Legislature(1993 - 1994)
04/28/1994 08:45 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 28, 1994 8:45 a.m. TAPES SFC-94, #83, Side 1 (150-end) SFC-94, #83, Side 2 (end-000) SFC-94, #85, Side 1 (000-050) CALL TO ORDER Senator Drue Pearce, Co-chair, convened the meeting at approximately 8:45 a.m. PRESENT In addition to Co-chair Pearce, Senators Rieger, Kerttula, Kelly, Jacko and Sharp were present. Co-chair Frank joined the meeting after it was in progress. ALSO ATTENDING: Senator Loren Leman; Representative Jeannette James, sponsor of HB 222; Representative Harley Olberg, sponsor of HB 397; Representative Joe Green, sponsor of HB 400; Melinda Gruening, aide to Representative Green; Thomas C. Williams, Director, Permanent Fund Dividend Division, Department of Revenue; Deborah Vogt, Contract Attorney, Department of Law; Larry Meyers, Director, Income and Excise Audit Division, Department of Revenue; Reed Stoops, lobbyist, Aetna Life & Casualty; Jerry Reinwand, lobbyist, Blue Cross of Washington & Alaska; Mike Greany, Director, Legislative Finance Division; representatives of the media, aides to committee members and other members of the legislature. SUMMARY INFORMATION CSHB 222(FIN): An Act relating to landlords and tenants and to the applicability of the Uniform Residential Landlord and Tenant Act, to termination of tenancies and recovery of rental premises, to tenant responsibilities, and to the civil remedies of forcible entry and detainer and nuisance abatement; and amending Rule 62(a) of the Alaska Rules of Civil Procedure and Rule 24(a) of the Alaska District Court Rules of Civil Procedure. Representative Jeannette James, sponsor of HB 222, testified in support of HB 222. Senator Loren Leman proposed amendment 1. CSHB 222(FIN) was HELD in committee. SCSCSSSHB 397(JUD): An Act relating to the power to levy property taxes in second class cities. Representative Harley Olberg, sponsor of HB 397, testified in support of the bill. SCSCSSSHB 397(JUD) was REPORTED out of committee with a "do pass," and a zero fiscal note for the Department of Commerce & Regional Affairs. HB 400: An Act relating to administrative proceedings involving a determination of eligibility for a permanent fund dividend or authority to claim a dividend on behalf of another. Representative Joe Green, sponsor of HB 400, and Melinda Gruening, aide to Representative Green, testified in support of HB 222. Thomas C. Williams, Director, Permanent Fund Dividend Division, Department of Revenue, was available to speak to the bill. HB 400 was REPORTED out of committee with a "do pass" and a fiscal note for the Department of Revenue for $7.5 showing a revenue of $121.8. CSHB 442(FIN): An Act relating to criminal justice information; providing procedural requirements for obtaining certain criminal justice information; and providing for an effective date. SCSCSHB 442(FIN) version "K" was ADOPTED. SCSCSHB 442(FIN) was REPORTED out of committee with a "do pass," zero fiscal notes for the Department of Public Safety, the Department of Law, the Department of Health & Social Services, and a fiscal note for the Department of Corrections for $150.0. CSSB 161(JUD): An Act relating to interest rates and calculation of interest under certain judgments and decrees and on refunds of certain taxes, royalties, or net profit shares; and providing for an effective date. CSSB 161(FIN) work draft "I" was ADOPTED. Deborah Vogt, Contract Attorney, Department of Law, and Larry Meyers, Director, Income and Excise Audit Division, Department of Revenue, spoke to the bill. Senator Rieger offered conceptual amendment 2. Senator Sharp amended amendment 2. Senator Rieger withdrew amendment 2. Senator Kelly then resubmitted amendment 2 as amended. Amendment 2 was ADOPTED. CSSB 161(FIN) as amended was REPORTED out of committee with individual recommendations, zero fiscal notes for the Department of Law, Department of Transportation & Public Facilities, Department of Administration - #59 & #71, and a fiscal note for the Alaska Court System for $27.6. CSSB 367(JUD): An Act prohibiting a civil action based on professional negligence against a health care provider by a person who on the date of the negligent act or omission is less than two years of age, unless the action is brought before the person's eighth birthday; establishing an advisory committee on a health care plan and an advisory committee on medical practice; and providing for an effective date. CSSB 367(FIN) work draft "X" was ADOPTED. Reed Stoops, lobbyist, Aetna Life & Casualty, and Jerry Reinwand, lobbyist, Blue Cross of Washington & Alaska, spoke to SB 367. Amendment 1 was withdrawn. Amendments 2 and 3 were ADOPTED. The bill was HELD until the meeting could reconvene in the p.m. at the call of the chair (after conference committee). The meeting reconvened. Senator Rieger offered amendment 4. Amendment 4 was ADOPTED. CSSB 367(FIN) as amended was REPORTED out of committee with individual recommendations, and fiscal notes for the Department of Commerce & Economic Development for $322.6, and Office of the Governor for 672.7. HOUSE BILL NO. 400: