Legislature(1999 - 2000)
02/02/1999 09:00 AM Senate FIN
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MINUTES
SENATE FINANCE COMMITTEE
February 2, 1999
9:00 AM
TAPES
SFC-99 # 17, Side A and B
CALL TO ORDER
Co-Chair John Torgerson convened the meeting at
approximately 9:00 AM.
PRESENT
Co-chair John Torgerson, Senator Sean Parnell, Senator
Randy Phillips, Senator Dave Donley, Senator Loren Leman,
Senator Gary Wilken, Senator Al Adams, Senator Pete Kelly
and Senator Lyda Green.
Also Attending: Senator RICK HALFORD; TERI KRAMER, Legal
Services, Legislative Affairs Agency; CAROL CAROLL,
Director, Division of Support Services, Department of
Natural Resources; JANET CLARKE, Director, Division of
Administrative Services, Department of Health and Social
Services; GINGER BLAISDELL, Fiscal Analyst, Division of
Legislative Finance; aides to committee members and other
legislative members.
Attending via Teleconference: DAVID HUDSON, First Sergeant,
Alaska State Troopers in Anchorage; DICK MYLIUS, Resource
Assessment and Development, Division of Land, Department of
Natural Resources in Anchorage.
SUMMARY INFORMATION
SENATE BILL NO. 49
"An Act relating to missions and measures to be
applied to certain expenditures by the executive
branch of state government and the University of
Alaska from the state operating budget for the fiscal
year ending June 30, 1999; and providing for an
effective date."
Co-chair Torgerson called SB 49, sponsored by the Senate
Finance Committee.
Senator Parnell explained SB 49 for the committee. It is
believed missions, measures and results should be clearly
defined for each department in order to assure
governmental results were to the satisfaction of the
people. He briefly quoted from SB 76, which was passed by
the Legislature and signed into law by the Governor last
year. He then referred to a Texas budget, Department of
Public Safety, 1995, using this as an example and explained
how results were obtained. (This was done with the use of
an overhead projector.) The next slide was from HB 325 the
Department of Health and Social Services showing portions
of missions and measures that were vetoed by the Governor
last year in order to protect the constitutional mandates.
The Governor felt the bill should not contain intent
language. Now they must decide what kind of bill to pass
and what it should contain. He suggested passage of a bill
containing measures that included dollar amounts. These
dollar amounts would reflect what had already been
appropriated.
SB 49 took all finance measures, which were negotiated last
year, and then vetoed by the Governor, and put them into
law this year for the 1999 budget. He hoped to continue
this for 2000. Senator Parnell then briefly summed up SB
49.
Senator P. Kelly asked if this was the sum total agreed
upon last year? Why not put it into the statutes?
Senator Parnell said it was the sum total from last year.
He requested Teri Kramer from Legal Services come to the
table.
Teri Kramer, Legal Services, Legislative Affairs Agency was
invited to join the committee. She said the missions and
measures could be put into the bill. It would only be
arduous to draft and there may be questions regarding
existing statutes.
Senator Adams asked what was the liability of putting
something like this into a bill if it would not be
correctly performed? He referred to section 2, page 2.
And what happens if they do not come up to full
expectations and there is a liability and challenge on each
of these? He believed this bill violated the State
Constitution and should perhaps have a judicial review.
Article 2, section 13 set out the single substance
requirement. Senator Adams felt it would not survive
judicial scrutiny.
Ms. Kramer said the single substance issue was certainly in
issue. However, it only addresses a single year of
appropriations. Courts have been generous in the past in
considering this matter. She suggested it would perhaps be
better to put it into several bills rather than lumped into
one.
Senator Parnell concurred that the Courts have been
generous in the past. Missions and measures are an
expression of legislative policy and therefore the State
would be immune to liability. It is a legislative duty to
set policy.
Senator Leman agreed with Senator Adams regarding page 2.
He felt that performance measures should only be what
ought to be acquired. With reference to page 8, line 15,
performance measures for permits.he asked what were the
workable permits issued compared to the total permits
issued. Will there be a total amount of workable permits
and another total for unworkable permits?
Senator Parnell responded. All missions and measures were
established in the subcommittees and are in rough form.
They were only a reflection of what was passed last year.
Senator Leman asked what does "workable permit" mean.
Senator Parnell said Ms. Kramer would have to respond.
