Legislature(1999 - 2000)
04/18/2000 05:45 PM RLS
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE RULES COMMITTEE April 18, 2000 5:45 p.m. MEMBERS PRESENT Senator Tim Kelly, Chair Senator Loren Leman, Vice Chair Senator Mike Miller Senator Drue Pearce Senator Johnny Ellis MEMBERS ABSENT None COMMITTEE CALENDAR HOUSE BILL NO. 331 "An Act relating to payment, allowances, and benefits of members of the Alaska National Guard and Alaska Naval Militia in active service; relating to computation of certain benefits for members of the Alaska State Militia; and providing for an effective date." -MOVED CSHB 331(RLS) OUT OF COMMITTEE CS FOR HOUSE BILL NO. 191(FIN) "An Act relating to charter schools." -MOVED CSHB 191(FIN) OUT OF COMMITTEE HOUSE BILL NO. 272 "An Act relating to the tax assessment by a home rule or general law municipality of housing that qualifies for the low-income housing credit under the Internal Revenue Code; and providing for an effective date." -MOVED HB 272 OUT OF COMMITTEE SENATE BILL NO. 256 "An Act relating to regulation of managed health care and allowing physicians to collectively negotiate with a health care insurer that has substantial market power." -MOVED ALL VERSIONS OF SB 256 OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION HB 331 - See Finance Report dated 4/18/00. HB 191 - See HESS minutes dated 3/27/00, 4/05/00 and 4/10/00 and Finance Report dated 4/15/00. HB 272 - See CRA minutes dated 3/1/00, Finance Report dated 4/16/00 and Rules minutes dated 4/16/00. SB 256 - See HESS minutes dated 2/21/00 and 2/23/00, Finance Report dated 4/7/00 and Rules minutes dated 4/17/00. WITNESS REGISTER Carol Carroll Administrative Services Division Department of Military and Veterans Affairs 400 Willoughby Ave., Ste. 500 Juneau, AK 99811 POSITION STATEMENT: Answered questions about HB 331 Representative Fred Dyson Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of HB 191 Kathi Gillespie Anchorage School Board Municipality of Anchorage PO Box 196650 Anchorage, AK 99519 POSITION STATEMENT: Explained a proposed amendment to HB 191 Jonathon Lack Legislative Aide to Representative Halcro Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Testified for the sponsor of HB 272 Julia Coster Assistant Attorney General Department of Law 1031 W 4th Ave., Suite 200 Anchorage, AK 99501-1994 POSITION STATEMENT: Explained a proposed amendment to SB 256 Senator Pete Kelly Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Sponsor of SB 256 Mike Ford Division of Legal Services Alaska State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Commented on a proposed amendment to SB 256 ACTION NARRATIVE TAPE 00-12, SIDE A CHAIRMAN KELLY called the Senate Rules Committee meeting to order at 5:45 p.m. All members were present. The first order of business to come before the committee was CSHB 331(MLV). HB 331-AK NATL GUARD/NAVAL MILITIA/DEFENSE FORCE CHAIRMAN KELLY noted that a technical amendment had been proposed. That amendment reads as follows. A M E N D M E N T OFFERED IN THE SENATE BY SENATOR LEMAN TO: CSHB 331(MLV) Page 3, Lines 15-27: DELETE ALL MATERIAL INSERT: (B) Members of the Alaska National Guard and Alaska Naval Militia are entitled to receive, for each day of active service under AS 26.05.070, pay [AND ALLOWANCES] equal to 200 percent of the minimum daily basic pay [THOSE] provided by federal laws and regulations for members of equivalent grades of the United States armed forces. However, a member may not receive less that $105 [$65] per day for active service performed during the fiscal year ending June 30, 2000 . For fiscal years beginning after June 30, 2000 , the minimum payment of [$65] $105 shall be increased one percent for each percent increase in the consumer price index for [of] Anchorage, Alaska, as determined by the United States Department of Labor, Bureau of Labor Statistics, not to exceed an annual increase of 4  percent. The increase, if any, takes effect not more than 30 days after the release of the consumer price index. The consumer price index that is published immediately after July 1, 1999 , is the reference base index. CHAIRMAN KELLY asked a DMVA representative to explain Senator Leman's amendment. MS. CAROL CARROLL, Administrative Services Division, Department of Military and Veterans Affairs (DMVA), explained Senator Leman's proposed amendment to HB 331 as follows. The amendment changes the existing statute provision that sets the minimum basic pay for Alaska National Guardsmen at $65 per day to $105 per day. It also changes the base year from June 30, 1982 to June 30, 2000. In addition, it lowers the ceiling for the amount of the consumer price index (CPI) that the daily pay rate can be adjusted on from 10 to 4 percent. Since 1960, the CPI has risen over 4 percent only 13 times. SENATOR LEMAN moved to adopt the amendment. CHAIRMAN KELLY objected and asked for further explanation. SENATOR LEMAN commented that some of the provisions in the amendment were proposed by DMVA but he suggested updating the provisions that were 20 years old. He also suggested that the ceiling be set at 4 percent the inflationary period that we was occuring when that provision first took effect in the early 1980's no longer