Legislature(1999 - 2000)
04/22/1999 06:05 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE April 22, 1999 6:05 P.M. TAPES SFC-99 #106, Side A & B SFC-99 #107, Side A & B CALL TO ORDER Co-Chair John Torgerson convened the meeting at approximately 6:05 P.M. PRESENT Co-Chair John Torgerson, Co-Chair Sean Parnell, Senator Randy Phillips, Senator Dave Donley, Senator Loren Leman, Senator Gary Wilken, Senator Pete Kelly, and Senator Lyda Green. Also Attending: SENATOR ROBIN TAYLOR; DARWIN PETERSON, Staff, Senator John Torgerson; BRETT HUBER, Staff, Senator Rick Halford; ROBERT BUTTCANE, Juneau Probation Officer, Department of Health and Social Services; NANCI JONES, Director, Permanent Fund Dividend Division, Department of Revenue; ANNE CARPENETI, Assistant Attorney General, Criminal Division, Department of Law; EDDY JEANS, Manager, School Finance Section, Department of Education; ROSALEE WALKER, Older Persons Action Group, Juneau; GARY BERRY, American Legion, Juneau; KEVIN RITCHIE, Alaska Municipal League (AML), Juneau; GERALD DORSCHER, Legislative Officer, Veterans of Foreign Wars (VFW), Juneau; ELMER LINDSTROM, Special Assistant to Commissioner Perdue, Department of Health and Social Services; JAY LIVELY, Deputy Commissioner, Department of Health and Social Services; LORAINE DERR, President, Alaska State Hospital and Nursing Association (ASHNA), Juneau. Teleconferenced: DALE BONDURANT, Kenai; ED ZASTROW, Alaska Association of Retired Persons (AARP), Ketchikan; BOB GORE, Pioneers of Alaska, Ketchikan; RICK SOLIE, Fairbanks Memorial Hospital, Fairbanks; DAN HOUGHTON, Alaska Regional Hospital, Anchorage. SUMMARY OF INFORMATION SB 4-OFFICE OF VICTIMS' RIGHTS SB 4 was HEARD and HELD in Committee for further consideration. SB 88-DIETITIANS AND NUTRITIONISTS CS SB 88(FIN) was reported out of Committee with a "do pass" recommendations and with a fiscal note by the Department of Commerce and Economic Development. SB 106-REMAND OF HEALTH FACILITY PAYMNT DECISION SB 106 was HEARD and HELD in Committee for further consideration. SB 151-MUNICIPAL PROPERTY TAX EXEMPTIONS SB was HEARD and HELD in Committee for further consideration. Co-Chair Torgerson called the Senate Finance Committee meeting to order at approximately 6:05 P.M. SENATE BILL NO. 88 "An Act relating to licensure of dietitians and nutritionists; and providing for an effective date." CS FOR SENATE BILL NO. 88(L&C) "An Act relating to licensure of dietitians and nutritionists; and providing for an effective date." Senator Dave Donley spoke to the committee substitute for SB 88. He explained that the committee substitute work draft, 1-LS0409\N, Lauterbach, 4/15/99, provided technical changes recommended by the Division of Occupational Licensing. [Copy on File]. The changes are to version "K" on Page 2, Line 26, deleting the language "after a hearing". The second change was to version "M", Page 3, Line 26-27, addition of language which allows the Department to adopt regulations necessary to implementing the chapter. Senator Donley MOVED to adopt the "N' version of the proposed legislation. There being NO OBJECTION, it was adopted. Senator Donley understood that there would be no changes to the fiscal note with the new version. He believed that the changes made would make the Department's work easier. Senator Donley MOVED to report CS SB 88(FIN) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS SB 88(FIN) was reported out of Committee with a "do pass" recommendations and with a fiscal note by the Department of Commerce and Economic Development. SENATE BILL NO. 4 "An Act relating to establishing an office of victims' rights; relating to compensation of victims of violent crimes; relating to eligibility for a permanent fund dividend for persons convicted of and incarcerated for certain offenses; and amending Rule 16, Alaska Rules of Criminal Procedure, Rule 9, Alaska Delinquency Rules, and Rule 501, Alaska Rules of Evidence." CS FOR SENATE BILL NO. 4(JUD) "An Act relating to establishing an office of victims' rights; relating to compensation of victims of violent crimes; relating to eligibility for a permanent fund dividend for persons convicted of and incarcerated for certain offenses; and amending Rule 16, Alaska Rules of Criminal Procedure, Rule 9, Alaska Delinquency Rules, and Rule 501, Alaska Rules of Evidence." Co-Chair Torgerson spoke to the Letter of Intent included in the bill package. The intent of the letter would specify the Legislature to fund the Office of Victim's Rights solely from the additional revenue generated by the new provisions established in the legislation. Additionally, that funding would not result in a decrease of funding for crime victim's compensation, Council on Domestic Violence and Sexual Assault. DARWIN PETERSON, Staff to