Legislature(1999 - 2000)
05/14/1999 03:10 PM Senate FIN
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
May 14, 1999
3:10 PM
TAPES
SFC-99 # 139, Side A & Side B
CALL TO ORDER
Co-Chair John Torgerson reconvened the meeting at
approximately 3:10 P.M.
PRESENT
In addition to Co-Chair John Torgerson, Senator Gary
Wilken, Senator Al Adams, Senator Pete Kelly, Senator Lyda
Green and Senator Randy Phillips were present when the
meeting was reconvened. Senator Sean Parnell arrived
shortly thereafter.
Also Attending: Senator JERRY MACKIE; Representative VIC
KOHRINGL; Representative JERRY SANDERS; ANNALEE MCCONNELL,
Director, Office of Management and Budget, Office of the
Governor; JACK KREINHEDER, Senior Policy Analyst, Office of
Management and Budget, Office of the Governor; JEFF BUSH,
Deputy Commissioner, Department of Commerce and Economic
Development; LAMAR COTTEN, Deputy Commissioner, Department
of Community and Regional Affairs; REMOND HENDERSON,
Director, Division of Administrative Services, Department
of Labor; CLARK GRUENING, Vice-Chair, Alaska Permanent Fund
Board of Trustees, Department of Revenue; DEBORAH VOGT,
Deputy Commissioner, Department of Revenue; NANCI JONES,
Director, Permanent Fund Dividend Division, Department of
Revenue; JIM KELLY, Director of Communications, Alaska
Permanent Fund Corporation, Department of Revenue; PETER
NAOROZ, Manager, Real Estate Investments, Alaska Permanent
Fund Corporation, Department of Revenue; NORMAN COHEN,
Executive Director, Coastal Villages Region Fund; aides to
committee members and other members of the Legislature.
SUMMARY INFORMATION
HB 156-PERMANENT FUND INVESTMENTS
The Committee heard from the Alaska Permanent Fund
Corporation, adopted an amendment and reported the bill
from Committee.
HB 40-EXECUTIVE BRANCH REORGANIZATION
The Committee considered ten amendments and held the bill.
CS FOR HOUSE BILL NO. 156(FIN)
"An Act relating to investments by the Alaska
Permanent Fund Corporation; and providing for an
effective date."
This was the second hearing for this bill in the Senate
Finance Committee.
Co-Chair John Torgerson noted that there was some
disagreement he had with the Alaska Permanent Fund
Corporation dealing with the amount of money the
corporation may borrow for real estate purposes. Under the
current language, he explained, there is no limit. He told
the Committee he had asked the corporation to propose an
amount appropriate as a limit.
Another concern of Co-Chair John Torgerson's related to
Section 1 of the committee substitute ".the corporation
may, either directly or through an entity in which the
investment is made, borrow money." He proposed an amendment
(Amendment #1) that deletes "either directly or" and said
the corporation agreed to that change.
Co-Chair John Torgerson referred to discussions about the
management of real estate owned by the corporation. His
proposed amendment adds a new subsection (C) that requires
properties to be professionally managed.
Co-Chair John Torgerson said he had also raised the issue
of allowing the Legislative Budget and Audit Committee to
review and approve real estate transactions rather than
simply review and comment. However, he was assured during
previous testimony that to make this change would give the
legislature too large of a role in the investments of the
fund.
The final concern Co-Chair John Torgerson had with the bill
related to the "five-percent float" and whether or not it
should only exclude equities.
Amendment #1: This amendment deletes, "either directly or"
following "may" on page 1 line 7 of the committee
substitute. The language then reads, "With respect to real
property investments of the fund, the corporation may,
through an entity in which the investment is made, borrow
money if the borrowing is without recourse to the
corporation and the fund." The amendment also adds a new
subsection to Section 2 of the committee substitute that
requires real estate management firms to be "professionally
managed." Senator Sean Parnell moved for adoption. Senator
Al Adams objected to hear the corporation's position on the
amendment.
JIM KELLY, Director of Communications, Alaska Permanent
Fund Corporation, Department of Revenue testified that the
amendment is acceptable to the corporation. He added that
the first part of the amendment also addresses Co-Chair
John Torgerson's concern with the borrowing limits. He
offered Peter Naoroz to explain "non-recourse" and how the
comfort level of the legislature can be maintained.
Senator Al Adams withdrew his objection and without
objection, Amendment #1 was ADOPTED.
PETER NAOROZ, Manager of Real Estate Investments, Alaska
Permanent Fund Corporation, Department of Revenue
testified. He related how, two years ago, Mr. Kelly asked
his office to review the existing statutes governing the
corporation's flexibility, and come up with ways to
increase the fund's return and to reduce risk. The
resulting review, he told the Committee, showed
opportunities to reduce operating and administrative costs.
Peter Naoroz used as an example a real estate investment in
Washington D.C. called Tyson's Corner; a mall that also
includes an office building and surrounding land. He
relayed that when the corporation went to refinance this
property, the lender requested the corporation to address
the statute that prohibits the corporation from borrowing
money or to guarantee from the principal of the fund, the
obligations of others. He said that it was thought that
because the corporation held this investment in partnership
with other investors, the state was in effect guaranteeing
the other investors' obligations. As a result, he said, the
corporation had to undergo a long process of forming a
legal opinion on the interpretation of the statute and then
convince the lender that the loan could be extended. He
identified this situation as an area where changing the
statute could show a cost saving to the State because of
the delay in procuring the loan and the extra cost to
obtain the legal opinion. He viewed this as a housekeeping
matter.
