployment insurance from the maximum of $212            
 to $248.  The weekly benefit amount had not increased since 1990.             
 He referred the committee members to a handout titled "Employer and           
 Employee Contributions under the Proposal to Cap WBA at $248 in               
 1997, Change the Employer/Employee Tax Share to 80/20, and Round              
 the Employee Tax to the nearest 100th %."  He explained currently             
 the employer paid 82 percent of the cost while the employee paid 18           
 percent.  The proposal in CSHB 483(L&C) reduced the employer                  
 contribution and increased the employee contribution.  This created           
 a net savings of $15 per employee per year to the employer.  The              
 additional cost to the employee was $20 per year.  He further                 
 explained the fiscal note was not seeking an additional                       
 appropriation.  The amounts shown were additional charges against             
 the payroll which would occur quarterly as claims were filed.  It             
 did not affect the general fund.                                              
 Number 0998                                                                   
 CHAIR JAMES responded that she was aghast that the employee paid so           
 little for unemployment insurance.  She called it a token.  Yet,              
 individuals felt that they were entitled to it because they paid              
 for it.  She had no problem reducing the contributions from the               
 employers and increasing the contributions from the employees.                
 Number 1056                                                                   
 MR. PERKINS replied Alaska was only one of four states that did pay           
 in the nation.                                                                
 Number 1093                                                                   
 REPRESENTATIVE PORTER stated the House Labor and Commerce Committee           
 and the Department of Labor worked closely together on this bill.             
 He voted in favor of the bill.                                                
 Number 1122                                                                   
 CHAIR JAMES asked the committee members if there was any objection            
 to waiving the bill from the House State Affairs Committee once it            
 was assigned to it?  There was no objection.                                  
 Number 1183                                                                   
 CHAIR JAMES adjourned the House State Affairs Committee meeting at            
 9:58 a.m.                                                                     

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