Senator John Torgerson, explained that the Senate Finance Committee at a previous meeting had requested a new fiscal note from Legislative Affairs Agency. In the FY00 column, it was requested that only the amount needed to establish that office be entered. He referenced information from Senator Torgerson's office, outlining how the funding would work. The estimated amount of revenue that would be generated and available by SB 4 from FY97 and FY98 convictions, would be $391 thousand dollars. Mr. Peterson addressed the fiscal notes included in member's packets. Senator Adams asked if the fiscal impact referenced by Mr. Peterson would be the same amount as contained in the new work draft. Mr. Peterson understood that the fiscal impact would not change in the work draft. Co-Chair Torgerson interjected that the effective date would need to be changed. The key to making the legislation work would be delaying when that office would open. Senator Donley explained that the proposed committee substitute would change the location of the Office of Victims Rights from the Legislative Branch to the Department of Public Safety. He pointed out that is where the other grants for a victim's right pass through. The only change would be the language on Page 10, Line 31. Senator Donley MOVED to adopt committee substitute 1- LS0029\H, Luckhaupt, 4/22/99, as the bill version before Committee members. There being NO OBJECTION, it was adopted. (Tape Malfunction) BRETT HUBER, Staff, Senator Rick Halford, pointed out that a qualification difference was indicated in the bill. The previous qualifications were more stringent that those recommended in the proposed draft. Senator Donley noted that the drafters had only four hours to work on the current language. Senator Donley MOVED to adopt Amendment #5 which would add the Senate Judiciary version qualifications for the victims advocate into the proposed committee substitute. There being NO OBJECTION, it was adopted. (Tape Resumed Functioning) Senator Donley MOVED to adopt Amendment #6 which would revise the name of the office to conform the committee substitute as it appears in the Senate Judiciary version, from the Office of Victim Advocacy to the Office of Victim's Rights. There being NO OBJECTION, it was adopted. Senator Donley reminded members that Amendment #2 was pending and that the effective date would need to be changed. Senator Green pointed out that the "appointment" language was also different. Senator Donley advised that placing the Office in the Department of Public Safety would constitutionally change the appointment criteria removing the Legislature from the "loop". Senator Donley MOVED to adopt Amendment #2, a change to Page 1, Line 13, after "may" inserting "reasonably". There being NO OBJECTION, it was adopted. Senator Donley MOVED to adopt Amendment #4, 1-LS0029\D.2, Luckhaupt, 4/19/99, which would provide for the delayed effective date for hiring. Upon request of Co-Chair Torgerson, Senator Donley WITHDREW consideration of Amendment #4. There being NO OBJECTION, it was withdrawn. Senator Donley MOVED a conceptual amendment to Amendment #4, that the committee substitute include the same delayed effective date as appears in the original #4. He requested that it be brought back to the full Committee for review. Co-Chair Torgerson noted that the delayed effective date would be restricted to the Department of Public Safety. There being NO OBJECTION, it was adopted. Co-Chair Parnell MOVED to adopt the Letter of Intent. There being NO OBJECTION, it was adopted. ROBERT BUTTCANE, Juneau Probation Officer, Department of Health and Social Services, stated that the Department is committed to providing victims of juvenile crime a whole array of services to restore them to wholeness. Victims are an equal partner in the work of the Department. The bill is of concern to the Department, as it establishes a separate bureaucracy that polices the delinquency system. The Department would prefer that the Legislature support the juvenile system in its current efforts to provide services to victims. ANNE CARPENETI, Assistant Attorney General, Criminal Division, Department of Law, testified that the Department of Law was not in favor of the proposed legislation. The Department does not support the public notice section or the approach of the bill. She stated that moving that Office to the Department of Public Safety was problematic. It would make that Department responsible for investigating some of their own staff people, placing them in an adversary position with their own lawyers. NANCI JONES, Director, Permanent Fund Dividend Division, Department of Revenue, noted that she was present to answer questions of the Committee. Co-Chair Torgerson noted that SB 4 would be HELD in Committee