Legislature(1999 - 2000)
04/13/2000 09:05 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
April 13, 2000
9:05 AM
TAPES
SFC-00 # 86, Side A & B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:05 AM
PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell,
Senator Al Adams, Senator Pete Kelly, Senator Loren Leman,
Senator Wilken, Senator Phillips, Senator Green, Senator
Donley.
Also Attending: KATELYN MARKELY, Development Specialist,
AIDEA; VERN JONES, Chief Procurement Office, Department of
Administration; RICK FULLER, Commissioner's Office,
Department of Public Safety; REPRESENTATIVE TOM BRICE;
GAYLE GARRIGUES, Staff to Representative Tom Brice
REPRESENTATIVE GENE THERRIAULT; JOE BALASH, Staff,
Representative Therriault; MIKE TIBBLES, Staff to
Representative Therriault; Steven Daugherty, Assistant
Attorney General, Natural Resources, Department of Law; PAT
GALVIN, Director, Division of Governmental Coordination,
Office of Management and Budget; JACK KREINHEDER, Senior
Policy Analyst, Office of Management and Budget, Office of
the Governor; KEN FREEMAN, Executive Director, Resource
Development Council; BOB STYLES, Senior Vice President,
Resource Development Council and President, Alaska Coal
Association.
Attending via Teleconference: From Anchorage: CHESTER
WEGER, Assistant State Fire Marshall, Department of Public
Safety; JANICE ADAIR, Director, Environmental Health,
Department of Environmental Conservation; From Kenai: SCOTT
WALDEN, City of Kenai, Fire Department; JASON ELSON, Fire
Chief, City of Kenai; From Kodiak: MIKE DOLPH, President,
Fire Chiefs Association.
SUMMARY INFORMATION
SB 261-PREVENTION OF NEEDLE & SHARPS INJURIES
This bill was scheduled but not heard.
SB 248-AIDEA: BONDS & RURAL DEVELOPMENT
An AIDEA representative testified. This amended bill was
moved from committee.
SB 220-PROCUREMENT PREFS:PARTNERSHP/LTD LIAB CO
The Department of Administration testified. This amended
bill was moved from committee.
HB 3-DRUGS: LISTED CHEMICALS/METHAMPHETAMINE
The sponsor testified, along with the Department of Public
Safety. The amended bill was moved from committee.
HB 380-INSURER TAX CREDIT: FIRE STANDRDS COUNCIL
The Department of Public Safety testified, along with the
general public. The amended bill was moved from committee.
HB 361-FEES FOR STATE SERVICES
The sponsor testified, along with various state agencies.
The bill was held in committee.
SENATE BILL NO. 248
"An Act relating to the financing authority, payment
in lieu of tax agreements, and tax exemption for
assets and projects of the Alaska Industrial
Development and Export Authority; relating to renaming
and contingently repealing the rural development
initiative fund within the Department of Community and
Economic Development, and establishing the rural
development initiative fund within the Alaska
Industrial Development and Export Authority; and
providing for an effective date."
Co-Chair Torgerson noted the concern by committee members
regarding Alaska Industrial Development and Export
Authority (AIDEA) having unlimited authority to transfer
assets into the new Economic Development Initiative Fund.
He continued that at this committee's last hearing, it was
decided that a $2 million cap would be workable.
KATELYN MARKELY, Development Specialist, AIDEA, responded
that this entity was comfortable with this $2 million cap.
Co-Chair Parnell made a motion to move Amendment #1, which
reads as follows:
Page 4, line 20, following "deposited into the fund by
the authority."
Insert "The assets transferred to the fund by the
authority may not exceed $2 million."
Co-Chair Torgerson hearing no objection, Amendment #1 was
ADOPTED.
Co-Chair Parnell made a motion to move SB 248 from
committee with individual recommendations and a Department
of Community and Economic Development, zero fiscal note
from committee. Hearing no objection SB 248 was MOVED FROM
COMMITTEE.
SENATE BILL NO. 220
"An Act clarifying the requirements for limited
liability companies and partnerships to qualify for
the Alaska bidder's and disability preferences under
the State Procurement Code; and providing for an
effective date."
VERN JONES, Chief Procurement Officer, Department of
Administration referred to Amendment #1, as addressed by
Co-Chair Torgerson. He stated that the department supports
this change.
Co-Chair Parnell made a motion to move Amendment #1, which
reads as follows:
Page 2, line 5:
Delete "directors"
Insert "members"
Page 2, line 22:
Delete "directors"
Insert "members"
Co-Chair Torgerson hearing no objection, Amendment #1 was
ADOPTED.
