Legislature(1999 - 2000)
03/28/2000 02:04 PM Senate L&C
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SENATE LABOR AND COMMERCE COMMITTEE
March 28, 2000
2:04 p.m.
MEMBERS PRESENT
Senator Jerry Mackie, Chairman
Senator Tim Kelly, Vice Chairman
Senator Loren Leman
Senator Lyman Hoffman
MEMBERS ABSENT
Senator Dave Donley
COMMITTEE CALENDAR
SENATE BILL NO. 289 "An Act establishing and relating to the Alaska
Board of Technical and Vocational Education; and providing for an
effective date."
-MOVED CS FOR SB 289 (L&C) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 240(CRA) "An Act relating to the
establishment of and accounting for an administrative cost charge
for the state's role in the community development quota program and
to the appropriation of receipts from the charge; and providing for
an effective date."
-MOVED CS FOR SB 240(L&C) OUT OF COMMITTEE
SENATE BILL NO. 248
"An Act relating to the financing authority, payment in lieu of tax
agreements, and tax exemption for assets and projects of the Alaska
Industrial Development and Export Authority; relating to renaming
and contingently repealing the rural development initiative fund
within the Department of Community and Economic Development, and
establishing the rural development initiative fund within the
Alaska Industrial Development and Export Authority; and providing
for an effective date."
-MOVED OUT OF COMMITTEE
PREVIOUS SENATE COMMITTEE ACTION
SB 289 - No previous Senate action.
SB 240 - See Community & Regional Affairs minutes dated 3/6/00.
SB 248 - See Community & Regional Affairs minutes dated 3/6/00.
WITNESS REGISTER
Mr. Jeff Bush
Deputy Commissioner
Department of Community & Economic Development
P.O. Box 110800
Juneau, AK 99811-0800
POSITION STATEMENT: Commented on SB 240.
Mr. Joe Kyle
Aleutian Pribilof Island Group
Address Not Provided
POSITION STATEMENT: Supports SB 240.
Mr. Pete Schaeffer
P.O. Box 296
Kotzebue, AK 99752
POSITION STATEMENT: Supports SB 240.
Mr. Gordon Ito
P.O. Box 307
Kotzebue, AK 99752
POSITION STATEMENT: Commented on SB 240.
Mr. Keith Laufer
Financial Manager
Alaska Industrial Development & Export Authority
480 West Tudor Road
Anchorage, AK 99503
POSITION STATEMENT: Commented on SB 248.
Ms. Mary Jackson
Legislative Staff for Senator John Torgerson
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on SB 289.
Mr. Mike Andrews
Executive Director
Alaska Human Resource Investment Council
Address Not Provided
POSITION STATEMENT: Opposes SB 289, and CSSB 289.
Ms. Barbara Thompson
Deputy Director
Division of Teaching & Learning Support
Department of Education & Early Development
801 West 10th Street, Suite 200
Juneau, AK 99801-1894
POSITION STATEMENT: Commented on CSSB 289.
Mr. Ruth Decampi
Program Manager
Municipality of Anchorage, Workforce Development Program
325 East 8th Avenue
Anchorage, AK 99501
POSITION STATEMENT: Opposed to CSSB 289.
ACTION NARRATIVE
TAPE 00-11, SIDE A
Number 001
CHAIRMAN MACKIE called the Senate Labor and Commerce Committee
meeting to order at 2:04 p.m. Present were Senators Mackie, T.
Kelly, Leman, and Hoffman. The first order of business to come
before the committee was SB 240.
SB 240-CHARGE FOR COMMUNITY DEVELOPMENT QUOTA
MR. JEFF BUSH, Deputy Commissioner of the Department of Community
& Economic Development, stated SB 240 creates a fee structure for
the Community Development Quota (CDQ) groups to make them self-
sufficient and displaces $250,000 of general funds with an
equivalent amount from Native groups. CDQ is a federal program
delegated to the Governor of Alaska, from there it is delegated to
the Department of Community & Economic Development (DCED) and
Department of Fish & Game (DFG). This has created over 1,000 jobs
annually and $20-30 million in royalty income to the groups.
DCED agreed that a program this profitable should become self-
sufficient. DCED approached the groups about creating a self-
sufficient plan. In some situations, State approval is required of
investment decisions that the groups are making. They need to have
DCED staffed and capable of responding to those requests for
approval. The federal program requires the State to approve these
investment decisions.
Half of the fee is set at an equal rate for each CDQ group, and the
other half is based upon the amount of the allocation the groups
received. The actual allocation amount does not always reflect the
same amount as the administrative cost associated with the program.
