Legislature(2003 - 2004)
04/30/2004 09:12 AM 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
April 30, 2004
9:12 AM
TAPES
SFC-04 # 101, Side A
SFC 04 # 101, Side B
SFC 04 # 102, Side A
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:12 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Ben Stevens
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: SENATOR GARY STEVENS; ANSELM STAAK, Chief
Financial Officer, Division of Retirement and Benefits, Department
of Administration; MELANIE MILLHORN, Director, Division of
Retirement and Benefits, Department of Administration; TIM
BENINTENDI, Staff to Representative Carl Moses; PETE KELLY,
Director, Government Relations, University of Alaska; TOM WRIGHT,
Staff to Representative John Harris; MICHAEL BARNHILL, Assistant
Attorney General, Commercial/Fair Business Section, Civil Division,
Department of Law; JASON HOOLEY, Staff to Senator Dyson; JEFF
OTTESON, Director, Division of Program Development, Department of
Transportation and Public Facilities;
Attending via Teleconference: From offnet locations: JANELLE
VANASSE, Yuut Elitnaurviat, Inc. People's Learning Center; ANNETTE
KREITZER, Chief of Staff, Office of the Lieutenant Governor; From
Anchorage: TONY LOMBARDO, Director, Division of Public Assistance,
Department of Health and Social Services; JAY MARLEY, Program
Manager, Fraud Control Unit, Division of Public Assistance,
Department of Health and Social Services; JEFF PARKER, Attorney;
SCOTT CLARK, Notary Commission Administrator, Office of the
Lieutenant Governor
SUMMARY INFORMATION
[Note: Computer malfunction occurred and original notes were
destroyed. Minutes compiled strictly from audio recording.]
SB 232-RETIREMENT: TEACHERS/JUDGES/PUB EMPLOYEES
The Committee heard from the Department of Administration. A
committee substitute was adopted and the bill was reported from
Committee.
HB 123-ALASKA WORKFORCE INVESTMENT BOARD
The Committee heard from the sponsor, the University of Alaska, and
a proposed vocational technical education center. An amendment was
adopted and the bill was held in Committee.
HB 503-TOBACCO MASTER SETTLEMENT AGREEMENT
The Committee heard from the sponsor and the Department of Law. The
bill was held in Committee.
SB 376-SUBPOENA POWER: PUB ASS'TNCE & PERM FUND
The Committee heard from the sponsor and the Department of Health
and Social Services. The bill was reported from Committee.
SB 371-POWERS/DUTIES DOTPF
The Committee heard from the sponsor, the Department of
Transportation and Public Facilities and an attorney representing
litigants against the Department. The bill was reported from
Committee.
SB 302-OATHS; NOTARIES PUBLIC; STATE SEAL
The Committee heard from the sponsor. Two amendments were adopted
and the bill was reported from Committee.
CS FOR SENATE BILL NO. 232(STA)
"An Act relating to federal tax requirements for and other
provisions of the teachers' retirement system, the public
employees' retirement system, and the judicial retirement
system; removing village public safety officers from the
public employees' retirement system; requiring the public
employees' retirement system to refund contributions under
$1,000 to inactive employees; limiting service credit for
village public safety officer service in the public employees'
retirement system to five years; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by the Senate Rules
Committee by request of the Governor, "amends current statutes
pertaining to the State's retirement systems to comply with IRS
standards. These changes impact the TRS, PERS and Judicial
retirement systems."
Co-Chair Green moved for adoption of CS SB 232, 23-GS1009\I, as a
working document.
Co-Chair Wilken objected for an explanation.
ANSELM STAAK, Chief Financial Officer, Division of Retirement and
Benefits, Department of Administration, testified that the primary
difference between the Senate State Affairs Committee substitute
and the Version "I" committee substitute pertains to the "specific
wording that have been negotiated with the IRS [federal Internal
Revenue Service]."
Mr. Staak stated that this bill is the "second installment" of the
changes required by the IRS in the "plan documents" of the Public
Employees Retirement System (PERS), the Teachers Retirement System
(TRS), and the Judicial retirement system. Because these are
"qualified tax plans" these changes must contain an appropriate
plan document. The plan documents for each of these plans is the
governing State statute. Therefore, State statute must comply with
the IRS code. This legislation would also repeal the provisions
adopted in the year 2001 by SB 145 relating to inclusion of Village
Public Safety Officers (VPSO) in the PERS program.
Mr. Staak informed that the State Affairs committee substitute
consists of the exact language requested by the IRS, although
differs from the formats utilized by the Division of Legal and
Research Services for statute. The committee substitute, Version
"I" conforms the language to the IRS code requirements and also
meets the standards required for State statute. The IRS approved
the committee substitute language.
