Legislature(1995 - 1996)
04/12/1996 01:30 PM Senate JUD
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE JUDICIARY COMMITTEE April 12, 1996 1:30 p.m. MEMBERS PRESENT Senator Robin Taylor, Chairman Senator Lyda Green, Vice-Chairman Senator Mike Miller Senator Al Adams MEMBERS ABSENT Senator Johnny Ellis COMMITTEE CALENDAR SENATE BILL NO. 264 "An Act limiting the authority of courts to suspend the imposition of sentence in criminal cases." SENATE JOINT RESOLUTION NO. 13 Ratifying an amendment to the Constitution of the United States concerning the balancing of the federal budget. CS FOR HOUSE BILL NO. 341(FIN) "An Act relating to administrative adjudication and judicial appeals and to the informal resolution of certain factual disputes between taxpayers and the Department of Revenue; establishing the office of tax appeals as a quasi-judicial agency in the Department of Administration; revising the procedures for hearing certain tax appeals, including appeals regarding seafood marketing assessments; relating to consideration and determination by the superior court of disputes involving certain taxes and penalties due, and amending provisions relating to the assessment, levy, and collection of taxes and penalties by the state and to the tax liability of taxpayers; providing for the release of agency records relating to formal administrative tax appeals; relating to litigation disclosure of public records; clarifying administrative subpoena power in certain tax matters; and providing for an effective date." CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 387(JUD) am "An Act rearranging existing provisions of AS 47.10 into chapters separately addressing the topics of children in need of aid, delinquent minors, and the institutions, facilities, and management, administration, and oversight of programs relating to minors, and conforming references and making other conforming changes due to that rearrangement; amending the manner of determining support obligations for children in need of aid and delinquent minors; amending the purpose of delinquency provisions; amending hearing procedures used in delinquency proceedings; amending provisions relating to enforcement of a restitution order entered against a minor; setting out the considerations to be given by a court in making its dispositional orders for minors adjudicated delinquent; authorizing municipalities to establish curfews for minors by ordinance; relating to enforcement of truancy under the compulsory school attendance law; and amending Rule 23(d), Alaska Delinquency Rules." PREVIOUS SENATE COMMITTEE ACTION SB 264 - No previous Senate committee action. SJR 13 - No previous Senate committee action. HB 341 - No previous Senate committee action. HB 387 - No previous Senate committee action. WITNESS REGISTER Kelly Huber Legislative Aide to Senator Halford Alaska State Capitol Juneau, Alaska 99801-1182 POSITION STATEMENT: Testified for sponsor of SB 264 Barbara Brink Public Defender Agency Department of Administration 900 W 5th Ave Ste 200 Anchorage, AK 99501-2090 POSITION STATEMENT: Commented on SB 264 Anne Carpeneti Assistant Attorney General Department of Law P.O. Box 110300 Juneau, AK 99811-0300 POSITION STATEMENT: No position on SB 264 Jerry Burnett Legislative Aide to Senator Phillips Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Testified for sponsor of SJR 13 Representative Joe Green Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 341 Deborah Vogt Deputy Commissioner Department of Revenue P.O. Box 110405 Juneau, AK 99811-0405 POSITION STATEMENT: Opposed to HB 341 in its present form Dan Seckers Alaska Oil and Gas Assn. 121 W. Fireweed Lane #207 Anchorage, AK 99503 POSITION STATEMENT: Supports HB 341 Representative Pete Kelly Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 387 ACTION NARRATIVE TAPE 96-36, SIDE A Number 001 CHAIRMAN ROBIN TAYLOR called the Judiciary Committee meeting to order at 4:12 p.m. The first order of business was SB 264. SB 264 LIMIT SUSPENDED IMPOSITION OF SENTENCE KELLY HUBER, legislative aide to Senator Halford, sponsor of the measure, explained the bill limits the authority of the courts to suspend the imposition of sentences in criminal cases by adding to the list of offenses a person cannot receive a suspended sentence for. Those offenses are crimes against a person (AS 11.41) or arson in the first degree. It also prevents a person convicted of a second felony, from receiving a suspended sentence. CHAIRMAN TAYLOR asked if SB 264 only pertains to felonies. MS. HUBER answered it does not; AS 11.41 includes misdemeanors. Number 044 BARBARA BRINK, Public Defender Agency, expressed concern about the broad range of the bill. The Public Defender Agency believes the committee should consider modifying the bill so that it only deals with felony offenses. The ability to suspend sentences provides an opportunity for deserving first offenders to try to get their records clean, and is used sparingly by judges, usually only for first offenders or older people who have become productive members of society but experience a lapse in judgment. The misdemeanors encompassed in AS 11.41 include assault in the fourth degree, reckless