Legislature(1993 - 1994)
04/15/1994 09:05 AM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 15, 1994 9:05 a.m. TAPES SFC-94, #62, Side 1 (000-end) SFC-94, #62, Side 2 (575-276) CALL TO ORDER Senator George Jacko, Vice-Chairman convened the meeting at approximately 9:05 a.m. PRESENT In addition to Vice-chair Jacko, Senators Kelly, Rieger, and Sharp were present. Co-chair Frank arrived as the meeting was in progress. Co-chair Pearce and Senator Kerttula were attending an ethics committee meeting and were not present at Senate Finance. ALSO ATTENDING: Attorney General Bruce Botelho; Harry Noah, Commissioner, Dept. of Natural Resources; Cheryl Frasca, Office of the Governor; Sharon Barton, Director, Division of Administrative Services, Dept. of Administration; Don Wanie, Director, Division of Finance, Dept. of Administration; Ken Lea, Supervisor, Southeast Region, Division of Fire Prevention, Dept. of Public Safety; Kit Ballentine, Acting Director, Division of Environmental Health, Dept. of Environmental Conservation; Deena Henkins, Chief, Drinking Water and Water Treatment Section, Division of Environmental Quality, Dept. of Environmental Conservation; Len Verrelli, Chief, Air Quality Management Section, Dept. of Environmental Conservation; Mike Greany, Director, Legislative Finance Division; and aides to committee members and other members of the legislature. SUMMARY INFORMATION SB 67 - MENTAL HEALTH TRUST AMENDMENTS Discussion of land issues was had with Attorney General Bruce Botelho and Commissioner Harry Noah of the Dept. of Natural Resources. The bill was subsequently HELD in committee for further consideration. SB 376 - STATE AGENCY FEES AND COLLECTIONS A sectional overview was presented by Cheryl Frasca, Kenneth Lea, Kit Ballentine, Deena Henkins, and Len Verrelli. The bill was HELD in committee for further review. SB 377 - STATE AGENCY FISCAL PROCEDURES A sectional overview was provided by Cheryl Frasca, Don Wanie and Sharon Barton. The bill was subsequently HELD in committee for further review. SB 67 - MENTAL HEALTH TRUST AMENDMENTS An Act amending provisions of ch. 66, SLA 1991, that relate to reconstitution of the corpus of the mental health trust and to the manner of enforcement of the obligation to compensate the trust; and providing for an effective date. Vice-Chairman Jacko directed that CSSB 67 (Fin) be brought on for discussion. BRUCE BOTELHO, Attorney General, Dept. of Law; and HARRY NOAH, Commissioner, Dept. of Natural Resources, came before committee. Commissioner Noah directed attention to the land list (copy appended to these minutes as Attachment A) associated with reconstruction of the mental health trust. The Attorney General provided a recap of the current proposal under consideration by parties to the litigation. He referenced a handout (copy appended as Attachment B) and noted specifically the schedule of events on page 3. Changes embodied within SB 67 are intended to bring closure to the mental health controversy through either resolution or settlement. Settlement involves agreement of all parties to the litigation. Resolution (a legislative fix) presupposes that not all parties will agree. SB 67 reconstitutes the trust via three basic components: 1. Restoration, to the extent possible, of original mental health lands to the trust. 2. Substitution of additional lands to the trust to make up the difference between the original 1 million acre trust and lands that are restored. 3. Cash payment reflecting the fair market value of lands that have been sold. If fewer than all parties agree to the settlement, the bill would provide cash, substitute lands, and restoration. The state retains the ability to set off, as the Supreme Court in the Weiss decision directed was possible, the $1.3 billion the legislature has appropriated for mental health programs since 1978. That means the state would continue to litigate the question of whether the state has fully satisfied the obligation of reconstituting the trust. Further, everything done with regard to Ch. 48 and Ch. 66 would vanish, and the state would no longer set aside 6% of its general fund receipts for mental health programs. If all parties agree, the cash, substitute lands, and restoration of original mental health trust lands become part of the bargain as well as benefits derived from the trust authority embodied in Ch. 66. That authority allows the mental health community to make recommendations that are "for the most part binding on the Governor and the legislature with respect to earnings." Additional program improvements are embodied in Ch. 66, and a trust fund, administered by the authority, would be established. If SB 67 is enacted, the state expects to "walk away from the mental health controversy now and forever." Commissioner Noah directed attention to page 4 of the second handout (Attachment B) and noted