Senator Adams referred to missions and measures that we
presently have and indicated that they were not
accomplished as they should. He said, "Perhaps we should
get away from the single substance issue."
Ms. Kramer said she didn't feel there was any liability
under single substance. She did not know what the
Legislature intended if a department did not accomplish its
measures.
Senator Parnell responded that if an agency did not
accomplish its measures then they would either do away with
the program or cut it back, or the agency would convince
the Legislature they needed more money to perform the
specific duty. He said the bill was only an expression of
policy and that the Legislature was immune to liability.
Senator Adams asked about the public or constituency
feeling that the missions and measures were not being
fulfilled? The public would like to see an accomplishment.
Senator Parnell agreed and said that the Legislature was
acting as a representative of the people in holding the
departments responsible.
Senator P. Kelly reiterated the key to the missions and
measures as discussed last year. The agencies did not have
much objection, if any, to them. There were some technical
problems and if departments and agencies could not agree
then they were held over. There was going to be some
failure, which would assist in getting a handle on what was
expected of the agency. He felt this interaction was good.
Senator Parnell said for years the executive branch had put
performance measures into their detail books but had never
been held accountable, nor did they really know what was in
the detail books. In referring to the Executive Budget Act
he said results could not be put into the budget itself.
Senator Donley said measures should be put in the budget
documents as in other states. "We are trying to get more
efficiency in State government so people see the result of
their money." By use of his veto power the Governor took
out some good measures. Most of the departments had agreed
to the measures he later vetoed.
Jack Kreinheder, Senior Policy Analyst, Office of
Management and Budget was invited to join the committee.
He said they supported the bill in concept and appreciated
the opportunity to work with the committee in the drafting
of the bill. It would be preferable to have some clearer
wording in the bill, however.
In response to Senator Phillips, Mr. Kreinheder responded
and used Y2K as an example. A mandatory statement by the
Legislature regarding missions and measures could be a
problem.
Senator Parnell asked if the Administration had any other
problems with any other section other than Y2K?
Mr. Kreinheder said they had not done a comprehensive
review. The Attorney General's office had done some. Y2K
popped out because it was a "hot potato". Many of the
other measures do not have a target, rather have a
baseline. He is not aware of others that may raise
pressing legal problems. This bill applies to current year
but there were concerns to get it adopted quickly. The
Administration was taking this seriously and departments
were working on enhancing these measures. It would be
preferable for the departments to work with the
subcommittees to fine-tune the measures.
Senator Parnell said he anticipated the subcommittees would
do this but felt they needed the support of the bill. It
would then be a potential vehicle for the year 2000.
Mr. Kreinheder said they did not have any legal opinion
regarding this bill. He spoke with Jim Baldwin along with
a few others that had looked at the bill but he noted that
no immunity for the State had been discussed. He said a
reasonable level of compliance should be reached. Targets
for litigation should be set if it were to be a compliance
requirement. In response to Senator Parnell he said they
felt the State could be held liable.
Senator Donley suggested adding an amendment that would
read: "The State could not be held liable for anything
contained herein."
Senator Phillips said he thought the State was looking for
perfection. Therefore a standard of excellence should be
set up and measured against. Perfection is not going to
happen. Department of Law was going to have to work with
the Legislature and this bill was a good start. People
want to know if they are getting their money's worth.
Senator Kelly said he knew there was going to be a problem
with Y2K. He asked if they were compliant?
Senator Parnell said Y2K was under mission critical. Co-
chair Torgerson concurred.
Senator Parnell further explained that one hundred percent
of mission critical was covered by disaster recovery
program. He also advised the committee that there were a
host of other Y2K problems.
Senator P. Kelly reiterated his concern for the Y2K issue.
There will still be problems because everything cannot be
anticipated.
Co-chair Torgerson felt that the Office of Management and
Budget was trying to delay the bill. They want to have
words in there that have no accountability.
Mr. Kreinheder said it was not their intent to hold the
bill up. He was also not going to argue on the one hundred
percent compliance for the Y2K problem. The Department of
Law can address the other questions raised. Some
redrafting would make it clear that the bill was an
expression of policy by the Legislature.
Senator Adams did not feel that the Office of Management
and Budget was trying to hold up the bill, rather they were
only suggesting rewording.