Peter Naoroz then explained how the fund is currently
governed by the "Prudent Investor Standard", and because of
this, the corporation looks at borrowing caps, loan-to-
values, its obligations to those it borrows from as well as
entities the corporation invests in. He said the
corporation then compares these factors to the existing
"rent roll" i.e. the existing assets of the entity, and
tries to match them. The corporation also looks at several
factors, he continued, for sources to address risk
mitigation. In this manner the corporation is able to
secure financing on portfolios of assets, according to
Peter Naoroz.
Peter Naoroz felt the request for a cap on a particular
investment is appropriate and should be considered,
However, he thought that when the corporation is attempting
to secure financing on a pool of assets, the amount could
potentially be much larger, he cautioned. He noted a number
of office investments in Atlanta, Washington D.C., New
Jersey and San Diego that are unleveraged, where the
portfolio is approximately $400 million. He stressed that
in today's marketplace, the finance on this pool is very
attractive compared to any single asset financing
opportunity. Therefore, he said, pooling of assets gives
the corporation more flexibility and additional buying
power, as well as reducing the costs and enhancing returns.
Peter Naoroz stated that the corporation is currently
addressing the loan cap internally on a case-by-case basis.
He wanted the Committee to consider allowing this practice
to continue.
Jim Kelly asked Peter Naoroz to give an example of the
Permanent Fund's risk to borrowing on a $400 million
portfolio. Peter Naoroz replied that in this situation, the
corporation would approach the marketplace and request the
best terms to borrow approximately $200 million. He noted
that the corporation's current portfolio of this amount has
between 8 1/2 and 9-percent current return and has
appreciated in value since its purchase. Using this data,
he predicted that the returns on the investment would be
deposited into the principal of the fund and could be
borrowed against. He stated that the assets in the
portfolio would be the only collateral, i.e. there would be
no obligation on the part of the permanent fund and the
$200 million that was borrowed would be a return of
principal. This is a good thing he stressed, because the
corporation can then redeploy its cash or principal. He
told the Committee that when he is asked to rebalance the
total portfolio, the ability to aggregate the assets and
place financing on them is a good tool.
Co-chair Torgerson asked for the definition of "real
property" versus real estate. Jim Kelly answered "real
property" is defined in statute as real estate that is
improved by completed and substantially rented buildings.
Co-chair Torgerson wanted a comparison to "raw land." Jim
Kelly responded that raw land is not allowable for
permanent fund investment purposes. However, he noted
proposed language that will allow raw land in some cases,
such as the property adjacent to Tyson's Corner. The
committee substitute will allow the corporation to invest
in vacant property that is adjacent to property in which
the corporation already has a vested interest in, thus
adding to the portfolio. He noted this is the only instance
where investment in raw land is allowed.
Peter Naoroz added to the definition of real property
saying it is the corporation's direct investments, whether
in entities or not. The other assets considered real
estate, he continued, are mortgages-both whole loans and
securities mortgages for commercial mortgage backed
securities, and investments in the stock of real estate
operating companies and real estate investment trusts.
Co-Chair John Torgerson asked if the Prudent Investment
Standards are in statute or simply practiced internally.
Jim Kelly responded that the standards are contained in
statue under AS 37.13.120.
Co-Chair John Torgerson referred to page seven of the
committee substitute discussing the "five-percent float."
He said he would leave it up to the Committee to decide
whether or not they wanted to limit the investments allowed
using five-percent of the total assets of the fund.
Jim Kelly recounted when the Permanent Fund was first
established and that it was given a conservative "legal
list" that did not include real estate or stocks. Over
time, he said, the legislature has given the corporation
authority to make those investments. He stated that it has
become more apparent in the investment world that risk is
not a matter of one individual asset, but rather how the
total portfolio is constructed. In the rules set for
pension funds, he noted, it was determined that risk should
be determined on a total portfolio basis. Therefore he
emphasized, very risky assets, such as international
investments can be held if they are included in a portfolio
that also contains domestic stock to result in a portfolio
with less risk. This applies to alternative investments as
well, and the corporation can purchase them under the
basket clause, he said.
Jim Kelly advised that to construct a portfolio that has
good risk management, the mix of investments should have
good correlation with each other. He pointed out that the
basket clause would increase the flexibility of the
corporation by allowing it to either increase the
allocation at an asset allocation level or at a security
level. He referred to a statement made by Michael O'Leary
describing how fixed income investments have evolved over
time.
Jim Kelly spoke of investment opportunities that have
arisen that were not on the "five percent float" list, such
as asset-backed securities that are considered not risky.
He speculated that similar opportunities would come up in
the next several years and said that the fund's trustees
want an opportunity to invest in both fixed-income and
equities, knowing that equities return more money. This
bill, he said, has a provision to allow those investments.
Jim Kelly stated that with the asset allocation currently
in statute, the fund's rate of return on investment would
be 7.75 percent. If the asset allocation increases five-
percent in equity, he predicted the fund would earn an
expected medium return of 7.94 percent. If the corporation
is allowed an asset allocation of fifty-eight percent in
equities, which would be two percent below the maximum, he
predicted a return of 8.13 percent rate of return. Changes
to the asset allocation, he qualified, would reduce the
amount of return.
Co-Chair John Torgerson calculated a rate of return
increase of 19 points for each five percent allocation to
equities.
Senator Gary Wilken understood that there were two separate
issues addressed in the bill. The first, he surmised, was
the original intent of the bill to expand the corporation's
portfolio into different markets, such as real estate. The
second issue dealt with the fifty-five percent provision,
he noted. Therefore, he concluded that there were really
two questions the Committee must decide on, either
independently or together. He expressed he was comfortable
supporting both items. He commented that he did not think
the corporation request of five percent of the total assets
to use in other investments was unreasonable. He believed
that the fund managers would remain conservative in the
investment strategy of the overall fund.