for further consideration. SENATE BILL NO. 151 "An Act relating to exemptions for municipal property taxes for certain primary residences; relating to property tax equivalency payments for certain residents; and providing for an effective date." Co-Chair Parnell explained that the bill addresses the municipal property tax exemptions for senior citizens and disabled veterans. He spoke to work draft 1-LS0842\G, Cook, 4/22/99 and the unfunded mandate. Co-Chair Parnell noted that the committee substitute would add a new Section #1, so that any property exempted from taxation for purposes not included in the local contribution calculation for school funding would remain in State law. Additionally, the proposed committee substitute would add Section #4, Page 3, which would move the exemption for the seniors to the optional exemption portion of the statute. Co-Chair Parnell MOVED to adopt the committee substitute as the working draft before the Committee. Senator Adams OBJECTED. Senator Adams questioned the exclusion from local tax limitations. Co-Chair Torgerson pointed out that Amendment Senator Donley asked if local government would be responsible for passing an ordinance in order to continue the existing exemption. Co-Chair Parnell explained that the legislation would clarify that the municipality, by ordinance, would be wholly or partially exempted by taxation and would be responsible for taking that step. Senator Phillips referenced Page 2, Line 19, and asked if $150 thousand dollars was the determined cap. Following discussion among Committee members, Senator Adams maintained his objection to adopting version "G" of the proposed legislation. He advised that pressure would be released in specific portions, however, would be applied more deeply to other cost areas. A roll call vote was taken on the motion. IN FAVOR: Donley, Green, P. Kelly, Leman, Parnell, Phillips, Torgerson, Parnell OPPOSED: Adams The MOTION PASSED (8-1). EDDY JEANS, Manager, School Finance Section, Department of Education, commented that the Department of Education did have a "problem" with Section #1 of the legislation because it changes the way the value determination is calculated. It would make it vary from community to community based upon what the voters of that community accepts for property tax. He continued that under Title 29, the State Assessor determines the full and true calculation of real and personal property within each community in the State. There exists a "mandatory exemption", which is $150 thousand dollars and an "optional" exemption which the community can exempt over and above the $150 thousand dollars. Under Section #1, it states that the property value may not be included in the determination to the extent of the exemption. TAPE SFC-99 #106 Side B Mr. Jeans continued. He stated that the Department recommends that there is a uniform calculation used in applying for a determination for State foundation purposes. Co-Chair Torgerson asked if the end result would be increased local effort, and State aid decreased. Mr. Jeans acknowledged that was correct. Co-Chair Torgerson pointed out that the $150 thousand dollars was already deducted from the full and true value. Mr. Jeans advised that an amount must be set and that vague language will create a problem. Senator Adams asked if there should be a "grandfather clause" included in the legislation. Mr. Jeans replied that his concern was only with the inclusion of the language "$150 thousand dollars". He recommended that a uniform process be used to determine the local effort. In response to Co-Chair Torgerson's concern, Mr. Jeans reiterated that he had had a conversation with the State assessor and that by moving it from a required exemption of $150 thousand dollars to an "optional" exemption would cost municipalities approximately $6 million dollars statewide. ROSALEE WALKER, Older Persons Action Group, Juneau, requested that the legislation be held in Committee. She noted that many important groups had not been consulted regarding such an important piece of legislation. Ms. Walker emphasized that this should not be an "optional" amount, and that instead it should stay mandatory. GARY BERRY, American Legion, Juneau, indicated that he was present to testify on a section of the bill which had been deleted. KEVIN RITCHIE, Alaska Municipal League (AML), Juneau, advised that the AML supports the passage of SB 151. He agreed that it is important that the school issue had been addressed. Additionally, AML supports giving the municipalities the broadest possible options in working with the senior community. Some of the options discussed by the municipalities would be to make that option "needs" based, potentially reducing the amount. The average exemption under the program is a