assumptions used in reconstruction of the mental health lands trust. He then directed attention to the first handout (Attachment A) and explained that land is listed by district. He cautioned that the handout was rapidly compiled and directed attention to associated maps and noted inaccuracies such as designation of land within the Pt. MacKenzie agricultural area as original mental health trust land when the intent is for the subsurface estate only to return to the trust. The surface estate falls within the "sold" lands category. Commission Noah voiced his anticipation that, as part of ongoing negotiations, the land list may be reduced to accommodate concerns the department was not aware of when the list was compiled. Commissioner Noah next recited assumptions used in reconstruction of the mental health lands trust as set forth on page 4 of the second handout (Attachment B). He stressed that the $1.3 billion set-off has not been used in the present proposal. In discussions of value, the $1.3 billion would be available to the court to deduct from claims that the trust has not been adequately compensated. Directing attention to page 5 of Attachment B, Commissioner Noah explained that of the original 1 million acre trust, 466,180 acres will return while 530,865 acres are not available for return. In addition, approximately 98,398 acres of subsurface only land are available for return. Mental health lawyers initially identified 525,000 acres they felt were suitable as potential substitute lands. DNR review and public comments pared the list to 356,884 acres. An additional 127,037 acres of subsurface only values have also been identified that could be returned to the trust through substitute lands. The final tally evidences total estate lands of 826,364 acres, consisting of 446,180 acr/es of original land and 360,184 acres of replacement land. Split estate lands total 225,435 acres, comprised of 98,398 acres of original lands and 127,037 acres of replacement land. Commissioner Noah next directed attention to large maps of original lands that would and would not return to trust as well as proposed substitute lands. Subsurface estate lands are distinguished as either mineral and/or hydrocarbon lands. Hydrocarbon only lands are associated with the original mental health trust. Discussion followed between Commissioner Noah and Senator Jacko regarding subsurface rights. The Commissioner explained that the subsurface owner would have to secure approval from the surface owner to come on to the lands and disturb them. Senator Rieger requested detailed information on legislatively designated areas. He then directed attention to the initial handout (Attachment A) and inquired concerning the status of Telephone Hill in Juneau, Commissioner Noah explained that the City and Borough of Juneau has spent considerable sums securing the site for a new state office building. Municipalities all had concerns regarding certain parcels. Consideration was given to instances where municipalities had expended considerable sums "over and above just having vacant land . . . ." The Commissioner then highlighted the subport area in Juneau which he described as under utilized because the water front property is only used for storage. Since there is great potential for higher use of this valuable property, it was designated for inclusion within the trust. In response to a question from Senator Sharp concerning state lands in the area of Circle Hot Springs, Commissioner Noah explained that land listed on Attachment A reflects more controversial parcels. Great amounts of land are not listed. Commissioner Noah next spoke to the status of negotiations. He attested to discussions in "tremendous detail," over the past six to seven weeks, in an attempt to reach a basic agreement everyone could support. He then voiced his belief that "We're pretty close on the land list," if we could agree on the money. If the current situation unravels, it will be because of the amount of money requested or control over mental health budgets. Commissioner Noah acknowledged that he was less optimistic a true settlement could be reached because of the number of individuals and groups involved in the issue. Senator Rieger inquired concerning the type of budgetary control sought by the mental health community. Commissioner Noah explained that the trust authority would like to have control over both the trust fund and general fund dollars for mental health. The authority would like to tell the legislature how the money should be spent. If the Governor or legislature deviates from that plan, a finding would have to be rendered detailing why another course was taken. Senator Rieger asked if the authority also wants control of land management. Commissioner Noah responded affirmatively. Senator Kelly asked if the trust authority is well established. Attorney