Legislature(1995 - 1996)
05/04/1995 02:45 PM 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
May 4, 1995
2:45 p.m.
TAPES
SFC-95, #61, Side 1 (121-end)
SFC-95, #61, Side 2 (575-end)
SFC-95, #63, Side 1 (000-500)
CALL TO ORDER
Senator Rick Halford, Co-chair, convened the meeting at
approximately 2:45 p.m.
PRESENT
In addition to Co-chairman Halford, Senators Donley,
Phillips, Sharp and Zharoff were present. Senator Rieger
arrived soon after the meeting began. Co-chairman Frank
arrived as it was in progress.
ALSO ATTENDING: Deborah Behr, Assistant Attorney General,
Legislation and Regulations Section, Dept. of Law; John
Lindback, Chief of Staff, Office of the Lt. Governor; Chris
Christensen, Staff Counsel, Alaska Court System; Dave
Hutchens, Alaska Rural Electric Cooperative Association;
Dennis Poshard, Director, Charitable Gaming Division, Dept.
of Revenue; Bruce Campbell, aide to Representative Kelly;
Tom Anderson, aide to Representative Martin; Jeff Logan,
aide to Representative Joe Green; and aides to committee
members and other members of the legislature.
SUMMARY INFORMATION
SB 167 - DAY FINES & INFO FOR COLLECTING FINES
Discussion was had with Chris Christensen. The
bill was held in committee for additional work by
Senator Rieger.
HB 17 - OFFICERS OF UTILITY COOPERATIVES
Discussion was had with Jeff Logan and Dave
Hutchens. An amendment deleting language (page 2,
lines 28 through 30) restricting electric
cooperative authority to provide direct satellite
television programming services in an area
certificated by the APUC for cable television was
adopted. SCS CSHB 17 (Fin) was then REPORTED OUT
of committee with zero fiscal notes from the Dept.
of Commerce and Economic Development
(Banking/Corporations) and Dept. of Commerce and
Economic Development (APUC).
HB 44 - GAMING PROCEEDS/DEFINE CHARITABLE ORG'NS
Testimony was provided by Tom Anderson and Dennis
Poshard. Amendments 1, 2, and 3 were distributed.
The bill was then held in committee for further
discussion.
HB 130 - REGULATION ADOPTION PROCEDURES & REVIEW
Testimony was presented by Bruce Campbell, John
Lindback, and Deborah Behr. An amendment changing
"consideration" to "attention" at page 5, line 16
was adopted. SCS CSHB 130 (Fin) was then REPORTED
OUT of committee with 18 zero fiscal notes and
notes from the following departments showing
associated costs:
Gov./Lt. Gov. $73.7
DEC (Solid Waste) 10.0
DEC (Wastewater) 4.5
DEC (Drinking Water) 6.0
DEC (Seafood Sanitation) 6.5
DEC (Palmer Lab.) 3.2
DPS (Commissioner) 5.0
DOR 20.0
CS FOR HOUSE BILL NO. 130(FIN) am(reengrossed)
An Act relating to the adoption, amendment, and repeal
of regulations.
Co-chairman Halford directed that CSHB 130 (Fin)am
(reengrossed) be brought on for discussion. BRUCE CAMPBELL,
aide to Representative Kelly, came before committee. He
explained that the proposed bill has a few, simple goals
relating to the Regulation Procedures Act. Language in
secs. 1, 2, 3, and 4 closes a loop in the process involving
the Legislative Regulation Review Committee and establishes
the Governor as the key elected official overseeing the
regulation process. Secs. 5 and 6 deal with public comment.
Sec. 5 strengthens public hearing requirements and directs
agencies to pay additional attention to factual, substantive
comments as well as public testimony regarding the cost of a
proposed regulation. While agency staff has considerable
expertise in terms of the benefits of regulations, the
private sector has the most expertise in issues relating to
costs. Sec. 6 incorporates a new section requiring agencies
to report use or rejection of public comments. Secs. 7, 8,
and 9 are housekeeping. Sec. 10 deals specifically with the
Dept. of Environmental Conservation and asks the department
to consider alternate methods of complying with the statute
while paying close attention to costs. The effective date
ensures that the proposed bill applies to regulations
noticed after the enactment date.
Discussion followed between Senator Donley and Mr. Campbell
regarding application of Secs. 1 through 4. Mr. Campbell
noted application to the Legislative Regulation Review
Committee under Title 24 and the requirement that committee
comments be provided to both the Governor and state
agencies. A loop is thus created between the committee and
the Governor.