Senator Loren Leman echoed Senator Gary Wilken's comments
in support of the bill.
Senator Gary Wilken offered a motion to report from
Committee, SCS CS HB 156(FIN). Without objection, it was
REPORTED from Committee with individual recommendations and
the House fiscal note for the Department of Revenue,
Revenue Operations in the amount of $3,154.6.
The committee took a brief at ease.
CS FOR HOUSE BILL NO. 40(FIN) am
"An Act merging certain departments in the executive
branch of state government; changing the names of
certain departments in the executive branch of state
government; transferring duties among departments and
offices in the executive branch of state government;
providing that certain discretionary duties formerly
performed by the Department of Community and Regional
Affairs are mandatory in the department to which those
duties are transferred; relating to the licensing of
child care facilities; relating to the division of
vocational rehabilitation; relating to the Alaska
Human Resource Investment Council; adjusting the
membership of certain multi-member bodies; providing
that a certain commissioner may designate department
employees to serve in the commissioner's place on a
board, council, or similar entity; providing for
advice to be given by a department head to the
governor and other commissioners on the delivery of
government services to rural areas and providing for
recommendations to be made to the governor and other
commissioners by that same commissioner about policy
changes that would affect rural governments and rural
affairs; relating to the federal community development
quota program; eliminating references to the division
of tourism; eliminating a reference to manpower
training programs; eliminating references to the
director and deputy director of international trade;
eliminating the requirement for a local advisory
committee for consideration of rural electrification
loans; and providing for an effective date."
This was the second hearing for this bill in the Senate
Finance Committee. In the previous hearing, a committee
substitute, 1-LS0056/N, 5/11/99, was moved for adoption and
then withdrawn.
Amendment #1: This amendment places the Statewide
Independent Living Council under the authority of the
Department of Labor and Workforce Development as
established elsewhere in this legislation. It changes
Section 77 of the bill to read:
Sec. 47.80.300. Statewide independent living
council. There is established the Statewide
Independent Living Council. For budgetary purposes.
the council is located in the Department of Labor and
Workforce Development [EDUCATION]. The Department of
Labor and Workforce Development [EDUCATION] shall
provide reasonable and necessary professional and
technical assistance when requested by the council.
Senator Randy Phillips moved for adoption. Co-Chair John
Torgerson advised the Committee that he submitted this
amendment on behalf of Administration and that it is a
technical amendment intended to conform to changes made the
bill by the other body.
MIKE KRIEBER, staff to Representative Vic Kohring testified
that the Representative had reviewed and does support the
amendment.
The amendment was ADOPTED without objection.
Amendment #2: This amendment makes the following changes to
the bill.
Page 52, lines 18 -23:
Delete:
"(a) A loan committee consisting of five
[SEVEN] members is established. The committee is
composed of [THE COMMISSIONER OF COMMUNITY AND
REGIONAL AFFAIRS,] the commissioner of community
[COMMERCE] and economic development, the director
of management and budget, or the designees of the
commissioner [COMMISSIONERS] or the director, and
three [FOUR] public members."
Insert:
"(a) A loan committee consisting of five
[SEVEN] members is established. The committee is
composed of the executive director of the Alaska
Industrial Development and Export Authority
[COMMISSIONER OF COMMUNITY AND REGIONAL AFFAIRS,
THE COMMISSIONER OF COMMERCE AND ECONOMIC
DEVELOPMENT], the director of management and
budget, or the designees of the executive
director [COMMISSIONERS] or the director, and
three (FOUR] public members.
Sec. 48. AS 42.45.060(c) is amended to read:
(c) The executive director of the Alaska
Industrial Development and Export Authority
(COMMISSIONER OF COMMUNITY AND REGIONAL AFFAIRS]
serves as chair of the committee. The committee
may elect other officers as necessary. A majority
of the members of the committee constitute a
quorum and may exercise the powers of the
committee.
Sec. 49. AS 42.45.990 is amended by adding a new
paragraph to read:
(6) "authority" means the Alaska Industrial
Development and Export Authority."
Page 58, line 13: Delete all material.
Page 77, following line 22:
Insert a new bill section to read:
Sec. 66. AS 44.88.070 is amended to read:
Sec. 44.88.070. Purpose of the authority. The
purpose of the authority is to promote, develop,
and advance the general prosperity and economic
welfare of the people of Alaska, to relieve
problems of unemployment. and to create
additional employment by
(1) providing various means of financing and
means of facilitating the financing. in
cooperation with federal, state, and private
institutions, of industrial, manufacturing,
export, small business, and business enterprises
and the other facilities referred to in AS
44.88.010(a) in the state;
(2) owning and operating the enterprises and
other facilities described in AS 44.88.172;
(3) fostering the expansion of exports of
Alaska goods, services, and raw materials;
(4) cooperating and acting in conjunction
with other organizations, public and private, the
objects of which are the promotion and
advancement of export trade activities in the
state;
(5) establishing a source of funding credit
guarantees and insurance, not otherwise
avai1able, to support export development;
(6) providing and cooperating or
participating with federal, state, and private
institutions to provide actual and potential
Alaska exporters, particularly small- and medium-
sized exporters, with financial assistance in
support of export transactions;
(7) carrying out the powers and duties
assigned to it under AS 42.45."
Page 83, line 3, following "42.45.030":
Insert ", 42.45,990(1)"
Page 84, line 27, following "REFERENCES.":
Insert "(a)"
Page 85, line 10:
Delete all material.
Page 85, following line 15:
Insert a new subsection to read:
"(b) The revisor of statutes shall change
references to "department" to read "authority" in
the following statutes; AS 42.45.010. 42.45.020.