Co-Chair Parnell made a motion to move SB 220 with
individual recommendations and a Department of
Administration, zero fiscal note from committee. Hearing
no objection SB 220 was MOVED FROM COMMITTEE.
CS FOR HOUSE BILL NO. 3(JUD)
"An Act relating to controlled substances and to the
possession of certain chemicals."
REPRESENTATIVE TOM BRICE, as sponsor stated that this
legislation bolsters law enforcement's efforts to raid
methamphetamine labs before the drug goes into production.
He added that this effort would elevate
the existing "intent" statute to a higher level of penalty.
GAYLE GARRIGUES, Staff to Representative Tom Brice stated
that this legislation would call for penalties of a Class A
nature.
Senator Green asked generally about users of these same
chemicals, who might legally possess these substances. She
wondered about these individuals being in harms way of
false accusations.
Representative Brice responded that initially there had
been concerns by the National Drug Manufacturers
Association regarding the potential of this legislation.
He added that individuals could possess 10 boxes of Sudafed
legally, for example. He stated that these same 10 boxes
cannot be possessed though, along with the glassware and
the remaining components to create methamphetamines with
the intent to manufacture.
Co-Chair Parnell made a motion to adopt Amendment #1, which
reads as follows:
Page 1, line 2, following "chemicals":
Insert "; and providing for an effective date"
Page 2, following line 31:
Insert a new bill section to read:
"*Sec. 4. AS 11.71.170(b) is amended by
adding a new paragraph to read:
(29) ketamine hydrocholride."
Page 4, following line 23:
Insert a new bill section to read:
"*Sec. 7. This Act takes effect immediately
under AS 01.10.070(c)."
Co-Chair Torgerson hearing no objection, Amendment #1 was
ADOPTED.
RICK FULLER, Commissioner's Office, Department of Public
Safety explained the term ketamine hydrocholride for the
committee. He explained that this legislation would
classify this substance as a "controlled substance."
Senator Donley made a motion to move HB 3 from committee
with individual recommendations and Public Safety, Criminal
Division and Public Defender Agency, zero fiscal notes.
Hearing no objection HB 3 was MOVED FROM COMMITTEE.
CS FOR HOUSE BILL NO. 380(L&C)
"An Act relating to contributions to the Alaska Fire
Standards Council and to an insurer tax credit for
those contributions; and providing for an effective
date."
CHESTER WEGER, Assistant State Fire Marshall, Department of
Public Safety testified via teleconference from Anchorage
to answer any pertinent questions. He stated that the
Division of Public safety supports this legislation.
Senator Adams questioned the capping of credits at $300,000
that would be funneled into this corresponding fund.
Co-Chair Torgerson responded that they would have to get
back to this question once the Division of Insurance was
available for comment.
SCOTT WALDEN, City of Kenai, Fire Department, testified via
teleconference from Kenai in support of this legislation.
JASON ELSON, Fire Chief, City of Kenai, testified via
teleconference from Kenai. He stated that this legislation
would be a great service to the state of Alaska by
providing professional standards for fire fighters.
MIKE DOLPH, President, Alaska Fire Chiefs Association
testified via teleconference from Kodiak in support of this
legislation. He voiced his appreciation for the
committee's persistence for the passage of HB 380.
MIKE MCGOWAN, Past President, Alaska Fire Chiefs
Association testified via teleconference from Fairbanks in
support of HB 380. He reminded the committee about the
grim fact that Alaska has the worst fire laws and fire
fatality record in the United States. He stressed the
necessity of a Firemen Standards Council.
Co-Chair Torgerson stated that when the committee heard
information about this legislation before, there was a
concern about an unlimited contribution in conjunction with
a fiscal note that outlined operation costs at an amount of
$225,000. He detailed the decision to cap this amount at
$300,000. He then read the language of an amendment that
would provide for this stipulation.
A taxpayer may not claim a contribution as a
credit under (A) of this section, unless the taxpayer
applies to the director for pre-qualification of the
contribution as a tax credit and receives written
notice from the director that the contribution pre-
qualifies for the tax credit. The director shall
allow pre-qualified tax credit for contributions under
this section in order that the director receives
application by taxpayers, but may not provide notice
of pre-qualification if the taxpayers contribution
would cause the total contribution made in that
calendar year to exceed $300,000.
REPRESENTATIVE GENE THERRIAULT stated that he understood
the objective of this amendment. He noted the
legislature's power to appropriate this money initially,
but understood the reasons to cap this money at the same
time. Representative Therriault, in response to a question
posed by Senator Green, stated that there was a tax credit
mechanism for support for universities in the State of
Alaska. He continued that the information he received
indicated that insurance companies, doing business in the
State of Alaska, do not avail themselves of this tax credit
mechanism.