If a group receives a larger allocated amount, that group is more
likely to have more investment options and decisions that will
require State oversight. Each group will require some
administrative overhead, the larger groups may require more than
the smaller groups.
The federal government authorized a fee program of its own, part of
the fee program is allocated to the State. It will be an
additional two years before the fee structure is in place. If any
fees are collected and received by the State, those become an
offset directly against the fees charged under this program.
The administration supports the proposed amendment relating to a
neutral position of the State with the FCC creating new CDQ groups.
Mr. Bush suggested adding to the amendment on page 3, line 6, the
word "new" before "CDQ groups", and on page 3, line 8, insert
"newly formed" before "CDQ group." Those changes have been adopted
in the House, and Mr. Bush suggested the Senate make the same
changes.
SENATOR LEMAN moved amendment number one, making the changes Mr.
Bush suggested. Without objection, the amendment was adopted.
SENATOR HOFFMAN moved amendment number two (a conceptual
amendment). Senator Leman objected.
SENATOR HOFFMAN stated Mr. Robin Samuelson suggested a change in
language so the State would not get into discussions, leaving the
issues to the federal government of whether to support the
expansion of the CDQ program.
CHAIRMAN MACKIE asked if the groups were comfortable with the
language in the amendment.
SENATOR LEMAN stated he objected to hear the explanation of the
amendment but will maintain the objection because he does not
believe the amendment should be put forth for the State to maintain
neutrality. The legislature should try to keep language as simple
as possible, without inserting language where it does not serve a
purpose.
SENATOR HOFFMAN stated the CDQ groups he spoke with support the
amendment.
MR. BUSH stated federal legislation is required to expand the
program. The existing CDQ groups would oppose expansion of the
program because it might cause a reduction in their allocation of
fish. Those groups can get federal authorization to do that and
can receive an increase in allocation.
CHAIRMAN MACKIE stated he supports Senator Hoffman because the
legislature cannot take a position on this issue. The amendment
does not hurt SB 240, the current language could make the State
appear that it is advocating for the expansion of the CDQ program.
Amendment number two was adopted with Senators Hoffman, T. Kelly,
and Mackie voting "Yea", and Senator Leman voting "Nay."
MR. JOE KYLE, Aleutian Pribilof Island Group, stated support for SB
240 and the amendments.
MR. PETE SCHAEFFER, representing himself, stated all attempts at
participating in the CDQ program are economically driven. Some
fish have been completely wiped out and some groups do not qualify
for federal or State aid to remedy that situation. The difference
in Kotzebue is that the numbers of fish are somewhat biologically
sound, it is the market that has disappeared. The marine animals
do not pay attention to boundaries for the CDQ groups, and CDQ
groups are being penalized because of boundaries. Mr. Schaeffer
stated support for SB 240 and the amendments.
MR. GORDON ITO, representing himself, stated he would like to be
included in the CDQ program. The State should support expansion
because it is getting harder to survive in Alaska. Mr. Ito stated
he supports SB 240, but does not support Senator Hoffman's neutral
position.
CHAIRMAN MACKIE stated Senator Adams had requested the committee
consider including language that would allow for the new approved
CDQ groups not to pay fees for two years. Senator Hoffman offered
that amendment on Northwestern Alaska's behalf. SB 240 would not
be used as a vehicle of support for other CDQ groups.
MR. ITO stated he understood when the CDQ program started many
aspects were experimental. Adopting a neutral amendment portrays
that the State does not support the CDQ program.
SENATOR LEMAN moved CSSB 240 (L&C) with individual recommendations
and accompanying fiscal notes. Without objection, the motion
carried.
SB 248-AIDEA: BONDS & RURAL DEVELOPMENT
MR. KEITH LAUFER, Financial Manager for the Alaska Industrial
Development & Export Authority (AIDEA), stated SB 248 has three
main elements that extend AIDEA's general bonding authority: it
transfers the Rural Development Initiative Fund Loan Program from
the Department of Community & Economic Development (DCED) to AIDEA;
and it makes technical changes to the provisions of existing laws
dealing with tax exemption and payment in lieu of tax agreements
related to AIDEA owned properties.
The bonding sunset date is one of several periodic sunsets the
legislature has put into AIDEA's bonding authority. The current
sunset would become effective July 1, 2000, and would prevent AIDEA
from issuing all bonds, other than refunding bonds, without
specific legislative approval. The sunset would prevent AIDEA from
issuing bonds under $10 million for developing finance projects.
Bonds over $10 million require legislative approval, and will
continue to do so. The sunset will also prevent AIDEA from issuing
conduit revenue bonds, these bonds AIDEA can issue for specific
private projects. They do not obligate the State's credit or
AIDEA's credit; these projects can obtain tax exempt financing
under the Internal Revenue Code. SB 248 would extend the sunset
provision until July 1, 2003, and makes clear the conduit revenue
bonds would not be subject to the future sunset.