An Act relating to administrative proceedings involving a determination of eligibility for a permanent fund dividend or authority to claim a dividend on behalf of another. CO-CHAIR DRUE PEARCE announced that HB 400 was before the committee and invited Representative Green, sponsor of the bill, and Melinda Gruening, aide to Representative Green, to come to the table. She also noted that Thomas C. Williams, Director, Permanent Fund Dividend Division, Department of Revenue, was available to answer questions. REPRESENTATIVE JOE GREEN said that it had become apparent that there were nearly 10,000 applicants for reconsideration of a denial of their permanent fund dividend check. The waiting period to process such appeals was up to about 20 months and lengthening. He felt the majority of the appeals were frivolous but the department was forced to do the necessary work in order to evaluate those appeals. HB 400 was an attempt to establish a filing fee of $25 to discourage unqualified appeals. MELINDA GRUENING reiterated that HB 400 came about because of complaints from constituents regarding the inordinate length of time the appeal process was taking. Processing the huge amount of appeals was costly. Currently there were 10 employees in the Permanent Fund Division and three appeal officers in the commissioners office working on processing the appeals. Still, approximately 10,000 appeals were pending with no end in sight. Over the past three years, the division had become more efficient but sighted the fact that it only took a 29 cent stamp to file an appeal as a big part of the problem. This year's denial rate was 64 percent and in previous years it had been even higher. HB 400 would implement a $25 filing fee. The department would allow an indigent individual to be exempt from the fee. The filing fee would be refundable if the applicant's appeal was successful and non-refundable if the denial was not overturned. It was felt that the $25 fee would discourage clearly unqualified individuals from appealing thereby reducing costs to the division. Since these costs were taken directly from the Permanent Fund, it would mean a little larger check for each eligible Alaskan. Senator Rieger MOVED for passage of HB 400 from committee with individual recommendations. No objection being heard, HB 400 was REPORTED out of committee with a "do pass," and a fiscal note for the Department of Revenue for $7.5 showing a revenue of $121.8. Co-chairs Pearce and Frank, Senators Sharp, Jacko, Kelly and Rieger signed "do pass." Senator Kerttula signed "no recommendation." CS FOR HOUSE BILL NO. 442(FIN): An Act relating to criminal justice information; providing procedural requirements for obtaining certain criminal justice information; and providing for an effective date. Co-chair Pearce said that SCSCSHB 442(FIN) version "K" was before the committee. She said it was the same bill as SB 276 that had passed out of Senate Finance. Senator Jacko MOVED for adoption of SCSCSHB 442(FIN) version "K". No objection being heard, it was ADOPTED. Senator Jacko MOVED for passage of SCSCSHB 442(FIN) from committee with individual recommendations. No objection being heard, it was REPORTED out of committee with a "do pass," zero fiscal notes for the Departments of Law, Health & Social Services, and Public Safety, and a fiscal note for the Department of Corrections in the amount of $150.0. Co- chair Pearce, Senators Jacko, Kelly and Sharp signed "do pass." Senator Rieger and Kerttula signed "no recommendation." SENATE CS FOR CS FOR SS FOR HOUSE BILL NO. 397(JUD): An Act relating to the power to levy property taxes in second class cities. Co-chair Pearce announced that HB 397 was before the committee and invited Representative Olberg, sponsor of the bill, to the table. REPRESENTATIVE OLBERG said that SCSCSSSHB 397(JUD) changed the cap on property taxes in second class cities from 5 mills to 20 mills. He said the Senate Substitute was the same as the original sponsor substitute. Any increase or imposition of property tax in second class cities would take a referendum within the city. In answer to Senator Kerttula, Representative Olberg said there was only one second class city astride the pipeline, Delta Junction, and it had managed to resist the temptation to pillage the pipeline. He said the bill was a request from Whittier as a response to the decline in municipal assistance, revenue sharing and grant money. He also said he did not object to Delta Junction paying for their own schools. Co-chair Pearce announced that Senator Jacko had asked that SCSCSSSHB 397(JUD) be HELD until the end of the meeting. Senator Jacko MOVED for passage of SCSCSSSHB 397(JUD) from committee with individual recommendations. No objection being heard, it was REPORTED out of committee with a "do pass," and a zero fiscal note for the Department of Commerce & Regional Affairs. Co-chairs Pearce and Frank, Senators Jacko and Kelly signed "do pass." Senators Rieger and Kerttula signed "no recommendation." CS FOR HOUSE BILL NO. 222(FIN): An Act relating to landlords and tenants and to the applicability of the Uniform