endangerment, and custodial interference. A person can be convicted of fourth degree assault or reckless endangerment simply for placing another person in fear, such as for setting off fireworks. Communities benefit if judges are allowed to exercise discretion by giving offenders an opportunity to wipe their records clean. A suspended sentence often provides great incentive to work at one's rehabilitation, and may require probation, restitution, and community work. MS. BRINK explained assault in the third degree occurs when one places another in fear by means of a dangerous instrument. She recounted a case of a defendant (an 18 year old) who was convicted of assault in the third degree for driving over the speed limit. The driver had no prior record but did cause harm to someone. There was no alcohol involved. The SIS prevents someone from being permanently branded who makes a mistake. She suggested removing all misdemeanors and assault in the third degree from the bill. Number 118 ANNE CARPENETI, Assistant Attorney General, stated no position on the bill, but suggested adding a reference to AS 11.41 on line 6, page 1. CHAIRMAN TAYLOR announced there was a pending amendment that would be offered by Senator Adams. SENATOR ADAMS explained the amendment provides the judge an opportunity to impose a suspended sentence for first time offenders for the list of crimes discussed by Ms. Brink. SENATOR ADAMS moved and asked unanimous consent that amendment #1 be adopted. CHAIRMAN TAYLOR objected for the purpose of discussion and noted SB 264 will be heard in the Senate Finance Committee, where the sponsor is a co-chair. He asked Senator Adams if the amendment removes only misdemeanor offenses. SENATOR ADAMS clarified all three offenses removed by the amendment are misdemeanors and there will be no possibility of a suspended sentence for a second offense. There being no further objection to the amendment, the motion carried. SENATOR GREEN moved SB 264 as amended out of committee with individual recommendations. There being no objection, the motion carried. SJR 13 RATIFYING FED BALANCED-BUDGET AMENDMENT JERRY BURNETT, staff to Senator Randy Phillips, explained SJR 13 ratifies a balanced budget amendment, as proposed in HJR 1, which passed the U.S. House of Representatives on January 26, 1995. The proposed amendment would require the U.S. President and Congress to adopt a budget for each fiscal year in which total outlays do not exceed total receipts. SJR 13 also requires a supermajority vote consisting of three-fifths of each house of Congress to adopt a budget in which outlays exceed receipts, or to increase the limit on debt. An exception to the balanced budget requirement is allowed in times of war or declared military emergency. The current national debt is in excess of $5 trillion, which represents about $20,000 per person in the U.S. SENATOR GREEN moved SJR 13 out of committee with individual recommendations. There being no objection, the motion carried. HB 341 TAX APPEALS/ASSESSMENT/LEVY/COLLECTION REPRESENTATIVE GREEN, sponsor of HB 341, gave the following overview of the legislation. HB 341 was introduced last year as a tax court bill but during interim hearings the parties involved determined a tax court would not be the best approach to streamline and create a more fair method of appeals. In January the Administration submitted a tax bill and the two bills were merged. The Department of Revenue has spent many hours working with Representative Green's staff on this legislation however two areas of dispute remain. The first point of contention is the establishment of a tax appeal board that would be nominated by the Governor and confirmed by the legislature. The second point of contention is the ability of the tax applicant to go directly to Superior Court and seek a de novo review after the first informal review by the Department of Revenue. Under current law the Department of Revenue holds both an informal review and formal review. After the formal review, the case can be appealed to Superior Court but the Court generally reviews the record and does not have a de novo review. Taxpayers want a complete review, starting from scratch. The Department of Revenue has agreed the formal review should be conducted elsewhere. In the House Finance Committee review of HB 341, Paul Frankel, a national tax expert, testified that the final appeal should be removed as far as possible from the Department of Revenue. One additional minor problem is the transition for people who have appealed under existing law, but may fall under the new law. Number 274 SENATOR ADAMS commented he planned to offer an amendment for the Department of Revenue to delete AS 43.05.242, which allows the direct appeal to the Superior Court, and to change the appointments section. He asked Representative Green his opinion of the particular amendment. REPRESENTATIVE GREEN stated the goal was to try to establish, in fact and perception, a review process that was removed from any bias. He hoped as an Alaskan citizen, the department would have a bias, since they issue what they believe to be a fair tax statement however, when a taxpayer disputes the amount