Mr. Campbell further noted that under Sec. 3 language, the
Governor may return regulations to an agency for two
reasons:
1. If they are inconsistent with faithful execution
of law.
2. Agencies have need to respond to specific issues
raised by the Legislative Regulation Review
Committee.
The Governor may delegate this authority solely to the Lt.
Governor.
In response to a further question from Senator Donley, Mr.
Campbell explained that the Regulation Review Committee will
receive a copy of proposed regulations. At the present
time, the Committee merely receives notice that regulations
will be forthcoming. The general theme of the proposed bill
is that issues brought to legislative attention are those
raised by the public. While the Governor now has the
authority to deny adoption of proposed regulations, HB 130
would include the Regulation Review Committee in the loop,
as far as comments are concerned, up to the end of the
public notice period. It allows the committee to address
concerns directly to the Governor rather than through a
commissioner.
Responding to a question from Senator Phillips regarding the
impact of passage of HJR 1, Mr. Campbell said that the
resolution would make the system work better. It brings the
legislature further into the loop. HB 130 contains
preparatory language to assist in the process.
JOHN LINDBACK, Chief of Staff, Office of the Lt. Governor,
next came before committee. He explained that the
administration has taken a neutral position on the bill, but
he added that, personally, the Lt. Governor is on the
"positive side of neutral." Of chief consideration are cost
aspects. The administration is very interested in
regulatory reform and looks forward to addressing the matter
in the interim, in concert with the legislature. As
attempts were made to amend the bill in previous committees,
it was determined that amendments are sometimes more costly
than expected. Mr. Lindback deferred comment on cost
aspects to staff from the Dept. of Law.
Mr. Lindback agreed that the proposed bill is a reasonable
approach to addressing weaknesses in the current process:
1. It is closer to the public perception of how the
regulation process works. The Office of the Lt.
Governor is occasionally contacted by people who
are under the impression that the Lt. Governor can
simply not adopt regulations sent to her for
filing based on how she feels about them. In
fact, filing is a perfunctory ministerial function
at this time.
2. It builds in extra steps to ensure that public
comment is taken into consideration before
regulations are adopted.
In his closing comments, Mr. Lindback asked that the
administration be allowed the opportunity to review its
fiscal notes prior to passage of the bill from committee, if
it is amended.
DEBORAH BEHR, Regulations Attorney, Dept. of Law, next came
before committee. She said she had reviewed the current
version of the bill and has no legal problems with it. She
attested to having worked closely with the sponsor and
expressed thanks for his cooperation in developing language
that will work for the administration.
Directing attention to page 5, line 16, Ms. Behr voiced need
to delete "consideration" and insert "attention." She
referenced page 3, line 29, and noted use of "attention" in
that instance and need for parallel language on both pages.
Parallel construction will clarify that the Dept. of
Environmental Conservation will not have to conduct two
types of review.
Ms. Behr acknowledged that the Governor presently plays an
active role in regulations. Some delay in adoption of
regulations will result from passage of the proposed bill
because of review by the Office of the Governor.
Recording of the use of public comments (Sec. 6) is a new
function for state government. At the present time, the
Alaska Administrative Procedures Act requires that the state
agency consider all comments. There is, however, no track
record when a commissioner accepts or rejects regulations.
Ms. Behr referenced fiscal notes associated with the new
function.
Speaking to cost compliance, Ms. Behr noted that bill
provisions direct state agencies to ask those who fall under
the proposed regulations what costs are likely to be and to
pay serious attention to those costs.
The final section deals with the Dept. of Environmental
Conservation and asks that the department give special
consideration to comments relating to the cost of compliance
and alternative methods. The department does not believe
this provision will be problematic.
Discussion followed concerning the number of regulations
dealt with in a year.
Senator Phillips MOVED for adoption of the recommended
change at page 5, line 16, substituting "attention" for
"consideration." No objection having been raised, the
amendment was ADOPTED.
Senator Donley directed attention to a subsequent amendment
which he explained was earlier added to other legislation
relating to regulations. He noted that under the existing
regulation system, the administration merely publishes
notice of what it intends to adopt. It does not show the
actual language. The administration then takes public
comment and thereafter adopts "almost anything they want."
It does not have to provide notice or conduct public
hearings if a subsequent change is made. The proposed
amendment requires that if substantial or significant
changes are made in the original intent of the regulation
identified in the notice, the administration is required to
re-notice the regulation and provide copies of what is posed
for adoption. Exemptions are similar to those worked out
several years ago relating to special boards such as the
board of fisheries, board of game, commercial fisheries
entry commission, emergency regulations, or regulations
adopted to meet federal requirements. In his closing
comments, Senator Donley acknowledged that the
administration would probably oppose the amendment. Ms.