Residential Landlord and Tenant Act, to termination of tenancies and recovery of rental premises, to tenant responsibilities, and to the civil remedies of forcible entry and detainer and nuisance abatement; and amending Rule 62(a) of the Alaska Rules of Civil Procedure and Rule 24(a) of the Alaska District Court Rules of Civil Procedure. Co-chair Pearce announced that HB 222 was before the committee and invited Representative James to join the members at the table. Co-chair Pearce asked if Senate Finance was the only committee of referral. Representative James agreed that it was. REPRESENTATIVE JAMES said that a comparison of HB 222 and SB 155 had been provided to the committee members. She went on to say that this bill was drafted to try to establish some balance in the landlord/tenant regulations that over the past 20 years had acted in favor of tenants. It allowed for an expedited eviction of a tenant who deliberately damaged the premises, clarified the legal obligations of both the tenant and the landlord, allowed a premises inventory signed by both parties to be used as legal evidence, made the state's nuisance abatement process more accessible to tenant/landlord proceedings, and simplified cross references between Title 9, civil procedure and Title 34, property, and provided much needed protection from abusive tenants for both law abiding tenants and landlords. She said the bill received a great deal of work in subcommittees and was such a fair and balanced bill that it passed the House unanimously 37-0. It had the support of both landlords and tenants and would greatly simplify landlord/ tenant proceedings. She said it was a much different bill than introduced because of the extensive rewritten language as it went through subcommittees. Co-chair Frank said he had the companion bill in the Senate and appreciated all the work Representative James had undertaken. He requested the bill be held so he could study HB 222 at more length. Co-chair Pearce announced that Senator Leman had a proposed amendment for HB 222. SENATOR LEMAN said that amendment 1 was the result of a case in Anchorage where a landlord chose not to rent to couples who were cohabiting outside of marriage. He said the case had gone to the Supreme Court and ended with a split decision. Amendment 1 allowed that a landlord, if he passed a three-part test, could refuse to rent to couples living in cohabitation. On the side of right to housing, he said that housing would remain available to those couples because few landlords would choose this option. Senator Rieger asked what would prevent a landlord from using this language to discriminate against a tenant beyond the purposes stated. He quoted the words "reasonably believed" and proposed those words could be used more broadly. Senator Leman said that national origin, looks, or sex, could not be used as a reason because of the "sincere religious belief" test that the landlord would have to pass. In answer to Senator Kelly, no committee member was willing to offer amendment 1. Co-chair Pearce said she would offer it if she could but being the chairman she was not able to. Again, Co-chair Frank asked that HB 222 be HELD. Co-chair Pearce announced that HB 222 would be HELD in committee. At this point in the meeting, the committee moved HB 397 (see portion of the minutes pertaining to HB 397). Recess 9:15am Reconvene 9:55am CS FOR SENATE BILL NO. 161(JUD): An Act relating to interest rates and calculation of interest under certain judgments and decrees and on refunds of certain taxes, royalties, or net profit shares; and providing for an effective date. Co-chair Pearce said that CSSB 161(JUD) was before the committee. Senator Rieger spoke to the bill section by section. The first section had to do with civil cases in general. The philosophy reflected was that the amount of damages payable should be essentially adjusted for inflation. The proxy that was used for inflation adjustment for civil damages was the one year treasury bill rate which might exceed inflation but not by any substantial amount. In regard to Section 2, he said that earlier versions of the bill referred to municipalities having to pay refund overpayments at a rate that was essentially equal to what they were earning on their money. That seemed difficult to administer, since each municipality had to calculate its own rate of return for its investments and then recalculate it depending on which three month period immediately preceded the date of the refund. This CS said that at the end of each calendar quarter, the treasury bill rate would be used as the rate for the next quarter. He felt it was a simple solution. Section 3, 4, 5, and 6 had to do with taxes and royalties. He felt the department would want to testify on these sections. The CS, as drafted, retained the 11 percent floor for underpayments by a taxpayer. One oversight he pointed out was that the department had asked to have the rate be a differential where underpayments would be at the discount rate plus 5 percent, and overpayments would be at the discount rate plus 2. In closing his review, he