Senator Parnell referred to Amendment #1. Accountability,
he said, rests back here. He then requested the bill be
held over until Thursday. He will work with Legislative
Legal, Senator Donley and the Administration on more
specific language. Perhaps that would help solve the saber
rattling.
Senator Adams voiced concern on the single substance issue.
He wanted a memorandum on that.
Senator Parnell agreed to seek to clarify the single
substance issue.
Suzanne Tryck, WWAMI Coordinator joined the committee by
teleconference from Anchorage. She said she had no
comments to make regarding the bill but would be happy to
answer any questions.
Co-chair Torgerson SET ASIDE SB 49 until Thursday.
He then called SB 3.
SENATE BILL NO. 3
"An Act relating to the crimes of murder, solicitation
to commit murder in the first degree, manslaughter,
and criminally negligent homicide; relating to
homicides of children; and relating to the crime of
interference with custody of a child or incompetent
person."
Senator Rick Halford was invited to join the committee. He
offered brief comments as sponsor of the bill. He
explained the fiscal note from the Department of Law at
zero and the Department of Administration as being an
indeterminate amount.
Senator Adams said he supported this piece of legislation.
Senator Leman referred to a particular case wherein an
individual fleeing a police officer shot and killed an
eight-year old child. He asked specifically if this type
of activity was covered in this bill?
Senator Halford said this was covered. Penalties increase
when a firearm is present. Penalties increase when the
victim is a child.
David Hudson, First Sergeant, Alaska State Troopers, said
they supported the bill. He voiced concerns that proper
consideration should be given for the necessary enabling
language that a convicted individual of sexual offense must
register. It was explained that a person could cause death
of a child during a sex offense and be charged with murder
therefore not having to register as a sex offender.
Senator Halford said this was not the intent of the
legislation or the sex offender registration program. He
would go back and look into this matter.
Tape: SFC - 99 #17, Side B
Senator Donley referred to item three of the sponsor
statement. He wanted an explanation of the impact this
would have and how it would apply to crimes against
children. Public policy.was taking homicides more
seriously and he agreed with this. How did this relate to
other forms of homicide in general?
Senator Halford asked Senator Donley for a better
explanation of his question.
Senator Donley explained homicide and a greater degree of
culpability. When one was raised what was it being equated
to? Was it being equated to a greater amount of
culpability. He agreed to talk about it later with the
sponsor.
Senator Halford said the terms and options would have to be
examined. A second-degree offense would be elevated if the
victim were a child. There was also an increase in the
penalty if the victim was a child.
Senator Donley asked if the particular individual would be
eligible for good time? Senator Halford said "yes".
Senator Halford explained his understanding of manslaughter
for Senator Kelly. However, he did not know the exact
legal definition. That was charges the lawyers argue
about.
Senator Kelly asked if perhaps Senator Donley could help
out. Which was more grievous, manslaughter or homicide?
Senator Halford said he understood manslaughter to be the
more grievous charge. However, he would have expected
these questions in the judiciary committee.
Senator Leman MOVED SB 6. WITHOUT OBJECTION it was
REPORTED OUT with individual recommendations and
accompanying fiscal notes from the Department of
Administration/Public Advocacy, indeterminate; Department
of Law, zero; Department of Administration/Public Defender,
indeterminate; Department of Corrections, zero.
Co-chair Torgerson called SB 6.
SENATE BILL NO. 6
"An Act relating to the disposal of state land."
Mel Krogseng, staff to Senator Robin Taylor was invited to
join the committee. She explained the bill on behalf of
Senator Taylor, sponsor. The land in question has been
purchased and returned to the State because of default. The
Department of Natural Resources proposed the amendments
that were already incorporated into bill. It is supported
by them and carries a zero fiscal note.
Senator Adams asked about the two amendments proposed by
the chairman. Ms. Krogseng said there was no objection to
the amendments.
Carol Carroll, Director, Division of Support Services,
Department of Natural Resources was invited to join the
committee. She did not wish to testify but said Dick
Mylius from the department was available via teleconference
in Anchorage.
Dick Mylius, Resource Assessment and Development, Division
of Land, Department of Natural Resources testified before
the committee via teleconference in Anchorage. He said the
department supported the bill as currently drafted. It
would allow them to get land up for sale more quickly.
Under State statute the land must be appraised before sale.