Behr advised that the amendment would be extremely expensive
since it would require "new rounds of public comments on
virtually all regulations." As an example, she cited fee
regulations which would require a new public comment process
for each fee change. The administration could find itself
in a continuous cycle of redoing regulations and not meeting
budget obligations. She suggested that if the amendment is
of interest to committee, she be allowed time to obtain
fiscal notes from all departments. Ms. Behr noted that the
public can bring court challenges against regulations that
are not properly noticed.
Co-chairman Halford asked if the proposed amendment was
considered when the bill was before prior committees. Bruce
Campbell explained that amending language is close to that
in an earlier "Z" version of the bill. That bill is not now
before committee, mostly because of cost considerations.
The amendment is similar to ideas proposed by the State
Chamber of Commerce for discussion during the summer. It is
the kind of concept that might well fit in a broader
package. Mr. Campbell stressed that the goal of the
proposed bill is not to reek havoc within the system but to
try to find small ways to make things work. The proposed
amendment is a much more serious fix than the sponsor
initially intended.
Co-chairman Halford voiced his belief that the regulatory
standard should be changed to provide that instead of merely
being reasonable to implement a statute, a regulation must
be essential to implementation of the express purpose of the
statute.
Senator Donley said he would not offer the amendment at this
time. He further expressed support for Co-chairman
Halford's comments regarding need for overall change in the
process.
Senator Sharp MOVED for passage of SCS CSHB 130 (Fin) with
individual recommendations and accompanying fiscal notes.
No objection having been raised, SCS CSHB 130 (Fin) was
REPORTED OUT of committee with 18 zero fiscal notes and
notes from the following departments showing associated
costs:
Gov/Lt. Gov. $73.7
DEC (Solid Waste) 10.0
DEC (Wastewater) 4.5
DEC (Drinking Water) 6.0
DEC (Seafood Sanitation) 6.5
DEC (Palmer Lab.) 3.2
DPS (Commissioner's Office) 5.0
DOR 20.0
Co-chairmen Halford and Frank and Senators Phillips and
Sharp signed the committee report with a "do pass"
recommendation. Senators Donley, Rieger, and Zharoff signed
"no recommendation."
SENATE BILL NO. 167
An Act relating to day fines in certain criminal cases
and release of employment information for use in the
collection of criminal judgments.
Co-chairman Halford directed that SB 167 be brought on for
discussion. CHRIS CHRISTENSEN, General Counsel, Alaska
Court System, came before committee. He explained that last
year the legislature passed law authorizing courts to impose
day fines for certain misdemeanor offenses. Pursuant to
that law, the Supreme Court appointed an 11-member panel to
develop a day-fine plan for implementation. In the course
of developing that plan, problems became apparent. Some of
the problems could be rectified by simple technical
amendments to the original statute. Those changes are
incorporated within SB 167. However, there are other
problems that are more fundamental. While the proposed
legislation does not address these problems, solutions could
be incorporated therein.
The first problem relates to legislative intent in passing
the original law. It is clear from committee comments and
floor debate that the primary intention of day-fines law was
to reduce the number of misdemeanor offenders who are sent
to jail and to increase fine collection rates. Day-fines
legislation, as enacted, will not achieve either of those
objectives without further changes. Day-fines law excludes
most misdemeanors for which people are presently sent to
jail. The vast majority (in excess of 85%) of those jailed
for misdemeanors are sentenced for one of six crimes:
1. DWI
2. Refusal to take a breathalizer.
3. Driving with license suspended.
4. Driving with license revoked.
5. Misdemeanor assault.
6. Violation of a domestic violence restraining
order.
As the law currently stands, a day fine is applicable to
none of the foregoing. Day fines will thus not
significantly reduce the number of misdemeanants clogging
the jail system.
The second problem is that, as now structured, increased
fine collection is unlikely. Imposing a day fine is one of
several sentencing options available to a judge. A judge
will only impose a day fine, in lieu of a regular fine or
jail if the judge feels the defendant will actually pay the
fine. Review of state collection practices evidences that
current fine collection rates are "incredibly low." People
are supposed to pay their fines immediately to the court
system. If they do not, we refer them to the Dept. of Law
fine collection unit which is funded by program receipts.
That unit is resource limited and is only able to go after
PFDs to collect fines. The collection rate is only 10%.