said the rest of the bill referred to transition and conforming provisions. Senator Kerttula asked Senator Rieger if he was asking for an amendment to the oversight on the underpayment and overpayment provisions. Senator Rieger said that it was a policy call and the committee could vote on it. Discussion was had by Co-chair Frank, Senators Kelly and Kerttula regarding the underpayment and overpayment indexes. Senator Rieger MOVED for adoption of CSSB 161(FIN) work draft "I". Hearing no objection, CSSB 161(FIN) work draft "I" was ADOPTED. DEBORAH VOGT, Contract Attorney, Department of Law, said that Senator Rieger had expressed the views of the administration accurately and the department was very happy with the current structure for underpayments which was 5 points above the federal discount rate or 11 percent which ever was higher and would rather not change it. The proposed legislation would give a differential between underpayments and overpayments. Senator Sharp asked if the department would accept a 5 percent differential and remove the 11 percent floor. LARRY MEYERS, Director, Income and Excise Audit Division, Department of Revenue, said the 11 percent floor was implemented in October 1991, specifically as an incentive to settle outstanding taxes. It had proven an effective tool especially in the current rate of economy. He recommended that the 11 percent floor remain. Ms. Vogt commented that it would be a substantial reduction in the interest rate if the floor was taken out today. Senator Sharp differed with the opinion that the 11 percent had been an antagonistic feature for settlement and may have even impeded settlement. Senator Kelly said that he would not be offering amendment 1. Senator Rieger MOVED conceptual amendment 2, page 3, line 2 and page 3, line 15, which changed "underpayments to index plus 5" and in sections 4 and 6, "overpayments to index plus 2". Senator Sharp MOVED an amendment to amendment 2 by deleting the words "at the annual rate of 11 percent, whichever is greater", on page 3, line 4-5 and page 3, line 17. End SFC-93 #83, Side 1 Begin SFC-93 #83, Side 2 Discussion was had by Co-chair Frank, Senators Sharp, Kelly, and Kerttula regarding the amendment, removing the floor and penalty rates. Ms. Vogt said the title of the legislation dealt with interest on judgments and also interest on refunds, royalties, etc. She said Senator Rieger's amendment would restore the law on underpayments to current status and she did not believe that any change to underpayments was within the title of the legislation. Senator Rieger and Co- chair Pearce said that since it was a Senate bill that would not be a concern. Co-chair Pearce called for a show of hands on the amendment by Senator Sharp to amend amendment 2 and the motion carried on a vote of 5-2. Co-chair Frank then changed his vote and it still carried on a vote of 4-3. (Co-chair Pearce, Senator Sharp, Kelly, and Jacko voted in favor. Co-chair Frank, Senators Kerttula and Rieger were opposed.) Senator Rieger WITHDREW amendment 2. Senator Kelly MOVED amendment 2 as amended. Co-chair Pearce called for a show of hands on amendment 2 and it was ADOPTED on a vote of 4 to 3. (Co-chair Pearce, Senator Sharp, Kelly, and Jacko voted in favor. Co-chair Frank, Senators Kerttula and Rieger were opposed.) Senator Sharp MOVED for passage of CSSB 161(FIN) as amended from committee with individual recommendations. Senator Kerttula OBJECTED. Co-chair Pearce called for a show of hands on the motion and it carried on a vote of 5 to 2. (Co-chairs Pearce and Frank, Senator Sharp, Kelly, and Jacko voted in favor. Senators Kerttula and Rieger were opposed.) CSSB 161 was REPORTED out of committee with "individual recommendations," and zero fiscal notes for the Department of Law, Department of Transportation & Public Facilities, Department of Administration - #59 & #71, and a fiscal note for the Alaska Court System for $27.6. Co-chairs Pearce and Frank, Senators Kelly and Sharp signed "do pass." Senator Kerttula signed "do not pass." Senator Rieger signed "no recommendation." CS FOR SENATE BILL NO. 367(JUD): An Act prohibiting a civil action based on professional negligence against a health care provider by a person who on the date of the negligent act or omission is less than two years of age, unless the action is brought before the person's eighth birthday; establishing an advisory committee on a health care plan and an advisory committee on medical practice; and providing for an effective date. Co-chair Pearce said that CSSB 367(FIN) version "X" was before the committee. She voiced her concern regarding language on page 3, beginning on line 8. Senator Rieger went through the bill section by section. In answer to Co-chair Frank, Senator Rieger said he would mark up the old sectional so it fit the new CS. Senator Rieger concluded that there was a large interest in the public health aspect of health care and the CS proposed an unpaid Public Health Commission to follow up on ideas regarding public health. He said one of his amendments was to tighten the title as requested by the Senate Judiciary