Legislature(1995 - 1996)
03/28/1996 03:40 PM Senate STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SENATE STATE AFFAIRS COMMITTEE March 28, 1996 3:40 p.m. MEMBERS PRESENT Senator Bert Sharp, Chairman Senator Randy Phillips, Vice-Chairman Senator Loren Leman Senator Jim Duncan Senator Dave Donley COMMITTEE CALENDAR SENATE BILL NO. 314 "An Act relating to issuance of a restaurant or eating place liquor license." SENATE BILL NO. 141 "An Act relating to legislative ethics; and providing for an effective date." SENATE BILL NO. 275 "An Act relating to state procurement practices and procedures; and providing for an effective date." HB 211 (VOTER REGISTRATION & ELECTIONS) was scheduled, but not taken up on this date. SB 182 (ELECTIONS ADMINISTRATION & VOTER REG'N) was scheduled, but not taken up on this date. SB 203 (TASK FORCE ON RECYCLING INDUSTRIES) was scheduled, but not taken up on this date. PREVIOUS SENATE COMMITTEE ACTION SB 314 - No previous senate committee action. SB 141 - See State Affairs minutes dated 4/20/95, 4/27/95, 1/30/96, 2/6/96, 2/27/96, and 3/26/96. SB 275 - See State Affairs minutes dated 3/12/96. WITNESS REGISTER Senator Rick Halford, Co-chairman Finance Committee State Capitol, Juneau, AK 99801-1182¶(907)465-4958 POSITION STATEMENT: prime sponsor of SB 314 George Malekos North Slope Restaurant Eagle River, AK POSITION STATEMENT: supports SB 314 Ann Ringstad, Aide Senate State Affairs Committee State Capitol, Juneau, AK 99801-1182¶(907)465-4522 POSITION STATEMENT: testified on SB 141 Terry Cramer, Attorney Legislative Legal and Research Services 130 Seward St., Ste. 409, Juneau, AK 99801-2105¶(907)465-2450 POSITION STATEMENT: testified on SB 141 Susie Barnett, Professional Assistant Legislative Ethics Committee P.O. Box 101468, Anchorage, AK 99510-1468¶(907)258-8172 POSITION STATEMENT: testified on SB 141 Brooke Miles, Regulation of Lobbying Alaska Public Offices Commission P.O. Box 110222, Juneau, AK 99811-0222¶(907)465-4864 POSITION STATEMENT: testified on SB 141 Jerry Burnett, Aide Senator Randy Phillips State Capitol, Juneau, AK 99801-1182¶(907)465-4949 POSITION STATEMENT: testified on SB 275 Dugan Petty, Director Division of General Services Department of Administration P.O. Box 110210, Juneau, AK 99811-0210¶(907)465-2250 POSITION STATEMENT: representing governor-prime sponsor SB 275 Loren Rasmussen, Acting Director Division of Engineering & Operations Department of Transportation & Public Facilities 3132 Channel Dr., Juneau, AK 99801-7898¶(907)465-2960 POSITION STATEMENT: testified on SB 275 ACTION NARRATIVE SB 314 RESTAURANT LIQUOR LICENSE OWNERSHIP TAPE 96-25, SIDE A Number 001 CHAIRMAN SHARP called the Senate State Affairs Committee to order at 3:40 p.m. and brought up SB 314 as the first order of business before the committee. He stated that the committee wouldn't take teleconference testimony at this time, but they would take testimony from one person who travelled to Juneau to attend the hearing. The chairman called Senator Halford to testify. Number 020 SENATOR RICK HALFORD, Co-chairman - Finance Committee, prime sponsor of SB 314, stated he introduced the bill at the request of one of his constituents. The system had always been that a seller couldn't be in both the wholesale and the retail business of alcohol at the same time. We went through a fairly extensive process to create the brew-pub licenses and put limitations on them. We required them to have a bar license. But inadvertently, we created a mega-license that goes around the rest of the precedents in this very regulated industry. If you combine a brewery license with a restaurant license, and then you add the exemption for entertainment, which can be called a mini-tavern license, and you have basically a mega license that can deal in wholesale, retail, and virtually everything, down to selling a product in a bucket or a barrel or a bag, and all the retail sales. That is not what was intended, but that's what happened. There are several of these licenses out there. SB 314 would reestablish what most people thought was the case: that you couldn't have a dispensing license and a wholesale license at the same time. It is not retroactive; there are several of these licenses already issued, and SB 314 would not affect those licenses. CHAIRMAN SHARP asked if currently people can get a small mini- brewing license. SENATOR HALFORD replied it is a brewery license in combination with a restaurant license, which allows them to make the product and to sell the product at the retail level. But since they're a brewery, they can also sell the product at the wholesale level. So they're integrated into the entire chain where no other licensee can be. The brew-pub license was supposed to satisfy the question of alcohol content in the product. You then go through the process, all the inspections, and probably $200,000.00 worth of