General Bruce Botelho explained that it does not exist at the present time. It is embodied within Ch. 66 which has not yet become effective due to lack of approval of the underlying settlement. SB 67 would set up the three-member board. Board membership is dictated by professional qualifications and recommendations from constituents in the mental health community. In function it would be similar to the permanent fund board. Commissioner Noah described the state approach which calls for DNR to act as the "hands and feet" for the group in terms of land management. The board would ultimately make the decisions. Moneys would be invested with the permanent fund corporation. Commissioner Noah observed that while there are advantages to establishment of the trust authority, the mental health enabling act did not require development of such an authority. Co-chair Frank directed that the meeting be briefly recessed prior to proceeding with remaining agenda items. RECESS - 9:35 A.M. RECONVENE - 9:50 A.M. SENATE BILL NO. 376 An Act relating to fees charged by state agencies for certain services and to reimbursement for expenses incurred by the state in providing certain services; and providing for an effective date. Upon reconvening the meeting, Co-chair Frank directed that SB 376 be brought on for discussion. CHERYL FRASCA, Office of the Governor, came before committee. She explained that SB 376 would implement "several fee changes to existing law." She then commenced a sectional review: Sec. 1. Allows the Dept. of Revenue to charge a fee for alcohol- server awareness courses. Last year the legislature passed legislation requiring alcohol servers to complete an awareness course. Sec. 2. Provides the Dept. of Public Safety authority to promulgate regulations and charge fees for permits to those servicing portable fire extinguishers and those who design, install and service fire alarm systems. KENNETH LEA, Deputy Fire Marshal, Dept. of Public Safety, came before committee in response to questions from Co-chair Frank. He explained that permitting was established at the request of industry. An ad hoc committee suggested collection of an associated fee. Mr. Lea voiced need to maintain quality control over both those who design and service fire systems. During the transition period of June 10, 1993, through June 10, 1996, anyone who is presently doing this type of work in Alaska may obtain a permit based on past experience. New people in the trade will be required to demonstrate proficiency by documenting past experience and passing a nationally recognized engineering technician certification test. Further discussion followed regarding fees associated with various permits as well as the length of time for which the permit would be good. Additional discussion ensued regarding the public process associated with issue of regulations establishing the proposed fees. Mr. Lea estimated that fees would generate $29.2 for fire extinguishers and $38.5 from fire alarm systems. Cheryl Frasca directed attention to information set forth on accompanying fiscal notes. Co-chair Frank asked that Mr. Lea provide written information on the interrelationship between the permit for fire sprinkler systems and the mechanical administrator permit. Sec. 3. Allows the Dept. of Public Safety to charge a fee for for permits issued to those who use dangerous fireworks displays. Approximately $3.0 is expected to be generated in FY 96 as a result of this fee. End: SFC-94, #62, Side 1 Begin: SFC-94, #62, Side 2 Co-chair Frank stressed need for language within the bill to ensure that fees bear a strict relationship to costs of administration of permit programs. Ms. Frasca noted a similar provision relating to program receipts. Departments are not to make a profit from program receipts that support a program. Sec. 4. Allows the Dept. of Public Safety to set in regulations the fee charged for retail fireworks permits. The current statutory fee for those who sell fireworks is $10. Sec. 5. Allows the Dept. of Public Safety to set in regulations the fee charged for wholesale fireworks permits. The statutory fee is presently $50. Co-chair Frank noted information indicating that the proposal is for a wholesale permit at $500 and a retail permit at $100. He again stressed need to ensure a strict relationship between the cost of the permit program and the fee paid. Taxing of an activity represents separate policy. Sec. 6. Allows the Dept. of Public Safety to increase fees for driver training school and instructor licenses. The present fee is $25 for training schools. That would increase to $100. Instructor licenses are now $5. They would increase to $25. Sec. 7. Allows the Dept. of Corrections to seek payment for medical care from third parties such as insurance companies, the veterans administration, Indian health services, or other federal agencies. Sec. 