Senator Adams stated his support for this legislation, but
he wanted some assurances that the program created by it
works. He worried about the $300,000 cap. He referred to
page two, line number two. He pointed out that a
contribution claimed by the taxpayer as a credit under this
section cannot be claimed as credit or when combined with
credits taken during a taxpayer's tax year provided by
particular statutes. He pointed out that there are a
number of these latter statutes that exceed a $500,000 cap
and wondered about the rational of a $300,000 as provided
by this current legislation.
JOE BALASH, Staff, Representative Therriault acknowledged
this concern about a "universe" of tax credits allowed and
stated that the university is already absorbing most of
these. He stated that Senator Adams' questions prompt the
logical question about whether there is any money left over
for the Fire Chiefs.
Co-Chair Torgerson stated that he thought this credit would
be in addition to what might be applied to the university.
Representative Therriault responded that the credit must be
applied to one or the other and referred to language on
page one, lines 13 - 14, and noted that these percentages
mirror the current university mechanism. He continued that
these credits for either entity is not preferable to the
other, but rather, place them on a level playing field.
Senator Donley made a motion to adopt SCS CS HB 380, 1-
LS1398\K. Hearing no objection, it was so ADOPTED.
Senator Donley made a motion to move SCS CS HB 380 from
committee with individual recommendations and Department of
Community and Economic Development, zero fiscal note.
Hearing no objection, the bill was MOVED FROM COMMITTEE.
HOUSE BILL NO. 361
"An Act relating to charges for state services;
requiring that fees levied by resource agencies for
designated regulatory services be based on the actual
and reasonable direct cost of providing the services,
except in the case of certain negotiated or fixed
fees; relating to negotiated or fixed fees of resource
agencies; relating to invoices for designated
regulatory services; establishing a petition process
regarding fees charged by resource agencies for
regulatory services; and providing for an effective
date."
Representative Therriault, as sponsor stated that he had
been working with the Resource Development Council (RDC) to
try to bring under control the fees charged by agencies for
permits. He continued that the RDC and resource companies
are not opposed to paying fees for the state services
received, but they would like some assurance that the money
paid is actually linked somehow to the work being performed
in relation to a permit's issuance. He stated that this
legislation provides assurance mechanisms to the industry.
He then outlined a schedule of fees charged as provided for
in this current legislation.
MIKE TIBBLES, Staff to Representative Therriault stated
that the fees levied by resource agencies are required to
establish wherever possible, as fixed. He continued that a
fee was not to exceed an estimated average, reasonable and
direct cost incurred by the resource agency in providing
the service. He noted that for those instances where a
fixed fee is not appropriate, this legislation allows for a
process where the industry may petition for a negotiated
agreement. He summed up by stating that if this negotiation
fails, it would fall back to a time and expense billing.
He then summarized the section of this legislation dealing
with invoices.
Senator Green asked for a typical example, of permit
negotiations that takes place among the various agencies.
Mr. Tibbles responded that the agencies that this
legislation affects are the Department of Environmental
Conservation, Department of Fish and Game, and Department
of Natural Resources, with an emphasis on water and solid
waste issues.
Co-Chair Torgerson referred to page four, lines 23 - 24,
and noted that this language does not reference the
Executive Procedures Act. He asked what was being left out
of this section, which reads as follows:
(f) No action taken by a resource agency or the
office of management and budget under (c) of this
section is subject to AS 44.62 (Administrative
Procedure Act).
Mr. Tibbles responded that the language addressed a concern
by the Department of Law, and this section only refers to
the provisions under Subsection (c) on the previous page in
the event of a resource agency petition for a single
project fee. He clarified that with the use of the word
"petition," this section makes it absolutely clear that
this is not a petition to adopt new regulations.
Senator Phillips referred to page 2, line 7, which reads:
A fee or other charge that is set by regulation
may no exceed the estimated actual costs of the state
agency in administering the activity or providing the
service unless otherwise provided by the statute under
which the regulation is adopted;
Senator Phillips felt that he could foresee an estimate of
costs being made and then for whatever reasons, these costs
being exceeded.
Mr. Tibbles responded that this language was already in
existing law and added that this section was added for the
exemption of fixed fees related to negotiated agreements.
Co-Chair Torgerson referred to language on page 2, line 14,
which reads as follows:
(b) Money collected for the state shall be
deposited by the collector in the nearest bank to the
account of the Department of Revenue when the
Department of Revenue directs this to be done.
Co-Chair Torgerson wondered if this was standard language.
Mr. Tibbles responded that this language could also be
found in existing statute.
Senator Leman referred to this legislation's fiscal notes
and wondered if there might be a duplication of efforts
between the Civil Division, Department of Law and Office of
Management and Budget.