Co-Chair Green referenced Section 8 of Version "I" on page 4, lines
6 - 26, which amends AS 14.25.075(b)(2) to, in part, insert
"irrevocable" in the provision allowing a member to purchase
credited services. She asked if "irrevocable" is a term employed in
IRS rules.
Mr. Staak affirmed and reiterated that every change included in
this legislation conforms to IRS code. He furthered that the issue
of irrevocable election to purchase credited service involved six
months of negotiation between the Division and the IRS. The
Division preferred the exclusion of the "irrevocable" stipulation.
Co-Chair Green asked for an explanation of the stipulation.
Mr. Staak explained that once the employee makes the election to
purchase the credited service, the employee could not change that
decision. He exampled that employees could opt to pay off an
indebtedness with pre-taxed income; however, once the agreement is
made, the payments must continue, regardless of reduced salary or
other circumstances. Payments could stop only upon termination of
employment. This stipulation is required to obtain a "very
favorable method to pay off an indebtedness."
Co-Chair Green next cited Section 24, on page 12, lines 17 - 25 of
the committee substitute, which reads as follows
Sec. 24. AS 39.35.200(b) is amended to read:
(b) [IF, UPON TERMINATION OF EMPLOYMENT, AN EMPLOYEE HAS
CREDITED SERVICE OF LESS THAN FIVE YEARS AND HAS LESS THAN
$1,000 IN THE EMPLOYEE CONTRIBUTION ACCOUNT, A REFUND OF THE
EMPLOYEE CONTRIBUTION ACCOUNT MUST BE MADE UNLESS THE EMPLOYEE
INDICATES IN WRITING THAT FUTURE RETIREMENT IS INTENDED AND
CONTRIBUTIONS SHOULD NOT BE REFUNDED.] An employee who is
reemployed with an employer and whose contributions have not
been refunded before reemployment is not eligible for a
refund.
[DELETED TEXT BRACKETED]
Co-Chair Green asked if the deletion of this language from statute
would result in a discontinuation of refunds of less than $1,000.
Mr. Staak responded that originally a "forced cash out" was made to
those employees who would be "deferred vested". The aforementioned
language is the result of an amendment to statute that removed the
cash out requirement. The IRS code allows an employer to cash out
an account of a small amount to simplify administrative expenses
for the employer. However, this language had been inserted in
statute to accommodate those employees who work for short periods
of time, including legislative employees, to allow them to retain
their contribution account.
Co-Chair Green understood that the funds in the contribution
account would remain and continue to increase if the employee
returns to service.
Mr. Staak affirmed and added that the employee would not need to
repurchase the service as indebtedness and pay additional interest.
The account would also earn interest while the employee was not in
service.
Co-Chair Green then asked about the term "actuarial adjustment"
included in Sections 13, 19 and 28 of the committee substitute, and
whether the amended language would be an improvement over current
practice.
Mr. Staak replied that the State is required, under the IRS code,
to place a description of any reduced benefit in the plan document.
He exampled a 50 percent joint survivor option for those members
eligible for a full benefit. He informed that the Division
unsuccessfully argued with the IRS to relent this position, which
would have required approximately 40 pages of additional statutory
language. Instead, the agencies agreed to allow the descriptions to
be provided for in regulations, given that regulations have
potentially the force of law in Alaska.
Senator Hoffman asked if the TRS and Judicial system require
changes as a result of the inclusion of VPSO employees in the PERS
program.
Mr. Staak answered that all the changes in this legislation are
required to comply with the IRS code.
AT EASE
Senator Dyson supported the creation of a Tier IV level of State
employment, and asked if this would not occur at this time.
MELANIE MILLHORN, Director, Division of Retirement and Benefits,
Department of Administration, affirmed such action is not included
in this legislation.
Senator Dyson asked when the Division anticipated a Tier IV would
be established.
Ms. Millhorn replied that recommendations would be presented to the
legislature in February 2005.
Co-Chair Wilken removed his objection to the adoption of the
committee substitute.
The committee substitute, Version "I" was ADOPTED without
objection.
Senator Bunde requested discussion on the situation, which resulted
in the need for an appropriation of funds to the PERS and TRS
programs. He commented on the magnitude of the problem.
Co-Chair Wilken stated that the matter would be discussed, although
not in conjunction with debate on this legislation.
Senator Bunde offered a motion to report CS SB 232, 23-GS1009\I,
from Committee with individual recommendations and accompanying
fiscal note.
There was no objection and CS SB 232 (FIN) MOVED from Committee
with zero fiscal note #1 for "Various" departments.
