Legislature(1993 - 1994)

04/15/1994 09:05 AM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    SENATE FINANCE COMMITTEE                                   
                         April 15, 1994                                        
                            9:05 a.m.                                          
  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.                                                      
  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                 
  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                 
            health lands to the trust.                                         
       2.   Substitution of additional  lands to the trust  to                 
            up  the difference between  the original 1 million                 
            acre trust and lands that are restored.                            
       3.   Cash payment  reflecting the fair market  value of                 
            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                 
  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                 
  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                 
  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  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                 
            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                 
            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                 
            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                 
            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                 
            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                 
            four (rather than two) years old from current year                 
  Sec. 3.   Changes the  terminal leave statute as  it relates                 
            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                 
            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.                                                  
  The meeting was adjourned at approximately 10:50 a.m.                        

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