equipment at a minimum. The brewery license takes away all those restrictions. When you combine that with a retail beer and wine license, then you have a complete integrated sales and production system. CHAIRMAN SHARP called Mr. Malekos to testify. Number 120 GEORGE MALEKOS stated he owns the first brew-pub in Alaska. Mr. Malekos submitted written testimony in support of SB 314. He gave a brief explanation on the difference between a brew-pub and a micro-brewery. He reiterated information on licensing previously stated by Senator Halford. He stated he has no way of marketing his beer under the type of license he has, but the new license allows for a semi-tavern. These licenses are able to compete on a completely different level from dispensary licenses, that sell for a much greater amount of money. Mr. Malekos stated he has read some of the letters of opposition submitted to the committee, which state SB 314 is to eliminate competition. He stated his industry is founded on competition. They would just like an equal playing field in the competition. There is simply no way to compete with the brewery-restaurants. In speaking to the Anchorage Assembly, they were under the mistaken impression that these brewery- restaurants would have the same brew-pub licenses as Mr. Malekos has. He stated all he is asking for is an equal playing field. CHAIRMAN SHARP asked if there are any questions on SB 314. SENATOR RANDY PHILLIPS asked the chairman if there were any more people to testify. CHAIRMAN SHARP responded he stated earlier that the committee would take testimony from anyone who travelled to Juneau to testify on the bill. There will be another hearing on SB 314 for public testimony via teleconference, whenever the bill is rescheduled. That meeting will be noticed. The primary purpose of this meeting has been stated. The chairman stated the committee would go on to the next item on the agenda. SB 141 LEGISLATIVE ETHICS Number 240 CHAIRMAN SHARP brought up SB 141 as the next order of business before the Senate State Affairs Committee. He asked committee members if they've come up with more possible amendments since the last committee meeting. We do have a side-by-side analysis of the Executive Branch Ethics Act and the Legislative Ethics Act in members' bill packets. He advised members who would like to amend the Executive Branch Ethics Act to do so in the Rules Committee. SENATOR DONLEY stated he has several amendments to offer. CHAIRMAN SHARP stated members should have in their bill packets comments from Susie Barnett of the Legislative Ethics Committee relating to the five amendments adopted at the last meeting. SENATOR DONLEY stated he has information from the legislative drafter on how the legal defense fund provision would relate to the initiative. Senator Donley's amendment, amendment R.4 relates to that. The amendment clarifies that the APOC would set up the regulations and guidelines. It also clarifies that it would be outside the impact of the initiative process. This addresses Senator Pearce's concern. CHAIRMAN SHARP asked if there would be any restrictions on how the defense fund could be used. Is it just for Ethics violations? SENATOR DONLEY replied that's the first time that question has ever been raised to him. He thought it was clear that since it will be under the domain of APOC, it was for some function that was related to your duties as a legislator. CHAIRMAN SHARP agreed; that's what he would think also. SENATOR DUNCAN noted that under subsection (d), the APOC will write regulations on how the money may be expended, that is covered. CHAIRMAN SHARP thinks the APOC could set whatever they want in regulation. Number 335 SENATOR DONLEY made a motion to adopt amendment R.4. CHAIRMAN SHARP asked Senator Donley if he believed, from line 11-19 on page 1 of amendment R.4, that this would not run afoul of the limitations in either the initiative or the bill, since this allows unlimited transfer of campaign money into a defense fund. He thinks the initiative forbids that. SENATOR DONLEY thinks the way to get around that is the contingent effective date. That was the issue the president raised yesterday. If you put that provision into effect before the initiative, the initiative would modify it; if you put it into effect after passage of an initiative, then-- CHAIRMAN SHARP asked if there was objection to amendment R.4. Hearing no objection, the chairman stated the amendment was adopted. He asked if there were other amendments committee members wished to offer at this time. SENATOR DONLEY asked if there wasn't another amendment that Senator Pearce suggested. CHAIRMAN SHARP stated there are some other amendments that Senator Pearce suggested. SENATOR DONLEY stated there was also another amendment he had asked to be drafted that dealt with the newsletter issue. He does not know if it was completed though. That's