Co-Chair Wilken spoke to media reports of earlier in the day
regarding the rates for PERS and TRS contributions, as referenced
by Senator Bunde. Co-Chair Wilken requested Ms. Millhorn provide a
brief outline of the situation.
Ms. Millhorn reported that on April 19, 2004, the PERS and TRS
boards of directors met in Anchorage and the PERS Board adopted a
five-percent rate increase, which would increase the average
employer contribution rate to 16.77 percent for FY 06. The TRS
Board recommended a five-percent increase, which would increase the
rate from 16 percent for FY 05 to 21 percent for FY 06. She stated
the Division has calculated the costs to the State for FY 06 for
all PERS and TRS employees.
Mr. Staak furthered that the cost of the five percent increases for
both PERS and TRS would total an additional $109 million in
contributions: approximately $79 million for PERS and $30 for TRS
employees. This is in addition to the $100 million cost for FY 05.
He indicated a spreadsheet would be made available to detail this
information.
Senator B. Stevens noted this amount reflects the mandatory
contribution rate and asked the amount suggested as the
contribution rate.
Ms. Millhorn replied that the amount for PERS was 26 percent and
TRS was 38 percent.
Mr. Staak pointed out the rate for TRS increased three-percent from
the recommended rate. The rate for PERS decreased "slightly".
Senator Bunde clarified that once an employee is included in the
retirement system, the courts have ruled their contributions could
not be changed. Therefore the entire amount of the increase must be
borne by the State.
Mr. Staak affirmed this provision is established in the Alaska
Constitution and the employers essentially must assume all of the
risk.
Senator Bunde calculated the State must contribute approximately
$100 million this year and another $100 million the following year.
He asked the number of years the increased contributions would be
required.
Mr. Staak responded that because the current rate is 16.77 percent
and the rates could increase to as high as 25 percent, another two
to three years of increases would occur until the highest
percentage was reached. This would also occur for the TRS program
for five to six years.
Senator Bunde asked the impact of early retirement programs and
whether these would expand the State's debt.
Mr. Staak affirmed.
Senator B. Stevens asked the percentage of the TRS contributions
made for State employees versus municipal employees.
Mr. Staak responded that approximately $22 million of PERS
contributions would be municipality obligations. He included TRS
employees and stated the total amount would be approximately $38
million.
CS FOR HOUSE BILL NO. 123(FIN)
"An Act relating to the allocation of money appropriated to
the Alaska Workforce Investment Board; and providing for an
effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by Representative Carl
Moses "adds the Southwest Alaska Vocational and Education Center in
King Salmon to the roster of entities eligible to receive money
under the technical vocational education program."
TIM BENINTENDI, Staff to Representative Carl Moses, noted three
changes were made to the original version of the bill. One reflects
the name change from the Alaska Human Resources Investment Council
to the Alaska Workforce Investment Board. The second change makes
the effective date July 1, 2004, and the third change eliminated
the inclusion of the Bethel People's Learning Center contained in
the original version of the bill.
Mr. Benintendi reiterated Co-Chair Wilken's statement. Mr.
Benintendi added this would provide the Southwest Alaska Vocational
and Education Center (SWAVC) a four percent share of available
funds through the workforce development program, thus reducing the
amount available to the University of Alaska to 59 percent. The
University of Alaska does not oppose this legislation, which would
provide $183,000 to SWAVC for operating expenses.
Mr. Benintendi informed this funding is generated from the one-
tenth of one percent assessment collected from each employee's
contribution to the unemployment insurance fund for the technical
vocational education program within the Department of Labor and
Workforce Development.
Mr. Benintendi assured this legislation would not require
additional general funds. The SWAVC would join the Galena Project
Education Vocational Center, the Kotzebue Technical Center, the
Alaska Vocational Technical Center and the University, in eligible
recipients of these funds.
Mr. Benintendi stated the SWAVC is located in a region in which
economic fisheries disasters have been declared in three of the
last eight years. An emphasis has been placed on retraining workers
from fisheries related activities to other occupations that would
enhance employment. In the two-year operation of the Center, SWAVC
has provided services to over 900 area residents. The region is
"ripe with potential" for new oil and gas development as manifested
by the recent passage of SB 265 and SB 266. Mining opportunities
also exist and demonstrate a need for skilled workers.
Senator Dyson asked about training for commercial operators
licenses as referenced in the sponsor statement. He asked if this
pertains to truck drivers or vessel operators.
Mr. Benintendi replied the training is for truck drivers.
Senator Dyson then referenced computer hardware training and asked
if software training would be available.
Mr. Benintendi understood the intent is to expand into the entire
information technology field.