Senator Adams referred to Amendment #1, section 5 having to
do with appraisals. His concern was that the director
might not reject an appraisal. What happens if there is a
low appraisal rating?
Mr. Mylius said they opposed Amendment #1. The department
may want to reject an appraisal for many reasons. Such as
error in computation, the wrong parcel of land, etc.
Senator Adams referred to Amendment #2.
Mr. Mylius said his concern for Amendment #2 was the
statute was changed previously to two years. Further, it
does not read quite clear what the addition modifies.
Senator Adams suggested that in Amendment #2, line 6, after
"lease" insert "or".
Mr. Mylius briefly described an inaccurate appraisal and
the problems caused by this for the committee.
Co-chair Torgerson commented about the situation of the
hiring of an appraiser to appraise a specific piece of
land, it was rejected and the case was now under
administrative appeal. He then explained purpose of the
amendment.
Mr. Mylius said this kind of situation rarely arises and
this one was an exception. There was significant error.
The private appraiser ignored all comments and suggestions
made by State appraiser.
Senator Torgerson said appraisers were hired because they
were supposed to be unbiased towards either party. Did
they try to negotiate a higher price?
Mr. Mylius said there was a lot of differences. The piece
of property was a difficult one to appraise.
Senator Torgerson asked if appraisers were licensed by the
State? Mr. Mylius said they were. Senator Torgerson asked
if they were covered by insurance? Mr. Mylius said he did
not know.
Senator Phillips asked if the process done for everyone was
normally the same?
Mr. Mylius said parcels of land were appraised beforehand.
They appraise the land up front and the buyer pays this fee
up front. They do sell exclusively to an individual in
certain situations.
Senator Phillips asked what happened if an individual did
not like the appraisal? Was another appraisal secured?
Mr. Mylius said that was correct.
Senator Adams asked what the third appraisal in this
particular situation came out to be? Mr. Mylius said the
issue was currently out to deal and he could not release
the amount of the appraisal.
Co-chair Torgerson asked what was the expectation of the
person paying for the appraisal? In this particular
situation, they got two more appraisals and still filed an
appeal.
Senator Donley MOVED Amendment #1. Senator Adams OBJECTED.
He MOVED to delete all of section 5 as an amendment to
Amendment #1. Co-chair Torgerson OBJECTED. He said there
was an expectation on behalf of the buyer when the
appraisal service was paid for. Therefore the department
did not have any veto right.
Mr. Mylius said this instance was a rare occasion. The
State certified appraiser had voiced her concerns. The
outside appraiser did not respond to her concerns.
Senator Torgerson said he felt Mr. Mylius wanted to leave
everything to the discretion of the department.
Mr. Mylius said they either do appraisal with their own
staff or hire another appraiser. Then it could be appealed
to the commissioner, the individual could purchase the
property or not, or they could take the matter to Court.
Senator Torgerson said this was not great policy and it did
not make sense.
Senator Phillips asked about the appraisals. Did the same
process apply to all properties? Mr. Mylius said they did
use the same appraisal process for all properties.
Senator Phillips questioned then why was this case so
different? Mr. Mylius said this was because of the
difference of the value of the property between the
purchaser and the department.
Senator Kelly asked if there was any contract that the
Department of Natural Resources would sell land to a person
based on an appraisal carried out by one of their approved
people? Mr. Mylius said there was no contract, but it
would still have to be approved by their appraiser. He
explained that the only ground for disapproval was fraud.
Senator Kelly explained his understanding of a contract
with an appraiser. Is one stuck with the obligation of
buying even if they do not like the appraiser? The larger
question to be determined is that is this something that
always goes on? Or is this just an isolated incident? He
said he would have to support Senator Torgerson's amendment
individuals.
Senator Donley asked for an explanation of the standard
used. Was there clear and convincing evidence that the
appraisal was inaccurate? Mr. Mylius said there was no
clear and convincing standard. There was however a
standard checklist to make sure the appraisal was good.
Senator Donley said he had received comments that State
policy was not being executed. There were people in
positions that have decision-making authority ignoring the
intent of the statute. This was causing great concern for
many individuals. A systemic pattern was seen and needs to
be attended to. He has been hearing of this process in the
business community.
Mr. Mylius said he would provide statistics to the
committee showing that this was a rare incident.
Co-chair Torgerson said if he wanted to purchase land he
had the option not to purchase it, not the appraiser.