The transfer of the Rural Development Initiative Fund Loan Program
to AIDEA was formerly with Department of Community & Regional
Affairs (DCRA) and now falls under the control of DCED. This
program makes loans available under $200,000 to businesses and
communities of less than 5000 people. AIDEA has supported this
program for many years in conjunction with AIDEA's loan guarantee
program. In 1993 and 1996, the legislature authorized AIDEA to
purchase loan portfolios from the State and use the proceeds from
those purchases to recapitalize the program. SB 248 would transfer
the program to AIDEA, and will allow the program to be self-
sustaining without the need for periodic legislative
appropriations.
SB 248 makes some technical changes to the tax exemption provisions
of existing law. Under existing law, local jurisdictions may
exempt users of AIDEA owned development projects from property tax,
or may enter into payment in lieu of tax agreements with the users
of those projects. However, existing law is not clear about the
mechanism that will be used to accomplish this.
SENATOR KELLY asked if there were any changes to the language on
page 4, section 9 regarding the Rural Development Initiative Fund.
MR. LAUFER stated SB 248 changes the name of the old fund within
the DCED and creates a new fund within AIDEA. An appropriation
piece of legislation will allow AIDEA to purchase the existing
portfolio from the State.
SENATOR KELLY asked what the previous name was.
MR. LAUFER replied the Rural Development Economic Initiative Fund.
SENATOR KELLY asked if there are any changes to the language on the
new Rural Development Initiative Fund from the old program.
MR. LAUFER stated no. Slight changes have been made in AS
44.88.600 to clarify how it resides within AIDEA, but no changes
have been made to the program.
CHAIRMAN MACKIE asked Mr. Laufer if he knew of opposition to SB
248.
MR. LAUFER stated no.
SENATOR LEMAN moved SB 248 with individual recommendations and
accompanying fiscal notes. Without objection, the motion carried.
SB 289-TECH & VOC EDUC/EMPLOYMENT ASSISTANCE
MS. MARY JACKSON, Legislative staff for Senator John Torgerson,
stated SB 289 will focus the efforts of the State on technical and
vocational education into one board, and SB 289 will provide
additional funding for that effort. SB 289 will also become a
vehicle within the new board for new federal funding. Senator
Torgerson has a proposed committee substitute that makes technical
corrections to SB 289.
SENATOR KELLY moved to adopt the CS for SB 289 (L&C) (version H) as
the working draft of the committee. Without objection, the motion
carried.
MS. JACKSON explained the differences between SB 289 and CSSB 289.
On page 8, line 22, "75 percent", was replaced with ".75 percent".
SENATOR LEMAN suggested using a zero before ".75 percent", to avoid
confusion.
MS. JACKSON stated on page 5, line 30, a new subsection (b) was
inserted. It formally places the current State training and
employment program under the office of the new board. On page 9,
line 9-25, new language was inserted. It increased the funding
amount to 3/10 of one percent, and half will come from employees
and half will come from employers as a contribution.
SENATOR LEMAN stated the funding that was increased is false. If
it is to be 3/10 of one percent, the figure needs to say 3/1000,
and "percent" needs to be deleted.
MS. JACKSON stated yes. The intent is for the figure to be 3/10 of
one percent. The word "percent" should be deleted and the figure
should say "3/1000".
CHAIRMAN MACKIE stated the drafters would correct the mistake.
MS. JACKSON stated the last change was made on page 12, line 18.
It is transitional language that accommodates the first year of
funding for the program. The intent is to assure that funds are
distributed from the new source. Because the new board will not
have been in place and able to go through a notification process
for grants to all entities, those funds will be available and they
will be distributed for that first year as is provided in the
language. Senator Torgerson feels strongly that the efforts need
to be focused on one board with authority, and accountability, and
that is how SB 289 would work.
SENATOR KELLY asked if there was legislative confirmation of the
board.
MS. JACKSON answered yes.
SENATOR LEMAN asked if the consolidation of this board would lead
to the elimination of other boards.
MS. JACKSON stated with the inclusion of the step program in the
committee substitute, funds will remain given to the Alaska Human
Resource Council (AHRIC) committee, but the funding would decrease.
SENATOR LEMAN asked if AHRIC would still exist.
MS. JACKSON stated yes.