8. Allows the Dept. of Environmental Conservation to charge for direct costs associated with pesticide registration, subdivision plan review, bank loan audits, analysis of water systems, and regulation of motor vehicle fuels. Senator Sharp raised concern regarding indirect costs. Ms. Frasca explained that questioned language was contained within a House version of the bill. KIT BALLENTINE, Acting Director, Division of Environmental Health, Dept. of Environmental Conservation, concurred. She further advised of discussion in House hearings regarding removal of the indirect charge. Cheryl Frasca attested to removal of such language from Senate versions of the bill as well. Senator Kelly directed attention to page 5, lines 8 and 9, subsection (14), and asked how the department intends to regulate motor vehicle fuels to control emissions. LEN VERRELLI, Chief, Air Quality Management Section, Dept. of Environmental Conservation, explained that activity relates to compilation of information to exempt Alaska from low sulfur fuel requirements. Senator Kelly voiced his understanding that the proposed bill would allow the department to establish a fee structure to capture sufficient funds to conduct the project. Mr. Verrelli concurred and noted the many interests in Alaska that would be impacted by such a waiver. Application for the waiver may only be made by the state. Co-chair Frank requested additional written information on the project. Discussion followed regarding analyses conducted by DEC versus private labs. Senator Sharp voiced his understanding that language within the bill prohibits DEC from conducting analyses if certified private labs are able to do so. Mr. Verrelli concurred. In response to further questions from the Senator, Mr. Verrelli attested to problems resulting from lack of certified labs within the state. Necessary equipment involves great expense. That is how the state lab got started. DEENA HENKINS, Chief, Drinking Water and Water Treatment Section, Dept. of Environmental Conservation, explained that certified laboratories must be available for public water system analyses in order to maintain primacy for state water programs. Private labs have thus been certified to conduct that analysis. The state must continue to do needed analyses in situations where the tests are too expensive for private labs to undertake, and the holding time on the sample is too short to allow for shipment to an out-of-state lab. Sec. 9. Is similar to an effective date clause. It allows departments to commence work on regulations prior to the actual effective date of the proposed bill. Sec. 10. Provides an immediate effective date for Sec. 9. Sec. 11. Provides a July 1, 1994, effective date. SENATE BILL NO. 377 An Act relating to state agency fiscal procedures; and providing for an effective date. Co-chair Frank directed that SB 377 be brought on for discussion. CHERYL FRASCA, Office of the Governor, remained before committee to provide a sectional review. Sec. 1. Limits the life of a warrant from two years to one year. After the initial year, the warrant would become stale dated. DON WANIE, Director, Division of Finance, Dept. of Administration, came before committee. He noted an existing conflict in statutes where AS 37.05. stale dates a warrant at two years while AS 34.45.250 provides that such a warrant becomes unclaimed property at one year. The intent of the proposed bill is to bring stale dating requirements into line with unclaimed property provisions. After one year, warrants would be submitted to unclaimed property for payment from a trust within the Dept. of Revenue rather than through the supplemental bill process. Sec. 2. Allows payment of obligations that are not more than four (rather than two) years old from current year appropriations. Sec. 3. Changes the terminal leave statute as it relates to non-covered employees. Under the present process, when a non-covered employee terminates and cashes out leave, the employee receives credit for any holidays that occur during the computed leave time. The proposed bill amends that practice and would not give credit for a holiday or any other increase that would have occurred had employment not been terminated. SHARON BARTON, Director, Division of Administrative Services, Dept. of Administration, further advised that the employee would have to take payment for accrued leave in a lump-sum manner rather than in installments. Sec. 4. Changes the time frame for stale dating permanent fund dividend warrants to one year. Sec. 5. Relates to terminal leave. At the present time, if an employee were to terminate with two months leave on the books and go back to work at another job within one month, the employee must pay back the other month of leave. The proposed bill repeals that requirement. ADJOURNMENT The meeting was adjourned at approximately 10:50 a.m.