Senator Dyson asked the training programs currently offered.
Co-Chair Wilken directed Senator Dyson's attention to a report
listing the Center's mission statement and highlighting the current
activities and goals of the program [copy on file.]
Amendment #1: This amendment would restore language in the original
version of the bill and would include the Bethel Yuut Elitnaurviat,
Inc. People's Learning Center as an eligible recipient of four
percent of the funding available through the technical vocational
education program.
Senator Hoffman moved for adoption and deferred to Ms. Vanasse to
speak to the motion.
Co-Chair Wilken objected for an explanation.
JANELLE VANASSE, Yuut Elitnaurviat, Inc. People's Learning Center,
testified via teleconference from an offnet location in Bethel to
"discuss the value of the amendment". She informed that the Yukon-
Kuskokwim region has been identified as the poorest in the State;
yet has great opportunity for workforce development. Despite high
poverty rates, jobs are available in the region, up to 300
positions at any time. The issue is that the local residents do not
have the education and training to fill the higher wage jobs. To
address this, nine agencies, including the Alaska National Guard
and the largest school district in the region, the City of Bethel,
the University of Alaska, and the Yukon-Kuskokwim Health
Corporation, and the Native corporations, have joined efforts to
provide training to the local workforce. This is important not only
for the quality of life of workers, but also for the economic
development of the region.
Ms. Vanasse assured that the training to be provided is in fields
identified as high priority and because jobs are available within
the region. She listed education and early childhood development,
construction trade, health care, and aviation. Local employers who
are willing to invest in the training of local workers drive this
project. This project would be sustainable and would utilize a
variety of funding sources. Once the facility is fully operational,
nine funding sources would sustain operations.
Ms. Vanasse stated the purpose of this legislation and this
amendment is "investing in this as a model of the State." The
commissioners of the Department of Labor and Workforce Development,
the Department of Education and Early Development and the
Department of Community and Economic Development have characterized
the Center as a valuable pilot project that should be invested in.
Ms. Vanasse reported that although the intent is to construct a new
facility, services are being provided currently. Programs are being
developed and delivered utilizing any available locations. Because
of this ability, the Center is currently serving over 300 local
residents.
Ms. Vanasse stressed that including the Center in the programs
eligible for funding through the technical vocational education
program would be a "solid investment in the State".
Senator Bunde congratulated the witness on the efforts made with
this project. Many community colleges utilized the practice of
"storefront education" whereby classes were held at various
available locations near the people in need of the training. He
asked if the facility were constructed whether the practice of
locating classes near the students would discontinue.
Ms. Vanasse replied that the opportunity to "mobilize training"
would remain. However, only inadequately equipped facilities are
currently available for some training such as nursing courses. The
new facility would have a nursing laboratory equipped with gurneys
and other necessary equipment. Construction trades also require
"hands on" training that is not available in the classrooms
currently used. She predicted that distance training would continue
with travel to the Center required only for those courses requiring
the equipped facilities.
Senator Bunde understood the need for equipped facilities, but
cautioned that with the establishment of a centralized location, it
becomes more convenient for the instructors to remain at that
location rather than "reach out" to students.
Senator Dyson surmised that allocating funds to one or both of the
vocational technical education centers would result in less funding
available for the University.
Mr. Benintendi responded that the funding would be received from
the University portion of the technical vocational education
program.
Senator Dyson asked the activities of the University that would not
be funded if this legislation were adopted.
Mr. Benintendi deferred to the University of Alaska.
PETE KELLY, Director, Government Relations, University of Alaska,
testified in support of this bill and the amendment. The University
would accommodate the reductions to its budget. The University
supports the workforce development efforts in those areas affected
by this legislation, and the University supports delivery of
services to residents of those regions. This legislation is a
viable method to accomplish this.
Co-Chair Green qualified she did not support this legislation. She
asked the status of the People's Learning Center and questioned the
ability for students to achieve certification without the
establishment of the Center.
Senator Hoffman replied that no structure currently exists and
deferred to Ms. Vanasse.
Ms. Vanasse responded that many organizations were already
attempting to fill the "workforce development gap", but the results
would be limited. It was agreed that existing successful programs
would be combined into a new system. The existing programs are
continuing and expanding, regardless that the new facility has yet
to be constructed.
Co-Chair Green wanted to know how the funding would be expended.
She pointed out that in many areas of the State, nursing assistance
and other vocational training is provided by the high schools as
part of the regular curriculum. These programs do not require a new
learning center and those communities are not requesting additional
funding from the legislature to provide the same services. She also
was unsure why funding should be appropriated for a Center that
does not exist. She also wanted to know why the request is only for
FY 05 and FY 06.