owed, independent people need to review the case, hence the reason for legislative confirmation of the appointments of administrative law judges. REPRESENTATIVE GREEN noted the ability to go directly to court after the information review is not an uncommon situation. When it is obvious the issues of contention remain after an informal review, it is both expensive and time consuming to go through a second review with the same people to get the same result, and then go to a Superior Court judge who can only review the hearing records. SENATOR ADAMS asked Representative Green if his strongest objection is to the appointment of the administrative law judges by the Administration. REPRESENTATIVE GREEN responded of the two issues, his strongest objection is to the fact the Department of Revenue does not support a direct avenue for taxpayer appeal to the Superior Court. He stated he was willing to modify the method of selecting the administrative law judges. Number 315 DAN SECKERS, Chairman of the Tax Committee for the Alaska Oil and Gas Association (AOGA), gave the following testimony on HB 341. AOGA is a trade association whose 19 members comprise the majority of the oil and gas exploration, production, transportation, refining, and marketing activities in the State of Alaska. The present tax appeal process is seriously flawed in practice and denies the taxpayers the opportunity to have their tax appeals heard and decided by a truly independent and impartial tribunal. HB 341 would significantly reform this process by establishing a form outside the Department of Revenue and independent of it, where tax appeals would be heard, tried, and decided. The bill would also clarify the standards to be used when reviewing claims and positions asserted by the department against the taxpayers. The bill would promote greater efficiency and speed, and provide for greater control over the discovery process, an area of abuse in the past. The great majority of the provisions of the CSHB 341(FIN) reflects consensus not only within industry, but also between the industry and the Department of Revenue. There are two significant areas in the bill the department opposes and AOGA supports: legislative confirmation of the administrative law judges; and the option for taxpayers to go directly to Superior Court instead of to the administrative law judges. MR. SECKERS stated AOGA supports legislative confirmation of the administrative law judges. They may decide cases involving tens, or even hundreds of millions of dollars in tax claims and their decisions could affect all Alaska taxpayers. It is essential they be qualified, capable, and fair. To achieve this, AOGA believes there need to be three essential elements in the process of appointment. First, there must be an opportunity for taxpayer comment on the qualifications of potential appointees before confirmation. Second, the process must be public and open. Third, there must be some independent body or entity in the process to act as a check on the executive branch's otherwise unlimited discretion in making these appointments to prevent any improper influence the executive branch might otherwise have in the appointment or reappointment of judges. Legislative confirmation provides all three of these essential elements in the appointment process. The Department of Revenue proposed, in the House Finance Committee, to run the appointments through the Alaska Judicial Council in a manner similar to that used in appointing judges to the state courts. At that time the AOGA Tax Committee had not had sufficient time to consider the proposal. AOGA believes that properly framed, the judicial council approach can be a reasonable alternative to legislative confirmation, and has developed an amendment to do so. The amendment closely follows the one offered by Rep. Brown on behalf of the Department of Revenue in the House Finance Committee, with two changes. The first change is a technical amendment on page 1, lines 9-12, which clarifies there is no requirement to create additional administrative law judge positions besides the chief, but if an additional judge is appointed, the Governor must choose each from a slate of nominees presented by the Judicial Council. The second difference is also technical: it clarifies a judge cannot be reappointed if the Judicial Council recommends against the appointment. This proposed amendment does not mean AOGA is withdrawing its support of legislative confirmation, rather it finds the judicial council approach equally acceptable. Although the Governor is not opposed to legislative confirmation, the Department of Revenue is, therefore the possibility of a veto exists. AOGA wants tax reform this year and can accept either alternative; it defers to the legislature's judgment to decide which approach should be included in the bill. MR. SECKERS discussed the provision allowing taxpayers to appeal directly to Superior Court instead of to the administrative law judges. AOGA did not propose this option but finds merit in the proposal and endorses it. AOGA agrees with the Administration that most taxpayers will prefer to use the tax expertise and procedural rules of the new system of