pretty simple though; it would be easily conceptualized. CHAIRMAN SHARP asked if that was the one with the June 1 deadline. SENATOR DONLEY stated Senator Pearce asked for a June 1 deadline, but Senator Donley thinks July 1 would be a reasonable deadline; that's what he was going to propose to the committee. CHAIRMAN SHARP agreed that there's not enough time to put out a newsletter between the date you get home and June 1. He asked Senator Donley to conceptualize that in writing. He asked for a motion to move the amendments in the committee's possession. Number 380 SENATOR RANDY PHILLIPS made a motion to adopt amendment R.5. SENATOR DONLEY stated amendment R.5 referred to a legislator specifically having a conflict of interest in a committee meeting, and the legislator would then orally disclose the conflict of interest. He does not have a problem with the amendment. CHAIRMAN SHARP, hearing no objection, stated amendment R.5 was adopted. CHAIRMAN SHARP asked if anyone cared to offer amendment R.6. SENATOR RANDY PHILLIPS asked for a brief explanation of the amendment. Number 400 ANN RINGSTAD, Committee Aide to the Senate State Affairs Committee, stated that Senator Pearce was concerned that personal gifts should not be publicly disclosed, but should be disclosed in confidentiality to the Ethics Committee. Only gifts that legislators receive through legislative contacts will be publicly disclosed. SENATOR DONLEY asked what the dollar amount that triggers reporting of gifts will be under SB 141. MS. RINGSTAD stated it will be $250.00 or more. SENATOR LEMAN asked for clarification that this amendment would still require reporting of personal gifts to the Ethics Committee, but the Ethics Committee would not disclose those gifts in the journal. MS. RINGSTAD responded that is correct: that information would be confidential. That is the intent of this amendment. SENATOR DONLEY thinks that C-6 are the ones that are open: public disclosures. MS. RINGSTAD stated it's referring to Section 18, page 10 of the "R" work draft. Number 420 SENATOR RANDY PHILLIPS made a motion to adopt amendment R.6. SENATOR DONLEY stated he seemed to remember that the problem was that you're supposed to report, but it wasn't clear whether you report to the Ethics Committee or to the clerk. This just sets out that you report to the Ethics Committee, and the Ethics Committee forwards the appropriate ones to the clerk, and the clerk then publishes those. MS. RINGSTAD stated that is how she understands it. CHAIRMAN SHARP asked if there was objection to amendment R.6. Hearing none, he stated the amendment was adopted. CHAIRMAN SHARP noted the next amendment was R.7. SENATOR RANDY PHILLIPS stated this is the amendment regarding the deadline. It's hard to comply with the deadline, because limited partnership reports aren't received until after the first of March. CHAIRMAN SHARP agreed it is impossible to comply. SENATOR DONLEY stated he hasn't yet heard a motion. SENATOR DUNCAN stated he's not moving it. CHAIRMAN SHARP stated you won't hear it from him. SENATOR RANDY PHILLIPS stated he has an amendment dealing with legislative spouses lobbying for compensation. It was brought to his intention that the amendment on this subject which was previously adopted might be interpreted to mean spouses of legislators would not have the ability to testify before a committee. This would keep the prohibition, but would allow spouses to testify before committees. He asked the legislative drafter if he correctly explained the amendment. Number 455 TERRY CRAMER, Attorney, Legislative Legal and Research Services, stated the explanation was fine. She is not sure the original amendment would have been interpreted with that result, but it was confusingly drafted. CHAIRMAN SHARP stated he was thinking about revisiting that amendment for rescinding action. SENATOR DUNCAN asked if this would replace the language previously adopted. SENATOR RANDY PHILLIPS stated yes. MS. CRAMER stated the original language had two new sections. The first of the two new sections is deleted by this amendment, so you're only putting in one new section. The language you're deleting raised the possibility that you would be denying spouses free speech. SENATOR DUNCAN asked if he is looking at the correct amendment: R.1 SENATOR RANDY PHILLIPS replied, no, Senator Duncan should be looking at amendment R.8. SENATOR DUNCAN stated he does not have the amendment. MS. CRAMER responded that R.8 is the new one. If you start with R.1, and delete what's labeled as Section 2, you get there. SENATOR DUNCAN stated that R.1 doesn't say delete anything. CHAIRMAN SHARP doesn't think he has it. MS. CRAMER stated the amendment is not drafted as an amendment to the amendment. It's drafted as an amendment to the bill. SENATOR DUNCAN stated that they've already adopted an amendment to the bill, so-- SENATOR RANDY PHILLIPS