Mr. Benintendi replied this is the cycle in which the allocations
are made, once the appropriation has been granted. The
appropriation is made annually.
Co-Chair Green asked if the provisions of this legislation are
passed every two years.
Senator Kelly responded that this legislation corresponds to the
lapse date of the original program established approximately four
years prior.
Ms. Vanasse stressed the potential of the Bethel center to serve as
a model, particularly before the construction of a new facility.
SFC 04 # 101, Side B
Co-Chair Wilken removed his objection to the adoption of the
amendment with the understanding that the bill would not be
reported from Committee at this hearing. He expressed the
University should review the impacts of the reduced funding.
Without further objection Amendment #1 was ADOPTED.
Mr. Benintendi commented that the sponsor supports the amendment.
Co-Chair Wilken ordered the bill HELD in Committee.
HOUSE BILL NO. 503
"An Act relating to the tobacco product Master Settlement
Agreement; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by the House Finance
Committee, "was drafted by the National Association of Attorneys
General and was unanimously supported by its membership. It closes
a loophole that benefits tobacco manufacturers that are not covered
under the Master Settlement Agreement."
TOM WRIGHT, Staff to Representative John Harris, reiterated Co-
Chair Wilken's statement. Mr. Wright noted that currently AS 45.53
requires all non-participating manufacturers to deposit a certain
amount of money into an escrow account with the intent to "level
the playing field". The amount this year is two cents per cigarette
and every manufacturer of a cigarette deposits that amount into an
escrow account.
Mr. Wright stated that the loophole allows those who did not
participate in the Master Settlement Agreement, to withdraw from
this escrow account, anything above their eligible share. Alaska's
allocable share is about .34 percent. He referenced a spreadsheet
prepared by the Department of Law titled, "NPM Escrow Release
Calculations for hypothetical non participating manufacturer Cheap
Smokes, Inc." [copy on file] detailing the consequences of this
loophole. He demonstrated that regardless of the number of
cigarettes a non-participating manufacturer sells in Alaska, the
manufacturer could maintain a balance in the escrow account of only
the amount of Alaska's allocable share, thus permitting the
manufacturer to pay significantly less than the participating
manufacturers.
Mr. Wright informed that this legislation would provide that
participating and non-participating manufacturers would both be
required to contribute the same amount to the escrow account.
Mr. Wright noted the bill is comprised of three sections, with the
provision that if the first section were found to be
unconstitutional, the language of Section 2 would be implemented.
If the court determines that neither section is valid, statute
would revert to existing language.
MICHAEL BARNHILL, Assistant Attorney General, Commercial/Fair
Business Section, Civil Division, Department of Law, added that
similar legislation has been enacted in at least 29 states. The
purpose is to close the loophole unintentionally created when the
statute was first adopted in 1999. The loophole was the result of
an assumption that non-participating manufacturers' sales would be
in all states and therefore the relative percentage of sales in all
states would mimic the allocable share. This has not proved true
and non-participating manufacturers are selling to "niche markets"
in a few states and thus the market share in each state is
significantly higher than the allocable share.
Senator Dyson understood from the sponsor statement that this
legislation would only apply to cigarette. He asked if it would
apply to other tobacco products as well.
Mr. Barnhill responded that the Master Settlement Agreement applies
only to cigarettes.
Co-Chair Wilken ordered the bill HELD in Committee.
CS FOR SENATE BILL NO. 376(HES)
"An Act relating to public assistance and subpoena powers; and
relating to the permanent fund dividend and subpoena powers."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by the Senate Health,
Education and Social Services Committee, "authorizes the
commissioners of the Department of Health and Social Services and
the Department of Revenue to issue subpoenas to compel the
production of records needed to investigate cases of suspected
fraud."
JASON HOOLEY, Staff to Senator Dyson, stated this legislation would
assist the Department of Health and Social Services and the
Department of Revenue to "combat fraud". Currently when public
assistance fraud or permanent fund dividend fraud is suspected, the
departments typically request additional documentation or
information from the applicants. However, these requests are often
unheeded or ignored. The departments must then engage the judicial
system to acquire subpoenas to obtain the information from the
applicants to determine eligibility. Engaging the judicial system
is time consuming and expensive in the use of State resources.
Allowing these departments to acquire subpoenas would enable the
State to more efficiently combat fraud and subsequently serve the
people of Alaska.
Senator Olson asked the number of cases of suspected fraud of
public assistance benefits occur annually.
Mr. Hooley deferred to the Department of Health and Social
Services.
TONY LOMBARDO, Director, Division of Public Assistance, Department
of Health and Social Services, testified via teleconference from
Anchorage to introduce Mr. Marley.