exists. Since 1985, there have only been two years in which the CPI increase was more than 4 percent. This will only affect the pay rates of guardsmen at the very bottom of the scale where the minimum amount kicks in. Right now it is set at two times the federal pay or the minimum, whichever is more. CHAIRMAN KELLY asked if the reason for this section is that calculating pay and allowances is a difficult computation that usually equals 200 percent. MS. CARROLL said that is correct and explained that, essentially, this bill attempts to eliminate a lot of complicated calculations. CHAIRMAN KELLY asked for examples of the types of allowances that are paid. MS. CARROLL stated the guardsmen are given a housing allowance, food allowance, and a cost of living allowance which is changed by the federal government about every two weeks. This bill attempts to get rid of that administrative burden while maintaining the same amount the soldiers are making now, which equals about 200 percent. A new calculation will be used that does not include any allowances. The new system will allow DMVA to process pay checks faster. MS. CARROLL replied that HB 331 is a streamlining bill. DMVA is trying to get rid of some administrative overhead caused by the burdensome calculations. CHAIRMAN KELLY asked Ms. Carroll to explain the last line of the amendment. MS. CARROLL replied that since 1981, DMVA has been using the dollar amount that was set in statute at that time to calculate what the pay would be with the CPI. As of July 1, 1999, that amount was $105 which is what DMVA uses now, so that amount was included in the amendment to be used as the new base amount. CHAIRMAN KELLY asked whether the July 1, 2000 CPI will contain an increase requiring the base amount to be increased beginning July 1, 2000. MS. CARROLL said yes, and when the CPI comes out in July, DMVA will do another calculation depending upon the CPI for Anchorage. CHAIRMAN KELLY asked if the increases should begin the next year because the 200 percent is a little bit more than the basic pay and allowances. MS. CARROLL stated that the 200 percent is a little bit less. SENATOR LEMAN noted that for three of the grades it is a little bit more but for most of the grades it is less. CHAIRMAN KELLY asked if there was objection to adopting the amendment. There being none, the amendment was adopted. SENATOR LEMAN moved to calendar, at the Chairman's discretion, all Senate versions of HB 331 with accompanying fiscal notes and individual recommendations. There being no objection, the motion carried. HB 191-CHARTER SCHOOLS CHAIRMAN KELLY informed Representative Dyson that the Anchorage School District has prepared an amendment to SCS CSHB 191(FIN). REPRESENTATIVE FRED DYSON, sponsor of HB 191, said that the charter school law in Alaska is one of the weakest in the nation. When it was enacted in 1995, proponents believed it would have to be revisited. This bill does four relatively uncontroversial things. It extends the contract periods; it doubles the cap and removes the geographic requirements; it removes the sunset provision; and it allows for a waiver by the fire marshall of public school safety requirements. His original intent was to also open up the accounting process so that charter school negotiators could see where the money they get or do not get comes from. That provision was problematic because a number of school districts said they are unable to provide that information. The remaining noncontroversial parts of the bill must pass this session to enable some charter schools to continue. The Department of Education and Early Development and the State Board of Education recommended the version before the committee [SCS CSHB 191(FIN)] but there is a strong case to remove a portion of the bill. SENATOR LEMAN asked Representative Dyson what his recommendation is. REPRESENTATIVE DYSON responded that he would "stand pat" but he admitted the Anchorage School District has a good argument. CHAIRMAN KELLY asked if Representative Dyson would prefer to stand pat on this bill and look at the argument at a future time. REPRESENTATIVE DYSON replied, "I would, but they make a good case, they may be right." Number 181 KATHI GILLESPIE, Co-Chair of the Legislative Subcommittee of the Anchorage School District, expressed the school district's concerns with SCS CSHB 191(FIN). The school district recommends the deletion of Section 4(e) on page 3, lines 6-11. Section 4(e) reads: (e) In addition to the amount provided to an approved charter school in the annual program budget under (a) of this section, a charter school budget must include an allocation equal to the amount determined by dividing the amount of local revenues contributed under AS 14.17.410(c) by the average daily membership of the district and multiplying that number by the average daily membership of the charter school. The school district's concern with Section 4(e) is that it sets a precedent for funding charter school students in a different manner than funding for all other school district students. This section basically says that charter school students will not be held accountable for contributing to districtwide operations and services. Currently, local funding is distributed