The day-fines committee believes that until the Dept. of Law
receives additional resources for fine collection, judges
are unlikely to use this sentencing alternative. The
committee thus suggested enactment of legislation to
prohibit issuance or renewal of a state license until
outstanding criminal fines are paid.
A further problem with day-fines law pertains to fine
amounts resulting from the day-fines formula. In order to
avoid separation of powers questions, the legislature
statutorily specified the unit scale and general formula for
computing day fines. A person sentenced for a class A
misdemeanor can be sent to jail for up to 365 days. The law
thus allows for a fine of up to 365 days of salary. The
day-fines committee found that that would require imposition
of fines of "incredible levels." The committee thus lowered
the maximum number of days of a person's salary from 365 to
45 days and discovered that even reduction would continue to
require "some incredible fines to be imposed." As an
example, Mr. Christensen cited the case of a motorist cited
for illegally passing a school bus. That offense is a class
B misdemeanor. When an individual is convicted of the
offense, it involves a mandatory court appearance, six
points on the individual's driving license, and a fine of
$100 to $200. Under day-fines law, reduction of the
mandated 365 days of pay to 45 days would require that a
person with an income of $10,000 receive a fine of $275. A
person with income of $40,000 would receive a $1,100 fine,
and an individual with a $100,000 income would be fined
$2,800.00. Since fines are so high, even after committee
reduction, the Supreme Court is reluctant to proceed without
legislative review of fine levels and approval of those
levels. Mr. Christensen stressed that establishment of the
foregoing fines is not a judicial power but legislative
power delegated to the courts. He then reiterated need for
the legislature to "sign off on this before we implement it
because we're not sure it's entirely what you expected."
The second largest category of misdemeanors is fish and game
offenses. After much deliberation, the day-fines committee
excluded those offenses from the plan. Unlike Title 11,
which has clear statutory framework with classification of
misdemeanors, fish and game law has no clear sentencing
structure. There are many different penalty provisions. It
is not always obvious which one applies to a particular
offense. Because many offense definitions overlap, the same
conduct can be charged under different statutes and
regulations with entirely different consequences. The
committee was unwilling to impose another layer of
complexity on this already overly complex system. The
committee recommended that the legislature appoint a special
legislative committee or interagency working group to assess
and restructure fish and game penalty provisions and
definitions of offenses.
In his closing comments, Mr. Christensen stressed that it
will require a significant commitment of resources to
implement legislation from last year. The proposed bill
takes care of technical problems, but larger fundamental
problems remain outstanding. Those will need to be
addressed at some time.
Responding to a question from Co-chairman Halford, Mr.
Christensen referenced the day-fine report which he
explained had been furnished to all legislators' offices.
He reiterated that even after reduction of the possible fine
from 365 days to 45 days, fines are very high for offenses
that "people shouldn't do but sometimes they do,
thoughtlessly." He urged the committee to review numbers
within the report and advise the court system if that is
what was intended when authority was provided. Co-chairman
Halford said he had no problem with the higher fines.
Senator Rieger asked if authority allows the court system to
use a fraction of a day as the basis for a day fine. Mr.
Christensen suggested that authority to reduce the number of
days achieved the same result. He questioned whether
application of a percentage of daily pay could be utilized.
End: SFC-95, #61, Side 1
Begin: SFC-95, #61, Side 2
In response to an additional question from Senator Rieger,
Mr. Christensen explained that the statute allows for use of
aggravating and mitigating factors. The court is required
to set a presumptive day fine for an offense. If
aggravating or mitigating factors are found, the judge may
reduce or increase the fine within a certain parameter.
Some of the proposed technical changes relate to aggravators
and mitigators.
Co-chairman Halford voiced his belief that it is not
excessive to fine someone $1,000 or $1,500 for "a major
violation that endangers people." He further voiced his
support for a minimum fine of $5,000 for drunk driving "that
becomes a super lien on the vehicle on the second offense."
No bank would then loan on a car, and no person would loan
their car to an individual after that individual was
convicted of DWI.
Senator Rieger advised of need to review the schedule of
fines, suggesting that some may be too low and others too
high. The maximum amount of 365 days was placed in statute
so that the judge could fine or sentence to jail for that
amount. It appears that when converted to a cash basis,
that flexibility was removed either by the manner in which
the courts interpreted the legislation or the way the law
actually reads. He said he was a proponent of day fines but
agreed that the punishment must fit the crime. He attested
to problems stemming from erratic enforcement of law.
Mr. Christensen directed attention to the fine schedule and
noted that a fine for a level six offense (the most serious
misdemeanor) if applied to DWI (which is not now covered)
could amount to $5,500 for a person with $100,000 income.
