Legislature(1995 - 1996)
04/18/1996 08:08 AM House STA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ 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
SHORT TITLE: INTERFERENCE WITH DISTRIB. OF FREE PAPERS
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
SHORT TITLE: PERMANENT FUND BOARD MEMBERS & STAFF
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,
however.
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
members.
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
priority?
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
process.
Number 1513
REPRESENTATIVE GREEN wondered how a case like this would ever be
prosecuted.
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
behavior.
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
Southeast.
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,
however.
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
goal.
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
long.
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
commission.
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
over.
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
board.
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
adopted.
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.
ADJOURNMENT
Number 1183
CHAIR JAMES adjourned the House State Affairs Committee meeting at
9:58 a.m.
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