in the following manner: the local funding is received and the four mills is contributed for all students, including charter school students, in order to access foundation formula monies. The school district has some discretion with the remainder of those monies to address the needs of students in specific schools. It is true that an equal amount is not spent on each student in the Anchorage School District. The amount spent depends on the location, whether the student is at risk, the income level of the family and other factors. It does cost the district more to educate some students than others. The district is concerned that this bill will set a precedent so that some students can say they get their portion first and that they do not have to contribute to the discretionary amount that is distributed according to need. That precedent will allow neighborhood schools to demand the same treatment. The district has never funded public education this way; it has always had the discretion to spend the money to bring all students up to a particular standard. The district fears that if Section 4(e) is left in the bill, it will negate the school district's ability to do that. MS. GILLESPIE asked committee members to delete Section 4(e) and noted the district has offered to work with Representative Dyson over the summer on the issue of funding for charter school students. She noted that the four charter schools in the Anchorage School District are still functioning; three are thriving. The one school that is having significant problems is Walden, located in the Dimond Mall. That school's problems are rooted in the fact that it has not met the 200 student limit required for the foundation formula. The Anchorage School District supports charter schools and will continue to do so. SENATOR ELLIS moved the amendment to delete Section 4 on page 3, lines 6 through 11. The motion failed with Senators Leman, Pearce and Kelly voting "nay," and Senators Ellis and Miller voting "yea." SENATOR LEMAN moved to calendar all Senate versions of HB 191 for calendaring at the Chairman's discretion. Without objection, the motion carried. HB 272-MUNICIPAL TAX: LOW INCOME HOUSING CHAIRMAN KELLY announced that a proposed Senate Rules Committee substitute had been drafted labeled "Version T." MR. JONATHAN LACK, legislative aide to Representative Halcro, sponsor of the measure, explained Version T as follows. Version T is Representative Halcro's preferred version. It says that for IRS-qualified low income housing, the municipal assessment shall be based on the actual income derived from the property recognizing the deed restrictions on that property. The second change says that the governing body of the local municipality shall determine by ordinance whether the properties that qualify for the low income housing tax credits after the date of the act shall be exempt from the requirements of the assessment procedure in the first section. For properties that have been exempted by ordinance, the governing body may determine by parcel which method of assessment will be used and may not change the manner of assessment if there is outstanding original debt on that property. CHAIRMAN KELLY asked if "by parcel," Mr. Lack meant by project. MR. LACK said yes. CHAIRMAN KELLY stated that all of the old projects are grand fathered in and any new projects are local option - project by project. MR. LACK agreed. SENATOR LEMAN clarified, for the record, that the term "actual income derived" pertains to that market. It does not mean that someone can, through bad management, actually cause a depression of the market value of that property. It is actual income derived at market and that the assessor assumed some type of vacancy factor for income property that is applied for that particular unit. MR. LACK agreed that is correct and noted that he spoke with the state assessor, Steve VanZant. The term "actual income derived from the property" means at market so if a property has a 60 percent occupancy but the market provides for an 80 percent occupancy, it will be assessed at 80 percent. That will provide no incentive for an owner to underfill a unit to get a break on property taxes. The amendment that came out of the Senate Finance Committee added "at full occupancy." The intent was to address a situation in which someone might intentionally underfill a unit. That amendment was problemative because "at full occupancy" ends up meaning that if there is a significant downturn in the rental market, for example if Elmendorf Airforce Base closed, ten percent would be the market occupancy rate and the unit would still have to pay taxes on 100 percent occupancy. Version T clears that problem up. SENATOR ELLIS moved to adopt Version T as the Senate Rules Committee substitute. There being no objection, the motion carried. SENATOR LEMAN moved to calendar all Senate versions of HB 272 for calendaring at the Chairman's discretion. There being no objection, the motion carried. CHAIRMAN KELLY announced an at-ease. SB 256-PHYSICIAN NEGOTIATIONS WITH HEALTH INSURER CHAIRMAN KELLY announced that two proposed amendments are before the committee; one sponsored by Senator Pete Kelly and the other by the Department of