The problem is that because DWI carries a mandatory jail
sentence, a day fine cannot be applied. Both Co-chairman
Halford and Senator Rieger indicated support for a fine of
that magnitude. Senator Rieger then questioned whether the
legislature had the courage to change DWI from the mandatory
three days in jail to a stiff fine. The Co-chairman
suggested that if the change had an enforcement mechanism,
there would be support. Unless there are provisions for
something like a super lien, the money will not be
collected.
In response to a question from Senator Sharp, Mr.
Christensen explained that for certain misdemeanors, a judge
has the option of imposing the standard jail sentence and
fine or the day fine. When a day fine is imposed, there is
no possibility of a jail sentence, but the defendant is "hit
with a very, very stiff fine." Thereafter, the defendant
cannot be put in jail because he or she does not pay the
fine because the constitution prohibits imprisonment for
debt. As a result of further discussion and concern
expressed by Senator Sharp, Mr. Christensen suggested
revising the traditional system of jail and a fine to
include larger fines based on salary. The fine would then
serve as a condition of probation. If it is not paid, the
defendant would go to jail. Mr. Christensen questioned
whether that would work within the confines of the
constitution. He noted that in the present situation, the
judge "really has to make his decision up front." The judge
evaluates the defendant and determines whether to impose the
traditional jail time and fine or a substantial day fine in
lieu of the traditional sentence. The judge will not levy a
day fine if he or she suspects it will go unpaid.
Senator Zharoff questioned whether alternatives such as jail
time, a low fine, or a higher fine could be imposed based on
the defendant's economic status. Mr. Christensen
acknowledged concerns regarding equal protection. Under a
day fine, an individual pays a percentage of what he or she
actually makes. No matter how poor an individual may be, if
the defendant is making money, he or she may receive a day
fine--a percentage of salary. The court will frequently
impose fines under the traditional system, and people who
cannot pay have the option of performing community work
service. Statutes have a dollar value for each day of the
fine. Judges have the option of allowing defendants to pay
day fines with legislatively defined community work service.
A judge could not send people to jail "just because they had
no money."
In response to a further question from Senator Zharoff, Mr.
Christensen voiced his understanding that while the statute
does not clearly say, day fines are based on a defendant's
income rather than combined income of a husband and wife.
Discussion followed among committee members concerning
disposition of the bill and whether it should be reviewed
during the interim in order to incorporate needed
fundamental changes in law. Mr. Christensen reiterated that
the court is reluctant to proceed with implementation of day
fines without further legislative review. The court system
will review comments before committees and send the issue
back to the day-fines committee for additional work.
Senator Rieger expressed support for implementation of day
fines. He then voiced support for legislative direction
that allows the day-fine schedule to be more flexible (a
combination of limits on days, total days, fractions of
days, a sliding scale, etc.) and removes prohibition against
use of day fines for misdemeanors that are now exempt from
application. He then asked if that would be sufficient for
the courts to implement the program. Mr. Christensen said
he could not predict what the courts might do. He
acknowledged that the foregoing changes would help achieve
one of the purposes of the day-fine concept: reduction of
the number of misdemeanants clogging jails. Co-chairman
Halford expressed doubt that there would be sufficient
legislative support for inclusion of DWI offenders unless
there is assurance of collection of "major, multi thousand
dollar fines."
Co-chairman Halford voiced his understanding that day fines
relate to income but do not apply against assets. He cited
instances of individuals who may have low income but
"tremendous assets" and suggested that they "ride the very
low penalty schedule." He then asked if that aspect was
considered. Mr. Christensen acknowledged the concern and
suggested that a judge might decide that a day fine is not
appropriate for a particular defendant, and the traditional
jail sentence and standard fine would be imposed. He
stressed that for 90% of the public, the day-fine approach
works.
Responding to a question from Co-chairman Halford regarding
the seasonal nature of income for some residents, Mr.
Christensen noted that one of the proposed technical changes
requires that judges must believe that the fine will be paid
within one year. The original provision required payment
within six months. The technical change extends that period
to one year.
Senator Rieger asked if a judge could suspend a portion of
the imposition of a day fine. Mr. Christensen responded
negatively. However, a technical change relates to set-
aside of conviction. At the present time a judge may impose
a suspended imposition of sentence and allow one's record to
remain clean. Day-fine law does not allow that. The day-
fines committee felt that if the state allowed for suspended
imposition of day-fines, it would encourage defendants to
pay. The technical change thus allows a judge to set aside
a conviction if, in the interest of justice, he believes it
is warranted, and the person has paid his or her fine.