MR. MIKE ANDREWS, Executive Director of AHRIC, stated AHRIC
believes these types of grants are important for employers,
workers, vocational education programs, students, and the State's
economy. AHRIC has concerns about SB 289, it seems to reverse the
consolidation efforts of Congress over the last five years. Four
major pieces of legislation in 1995 consolidated three councils
into AHRIC that included the Governor's council on vocational
education.
In 1998, SB 334 was a reform bill of the system that created
performance measures and accountability, and provided more
authority for AHRIC for planning and reporting to the legislature.
In 1999, HB 40 consolidated 17 federal state workforce investment
programs and adult education programs, from three departments into
one new department, the Alaska Department of Labor & Workforce
Development. In 1998, Congress passed the Workforce Investment Act
that goes into effect July 1, 2000 which consolidated 60 federal
programs and established AHRIC as the State's workforce investment
board. AHRIC believes some areas of SB 289 are duplicative, and
will increase administrative effort.
AHRIC has been effective bringing business and education closer
together to work on career pathways and skilled training for
students and adults. The job training programs are meeting their
performance levels. AHRIC has been able to receive additional
funds to help Alaska's rural youth, and develop regional skills
consortiums for the State, so business and education work directly
in providing industry standard training.
There are no eligibility requirements for persons being trained and
that is a concern for AHRIC. AHRIC is concerned if SB 289 passes
it should be viewed as a demonstration program so AHRIC is assured
that it is providing the results that AHRIC would like to see, and
that it doesn't offset the actuarial condition of the unemployment
trust. AHRIC believes the grant program and the State coordinated
plan is a good idea and necessary at this time, but this can be
accomplished without creating a duplicative board and a duplicative
administrative and funding cycle. AHRIC has not had time to review
the committee substitutes, but is raising concerns about shifting
step funds into this program.
CHAIRMAN MACKIE asked if Mr. Andrews had talked with Senator
Torgerson about the committee substitute.
MR. ANDREWS answered yes. They have discussed how to raise
additional money for vocational education training that would help
support the connection with post-secondary education, and the need
for a coordinated plan. Where AHRIC differs from Senator Torgerson
and Congress is in the need for a new board and some duplicative
text. AHRIC's administration cannot support SB 289 as it exists.
SENATOR KELLY asked if AHRIC's position and the administration's
position are the same.
MR. ANDREWS stated he was speaking for the administration.
MS. BARBARA THOMPSON, Deputy Director of the Division of Teaching
& Learning Support for the Department of Education & Early
Development (DEED), referred to the fiscal note. What the DEED saw
as a cost for establishing this new board would be included first
for the Alaska Technical Vocational Education Program Fund. The
Department of Labor & Workforce Development (DLWD) estimates what
they would collect for this portion of SB 289.
TAPE 00-11, SIDE B
MS. THOMPSON explained the funds listed in the grant line on page
1 of the fiscal note. The other costs are related to the
establishment and operation of the new board and ongoing
activities, personal services for staffing of the board, a grant
administrator, travel for the board, contractual relating to the
ongoing cost of the board, and supplies for the board.
The last page of the fiscal note discusses existing resources that
are in DEED, that would fall under the preview of the new board.
Those include federal grant funds, text prep grant funds, and non
K-12 portions of the federal Carl Perkins Grant. The management
fee assessed from the Alaska Vocational Technical Center (AVTeC) is
currently a management assessment fee to AHRIC, and assume the fee
would go to the new board.
MR. DWIGHT PERKINS, Deputy Commissioner of the Department of Labor
& Workforce Development (DLWD), stated the concerns that DLWD has
are financial and technical in nature, with employment security and
the Unemployment Insurance trust fund.
CHAIRMAN MACKIE stated his concerns are dealing with the fiscal
note of CSSB 289. Chairman Mackie stated the bill should be passed
to the Finance committee so Senator Torgerson can work with Mr.
Andrews and Ms. Thompson.
MR. PERKINS stated DLWD will continue to cooperate with Senator
Torgerson regarding the fiscal note, but Mr. Andrews' concern seems
to be a philosophical concern.
MS. RUTH DECAMPI, Program Manager for the Municipality of Anchorage
Workforce Development Program, stated opposition for CSSB 289. The
Workforce Development Program administers the step training program
for people who are unemployed, and for half of the State's
workforce in Anchorage. CSSB 289 defies the entire Workforce
Investment Act, which is based on customer choice, and performance
base. Institutions receive funding if people choose to go there.
Ms. Decampi does not see a reason for AHRIC to exist if CSSB 289
passed.
SENATOR KELLY moved CSSB 289 (L&C) with individual recommendations
and accompanying fiscal notes. Without objection, the motion
carried.
There being no further business to come before the committee,
CHAIRMAN MACKIE adjourned the meeting at 3:00 p.m.
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