JAY MARLEY, Program Manager, Fraud Control Unit, Division of Public
Assistance, Department of Health and Social Services, testified via
teleconference from Anchorage told of two types of cases the
Division tracks: applicant fraud and recipient fraud. The Division
attempts to stop applicant fraud before benefits are distributed.
Last year, the Division investigated 595 applicant fraud cases and
698 recipient fraud cases.
Senator Olson asked the number of these investigations would
require subpoena power.
Mr. Marley replied the number varies and averages one-quarter of
the number of investigations. The subpoenas are not necessarily
issued to recipients or applicants, but rather to employers, banks,
and other institutions that would have information regarding the
applicants and recipients' employment and financial status.
Co-Chair Green offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal notes.
There was no objection and CS SB 376 (HES) MOVED from Committee
with fiscal note #1 for $5,500 and fiscal note #2 for -$25,100 from
the Department of Health and Social Services and a new zero fiscal
note dated 4/21/04 from the Department of Revenue.
CS FOR SENATE BILL NO. 371(TRA)
"An Act relating to the powers and duties of the Department of
Transportation and Public Facilities; relating to a long-range
program for highway construction and maintenance; and
providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill sponsored by the Senate State
Affairs Committee, "relates to the powers and duties of the
Department of Transportation and Public Facilities. It affirms the
validity of the current Department's planning process." He noted
the provisions of the legislation would be retroactive to 1977.
AT EASE
JEFF OTTESON, Director, Division of Program Development, Department
of Transportation and Public Facilities, testified this legislation
is "vitally important to both the Department and to the State." It
has been discovered through a lawsuit, that the Department must
undertake a consideration of costs and benefits at the time of
project selection for the capital budget in the Statewide
Transportation Improvement Program (STIP). This has not been done
for a significant number of projects and all such projects
currently underway are at risk.
Mr. Otteson furthered that undertaking cost and benefit analyses at
the time a project is under consideration for inclusion in the
capital budget would not always be useful. This would not be
meaningful information to decision makers for several classes of
projects, or would incur such costs as to be overwhelming to the
project.
Mr. Otteson outlined Section 1 reflects language recommended by the
Department of Law as necessary to instruct the court that the
current project involved in litigation should be allowed to
proceed. Section 4 has been the most widely discussed substance of
the bill and pertains to the consideration of cost and benefits for
new transportation projects and facilities. The language in statute
was codified from administrative code in 1977 and has never
undergone the legislative process. Section 6 stipulates the new
provisions would be retroactive to 1977. This would allow any
project underway to be covered by the amended statute, some of
which actually are 30 years old, including the Cooper River Project
on the Sterling Highway.
Mr. Otteson stressed the importance of this legislation to the
Illiamna/Nondalton project, which has been underway since 1975 and
is nearly complete. The key portion of the project is the
construction of a bridge across the Newhalen River. This
legislation is important to address other projects that could be
similarly litigated. Environmental organizations have indicated
using the existing statute to halt other projects. He warned that
this would be easily accomplished for these groups were the statute
not changed.
Mr. Otteson compared the stoppage of the project at the Pogo Mine
to the potential existing for projects with the existing statute.
The Pogo Mine project obtained all permits and was underway, until
the project was halted due to complications in federal law. State
statute could not address the Pogo Mine issues, but this
legislation could prevent such occurrences for State projects.
SENATOR GARY STEVENS informed that Governor Walter Hickel signed an
executive order in 1977 establishing the Alaska Transportation
Council and stipulated that no project could be undertaken without
review and approval by the Council. However, the Governor never
appointed members to this Council and adherence to the approval
requirement was overlooked. The existing statute should be amended
to avoid future lawsuits and to prevent further delays with the
Illiamna/Nondalton project.
JEFF PARKER, Attorney, testified via teleconference from Anchorage
and indicated he is the attorney to the plaintiffs of the
Illiamna/Nondalton litigation, Bob Gilliam [spelling not verified]
and Trout Unlimited. Mr. Parker recommended the bill be held in
Committee. The requirement of cost benefit analyses relate directly
to fiscal issues. If the ability to undertake cost benefit analyses
for new transportation modes and facilities is undermined, the
legislature would "put fiscal resources of this State at risk"
because projects would be constructed that are not cost effective
and would therefore not be maintained. The cost benefit requirement
does not apply to improvements or repairs to existing
transportation projects and facilities. Cost benefit analyses allow
the legislature to make reasonable decisions about the most
effective use of fiscal resources. Absent this requirement,
projects become "political horse trading" because no other
objective criterion is imposed in statute to facilitate decisions.