Co-chairman Halford voiced concern that the proposed bill
was introduced on the 100th day of a 120-day session, and
the committee which should properly deal with such an issue
waived referral to Finance.
Further discussion followed regarding inclusion of DWI
offenses. Co-chairman Halford stressed need to ensure an
arrangement such as three days in jail or a fine of $5,000--
"whichever the judge determines to have the maximum
deterrent value on that particular offender. " If there is
no mechanism for collection, the state will likely never get
paid. Senator Rieger expressed his understanding that the
bill as presently proposed would not accomplish all that it
should. Co-chairman Halford suggested that the bill be held
for additional work and advised that he would bring it back
for further discussion at the next meeting.
CS FOR HOUSE BILL NO. 17(L&C) am
An Act expanding the services that may be offered by an
electric cooperative to include sewer and water and gas
services when authorized by the Alaska Public Utilities
Commission, and to include direct satellite television
services; relating to officers of a telephone or
electric cooperative; relating to amendment of the
articles of incorporation of a telephone or electric
cooperative; and providing for an effective date.
Co-chairman Halford directed that CSHB 17 (L&C)am be brought
on for consideration. JEFF LOGAN, aide to Representative
Green, came before committee. He explained that the bill
amends Title 10 in three categories:
1. Expansion of the scope of services that can be
offered by electrical cooperatives to include water,
sewer, natural gas, and direct satellite
television.
2. Clarification of voting procedures for amendments
to articles of incorporation for electrical
cooperatives. New language clarifies how members
may vote either at the annual meeting or by mail.
3. Provision of a local option in the titling of
board members of electric cooperatives. Under
current law, board members are required to be
titled: president, vice-president,
secretary, and treasurer. Common practice is
for the presiding officer of a board to be
called the chairman. Some cooperatives use
other titles. Proposed changes allow them to
select the titles they wish to use.
Remaining sections, with the exception of the effective
date, are conforming changes.
Mr. Logan next directed attention to a draft SCS CSHB 17 and
voiced support, on behalf of the sponsor, for amending
language therein. Changes incorporated within the draft
include:
Page 2, line 1, removes inclusion of subsection (7)
from the citation of AS 10,25.020 (6) since there is no
need to include direct satellite television under
APUC regulation.
Page 2, line 25, subsection (6) utilizes Senate
language which is cleaner.
Page 2, line 28, subsection (7) makes clear where
direct satellite television services may be offered and
where they may not. It also provides a
definition.
Senator Randy Phillips voiced his understanding that the REA
has changed to the RUS (Rural Utility Services) in order to
obtain loans for provision of other utilities. Mr. Logan
concurred. The Senator then asked if there was objection
from gas, water, and sewer companies to expansion of rural
electrical cooperatives to other utilities. Mr. Logan
responded negatively. Co-chairman Halford voiced his
understanding that water, sewer, and gas services are
provided through a system but not certified or regulated by
APUC.
Co-chairman Frank voiced his understanding that it is not
anticipated that rural electrical coop provision of water,
sewer, or gas services would overlap areas where existing
utilities provide these services. The proposed bill will
only apply to areas where there in presently no such
service. Mr. Logan agreed that it is not the intent that
service areas overlap.
DAVE HUTCHENS, Alaska Rural Electric Cooperative
Association, next came before committee. As background
information he explained that the proposed bill represents
the first amendment to AS 10.25, the electric telephone
cooperative act, since the 1988 code revision. It contains
a collection of needed items due to a change in present
circumstances or the fact that some items were overlooked
when revision occurred.
Speaking to concern raised by Senator Phillips questioning
electric coop expertise in other utility areas, Mr. Hutchens
explained that "this section does not confer the right on
the electric cooperatives to go out and provide this
service." It merely places provision of services within
their corporate powers. It would then be legal for them to
engage in this business, if authorized to do so by the APUC.
Speaking to the change from REA to RUS, Mr. Hutchens
referenced combination of all rural utility loan programs
within the Dept. of Agriculture into one entity. The reason
for the change was to allow electric cooperatives that have
a good track record of management success to extend sewer
and water in rural areas where needed. For loans to rural
entities for small sewer and water systems that do not have
a good management record, the proposed bill would allow
rural electric coops to step in and provide management
services, where necessary, to protect assets built with USDA
loans. That is the national push behind the issue.
In response to concern raised by Senator Phillips, asking if
a rural cooperative could take over gas services. Mr.