42.45.040, 42.45.050, 42.45.060, 42.45.100,
42.45.110, 42.45.120, 42.45.140, 42.45.160,
42.45.170, 42.45.180, 42.45.200, 42.45.250,
42.45.400, and 42.45.410."
Co-Chair John Torgerson said that he would not be offering
this amendment.
Amendment #3: This amendment changes the bill as follows.
Sec. 54. AS 44.33.020(11) is amended to read:
(11) if directed by the governor to do so,
adopt regulations that authorize the state to
participate in the administration of the western
Alaska community development quota program to the
extent, and in the manner, authorized by
Congress, the U.S. Secretary of Commerce, and the
North Pacific Fishery Management Council.
Senator Al Adams moved for adoption. Co-Chair John
Torgerson objected. Senator Al Adams spoke to his motion
saying this amendment is clarification language that
emphasizes state participation in the community development
program if directed to do so by the governor. He noted that
there are several board members on the North Pacific
Fisheries Management Council who are appointed by the
governor. Therefore, Senator Al Adams surmised, the
governor would have to direct them to adopt the necessary
regulations.
Senator Lyda Green voiced her objection to the amendment.
The committee took a brief at ease.
ANNALEE MCCONNELL, Director, Office of Management and
Budget, Office of the Governor testified she had concerns
with the ambiguity of administering the community
development program. Given the importance of the program,
she believed it would be advisable to retain the existing
language since it clearly defined the responsibilities. She
quoted the proposed language, ".participate in the
administration if directed by the governor." saying this
leaves questions relating to the administration of the
program and there could be unforeseen consequences.
Senator Al Adams requested that Norm Cohen, be allowed to
explain the amendment and answer Senator Loren Leman's
question.
NORMAN COHEN, Executive Director, Coastal Villages Region
Fund, explained that his organization is one of the CDQ
groups involved in the program. He stated that the sole
purpose of the amendment is to clarify that the regulation
authority of the department must be consistent with the
regulations that were and are adopted by the Secretary of
Commerce and the laws passed by the U.S. Congress. In other
words, he said the amendment sets the perimeters that the
state regulations must follow.
Co-chair Torgerson stated he maintained his objection.
The amendment FAILED to be adopted by a vote of 3-5-1.
Senator Loren Leman, Senator Al Adams and Senator Randy
Phillips voted in favor.
Amendment #4: This amendment inserts a new bill section on
page 25 following line 22 and amends the next two sections
to read:
Sec. 14. AS 18.62 is amended by adding a new section
to read:
Sec. 18.62.090. Definition. In this chapter,
"department" means the Department of Community
and Economic Development.
Sec. 15. AS 18.63.030 is amended to read:
Sec. 18.63.030. Fee. The department
[COMMISSIONER] shall establish the triennial fee
for a hazardous painting certificate by
regulation. The fee must reflect the department's
approximate costs or projected costs for the
hazardous painting certification program.
Sec. 16. AS 18.63.100(1) is amended to read:
(1) "department" means the Department of
Community and Economic Development [LABOR];"
Senator Lyda Green moved for adoption. Co-Chair John
Torgerson and Senator Al Adams OBJECTED. Senator Lyda
Green explained that in the process of reviewing the
missions and measures and attempting to realign functions,
she concluded it would be beneficial to move all licensing
procedures into the Division of Occupational Licensing.
Representative Vic Kohring requested the Administration
address the amendment. Annalee McConnell recommended
against the change noting the expertise in the Department
of Labor is important to maintain for the certification and
licensing programs. She also pointed out there would be no
savings with the amendment.
Senator Sean Parnell commented on Annalee McConnell's
testimony that because there are working relationships in
the Department of Labor, no changes should be made. He
noted that this is the case in every department. He asked
if there would be disadvantages or a poor mission alignment
if the amendment were adopted. Why is it better to stay in
already established relationships, he wanted to know.
Ms. McConnell stated that the expertise of administering
the program resides in the Department of Labor. She
explained that the licensing function relates to the other
functions that the Department of Labor staff will continue
to perform after the reorganization. She suggested that
someone from the Department of Labor would be better suited
to detail the reasoning. She noted that the Office of
Management and Budget had looked at whether any
efficiencies would be gained with this amendment, and
determined that because the Division of Occupational
Licensing already RSA'd the task to the Department of
Labor, there was no advantage to moving the function to the
new Department of Community and Economic Development.
Senator Lyda Green countered that it would be anticipated
that the expertise would follow the move. She thought that
separation was needed and suggested that a board, funded
through licensing fees, could be formed to oversee the
licensing functions.
Representative Vic Kohring said he would not recommend
adoption of the amendment. He did not feel the timing was
right. However, he stated he would be happy to work with
Senator Lyda Green over the interim to draft other
legislation to address the issue.
Senator Lyda Green granted that there is often reluctance
to change, but noted there are important considerations to
be given to aligning occupational licensing and having all
licensing approvals handled in the same manner.
Senator Pete Kelly asked if the Department of Labor should
testify.
REMOND HENDERSON, Director, Division of Administrative
Services, Department of Labor qualified that he is not the
expert in this field but noted he had discussed the matter
with the director of the Division of Occupational
Licensing. He learned that the working relationships and
expertise referred to the mechanical inspectors who work
directly with the licensing staff. He concluded that it is
not advantageous to move only one of the two functions,
licensing and inspection.
Senator Lyda Green recalled that the Division of
Occupational Licensing already handles the administrative
functions of regulating Master Electricians and Master
Plumbers. Therefore, she thought the division would more
appropriately handle this function as well.