administrative law judges, but there may be times when it may be more efficient and expedient to proceed directly to court. A dispute may involve constitutional issues which an administrative law judge cannot rule on. As Mr. Frankel testified before the House Finance Committee, even the federal system offers taxpayers a choice. Additionally, over one-half of the states allow such an option. Superior Court judges are competent professionals who have responsibility for hearing very complex cases, such as royalty and commercial litigation. Under current law, Superior Court judges review the formal hearing decisions of the Department of Revenue. The option would not cost the state additional money and may result in reduced expenditures. This bill also requires that the standards of review used by the Superior Court judges under this option be the same as under the administrative law judge system. By making this option available, the state will ensure taxpayers it is committed to a fair tax appeal process. MR. SECKERS noted while confirmation and the "go directly to court" option are the only two major unresolved issues in the bill, AOGA has some concerns over the transitional provision. Both AOGA and the Department agree in principle that taxpayers who are still in the first stages of the existing formal hearing process should be allowed to use the new procedures. Though AOGA and the department have not come to agreement on the precise wording of such a rule, AOGA will continue to work on options for an appropriate transition rule. MR. SECKERS concluded CSHB 341 (FIN) is an excellent bill. AOGA's testimony on the few remaining areas of disagreement must not detract from the fact that there is great deal more consensus and compromise in the bill than controversy. Number 456 SENATOR ADAMS asked Mr. Seckers to review his proposed amendment to see if it is compatible with AOGA's amendment. DEBORAH VOGT, Deputy Commissioner of the Department of Revenue, discussed the department's position on CSHB 341(FIN). The department opposes HB 341 in its present form. It has worked hard on the legislation with a variety of people for several months, however has reached an impasse over at least one major provision. The Department of Revenue's current procedures for resolving tax appeals involves the following. A dissatisfied taxpayer has the option of going to an informal conference. No depositions are taken, no witnesses are heard, and the proceedings are not recorded: the proceeding is not adversarial. The taxpayer gets an opportunity to present arguments and missing information. The informal conferee issues a written decision. A taxpayer can skip the informal conference and instead have a formal hearing in the Commissioner's Office held by a specialized hearing officer or the Commissioner. Because the Commissioner can sit in a judicial capacity, when the case enters the formal hearing process, the Commissioner must distance him/herself from the management of that case on a day-to-day basis. That dual role presents difficulties for every Commissioner of the Department of Revenue which is one of the reasons the department supported moving the hearing process out of the department. The formal hearing is a requirement before going to court. This model is similar to many other administrative agencies, both state and federal, and has been litigated and upheld many times. There is a perception by taxpayers that this tax system is stacked against the taxpayer which is the second reason the department agreed to consider moving the tax dispute resolution program out of the department. MS. VOGT explained the provisions of the bill. HB 341 sets up an independent office of tax appeals within the Department of Administration. It sets criteria for selection of administrative law judges who must have tax expertise. The administrative law judge would serve for a term certain and would be dismissible only for cause. Those two provisions were included to give taxpayers the assurance that appointments of administrative law judges would not be arbitrary. The administrative law judge would issue decisions that would not be adopted by any Commissioner. Currently, decisions made by the hearing officer must be adopted by the Commissioner of the Department of Revenue. Moving the program to the Department of Administration empowers the administrative law judge to issue a final administrative decision: it does not have to be adopted by anyone before it can be appealed to Superior Court. The administrative law judge could adopt regulations governing procedures in tax cases. The legislation establishes a standard of review for tax cases. Actual determinations would be decided upon the preponderance of the evidence unless a different standard is set by law. Legal determinations would be made on a substitution of judgment basis. Issues that are committed to the agency's discretion, whether they be factual or legal, would remain within the department. HB 341 makes some provisions for curbing the rampant discovery that has characterized the large oil and gas cases in the past. Number 530 CHAIRMAN TAYLOR asked how the bill takes care of abusive discovery practices. MS. VOGT