little under $100 thousand dollars. He recommended that options be included in the package in order to allow the opportunity for deferral. Senator Parnell requested Mr. Ritchie to explain the concept of "deferral". Mr. Ritchie explained that tax deferral is a concept used nationally which would simply allow a senior to defer taxes, and that it essentially becomes a lien on the property and not become payable until the property is either sold or the senior dies. Senator Leman inquired if AML would continue to support the legislation if the exemption was included, but the municipalities were allowed to opt out. Mr. Ritchie replied that the bill in the present form is relatively new and that he would not be able to comment on that possibility. He noted that the AML policy, which was adopted in November 1998, states that the choices of the organization provide that there are exemptions. Senator Adams asked if AML would support the desires of the senior citizens with the property tax exemptions. Mr. Ritchie replied that AML adopt its policy statement annually. Co-Chair Torgerson requested that Mr. Ritchie closely study Section #1 to further discuss the impact. GERALD DORSCHER, Legislative Officer, Veterans of Foreign Wars (VFW), Juneau, asked if the disabled veterans would be affected by the proposed legislation. Co-Chair Parnell acknowledged that was correct. The disabled veterans' exemption would remain in place under the proposed draft and would not be affected. DALE BONDURANT, Kenai, (Testified via Teleconference), testified against SB 151. He stated that it would downgrade medical health care, social benefits, schools, roads and so forth. The oil company knows that the citizens as a whole have less personal benefits from the income of depleting oil resources than the oil industry can easily rate. Mr. Bondurant noted that fewer benefits equate to less public watchdog interest. He claimed that the oil companies are raping the Alaska resources. ED ZASTROW, Alaska Association of Retired Persons (AARP), Ketchikan, (Testified via Teleconference), spoke in opposition to SB 151. He noted that there are a growing number of senior citizens that have chosen to live in their homes because of the property tax exemption, permanent fund checks and longevity bonus. These monies are major factors in their fixed income. He emphasized that a threat to eliminate any of these sources of funds creates a major fear within the senior population. Mr. Zastrow pointed out that the latter portion of the bill addresses local elections. AARP sees that as "pitting" the seniors against their neighbors which is totally unacceptable. He urged that the bill be left in Committee. BOB GORE, Past President, Pioneers of Alaska, Ketchikan, (Testified via Teleconference), spoke in opposition to the proposed legislation. He stated that this is a "hardship" bill and that there is not enough space in the Pioneer Homes to take care of all the seniors that will need to sell their homes with the bill's passage. He emphasized that this bill does not treat the older Alaskans with respect. Co-Chair Parnell MOVED to adopt Amendment #1, 1-LS0842\A.2, Cook, 4/22/99. [Copy on File]. There being NO OBJECTION, it was adopted. Co-Chair Parnell MOVED to adopt Amendment #2. [Copy on File]. The amendment would insert language on Page 3, Line 4: "An ordinance adopted under this subsection may limit the exemption to only those individuals with financial need as defined in the ordinance". There being NO OBJECTION, it was adopted. Senator Leman MOVED a conceptual amendment, Amendment #3, which would change the "opt in" method to the "opt out" option on Page 4, Line 3. The language would make the option a municipal decision rather than going before the voters. Senator Adams questioned language on Page #2 regarding the $150 thousand dollars. Co-Chair Torgerson noted that these concerns would be addressed at a later time. Senator P. Kelly requested clarification regarding the proposed amendment. Co-Chair Parnell explained that it would be by ordinance and not by the approval of voters. There being NO OBJECTION, Amendment #3 was adopted. SB 151 was HELD in Committee for further discussion. SENATE BILL NO. 106 "An Act relating to decisions by the commissioner of health and social services to remand certain health facility payment decisions back to the hearing officers; and amending Rule 602, Alaska Rules of Appellate Procedure." SENATE BILL NO. 106 "An Act relating to decisions by the commissioner of health and social services to remand certain health facility payment decisions back to the hearing officers; and amending Rule 602, Alaska Rules of Appellate Procedure." SENATOR ROBIN TAYLOR requested that the bill be moved to the amendment process. Senator Wilken noted that