By a roll call vote of 4-4-1, the amendment FAILED to be
adopted. Co-Chair John Torgerson, Senator Gary Wilken,
Senator Al Adams and Senator Pete Kelly voted in
opposition. Senator Dave Donley was absent.
Amendment #5: This amendment makes the following changes to
the safety inspection provision of the bill.
Page 25, lines 23 -28:
Delete all material.
Insert new bill sections to read:
"Sec. 14. AS 18.60 is amended by adding a new section
to article 3 to read:
Sec. 18.60.399. Definition. In AS 18.60.180-
18.60.399, unless the context otherwise requires,
"division" means the division of safety
inspections, Department of Public Safety.
Sec. 15. AS 18.60 is amended by adding a new section
to article 4 to read:
Sec. 18.60.465. Definition. In AS 18.60.400
-18.60.465, unless the context otherwise
requires, "division" means the division of safety
inspections, Department of Public Safety.
Sec. 16. AS 18.60.580 is amended to read:
Sec. 18.60.580. Minimum electrical
standards. After the American National Standards
Institute approves a new, published edition of
the National Electrical Code or a new, published
edition of the National Electrical Safety Code,
the division of safety inspections, Department of
Public Safety, [LABOR} may, by regulation, adopt
the most recent codes to constitute the minimum
electrical safety standards of the state.
Sec. 17. AS 18.60.660 is amended by adding a new
paragraph to read:
(5) "division" means the division of safety
inspections, Department of Public Safety.
Sec. 18. AS 18.60.740(4) is amended to read:
(4) "inspector" means a qualified inspector
employed by, designated by, or under contract to
the division [DEPARTMENT OF LABOR].
Sec. 19. AS 18.60.740 is amended by adding a new
paragraph to read:
(5) "division" means the division of safety
inspections, Department of Public Safety.
Sec. 20. AS 18.60 is amended by adding a new section
to article 10 to read:
Sec. 18.60.825. Definition. In AS 18.60.800-
18.60.825, "division" means the division of
safety inspections, Department of Public Safety.
Sec. 21. AS 18.70.081 is amended to read:
Sec. 18.70.081. Approval of fire protection
systems. Before October 30 of each year, the
division of safety inspections, Department of
Public Safety, shall prepare and make available a
list of approved fire protection systems to [THE
DEPARTMENT OF COMMUNITY AND REGIONAL AFFAIRS,]
the Department of Community [COMMERCE] and
Economic Development [,] and the public."
Page 77, following line 17:
Insert a new bill section to read:
Sec. 70. AS 44.41 is amended by adding a new section
to read:
Sec. 44.41.023. Division of safety
inspections. There is established in the
Department of Public Safety a division of safety
inspections. The Alaska Safety Advisory Council
and the position of state fire marshall are
included within the division. The division shall
perform the duties of the Department of Public
Safety that are specified for the
(1) state fire marshall; and
(2) division of safety inspections under AS
18.60, AS 18.70.081, and AS 45.45.910."
Page 77, following line 22:
Insert new bill sections to read:
Sec. 72. AS 45.45.910(a) is amended to read:
(a) Unless exempted by the division
[DEPARTMENT] under (d) of this section, a person
may not sell, offer to sell, or otherwise
transfer in the course of the person's business a
consumer electrical product that is manufactured
after August 14, 2 1990, unless the product is
clearly marked as being listed by an approved
third-party certification program.
Sec. 73. AS 45.45.910(d) is amended to read:
(d) If a consumer electrical product is a
work of art or an item that has an unusual
application that makes approval by a third-party
certification program not reasonably available,
the division [DEPARTMENT] shall upon request
exempt the item from (a) of this section. The
division [DEPARTMENT] shall establish by
regulation guidelines to identify consumer
electrical products that qualify for an exemption
under this section.
Sec. 74. AS 45.45.910(e) is amended to read:
(e) The warning label required by this
section must be a brightly colored label that
contains in simple, direct language a warning
that the electrical product is not listed by an
approved third-party certification program. The
division [DEPARTMENT] shall adopt regulations
establishing the exact content, color, design,
and use of the warning label.
Sec. 75. AS 45.45.910(f) is amended to read:
(f) Unless a later version has been adopted
by the division [DEPARTMENT] by regulation, a
certification program must meet the requirements
of ANSI Z-34.1 - 1987, American National
Standards for Certification - Third-Party
Certification Program, published by the American
National Standards Institute, in order to qualify
as an approved third-party certification program
under this section. The division [DEPARTMENT] may
adopt by regulation later versions of the
American National Standards for Certification -
Third-Party Certification Program, as the
standard for third-party certification programs
under this section. If the division [DEPARTMENT]
has adopted a later version, a certification
program must meet the requirements of the most
recent version adopted by the division
[DEPARTMENT] in order to qualify as an approved
third-party certification program under this
section.
Sec. 76. AS 45.45.910(g) is amended by adding a new
paragraph to read:
(4) "division" means the division of safety
inspections, Department of Public Safety."
Page 83, line 2, following "REPEALER.":
Insert "AS 18.60.660(1), 18.60.660(2),
18.60.740(2), 18.60.740(3);"
Page 83, line 11, following "44.47.998;":
Insert "AS 45.45.910(g)(3);"
Page 84, following line 25:
Insert a new bill section to read:
Sec. 99. TRANSFERS FROM DEPARTMENT OF LABOR TO
DIVISION OF SAFETY INSPECTIONS, DEPARTMENT OF PUBLIC
SAFETY. The revisor of statutes shall change
references to the "Department of Labor" and
"commissioner of labor" to read "division" in the
following statutes: AS 18.60. 190(a), 18.60.200,
18.60.210(a)(9)(A), 18.60.210(c), 18.60.220,
18.60.230, 18.60.240, 18.60.270(a), 18.60.280,
18.60.290, 18.60.300(a), 18.60.310, 18.60.315,
18.60.320(a)(4), 18.60.340, 18.60.350, 18.60.360(a),
18.60.360(c), 18.60.370, 18.60.395(a), 18.60.420,
18.60.440, 18.60.800(a), 18.60.800(b), and 18.60.820."