replied the bill makes substantial steps but does not go quite as far as the Department of Revenue would like. It requires the parties to come before the administrative law judge with a discovery plan. The plan has to be consistent with the efficient, speedy, and just resolution of the case. Mr. Frankel testified that he does not believe there should be any discovery in tax cases. MS. VOGT continued. The legislation also requires the parties to make fact stipulations wherever they can. It establishes a system for publicizing and compiling tax decisions so that taxpayers and the state will know what the precedent is. The rules would be available for all to see, auditors would know how to audit, and other taxpayers would know how to fill out their tax returns. The department agrees with these provisions but has two major problems with the bill, the first being the appointment of administrative law judges. The original draft of HB 341, and the Governor's bill, simply moved the hearing officer to the Department of Administration. The change to legislative confirmation is unconstitutional according to Hammond v. Bradner. The response to the constitutional issue was to create a board of tax appeals rather than a single judicial officer however this approach more than doubles the fiscal note and makes for a hybrid, cumbersome agency. Usually boards and commissions operate like a committee, with a quorum and majority votes. Normally when a board or commission has judicial powers, it hires a hearing officer to make recommendations. The commissioners of a board of tax appeals would be the judges. The Department of Revenue proposed the judicial council alternative which would provide the assurance to taxpayers that they will receive independent review, and will allow the fiscal note to reflect the need for only one administrative law judge and one half-time clerk. The Administration stongly prefers the judicial council approach. TAPE 96-36, SIDE B MS. VOGT emphasized the more difficult problem is the provision that allows taxpayers to go directly to court and is the reason the department cannot support the legislation. The provision on page 16 negates everything in the bill prior to it because it allows the taxpayer to go from informal conference straight to court. The consequences of this provision are that there would be no limitations on discovery as discovery would follow Superior Court rules, there would be no fact stipulations, and the judge deciding the case would not be required to have any tax expertise. It is incumbent on the Department of Revenue and the legislature to think carefully about the administration of its tax provisions because the most important aspect of sovereignty is the power to tax. Tax laws must provide for expertise, uniformity, balance, and certainty. A judge without tax expertise would decide a case and set a precedent for tax law. Tax laws can be arcane, complex and confusing and very controversial. The precedents these cases can set for other cases can be very important. One of the consequences of the direct to court rule is that Superior Court decisions are not published and they are not binding on one another. HB 341 provides that the decisions of the tax appeals office be published. Cases should go from an administrative law judge to the Superior Court because the trial court decision would be made public. MS. VOGT provided tables describing how other states handle this issue. Every state has some sort of body of experts who have been empaneled to decide tax cases. In some states that body is in- house, others have created independent boards or tribunals. The tables divide the jurisdictions into three categories. Table 1 applies to states where tax authorities conduct tax appeals. Number 532 CHAIRMAN TAYLOR asked if the Department of Revenue has had any taxpayers go to court on oil and gas tax cases. MS. VOGT answered yes. Referring to Table 1, MS. VOGT indicated of the 25 jurisdictions that have tax appeal boards within the taxing authority, 10 require taxpayers to use it, 11 allow taxpayers to skip that forum if the taxpayer pays all taxes due first. Among the states that allow the taxpayer to skip the forum, the taxpayer must pay the taxes and then sue for a refund. The court system is often used by taxpayers when they challenge the validity of the law rather than the application of the law. Number 518 CHAIRMAN TAYLOR questioned whether that requirement was contemplated as an alternative in the legislation. MS. VOGT replied in HB 341 the taxpayer has to post a bond before going to Superior Court, but does not have to prepay taxes. CHAIRMAN TAYLOR asked if that alternative was part of the discussion. MS. VOGT stated that alternative was never raised to the department as an option. CHAIRMAN TAYLOR asked if a prepayment requirement would act as a significant constraint on people opting out of the administrative law panel. MS. VOGT believed it would be a significant constraint, but she did not know whether the other parties would support that provision. MS. VOGT drew the committee's attention to Table 2 which describes state appeal procedures in states with independent forums. Seven states that