Law (DOL). SENATOR MILLER moved to adopt the amendment proposed by Senator Pete Kelly. That amendment reads as follows. A M E N D M E N T OFFERED IN THE SENATE BY SENATOR PETE KELLY TO: CSSB 256(FIN) Page 4, lines 10 - 11: Delete ", or a particular physician type or specialty" Page 4, line 15: Delete "and" Insert a new paragraph to read: "(7) the attorney general may limit the percentage of practicing physicians represented by an authorized third party; however, the limitation may not be less than 30 percent of the market of practicing physicians in the geographic service area or proposed geographic service area; when determining whether to impose a limitation described under this paragraph, the attorney general shall consider the provisions described under (h), (i), and (j) of this section; this paragraph does not apply if the market of practicing physicians in the geographic service area or proposed geographic service area consists of 40 or fewer individuals; and" Renumber the following paragraph accordingly. SENATOR ELLIS objected to the adoption of the amendment. CHAIRMAN KELLY noted that unless the DOL amendment to Senator Kelly's amendment is offered at this time, the vote will only pertain to Senator Kelly's amendment. SENATOR ELLIS moved to adopt the DOL amendment which reads as follows. A M E N D M E N T - VERSION 2 OFFERED IN THE SENATE BY DEPARTMENT OF LAW TO: CSSB 256(FIN) [Page 4, lines 10-11: Delete ", or a particular physician type or specialty"] Page 4, line 15: Delete "and" Insert a new paragraph to read: "(7) the attorney general may limit the percentage of practicing physicians or a particular physician type or specialty represented by an authorized third party; [however, the limitation may not be less than 30 percent of the market of practicing physicians in the geographic service area or proposed geographic service area;] when determining whether to impose a limitation described under this paragraph, the attorney general shall consider the provisions described under (h), [(i), and (j)] of this section; [this paragraph does not apply if the market of practicing physicians in the geographic service area or proposed geographic service area consists of 40 or fewer individuals;] and" Renumber the following paragraph accordingly." SENATOR MILLER objected to the adoption of DOL's amendment. SENATOR PEARCE asked for an explanation of the amendment. SENATOR PETE KELLY, sponsor of SB 256, explained that the problem with DOL's amendment is that it essentially guts the bill. It turns policy decisions over to DOL. The wording of the amendment will allow DOL to declare that no one is eligible to participate in the negotiations. DOL's amendment gives DOL way too much authority over the negotiations. MS. JULIA COSTER, Assistant Attorney General, Department of Law, responded that the first part of DOL's amendment actually returns the bill to what it was originally. On page 4, subsection (6), the bill originally allowed the number of physicians to be limited to 30 percent, both in the general and specialty markets. The second part of the DOL amendment allows the physician group to be limited not only on the entire market but also with the specialty market which was in subsection (6) also. She thought that Senator Pete Kelly was referring to the deletion of the limit in DOL's amendment. She did not agree that it guts the bill; it allows the Attorney General to have the percentage of physicians be less than 30 percent if it meets the criteria under subsection (h), which means the Attorney General would determine whether or not the anti- competitive effects of a larger group of people outweigh the benefit. It would allow the Attorney General to engage in a balancing test. That same provision is required under the Texas legislation. Number 357 SENATOR PETE KELLY asked that Mike Ford, the legal drafter of SB 256, address DOL's amendment. He noted that Mr. Ford provided committee members with his analysis of DOL's objections to the bill. MR. MIKE FORD, Division of Legal Services, Legislative Affairs Agency, stated that after reading DOL's amendment, he cannot see how one can maintain that it does not allow the Attorney General to go to a zero percentage. It does not set up a mechanism that would limit the Attorney General's authority. It removes the bottom cap that prevents the limitation from being less than 30 percent. He agreed that it leaves in the consideration of subsection (h) but that does not preclude the Attorney General from determining that a percentage may be one or two percent. SENATOR MILLER continued to object to DOL's amendment. The motion to adopt DOL's amendment failed with Senators Leman, Miller and Pearce voting "nay," and Senators Ellis and Kelly voting "yea." SENATOR LEMAN moved to adopt Senator Pete Kelly's amendment. There being no objection, the motion carried. SENATOR LEMAN moved to calendar all Senate versions of SB 276 at the Chairman's discretion. SENATOR ELLIS objected. The motion to calendar all versions of SB 276 carried with Senators Miller, Pearce, Leman and Kelly voting "yea," and Senator Ellis voting "nay." There being no further business to come before the committee, CHAIRMAN KELLY adjourned the meeting at 6:18 p.m.