Existing statute does not prohibit the undertaking of certain
projects that do not have a favorable cost benefit ratio.
Mr. Parker informed that the litigation over the Illiamna/Nondalton
project arose because it was one of two projects included in the
Southwest Regional Transportation Plan in which the Department
decided "on the record" to not conduct a cost benefit analysis.
Although Mr. Otteson warns that all transportation projects are at
risk without the adoption of this legislation, Mr. Parker countered
that cost benefit analyses were conducted for all other projects
and are therefore not subject to the provisions of current statute.
Co-Chair Wilken asked Mr. Otteson the threat to the
Illinois/Barnett Street Connector bridge project located in
Fairbanks if this legislation were not adopted.
Mr. Otteson surmised it would be, along with many of the projects
included in the bond package approved by voters in the last
statewide general election. He listed the North Pole interchange, C
Street extension, Donlin Creek Mine project, as examples. Cost
benefit analyses could be conducted for each of these projects,
although only at significant expense. A cost benefit analysis was
recently completed for a Naknek River bridge project at a cost of
$185,000 and six months of time. An analysis is underway for the
Illiamna/Nondalton project with a projected cost of $55,000 for the
consultants alone. In both instances, the analysis confirmed the
Department's assessment that the projects are legitimate.
Mr. Parker countered that this legislation "creates a greater
likelihood of projects getting into the ten year time track". He
defined the "ten-year time track" as a provision of federal law
that stipulates that if federal funds are expended on a project for
planning, design or other activities, and the project does not
reach construction within ten years, the State is potentially
liable to refund the federal funds. The STIP includes approximately
60 projects within the ten-year time track and involve hundreds of
millions of dollars of federal funding.
Mr. Parker contended that the more options to facilitate making
better-informed decisions that are eliminated, the greater the
likelihood that "mere politics" would move a project forward. As
"more reasoned" decision-making is implemented later, these
projects are "put on the back burner". This is the situation that
occurred with the Illiamna/Nondalton project. He stated that
project is not near completion, as attested to by Mr. Otteson and
he spoke of the high cost and political motivation behind the
project.
Co-Chair Green offered a motion to report the bill from Committee
with individual recommendations and accompanying fiscal note.
There was no objection and CS SB 371 (TRA) MOVED from Committee
with zero fiscal note #1 from the Department of Transportation and
Public Facilities.
CS FOR SENATE BILL NO. 302(JUD)
"An Act relating to the authority to take oaths, affirmations,
and acknowledgments in the state, to notarizations, to
verifications, to acknowledgments, to fees for issuing
certificates with the seal of the state affixed, and to
notaries public; and providing for an effective date."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated this bill, sponsored by the Senate Rules
Committee by request of the Governor, "comprehensively updates AS
44.50, the chapter that governs notary publics. The last time we
did this was in 1961."
SCOTT CLARK, Notary Commission Administrator, Office of the
Lieutenant Governor, deferred to Ms. Kreitzer to present the bill.
ANNETTE KREITZER, Chief of Staff, Office of the Lieutenant
Governor, testified via teleconference from an off net location in
Anchorage, and referenced a table titled, "Notary Statute
Comparison - CS SB 302 (JUD)" [copy on file], which demonstrates
the current requirements and the proposed changes. Upon review of
the current procedures, potential improvements were identified.
Ms. Kreitzer noted the change of the minimum age requirement from
19 years to 18 years. This is to accommodate the significant number
of banking clerks who are 18 years of age and require notary
authority.
Mr. Kreitzer stated that the residency requirement would change to
be consistent with the general residency statute AS 01.10.055. It
was also discovered that felons are not currently restricted from
becoming notaries and this legislation would stipulate that
applicants may not be convicted or incarcerated felons within ten
years of application. The original version of the bill would have
imposed a zero tolerance and would have prohibited all felons from
obtaining notary authorization. However, statistics demonstrate
that most felons who have not re-offended within ten years are
likely to remain lawful citizens, and the bill was amended to allow
for those felons to become notary publics.
Ms. Kreitzer noted the terms would remain unchanged with the
exception of Limited Governmental Notaries Public, which would
remain active until termination of employment in the governmental
capacity that necessitates the notary authority.
Ms. Kreitzer told of the proposed increase in the price from $2 to
$5 for each notary public certificate issued by the Office of the
Lieutenant Governor to reflect increased postage and printing
expenses. The Notary Bond requirement would remain unchanged at
$1,000, although Limited Governmental Notaries would no longer
require the bond because the governmental entities are self-
insured.
Ms. Kreitzer explained that Limited Governmental Notaries Public
are currently restricted to providing notary services only in the
capacity of their employment unless they purchase a separate public
commission. This legislation would allow the Limited Governmental
Notaries Public to perform notary services independently as well.