allow the taxpayer to skip the forum require prepayment of taxes before going to court. New Hampshire and Idaho permit a taxpayer to go straight to court without prepayment. Many states that allow taxpayers to prepay before going to court do not allow the taxpayer to go to court in defense of an assessment. If the taxpayer pays the tax and has not challenged the law, and owes more taxes after a reassessment, the taxpayer cannot go to court at that time. CHAIRMAN TAYLOR asked if that provision is in HB 341. MS. VOGT answered none of that is in the bill. In conclusion, MS. VOGT repeated the bottom line is that taxes are such an important component of the governmental function, they should be reviewed by experts. The Department of Revenue believes if the tax function is going to be moved out, it needs to be done in a way that everyone feels is fair, independent, unbiased, and is protected from political influence. Once that system is in place, however, everyone should be required to use it so that we have a consistent body of tax law that taxpayers and auditors can rely on and understand. Another aspect to this system is that the Department of Revenue will not have the option of going to court if it is ruled against. CHAIRMAN TAYLOR indicated if the state is going to create the ball field, it has to play on it. He noted if one party will have the option of going to court, it needs to have some parameters, such as the prepayment requirement, and suggested either side have the option of going to court. He expressed concern that forum shopping will occur. When a court decision favors a taxpayer on one issue, but not on a second issue, another taxpayer will know whether to go to court, depending on the issue. He believed the only justification for depriving people of the opportunity to go straight to court would be because of an inherent lack of competence within the judicial system being able to handle the complexity of the litigation involved. Number 447 MS. VOGT did not believe the problem to be a lack of confidence in the judicial system, but rather a lack of tax expertise. If the judicial council approach is used, administrative law judges will be chosen for their tax expertise. Some of the cases take up to one year to decide. The judicial system has submitted a fiscal note for the straight to court option of $149,000 in anticipation of bringing in judges pro-tem to backfill behind Superior Court judges assigned to major tax cases. That cost could be saved if the direct to court option is deleted. The Department of Revenue believes that option does more than even the playing field, it tips the playing field in favor of the taxpayer. Number 408 CHAIRMAN TAYLOR asked Ms. Vogt to discuss the issue of transition. MS. VOGT explained the transition provision was originally drafted to simply say whatever gets appealed after the effective date of the act uses the new system, cases currently pending before the Department of Revenue stay with the department. There are a number of reasons existing cases should stay within the department. Many of the cases are currently in progress, some have already been heard and are awaiting a decision, but more importantly those cases did not come up through the department in contemplation of new provisions, and some cases may have skipped informal conference. After this provision was crafted, one taxpayer approached the department because he/she had chosen not to have an informal hearing. The department gave the taxpayer the option of having an informal hearing, and tried to craft language to accommodate that taxpayer. That language appears on page 19 in Section 17 of the bill and provides for trigger points based on whether there has been material discovery by either party, or whether substantive motions were filed. Both of those terms are very vague, and leave up in the air who will decide whether a motion that was filed is substantive. It also requires that consent to that stipulation not be unreasonably withheld, but again it does not specify who will determine "unreasonable." Everyone recognizes that there are problems with that language that need to be addressed. The Department of Revenue would prefer to go back to the original, simple language requiring new cases to use the new system, and existing cases to use the existing system, unless the parties agree to change forum. Number 358 CHAIRMAN TAYLOR informed Ms. Vogt he had prepared a new transition provision to take into account some of those concerns. It reads as follows: Sec. 17. TRANSITIONAL PROVISIONS. The remedies and procedures provided by this act apply to all revenue tax appeals in which a request for formal hearing has been filed with the Department of Revenue on or before the effective date of this Act. A taxpayer who has filed a request for formal hearing on or before the effective date of this act may elect within 45 days from the enactment of this act to use the remedies and procedures existing prior to the enactment of this act. He explained the amendment would allow the taxpayer to stay within the system, or to opt out. MS. VOGT asked for more time to review the amendment. CHAIRMAN TAYLOR commented on the time constraints