Senator Lyda Green moved for adoption. Senator Al Adams
objected. Senator Lyda Green told the Committee about a
letter given to her, unsolicited, from a former inspector
and current International Brotherhood of Electrical Workers
(IBEW) member, Gerald Newton. (Copy of letter on file.)
Senator Lyda Green explained that the amendment involves
the consolidation of public safety issues under the
Department of Public Safety into a newly created Division
of Safety Inspections.
Gerald Newton's letter explains that the Department of
Public Safety, through its Fire Marshall's Office, is
responsible for enforcing compliance to the National
Electrical Code (NEC), which has the purpose of "protecting
persons and property from the hazards arising from the use
of electricity." The State Fire Marshall is also
responsible for enforcement of NICET certification of
personnel performing fire alarm system installations,
according to Gerald Newton. In addition, the letter claims
the Department of Labor employs electrical inspectors to
perform inspections on new commercial installations. Gerald
Newton concluded that two departments performing these
parallel functions is redundant.
Senator Lyda Green therefore suggested maintaining the
Occupational Health and Safety Act (OSHA) within the
Department of Labor and moving the other inspection
functions into the Department of Public Safety. She
explained that this would keep the inspections that involve
the specific safety of workers in the Department of Labor
and place the inspections affecting all those who would use
facilities into the Department of Public Safety.
ANNALEE MCCONNELL stated that the Administration had
scrutinized the amendment and found more reason to keep the
inspections with the other functions performed by the
Department of Labor. She noted the status quo prevents
unnecessary duplication in the same facilities, which the
separation would require. She stated that the alignment of
functions currently proposed in the bill is the most
streamlined.
Representative Vic Kohring stated he could not support this
amendment either.
The amendment FAILED to be adopted by a vote of 3-5-1.
Senator Loren Leman, Senator Lyda Green and Senator Randy
Phillips cast yea votes. Senator Dave Donley was absent.
Amendment #6: This amendment inserts a new bill section on
page 26 following line 3 to read as follows.
Sec. 16. AS 23.05.360(a) is amended to read:
(a) There is established within the
Department of Law [LABOR] the Alaska labor
relations agency. The agency is comprised of six
members appointed by the governor and confirmed
by the legislature. The term of office of a
member is three years. Members serve staggered
terms in accordance with AS 39.05.055. A vacancy
in an unexpired term shall be filled by
appointment by the governor for the remainder of
the term. The agency must include two members
with a background in management, two members with
a background in labor, and two members from the
general public. All members must have relevant
experience in labor relations matters."
Senator Lyda Green moved for adoption. Senator Al Adams
objected. Senator Lyda Green spoke of the Alaska Labor
Relations Agency, located within the Department of Labor,
that deals with grievances filed under union contracts. She
stated that there could be a conflict of interest in the
current system that allows an employee who files a
grievance to possibly impact existing contracts. She
thought there should be "an arm's length" between the
grievance process and the implementation of contracts and
therefore suggested moving the agency into the Department
of Law. While she noted that the Department of Law had
expressed there could be a conflict of interest in
performing these functions, she disagreed and noted that
the Department of Law has argued many issues in which it
has been on opposing sides.
Ms. MCCONNELL indicated her office had contacted the
Department of Law regarding this matter. She clarified that
the Department of Law very rarely handles cases which they
represent both sides of an argument. She noted that the
Department of Law already advises agencies on cases pending
and therefore, she did not recommend having the same
department perform the functions of the Alaska Labor
Relations Agency. She noted that the agency's board does
not report to the commissioner and that the department only
handles the administrative functions of the agency. She
added that there had been no complaints registered against
the current location of the agency and she felt the
Department of Labor is the most logical location for the
agency.
Representative Vic Kohring said he is not looking for
conflict with the amendment's sponsor but could only
recommend a "no" vote.
By a vote of 2-6-1, the amendment FAILED to be adopted.
Senator Lyda Green and Senator Randy Phillips voted in
favor of the motion. Senator Dave Donley was absent.
Amendment #7:
Page 52, lines 18- 23:
Delete:
"(a) A loan committee consisting of five
[SEVEN] members is established. The committee is
composed of [THE COMMISSIONER OF COMMUNITY AND
REGIONAL AFFAIRS,] the commissioner of community
[COMMERCE} and economic development, the director
of management and budget, or the designees of the
commissioner [COMMISSIONERS] or the director, and
three [FOUR} public members."
Insert:
"(a) A loan committee consisting of five
[SEVEN] members is established. The committee is
composed of the executive director of the Alaska
Energy Authority [COMMISSIONER OF COMMUNITY AND
REGIONAL AFFAIRS, THE 13 COMMISSIONER OF COMMERCE
AND ECONOMIC DEVELOPMENT], the director of
management and budget, or the designees of the
executive director [COMMISSIONERS] or the
director, and three [FOUR] public members.
Sec. 48. AS 42.45.06Q(c) is amended to read:
(c) The executive director of the Alaska
Energy Authority [COMMISSIONER OF COMMUNITY AND
REGIONAL AFFAIRS] serves as c1air of the
committee. The committee may elect other officers
as necessary. A majority of the members of the
committee constitute a quorum and may exercise
the powers of the committee.