Rick Solie was on teleconference and had a limited time to testify. RICK SOLIE, Representing Fairbanks Memorial Hospital, Fairbanks, (Testified via Teleconference), voiced his concern with SB 106. He noted that it was the intent of the Alaska State Hospital and Nurses Association (ASHNA) to work in a dual track with the legislation, which would move the legislation, but at the same time work with the departments to discuss the appeal process and timing. Mr. Solie stated that Fairbanks Memorial Hospital's concern is that issues can be resolved within the working group in a timely fashion. Mr. Solie suggested that it would make more sense to focus on efforts outside of the Legislative process, such as addressing the backlog of appeals. Mr. Solie advised that ASHNA has concerns with the amendments, particularly Amendment #1. [Copy on File]. He referenced the report submitted to Committee members from Donna Herbert, a consultant, identifying the difficulty in establishing a flat rate. [Copy on File]. Mr. Solie continued that Amendment #2 was reasonable and not of great concern to his organization. [Copy on File]. Additionally, Amendment #3 addresses the backlog of appeals. He reiterated that his comments were in opposition to Amendment #1. DAN HOUGHTON, Alaska Regional Hospital, Anchorage, (Testified via Teleconference), stated that he was available to answer questions. He stated that he would support passage of SB 106 in its present format. ELMER LINDSTROM, Special Assistant to Commissioner Perdue, Department of Health and Social Services, stated that the Department is opposed to the proposed legislation. He noted that the rate appeals process is cumbersome and costly. The Department believes that the reasons for those problems is that the appeals process is "lost" because the underline rate setting system is obsolete. The existing rate setting system is expensive and those costs are largely based on a federal mandate which has since been appealed. He noted that there are budget negotiations still in process requiring $15 million dollar reductions to the Medicaid budget. Mr. Lindstrom concluded that the existing system preserves the status quo and the existing system insulates a portion of the budget more entirely than anything else he is aware of. TAPE SFC-99 #107 Side A Mr. Lindstrom stated that the bottom line is that if the State is concerned about reforming the system, the issue should not be distracted. He referenced the letter in members packet dated April 19th by Commissioner Perdue regarding the appeals issue at Bartlett Regional Hospital. He reiterated that the Department could not accept the underlining premise of SB 106. Senator Phillips asked if Providence Hospital had any appeals current at this time. Mr. Lindstrom replied that there are a number of facilities that have appeals every rate every year. Of the forty appeals that are outstanding, one issue accounts for twenty of the appeals. Senator Phillips voiced a conflict of interest as he is employed by the Providence Health Care System. He asked to refrain from voting on the amendments and the bill. Senator Leman asked if the Department could recommend any changes for the current "archaic" system in place. He questioned the opinion of Commissioner Perdue on an amendment that he had recommended. Mr. Lindstrom agreed that there was need for legislation to change the current system. A big portion of the problems is imbedded in State laws resulting from federal mandates. He deferred the question regarding the amendments to Mr. Lively, Deputy Commissioner. Senator P. Kelly pointed out that some of the ASHNA Hospitals are in support of the legislation. Mr. Lindstrom replied that he could not speak for all the facilities, however, there have been some facilities that have never appealed a rate. He believed that Fairbanks would fall into that category. Mr. Lindstrom spoke to the problems with the proposed legislation. On the facilities side of the Medicaid budget, the ability to actively manage the cost control is very limited. There are only two elements, one on the front end and the certificate of need process and the second is the ability to some degree to oppose policy and issues reflected in the appeals payments process. Those are the only tools that the State has. He emphasized that this bill would essentially remove one of those tools. JAY LIVELY, Deputy Commissioner, Department of Health and Social Services commented on Amendment #1 in response to questions from Senator P. Kelly. Mr. Lively pointed out that the Department has focused mostly on the details of the appeal process. He commented that the amendment would charge the Department to go back to determine how current rates are set and then create an alternate system that would be less