imposed on the committee, and the several amendments proposed to this legislation. SENATOR ADAMS asked whether the Governor will veto this legislation if it passes as is. MS. VOGT indicated the department will strongly ask the Governor to veto the bill. She believed the Governor has discussed his concerns with oil and gas industry representatives. SENATOR ADAMS asked which concerns are most critical. MS. VOGT responded all three provisions that have been discussed today. Number 310 CHAIRMAN TAYLOR noted his concern with the selection of the hearing officer is that the judicial council system works well for judges, but due to the magnitude and complexity of tax cases, it may not fit well within the current judiciary as it has not been trying these cases. He expressed frustration that this bill would continue to allow an Administration to continue to utilize a bureaucracy within it for an appeal process. At some point in time one has to leave that system and go into the court system anyhow, although it may take years. Over the last couple of years, he co- sponsored legislation to ex-post facto rollback the statute of limitations on tax cases because someone had forgotten to get an oil company to sign off and waive rights, a bizarre piece of legislation at best. He apologized for helping to sponsor it, but it was an attempt to resolve some of these large tax issues. If an appointment process is established that is very much controlled by the Administration, it is difficult to believe that politics would not invade and infect that system. In just the last year, this Administration has dismissed the Babbitt case, forfeiting Alaska's rights under its Constitution to the federal government on the drafting of subsistence regulations. The Administration has dismissed the Venetie case, creating 226 tribal entities that will be devastating regarding custody cases, the Native child welfare act, and commercial transactions. The settlement of the Tyson case has raised a lot of eyebrows. In addition the Senate has been contemplating hiring a special investigator to review a settlement by this Administration with one of the labor unions. Billions of dollars of tax cases have been outstanding for years that various governors have chosen to settle. He asked Ms. Vogt whether she was aware of any Governor dismissing or settling a tax case for 15 cents on the dollar. Number 255 SENATOR ADAMS noted the previous Republican Administration was wrong in filing the Babbitt and Venetie cases which is why this Governor had to dismiss them. CHAIRMAN TAYLOR responded he understood the Governor may have made those decisions based on law, however the Attorney General informed the legislature those decisions were not based on law, they were based on other reasons. SENATOR ADAMS stated whoever has the gold makes the rules and the Attorney General at that point was working for another governor. CHAIRMAN TAYLOR agreed that is the problem, and pointed out it often will depend upon who does have control. Setting up a selection process that is dominated by the executive branch or the legislative branch is cause for concern. Merely utilizing the judicial council to screen applicants may help, but requiring nomination by the Governor and confirmation by the legislature seems burdensome. MS. VOGT believed there are provisions in HB 341 that address some of those concerns. The judicial council is a constitutional council made up of seven members and would solicit public comment on pending applicants. The names would then be submitted to the Governor for selection. The administrative law judge would then be appointed for a two year term and after the two years would be reviewed again by the judicial council with the same opportunity for public input. The second term would be for four years, and the administrative law judge could not be fired for anything except cause. Those two conditions were included in the bill to address the concerns articulated by Chairman Taylor. CHAIRMAN TAYLOR stated while the administrative law judge has the case on formal appeal, the process is closed. MS. VOGT noted the Department of Revenue would be delighted if the process was made open to the public. The bill originally had such language making the appeal process open to the public, but that was removed after taxpayers raised strong objection. Number 191 CHAIRMAN TAYLOR commented that everyone would know what the amount in question was if the case was filed in court and there is a prepayment provision. Then if a governor decided to dismiss a case, and the public was aware of the disputed amount, the Administration would be called upon to explain the settlement. There is a lot of frustration about the lengthy amount of time these cases take, and the bill should at least quicken the process. SENATOR GREEN questioned whether the bill provides for the legislature to see the public input on nominees provided to the judicial council. MS. VOGT stated the fact that a candidate is up for review would be published, but she did not know how much would be disclosed to the public. For judicial appointments, a bar poll ranks judicial applicants and the results of the poll are published, but