Sec. 49. AS 42.45.990 is amended by adding a new
paragraph to read:
(6) "authority means the Alaska Energy
Authority."
Page 77. following line 22:
Insert two new bill sections to read:
Sec. 66. AS 44.83.070 is amended to read:
Sec. 44.83.070. Purpose of the authority.
The purpose of the authority is to promote,
develop, and advance the general prosperity and
economic welfare of the people of the state by
providing a means of financing and operating
power projects and facilities that recover and
use waste energy and by carrying out the powers
and duties assigned to it under AS 42.45.
Sec. 67. AS 44.83.080 is amended to read:
Sec. 44.83.080. Powers of the authority. In
furtherance of its corporate purposes, the
authority has the following powers in addition to
its other powers:
(1) to sue and be sued;
(2) to have a seal and alter it at pleasure;
{3) to make and alter bylaws for its organization
and internal management;
{4) to adopt regulations governing the exercise
of its Corporate powers;
{5) to improve, equip, operate, and maintain
power projects;
(6) to issue bonds to carry out any of its
corporate purposes and powers, including the
establishment or increase of reserves to Secure
or to pay the bonds or interest on them, and the
payment of all other costs or expenses of the
authority incident to and necessary or convenient
to carry out its corporate purposes and powers;
(7) to sell, lease as lessor or lessee, exchange,
donate, convey, or encumber in any manner by
mortgage or by creation of any other security
interest, real or personal property owned by it,
or in which it has an interest, when, in the
judgment of the authority, the action is in
furtherance of its corporate purposes;
(8) to accept gifts, grants, or loans from, and
enter into contracts or other transactions
regarding them, with any person;
(9) to deposit or invest its funds, subject to
agreements with bondholders;
(10) to enter into contracts with the United
States or any person and, subject to the laws of
the United States and subject to concurrence of
the legislature, with a foreign country or its
agencies, for the financing, operation, and
maintenance of all or any part of a power
project, either inside or outside the state, and
for the sale or transmission of power from a
project or any right to the capacity of it or for
the security of any bonds of the authority issued
or to be issued for the project;
(11) To enter into contracts with any person and
with the United States, and, 34 subject to the
laws of the United States and subject to the
concurrence of the legislature, with a foreign
country or its agencies for the purchase, sale,
exchange, transmission, or use of power from a
project, or any right to the capacity of it;
(12) to apply to the appropriate agencies of the
state, the United States, and to a foreign
country and any other proper agency for the
permits, licenses, or approvals as may be
necessary, and to maintain and operate power
projects in accordance with the licenses or
permits, and to obtain, hold, and use the
licenses and permits in the same manner as any
other person or operating unit;
(13) to enter into contracts or agreements with
respect to the exercise of any of its powers, and
do all things necessary or convenient to carry
out its corporate purposes and exercise the
powers granted in this chapter;
(14) to recommend to the legislature
(A) the pledge of the credit of the state to
guarantee repayment of all or any portion of
revenue bonds issued to assist in construction of
power projects;
(B) an appropriation from the general fund
(i) for debt service on bonds or other project
purposes; or
(ii) to reduce the amount of debt financing for
the project.
(15) to carry out the powers and duties assigned
to it under AS 42.45.
Page 83, line 3, following "42.45.030":
Insert ", 42.45.990(1)"
Page 84, line 27, following "REFERENCES.":
Insert "(a)"
Page 85, line 10:
Delete all material.
Page 85, following line 15:
Insert a new subsection to read:
"(b) The revisor of statutes shall change
references to "department" to read "authority" in the
following statutes: AS 42.45.010, 42.45.020,
42.45.040, 42.45.050, 42.45.060, 42.45.100, 42.45.110,
42.45.120, 42.45.140, 42.45.160, 42.45.170, 42.45.180,
42.45.200, 42.45.250, 42.45.400, and 42.45.410."
Senator Sean Parnell moved for adoption. Co-Chair John
Torgerson noted that the amendment was submitted at the
request of Senator Jerry Mackie.
Senator JERRY MACKIE stated that this amendment replaces
Amendment #2 that was not offered. He referenced a packet
of information before Committee members. The first page is
titled, "Division of Energy (DOE) Program Description" and
the packet also includes a photocopy of the relevant state
statutes. (Copy on file.)
Tape: SFC - 99 #139, Side B
Senator Jerry Mackie explained that this amendment moves
the functions of the Division of Energy from the Department
of Community and Regional Affairs to the Alaska Industrial
Development and Export Authority (AIDEA). He noted that the
amendment was drafted with the input of the Administration
because of the Administration's concerns that the transfer
could have a negative affect on the authority's bond
rating. Senator Jerry Mackie emphasized that he had no
intention of influencing the bond rating and therefore
decided to make the transfer to the Alaska Energy Authority
(AEA), which is a "shell" corporation that resides within
AIDEA. He stated that the protection of the AEA would
shield the Division of Energy Program from any effect on
the bond rating.
Annalee McConnell qualified that while this amendment was
submitted late in the legislation's process, the transfer
is actually a concept the Administration has been
considering and supports. She said the reason the amendment
was not made to the bill earlier was due to concerns from
rural legislators, which have since been alleviated. She
stated that the Administration thinks this is a positive
alignment of services.
Senator Pete Kelly requested further elaboration on the
benefits of the transfer. Knowing what he does about the
Division of Energy and how it relates to AIDEA, which
functions more as a corporation than a government service
agency, he did not see how the two could be successfully
combined.
Ms. McConnell clarified that the Division of Energy would
actually transfer to the AEA, which is a subsidiary of
AIDEA. She stated that the AEA already has certain
responsibilities for providing government services and this
amendment specifies the responsibilities even further.