Hutchens replied, "Absolutely not." The rural coop would
have to go before the APUC and make a case that they could
do the job better than Enstar. He then voiced his
understanding there is no chance they could do that.
Senator Rieger asked if certificates of convenience and
necessity are always exclusive. Mr. Hutchens answered, "In
practice, it has been . . . for sewer, water, gas, and
electric." Local telephone service has also been exclusive
in practice.
Responding to an additional question from Senator Phillips,
Mr. Hutchens explained that RUS provides ready funding to
rural electric coops for water and sewer projects. There is
$900 million in the federal budget for this year.
Senator Phillips again posed a question regarding expertise.
Mr. Hutchens pointed to common practice in a number of
states for the electric cooperative to also provide sewer
and water service. The management system is in place.
Specific expertise in sewer and water is then hired.
Noting that the Dept. of Environmental Conservation is
attempting to construct sewer and water projects in a number
of areas, Co-chairman Frank asked if cooperatives were
working with the department. He suggested that coops could
provide both management and maintenance expertise that was
lacking in the past.
Senator Sharp suggested that for small water and sewer
utilities that are now precluded from selling out to an
existing electric cooperative if they chose to "get out of
the business," the proposed bill offers an opportunity for
improvement of service by an entity with greater financial
capabilities.
Mr. Hutchens stressed that in Alaska cooperative members are
not "hungry after the idea of getting into sewer and water."
Members feel it is good to have authority to do so if the
right opportunity comes along, or it makes sense for the
coop to do so. Mr. Hutchens acknowledged that the Alaska
Village Electric Cooperative which services 50 villages in
the western part of the state is willing to take on whatever
services might be necessary to make their communities more
viable. Naknek Electric is also interested in being able to
provide sufficient natural gas for local service.
Senator Sharp MOVED for adoption of SCS CSHB 17 (9-LS0096\W,
Cramer, 4/26/95). Senator Rieger OBJECTED and inquired
concerning the difference between Senate and House versions,
specifically referencing new language at page 2, relating to
direct satellite television. Mr. Logan explained that
satellite television differs from cable in that programming
is received by a satellite dish and relayed to users. The
utility would not offer the service itself. Cooperatives
would "service" the service. They would provide
administrative and billing services. Mr. Hutchens added
that the National Rural Telecommunications Cooperative is
owned by a national collection of coops. NRTC has its own
programming package put together in direct negotiations with
programmers such as Disney.
Senator Rieger next questioned inclusion of the following:
to a location that is not part of an area
certificated by the Alaska Public Utilities
Commission to a cable television company on the
effective date of this Act.
Mr. Hutchens explained that areas cooperatives would like to
serve with direct satellite television are "the scattered .
. . housing areas in their electric service areas." As an
example, he cited areas in the Matanuska Valley, Kenai
Peninsula, Copper Valley, and rural areas outside of
Fairbanks where it is not feasible to have a cable
television system. The foregoing was added as a means of
assuring cable television companies that electric coops will
not be "poaching their territory." Coops would not be
serving areas that have cable television. Mr. Hutchens
acknowledged that the above does not forego direct satellite
television service in competition with cable delivery.
However, that would be done through "somebody like RCA-
Hughes" rather than by an electric coop.
End: SFC-95, #61, Side 2
Begin: SFC-95, #63, Side 1
In the course of further discussion of satellite television
delivery, Mr. Hutchens explained that the consumer would own
his or her own satellite dish. The coop would merely
provide billing services. Language within the bill is
intended to allow for provision of service "if and when the
satellite actually has Alaska in its footprint . . . . Two
years is the projection on that." Scattered housing would
be the market area. The benefit of coop provision of this
service rests in the value added service and negotiated
rates on programming packages through NRTC.
Responding to a question from Senator Rieger, Mr. Hutchens
advised that homes located in an area certificated to a
cable company, would fall outside the area that could be
served through a coop. If the area is not served by cable
when the proposed bill becomes law, it could be served by a
cooperative.
Senator Rieger inquired concerning the position of the
sponsor on the proposed amendment. Jeff Logan voiced
concern regarding passage of the legislation if the
amendment is incorporated. He then expressed a preference
for the draft SCS CSHB 17 as written. Senator Rieger said
he would not proceed against the wishes of the sponsor but
expressed concern over backing down because a regulated
utility "doesn't want the competition."
Senator Zharoff raised concern that in smaller communities,
provision of television services is a private enterprise.
He suggested that service by a utility would limit or
prohibit service by the private sector.
In response to a further question by Senator Rieger, Mr.