Ms. Kreitzer informed that currently the Administrative Procedure
Act must be invoked to review all complaints against notaries,
regardless of the seriousness of the allegations. The House Finance
Committee is considering legislation that would consolidate the
appeals processes of many State agencies to a centralized hearing
officer. A proposed amendment to SB 302 would include notary public
activities in the centralized appeals process.
Ms. Kreitzer reported that improvements would be made to the web
site detailing the locations of notary publics available to provide
notary services. Additional information would be gathered from
notary publics, including e-mail addresses and phone numbers that
would not be made public but would assist the Office of the
Lieutenant Governor in maintaining current contact information.
Senator Dyson asked if this legislation only pertains to notary
publics.
Ms. Kreitzer responded that Section 1 of the bill provides that the
presiding officers of the House of Representative and the Senate
would become notary publics upon appointment to those positions.
This is necessary because an official must be a notary public to
administer an oath of office, which is done to swear in persons
appointed to fill vacant legislative seats.
Senator Dyson told of allegations that seated legislatures were not
"validly serving" because they had not taken the oath of office
under the "proper [State] seal" and had not spoken the correct
language in taking the oath. He asked if this issue would be
addressed.
Ms. Kreitzer had heard similar compliant and replied that this
situation would be corrected with the language in Section 1.
Amendment #1: This conceptual amendment inserts a new bill section
on page 16, following line 25 to read as follows.
Sec. 12. AS 44.50.068(e) is repealed and reenacted to read:
(e) If the lieutenant governor finds that formal
disciplinary action may be warranted, the lieutenant governor
shall refer the matter to the office of administrative
hearings for a hearing.
This amendment also inserts new bill sections on page 18, following
line 8 to read as follows.
Sec. 18. The uncodified law of the State of Alaska is amended
by adding a new section to read:
CONDITIONAL EFFECT. Section 12 of this Act takes effect
only if a bill is passed by the Second Session of the Twenty-
Third Alaska State Legislature, and enacted into law, that
establishes procedures for administrative hearings conducted
by an office of administrative hearings in the Department of
Administration.
Sec. 19. If sec. 12 of this Act takes effect under sec. 18 of
this Act, it takes effect on the effective date of the
provisions described in sec. 18 of this Act.
Co-Chair Wilken moved for adoption.
Senator Dyson objected for discussion purposes.
Ms. Kreitzer noted the conceptual amendment would allow the
Division of Legal and Research Services to make technical changes
where necessary. The language of this amendment pertains to SB 203.
If SB 203 does not pass, existing statute is retained, that
provides that the lieutenant governor determines whether sufficient
evidence exists for a complaint to proceed.
Senator Dyson surmised that the Office of the Lieutenant Governor
and the Office of the Governor do not oppose this amendment.
Ms. Kreitzer affirmed.
Senator Dyson removed his objection and the amendment was ADOPTED.
Senator Bunde relayed concerns that all commissioners and
appointees do not take an oath of office.
Ms. Kreitzer was unsure of the concern, as all commissioners are
required to take the oath.
Senator Bunde clarified that State appointees to the federal
Subsistence Board do not take an oath promising to uphold the
Alaska Constitution. If this oath were taken, those appointees
would be unable to make allocations of fish and wildlife for
subsistence users.
Ms. Kreitzer responded that this bill would not address that
situation.
Amendment #2: This conceptual amendment would insert language in
Section 4, amending AS 09.63.090. Certificate of acknowledgment.,
and Section 5, amending AS 09.63.100. Forms of acknowledgment., on
page 3, line 1 through page 7, line 3, relating to limited
liability partnerships to reflect language included in HB 439.
Ms. Kreitzer proposed this amendment to align this legislation to
its companion bill in the House of Representatives. It was
discovered that this legislation would not pertain to limited
liability partnerships. This is "housekeeping language".
SFC 04 # 102, Side A
Co-Chair Wilken moved for adoption.
Without objection the amendment was ADOPTED.
Co-Chair Green offered a motion to report CS SB 302 (JUD), as
amended, from Committee with individual recommendations and
accompanying fiscal note.
There was no objection and CS SB 302 (FIN) MOVED from Committee
with zero fiscal note #1.
Co-Chair Green spoke to public comments on complications caused by
provisions in the FY 04 supplemental budget. She announced she has
been communicating with the Office of the Governor and Department
of Health and Social Services to achieve an "interim solution" to
this "anomaly" to ensure that assisted living and health care
providers and other vendors receive payment without delay.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting.
| Document Name | Date/Time | Subjects |
|---|