cumbersome. Senator Wilken referenced Page 2, Line 16 and asked the recommendation of the Department regarding the most reasonable amount of time. Mr. Lively responded that the Department would like to see between 120 and 180 days. Co- Chair Torgerson interjected that 120 days was not a reasonable number. He acknowledged that 30 days might be too "tight". LORAINE DERR, Representing the Alaska State Hospital and Nursing Association (ASHNA), Juneau, spoke in support of the legislation and stated that the problem is that in the appeals process, there is no finality. The basis of the bill puts finality to the process. ASHNA would like to see the process have some sort of completion. Co-Chair Torgerson explained that he agreed with the bill and the way it was written, however, he believed that the legislation does not address the heart of the problem. The legislation does solve the problem in how quickly it could move to court, however, the underlining problem is that there is no agreement on what qualifies an eligible reimbursement. Senator Donley MOVED to adopt Amendment #1. Senator Wilken OBJECTED. Senator Wilken pointed out that there are many hospital officials that are uncomfortable with Amendment #1. Co-Chair Torgerson stated that the bill would not be moved out of Committee if Amendment #1 failed. Senator Adams commented that it was his preference to work on the bill in Subcommittee. Senator Taylor disagreed with comments made by the Department regarding the legislation and the amendments. He commented that he would not object to Amendment #1 which would allow the benefit of finality for legislative consideration. Co-Chair Torgerson urged the various factions to come to the table and create a working document. He acknowledged that the Legislature does not have the expertise to undertake the challenge at this time. Senator Wilken asked if the new rates would be included in the report. Co-Chair Torgerson commented that there would be a report provided with the rates, subject to appeal. He advised that it was his intent to create language, which would remove all the appeals. Senator P. Kelly commented that Amendment #1 should be made into a separate bill rather than incorporated into the legislation. Co-Chair Torgerson stated that he was not willing to make that change. A roll call vote was taken on the motion. IN FAVOR: Donley, Green, Leman, Parnell, Torgerson OPPOSED: Adams, P. Kelly, Wilken, Phillips The MOTION PASSED (5-4). Co-Chair Parnell MOVED to adopt Amendment #2 which would insert language on Page 2, Line 17, "unless the facility requests a delay", and Page 2, following Line 25, inserting a new subsection: "At the request of any party, the department may offer a process of voluntary mediation". There being NO OBJECTION, it was adopted. Senator Leman questioned if Amendment #3, 1-LS424\G.7, Bannister, 4/21/99, would be beneficial to the proposed legislation. [Copy on File]. Senator Leman MOVED to adopt Amendment #3 and asked to hear from the Department. Mr. Livey responded that Amendment #3 would provide any appeal that is remanded back to the hearing officer by the Commissioner after April 20th but before the effective date, would also be subject to the 30-day rule. Senator Taylor questioned the retroactive date and the effect that the amendment would have on the legislation. He commented that he was not concerned with passage of the amendment. Senator Leman WITHDREW Amendment #3 with the understanding provided by Commissioner Perdue from an earlier conversation that the Department would work diligently to achieve finality. There being NO OBJECTION, it was withdrawn. Co-Chair Torgerson commented that the bill would be HELD in Committee in order to work in more detail with the Department on the fiscal notes. Co-Chair Parnell requested a brief discussion on the fiscal notes. He noted the three temporary positions requested in the fiscal statement. Mr. Lindstrom commented that new hearing officers would be needed to deal with the backlog of outstanding appeals. He emphasized that the most effective way to resolve the backlog of appeals would be to grant an additional hearing officer position and the additional resources for the Department of Law and the Department of Health and Social Services Commissioner Office to address the concern. Co-Chair Torgerson requested a check of the length of time between the 30-60-90-day comparison and the fiscal impacts that each would bear. Senator Taylor commented that he would oppose any additional changes to the fiscal note. Mr. Lively responded that 120 days would be a more acceptable amount of time. SB 106 was HELD in Committee for further clarification on the fiscal notes. TAPE SFC-99 #107 Side B ADJOURNMENT The meeting adjourned at 8:45 P.M. SFC-99 14 4/22/99 p.m.