Hutchens explained that the cable television industry was
not convinced that language passed in the House bill would
provide sufficient protection against competition from
satellite service. New language contained within subsection
(7) at page 2 was thus incorporated within the Senate
committee substitute.
Senator Rieger MOVED to withdraw his proposed amendment.
Co-chairman Frank then MOVED for adoption, saying that
competition should be allowed. Regulation should only be
necessary where competition is not possible because of
economic reasons. Senator Sharp voiced concern that
competing services, regardless of technological advances, in
a small service area may dilute the number of customers
needed for the service to be viable. Senator Zharoff raised
a question regarding reversal of services provided by a coop
should a community or private enterprise seek to take over
service provision. Co-chairman Frank clarified that the
proposed amendment would not grant exclusivity to existing
cable operators relative to direct satellite television
program services. The change would merely open competition
to electric utilities that choose to provide the service.
Co-chairman Halford raised a question regarding
certification of cable television services, and discussion
of the issue followed.
Senator Sharp expressed concern over possible unequal
competition if one segment of the industry is certificated
and regulated by the APUC while the other is provided
authority by the legislature, through statutes, and bypasses
the regulatory process.
Co-chairman Frank said that the proposed amendment does not
go as far as he would like. He voiced a preference for
allowing technology to advance competition for the benefit
of the consumer.
In response to additional questions regarding regulation,
Mr. Hutchens advised that cable television companies that
serve ten or more customers are to be certificated by the
APUC. None of the companies are regulated in terms of
rates, unless consumers petition for economic regulation.
The company in Juneau is the only regulated cable service
provider in Alaska.
Co-chairman Frank cautioned that it is not good policy to
artificially restrict competition where technology is
allowing it to happen. Senator Zharoff questioned allowing
a utility to provide a service that is not governed by APUC
in possible competition with service that has undergone the
certification or regulatory process.
Co-chairman Halford voiced his understanding that the
proposed bill merely allows utilities to engage in a form of
competition that is presently available to any other entity,
since provision of television services is unregulated. The
Co-chairman then called for objection to adoption of the
proposed amendment. No objection having been raised, the
amendment was ADOPTED.
In response to a further question from Senator Zharoff, Mr.
Hutchens explained that the bill would simply grant utility
cooperatives authority to provide needed services not
provided by another entity.
Senator Sharp MOVED for passage of SCS CSHB 17 (Fin) with
individual recommendations. Senator Zharoff OBJECTED and
advised of need for additional review. Co-chairman Halford
called for a show of hands. The motion carried on a vote of
4 to 2. SCS CSHB 17 (Fin) was REPORTED OUT of committee
with zero fiscal notes from the Dept. of Commerce and
Economic Development, one from the Division of Banking,
Securities, and Corporations and the other from the Alaska
Public Utilities Commission. Co-chairmen Halford and Frank
and Senators Phillips, Rieger, and Sharp signed the
committee report with a "do pass" recommendation. Senators
Donley and Zharoff signed "no recommendation."
CS FOR HOUSE BILL NO. 44(FIN) am
An Act relating to reporting by permittees, licensees,
and vendors; relating to municipal regulation of
charitable gaming; providing that a political group is
not a qualified organization for purposes of charitable
gaming, other than raffles, and relating to those
raffles; relating to identification to the public of
each permittee that will benefit from the sale of each
pull-tab series and each bingo session; providing that
the proceeds from charitable gaming, other than certain
raffles conducted by a political organization, may not
be contributed to a political party or other political
group; and providing for an effective date.
Co-chairman Halford directed that CSHB 44(Fin) am be brought
on for discussion and directed attention to SCS CSHB
44(STA).
TOM ANDERSON, aide to Representative Martin, came before
committee. He explained that under the proposed bill
political permittees would not be allowed. No political
organization or group may hold a charitable gaming permit.
The bill continues to allow remaining, non-political
permittees to contribute and donate to candidates, but
distribution of such funds has been tightened. Political
groups may continue to obtain raffle permits. Mr. Anderson
urged passage of the bill with proposed amendments.
DENNIS POSHARD, Director, Charitable Gaming Division, Dept.
of Revenue, next came before committee to speak to the
technicalities of the bill. Co-chairman Halford directed
attention to Amendments 1, 2, and 3. Duplicate amendments
contained within a packet of information highlighting
differences between House and Senate versions of the bill
and the three amendments logged-in and stamped for
distribution to committee caused temporary confusion. The
meeting was recessed for review and comparison of the
amendments.
RECESS
The meeting was recessed at 4:50 p.m. and did not reconvene
on this date.
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