LAMAR COTTEN, Deputy Commissioner, Department of Community
and Regional Affairs testified that the Rural Utility
Business Assistance (RUBA) program currently in the
Division of Energy would remain in the Department of
Community and Regional Affairs under the Division of
Municipal and Regional Assistance. In addition, he noted
that the Power Project Loan Program would be better suited
if included in AIDEA because AIDEA oversees other loan
programs. He stated that it would be important in the next
fiscal year to review the transfers to determine which are
successful and if other changes are necessary.
Representative Vic Kohring advised that he supported the
amendment.
The amendment was ADOPTED without objection.
Amendment #8: This amendment exempts the Alaska Railroad
Corporation from AS 44.33.010. Senator Gary Wilken moved
for adoption. Co-Chair John Torgerson objected for
explanation.
Senator Gary Wilken explained that the bill specifically
allows that when a statute appoints a commissioner as a
member of a board or council the commissioner may designate
an employee of the department to act in his or her place.
He shared that the Alaska Railroad Corporation contacted
him with concerns about this provision. He said that in
1992 the railroad was set up with an "arms-length
relationship between the state and the corporation" and was
restricted by statute from allowing voting by proxy.
Therefore, this legislation creates a conflict, he noted.
He elaborated saying the commissioner of the Department of
Community and Economic Development sits as one of the seven
board members of the Alaska Railroad Corporation and deals
with expensive, weighty and important issues on a regular
basis. The corporation expressed concerns that by allowing
a representative of the commissioner partake in the board
proceedings there would be a lack of consistency.
Co-Chair John Torgerson said he could see the potential for
problems with allowing a designee to sit on the board
rather than the commissioner.
Annalee McConnell supported the amendment. She said the
Administration felt it is appropriate to have the
Commissioner sit on the board.
Co-Chair John Torgerson asked if there were any other
boards or commissions that should also be exempted from the
provision to allow the commissioner to appoint a
representative to serve in his or her place. He wondered if
the entire section should be eliminated from the bill.
Senator Loren Leman suggested inserting the language,
"unless otherwise provided for by law" wherever this matter
arose. This would prevent other conflicts like the one
with the Alaska Railroad Corporation, he surmised.
Co-Chair John Torgerson thought similar language was
already present elsewhere in statute that allows a
representative of the commissioner may participate in
boards or commissions unless otherwise prohibited.
Therefore, he did not believe AS 44.33.010, as proposed in
the bill, is necessary.
Annalee McConnell suggested clarifying the other relevant
statute to say that if a designee is appropriate, that
person may serve in place of the commissioner. She noted
that because the departments are changing, it is necessary
to specify which commissioner is appointed to which boards.
There will no longer be a commissioner of the Department of
Community and Economic Development, she stated and
therefore, the language needs to provide a replacement
commissioner.
Co-Chair John Torgerson withdrew his objection to the
amendment.
JEFF BUSH, Deputy Commissioner, Department of Commerce and
Economic Development felt this amendment would make the
statute consistent with the ongoing practice. He pointed
out that the only board or commission with a statutory
requirement that the commissioner him or herself must sit
on, is the Railroad.
Without objection Amendment #8 was ADOPTED.
Amendment #9: This amendment makes the following changes to
the bill.
Page 83, line 4:
Delete "AS 44.29.020(a)(14);"
Page 83, line 13, following "44.19.627;":
Insert "AS 44.29.020(a)(14);"
Page 86, line 1, following "Act,":
Insert "the amendment made to AS 44.27.020(3) and
(4) by sec. 51 of this Act,"
Page 86, line 2, following "63,":
Insert "73 -76,"
Senator Sean Parnell moved for adoption.
Annalee McConnell stated that this is a technical amendment
that the Administration recommends.
JACK KREINHEDER, Senior Policy Analyst, Office of
Management and Budget, Office of the Governor testified
that this is to fix a drafting oversight made in the House
Finance Committee. He explained that the effective dates of
the transfer of childcare licensing to the Department of
Education from the Department of Health and Social Services
did not coincide. This amendment expands the effective date
for the Department of Health and Social Services to prevent
a one-year lapse in service.
Representative Vic Kohring stated he had no objection.
There was no objection and the amendment was ADOPTED.
Amendment #10: This amendment deletes "Department of
Education and Child Development" everywhere it appears in
the bill and replaces it with "Department of Education".
Senator Loren Leman moved for adoption. Senator Al Adams
and Senator Gary Wilken objected.
Representative Vic Kohring deferred to the Administration
saying he did not have a strong opinion on the amendment.
Annalee McConnell testified that the commissioner of the
Department of Education felt it is important to clarify
that the department's responsibilities will broaden beyond
the traditional K-12 services.
Senator Gary Wilken spoke against the amendment saying he
felt the expansion of the responsibilities of the
Department of Education to include aspects of child care is
one of the best features of the bill. He thought the title
of the department should reflect the added
responsibilities. While, he remained concerned with the
multiple acronyms that this bill would create and hoped
they could be reduced, he believed this particular one
should remain.
Senator Loren Leman stressed that the functions of the
departments remained the same and he felt the department
titles should be as simple as possible. He recommended
keeping the title of Department of Education.
The amendment FAILED to be adopted by a vote of 3-4-1. Co-
Chair Sean Parnell, Senator Loren Leman and Senator Randy
Phillips voted in favor. Senator Dave Donley was absent.
ADJOURNMENT
Co-Chair John Torgerson recessed the Committee until after
the floor session at approximately 4:20 PM.
SFC-99 (27) 5/14/99
| Document Name | Date/Time | Subjects |
|---|