Senator Green voiced her concerns. The Commissioner was
approving each appraiser. Perhaps it was time to get back
into the reversionary relationship of buyer and appraiser.
The present system does not work very well. Was this
appraiser still on the payroll? Mr. Mylius said this
person was no longer a certified appraiser. The particular
appraiser did not fill out and submit the required re-
certification papers and therefore was not on the certified
list.
Senator Green asked if a minimum bid was ever set? Mr.
Mylius said the appraiser did set a minimum bid.
Senator Green asked if they were operating according to
policy? Mr. Mylius asked for clarification?
Senator Green asked if the department was operating under
statute so an individual could anticipate what they might
have to go through?
Senator Kelly asked if this was under regulation or policy?
Mr. Mylius said most operations were under regulation.
Senator Phillips asked about list of approved appraisers?
And how often was this reviewed? Mr. Mylius said he was
not sure how many were on the list. It was reviewed less
often than once a year. The appraiser in question was not
on the list any longer.
Co-chair Torgerson said the Department of Natural Resources
also had a list of appraisers that were not approved to
use. This has created a problem. He asked if the bank
changes the appraisal on a loan? Mr. Mylius said he was
unaware of what the bank did.
Co=chair Torgerson spoke briefly to the committee regarding
appraisals in favor of the State.
Senator Wilken asked Co-chair Torgerson to set aside the
amendment to Amendment #1 pending receipt of requested
information.
Senator Donley referred to amendment to Amendment #1 and
perhaps it could be incorporated into Amendment #2.
Tape: SFC - 99 #18, Side A
Co-chair Torgerson explained Amendment #2 and the change of
two years to five years for an appraisal. They were trying
to assist Alaskans in their purchase of land.
Senator Donley spoke to the "clear and convincing"
standard. Senator Adams concurred. He suggested they work
on this bill overnight to find a negotiated point and also
take care of the involved constituent to make sure this
does not happen in the future. He felt this truly was an
isolated case.
Co-chair Torgerson said he did not feel this was an
isolated issue. As he said, they might as well not license
appraisers.
Senator Kelly asked if appraisers were licensed in the
State? Co-chair Torgerson said he thought they were
certified.
Senator Donley asked if the amendment to amendment #1 was
presently before the committee. Senator Adams said this
could be held overnight and perhaps they could come up with
a compromise and get bill out tomorrow.
Co-chair Torgerson briefly commented.
Senator Donley said there was really two questions. The
first one was the approval of appraisers. The department
should not have the authority to approve appraisers.
Second, was the "clear and convincing" standard if there
was "discretion" to be approved by the department. These
were possible suggestions offered by Senator Donley.
Senator Green said his suggestions would not correct the
situation. Senator Donley disagreed saying this suggested
standard would have given the constituent something to go
by.
Co-chair Torgerson felt there should have been an unbiased
appraisal.
Senator Donley pointed out that the same thing could happen
if the Commissioner discriminated in approving appraisers
who were sympathetic to them. Co-chair Torgerson's concern
was that the State, in this matter, was asking Alaskans to
come, give money and then they would do the appraisal.
Senator Green asked if the burden of appraisal were back on
the State, either there could be a flat fee or the
applicant could pay and State would handle the appraisal?
Co-chair Torgerson said this could be an option.
Mel Krogseng rejoined the committee and also said this
could be an option. The price of an appraisal is pretty
standard unless it is a remote parcel. She suggested Mr.
Mylius check into this matter.
Ms. Krogseng continued. It was her understanding that a
bank had an appraisal list and no matter who ordered the
appraisal the official appraiser is taken from that list.
If there is a problem then perhaps we should check into the
standard of their certification.
Co-chair Torgerson HELD the bill in committee along with
the amendments. This should be worked out with Department
of Natural Resources. Ms. Krogseng said she would be glad
to work with the committee and the department.
Co-chair Torgerson reviewed the agenda for tomorrow. An
Overview of the Department of Administration was scheduled.
Senator Adams asked if the University of Alaska would also
be taken up?
Senator Parnell said he had asked for a review of all
bargaining units. He did not know if the University would
be present.
ADJOURNED
Co-chair Torgerson adjourned the meeting at approximately
10:50 A.M. (Tape number#18, Side A.)
SFC-99 (1) 02/02/99
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