individual comments are kept confidential. Number 154 SENATOR GREEN pointed out her concern that a candidate could be deemed inappropriate for retention by a member of the public, and the legislature would never know. She questioned whether a judge needs to be reconfirmed once seated, or reappointed. MS. VOGT replied that is correct, but that issue is addressed in the amendment being proposed by AOGA. She added if the judicial council recommended a person not be reappointed, that fact would be public. CHAIRMAN TAYLOR commented it would be public but not binding. CHAIRMAN TAYLOR indicated that Senator Adams has suggested the bill be scheduled for Monday to give the interested parties an opportunity to present a compromise. The matters will be brought up for a vote by the committee at that time. He suggested addressing the prepayment requirement, the transition provision, and appointment provisions including a legislative role. MS. VOGT pointed out the fiscal impact of getting into the constitutional confirmation issue will be much larger. There being no other comments on HB 341, the committee held the bill until Monday. HB 387 JUVENILE CODE REVISION REPRESENTATIVE PETE KELLY, sponsor of HB 387, explained HB 387 creates a structural change that separates in statute the program for children in need of aid and delinquent juveniles. It includes policy language allowing the state to consider sanctions for delinquent behavior, and gives judges more direction in how to deal with juveniles in sentencing. The bill also includes a provision for truancy, and gives the responsibility for enforcing truancy to the school districts themselves. It establishes in Title 38 the ability of municipalities to impose a curfew which are currently imposed under general police powers. Chapter 10 deals with children in need of aid, Chapter 12 deals with delinquent children, and Chapter 14 gives DHSS purview over both of those programs. Number 039 CHAIRMAN TAYLOR asked if separating the programs will solve the problems of disclosure in regard to federal funding under Title 8, should the legislature decide to pass legislation in the future pertaining to the release of the names of juvenile offenders. REPRESENTATIVE KELLY responded HB 387 begins that process by separating the programs. This structure will allow the legislature to avoid some of the pitfalls of losing federal funds. CHAIRMAN TAYLOR questioned the permanency board provision. REPRESENTATIVE KELLY noted that board has been in statute for a number of years, but was funded for the first time last year. TAPE 96-37, SIDE A Number 000 CHAIRMAN TAYLOR asked if the Duties of Local Panel section (page 55) is existing law. REPRESENTATIVE KELLY answered in Chapter 14, which is one of the new chapters, that is existing code. He added almost the entire bill is existing code. CHAIRMAN TAYLOR questioned why, in reviewing three pages of the bill, he could not find any changes in the language. REPRESENTATIVE KELLY explained it is not underlined or bracketed because existing language was pulled out of Chapter 10 and written in new Chapters 12 and 14. CHAIRMAN TAYLOR asked if the definition was amended to take a portion of the juvenile offenses out of the jurisdiction of DHSS and place those within the Court System. REPRESENTATIVE KELLY replied that subject is addressed in HB 474. Number 056 REPRESENTATIVE MILLER noted his concern with Section 3, regarding truancy, because other states have used truancy laws to crackdown on homeschooling. He offered to work with Representative Kelly to draft an amendment to ensure that truancy laws cannot be used against people who homeschool. REPRESENTATIVE KELLY indicated existing code is a cumbersome methodology for the school districts to deal with truancy. BRUCE CAMPBELL, legislative aide to Representative Kelly, commented a prior version of the bill allowed private school administrators to establish their own truancy rules. REPRESENTATIVE MILLER pointed out a home school is not defined in statute as a private school. The vast majority of homeschoolers are not affiliated with the school district. He repeated he wants to ensure that a school district cannot adopt procedures to crackdown on homeschoolers under HB 387. REPRESENTATIVE KELLY asked Representative Miller his opinion of the language in the original bill. REPRESENTATIVE MILLER contended the original language required the truant student to go before a governing body to validate the absence. He expressed concern with giving governing bodies the ability to establish procedures. CHAIRMAN TAYLOR added there is a major problem with truancy in public schools that is not being addressed, but at the same time society has the right to know whether there is integrity and quality to the homeschool process. He thought there should at least be some measurable standards every three years, such as a competency exam, that the child submits to. He acknowledged many homeschooled children excel academically. REPRESENTATIVE KELLY thought there was an affirmative defense provision addressing this issue in the code book. CHAIRMAN TAYLOR announced the bill would be brought up on Monday. CHAIRMAN TAYLOR adjourned the meeting at 6:10 p.m.