Mr. Tibbles responded that this legislation allowed for a
$3 million dollar fiscal note originally. He added that he
did not necessarily understand the need for reviews, or
appeals within the first year as required by the Office of
Management and Budget and the Department of Law if this
legislation went into effect.
JANICE ADAIR, Director, Environmental Health, Department of
Environmental Conservation testified via teleconference
from Anchorage. She stated that it was clear that the
state needs a rational basis for setting permit fees. She
added that the department felt that equity was a
cornerstone of cost and to the extent there is no equity,
there should be a rational basis for such. She defined
equity as the percentage of program supported by fees and
by general funds. She gave percentages of how fees and
general funds are allocated throughout various programs.
She pointed out how crucial it was that funding of the
fiscal notes enable the departments to implement
corresponding programs. She stressed that with the
implementation of fixed permits fees, it will be necessary
to account for program costs more intricately.
STEVEN DAUGHERTY, Assistant Attorney General, Natural
Resources, Department of Law spoke to the fiscal note as
being incorrect. He referred to a revised fiscal note,
dated March 22, 2000, which is considerably lower. He then
gave a breakdown of the corresponding costs and reasons why
some of the amounts seem exorbitant. He summarized the
procedure for the review of pertinent regulations by the
Department of Law.
Tape: SFC - 00 #86, Side B, 9:58 AM
PAT GALVIN, Director, Division of Governmental
Coordination, Office of Management and Budget, stated that
the department had failed to recognize the effective date
of this legislation. He gave a justification of the
funding amounts outlined in the corresponding fiscal note.
He referred to Subsection C of the legislation regarding an
opportunity for an entity to petition, as further
justification for costs outlined in the corresponding
fiscal note. He then referred to the appeals process
outlined on page five, lines 11 - 18, in this same
subsection. He stated that the Office of Management and
Budget would perform these appeal duties.
Senator Leman asked how many petitions the departments
would expect to receive.
Mr. Galvin responded that the departments could not know
for sure how many of these petitions would be forthcoming,
but realistically the amount would probably not be very
large.
Senator Leman concurred with this low volume and wondered
why the proposal of two, half-time positions to fulfill
these duties was being considered. A conversation ensued
between Mr. Galvin and Senator Leman regarding the
justification for these positions.
Senator Wilken quoted a section of the fiscal note, which
reads, "In addition the bill provides that any business or
an individual can petition," and asked for an example of
how this would work.
Mr. Galvin responded that if a project required multiple
permits, and a petition directed to various departments
results, then a standard fee could be attributed to the
process. He continued, that in the future, similar fees
can be attributed to similar projects. He used the example
of where a general permit requirement would apply, such as
for "temporary camps," related to exploration activities.
JACK KREINHEDER, Senior Policy Analyst, Office of
Management and Budget, Office of the Governor responded to
the two, one-half time positions accounted for in the
Office of Management and Budget fiscal note. He noted that
currently there are no available individuals to perform
these related duties. He pointed out that these
corresponding petition reviews must be performed within 30
days.
KEN FREEMAN, Executive Director, Resource Development
Council stated that his organization was tasked with
building industry-wide consensus on legislation related to
departmental permit fees. He then gave an historical
summary of this present legislation. He stated that his
organization supports SB 361 and noted those state
agencies, which the Resource Development Council has been
designated to worked with.
BOB STYLES, Senior Vice President, Resource Development
Council and President, Alaska Coal Association referred to
the example of "temporary camps" and noted that anytime a
project affects a coastal zone, the Resource Development
Council is automatically involved because they are required
to go through the coastal zone review process. He added
that one of the key elements in moving towards a single fee
permit approach is to attempt to categorize related
projects, which have a consistent set of permits required
for conducting the corresponding work.
Co-Chair Torgerson responded that he would explore taking
the Office of Management and Budget out of this legislation
completely. He noted that the intent of this legislation
is to set consistent permit fees and he questioned the
validity of challenging already agreed upon costs for
permitting. He stated that he did not see the need for
additional series of reviews above what the Commissioner
deems appropriate.
Mr. Freeman stated that some of the Council members would
agree with this possibility, but on the other hand, these
same individuals might appreciate a second opinion from the
Office of Management and Budget.
Mr. Tibbles responded that the possibility of removing
Office of Management and Budget from this process had yet
to be discussed by Representative Therriault's office. He
spoke to reducing the amount of employees from two to one,
who would travel to the field for possible project reviews
under the budget perimeters allowed.
Co-Chair Torgerson ordered that SCS CSHB 361 be HELD in
committee.
ADJOURNED
Senator Torgerson recessed the meeting at 10:30 AM until
6:00 PM.
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