Committee. Reed Stoops, lobbyist, Aetna Life & Casualty, and Jerry Reinwand, lobbyist, Blue Cross of Washington & Alaska, joined the committee at the table. REED STOOPS said that Aetna was generally in support of CSSB 367(FIN). He said there were some concerns with Sections 2, 5, and 7, which dealt with insurance rate regulations. He said there were 6 or 7 states that did not regulate insurance rates, about 32 states used the "file and use system" requiring insurance companies to file rates and methodologies, and the "prior approval system" which was contained in the proposed bill. In effect, he said, with this bill Alaska would go from the least regulated state to one of the most regulated. He did not support this section because 90-95 percent of insurance rates were simply passed through to the provider community. Studies showed that states with the greatest regulation had the least competition among insurers and where rates were highly regulated, some insurers drop out of the market. He encouraged the committee to consider that the Health Care Provider Commission study this issue, or adopt the "file and use system" as found in HB 414. Mr. Stoops went on to discuss Section 9. He questioned why Alaska should change from the NAIC model used by the Division of Insurance. He would like to see an analysis that described the proposed changes. He felt it would be difficult to coordinate benefits with these changes when members of a family were living in different states. JERRY REINWAND, said that Blue Cross did not have any problems with health care reform but he thought it was appropriate to throw the insurance regulation piece into the Public Health Commission and let them look at that along with the other insurance related issues in the bill. He did not support rate regulation at this point. In answer to Co-chair Frank, Mr. Stoops said that there were about a dozen or more companies that competed with Aetna. Again, in answer to Co-chair Frank, Mr. Stoops said that companies had to fill out an application and provide a certificate of insurance before it could be licensed to do business in Alaska. There were general rules that applied and it was highly regulated. He said that companies needed to be sufficiently capitalized so insurers did not bear the risk of default. There was an Insurance Guarantee Association to prevent losses. Coordination of benefits had extensive sets of regulations and policies needed to be reviewed by the Insurance Division to insure language was consistent with regulations. Mr. Reinwand added that under Director Walsh's leadership, the division had improved substantially. Senator Kelly MOVED for adoption of CSSB 367(FIN) work draft "X". Senator Kelly voiced his support to amend the work draft to a file and use system. He MOVED for amendment 1 to conceptual adopt a file and use system. Senator Kelly WITHDREW amendment 1. Senator Kelly MOVED amendment 2. Senator Rieger said that earlier discussion had suggested that all insurance companies should be under regulations by the Division of Insurance. He admitted that insurance companies were opposed to that section of the CS. Co-chair Frank said he supported more competition rather than more regulation. No further objection being heard, amendment 2 was ADOPTED. Senator Rieger MOVED amendment 3 which tightened the title. No objection being heard, amendment 3 was ADOPTED. Co-chair Pearce asked the committee to turn to page 3, line 8. She said that she had no problem with a data system that included health care expenditures or demographic data but she opposed parts of (3). She felt revealing the "diagnosis", and "result of the care" was an invasion of privacy. She referred to page 3, lines 23-25, and questioned what would become part of the public health record. Senator Rieger said that the intent was to have a presumption of confidentiality and fully supported that confidentiality. He said an individual's identity would not be divulged in the collecting of data. Co-chair Pearce asked that she and Senator Rieger work on new language regarding this issue. End SFC-93 #83, Side 2 Begin SFC-93 #85, Side 1 Co-chair Pearce said that CSSB 367(FIN) as amended would be HELD in committee. Recess 11:10am Reconvene 6:30 pm (The following part of the meeting is not on tape.) Co-chair Frank MOVED amendment 4 which changed the language on page 3, lines 8-31, making data voluntary and ensuring the reporting format would not identify individual patients. No objection being heard, Amendment 4 was ADOPTED. Senator Rieger MOVED for passage of CSSB 367(FIN) as amended from committee with individual recommendations. No objection being heard, CSSB 367(FIN) was REPORTED OUT of committee with "individual recommendations," a fiscal note for the Officer of the Governor for $672.7, and a fiscal note for the Department of Commerce & Economic Development for $322.6. Co-chair Pearce, Senator Rieger and Kelly signed "do pass." Co-chair Frank and Senator Sharp signed "no recommendation." ADJOURNMENT The meeting was recessed at approximately 6:45 p.m.
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