asked if it could be redrafted to make the amendment an amendment to the amendment. MS. CRAMER responded yes. CHAIRMAN SHARP thinks that's a little hard to do, since the amendment's been adopted. SENATOR DUNCAN stated we can rescind our action on the other one and adopt this one. SENATOR DONLEY replied, no, we've got a cs before us; it can just be conceptual. MS. CRAMER replied she can do whatever the committee wishes. CHAIRMAN SHARP asked if rescinding our previous action and then reenacting this do it? MS. CRAMER responded if you rescinded your previous action in adopting M.1, and adopted R.8, then you would get there. But I should also point out that R.1 was rolling in M.1 and a couple of others that you had adopted at that meeting. SENATOR DUNCAN asked if R.1 was adopted in it's entirety. SENATOR RANDY PHILLIPS replied, right. SENATOR DUNCAN stated they did not. MS. RINGSTAD responded those were the three amendments the committee adopted on Tuesday, and rather than rolling it into another bill, she just had Ms. Cramer roll it in to this one amendment, so you can see what was going to be put in. SENATOR DUNCAN stated the amendments were adopted separately, though. MS. RINGSTAD replied that's correct. MS. CRAMER stated as long as the committee is not actually adopting R.1, you can go back and rescind-- SENATOR DUNCAN stated they've already adopted everything in R.1. MS. CRAMER responded they've adopted the contents of R.1, but not the form of R.1. So you could rescind M.1 and adopt R.8. CHAIRMAN SHARP asked Senator Phillips how he wanted to get there. MS. CRAMER stated she can also do a "quick and dirty" amendment to R.1. SENATOR RANDY PHILLIPS stated that's what he was thinking of doing, because that would be easier than going through two motions, and trying to explain all this. Basically what he wants to do is refine the amendment that was made. SENATOR DONLEY asked Senator Phillips to explain again the amendment. SENATOR RANDY PHILLIPS stated the amendment adopted a few days ago, makes total prohibition, if you're being paid as a lobbyist, to be married to a lobbyist, as a legislator. SENATOR DONLEY noted, you mean to be married to a legislator? CHAIRMAN SHARP responded, yes, a lobbyist married to a legislator. SENATOR DUNCAN added, and cohabitating. SENATOR RANDY PHILLIPS stated if you are married to someone who's not paid as a lobbyist, but wanted to testify before a committee, then that would also be prohibited. That was not the intent of the amendment. SENATOR LEMAN asked where that appears in this amendment? He is not seeing it. MS. RINGSTAD showed Senator Leman where that is in the amendment. MS. CRAMER explained she is not sure that it would be interpreted to deny spouses the opportunity to approach legislators and legislative committees, but it might be. SENATOR RANDY PHILLIPS stated they have a fax from the Ethics Committee stating they have a different view of the world on this one. Number 515 SENATOR DONLEY asked if the proposed amendment would allow a spouse who wasn't a lobbyist to do whatever they want. SENATOR RANDY PHILLIPS replied, yes. SENATOR DONLEY asked if it would allow a spouse who was a registered lobbyist to participate in the legislative process for things other than the clients they represent? He asked Senator Phillips if he understood the question. Senator Donley thinks they should have freedom of speech. SENATOR DUNCAN thinks this is getting confusing, the way it's drafted. He thinks this could be corrected in the Rules Committee. SENATOR RANDY PHILLIPS stated that's fine. He doesn't care, frankly. He withdrew the amendment. SENATOR DONLEY doesn't think it's that hard. We just need to decide how much freedom of speech to give them. SENATOR RANDY PHILLIPS agreed, but he doesn't want to risk losing the whole amendment, so he would just as soon keep the ban for everyone. SENATOR DONLEY asked Senator Phillips if he is withdrawing the amendment. SENATOR RANDY PHILLIPS stated if Senator Donley is interested, he will move it again, as written by Ms. Cramer. CHAIRMAN SHARP asked Senator Donley if he had an amendment. Number 535 SENATOR DONLEY stated he had an amendment dealing with a deadline for sending out newsletters. He asked if Senator Phillips amendment was adopted. CHAIRMAN SHARP stated Ms. Cramer is currently redrafting the amendment. SENATOR DONLEY asked the chairman if he would like to move on to that amendment. CHAIRMAN SHARP responded yes. SENATOR DONLEY stated there is a provision suggested by the Ethics Committee that we not allow newsletters within 90 days of an election. CHAIRMAN SHARP stated they suggested June 1, the filing deadline. SENATOR DONLEY thinks they're trying to address something that isn't really a problem. The compromise, since they seem to be intimidated into doing some of these ridiculous things, would be to change it to July 1. He doesn't think he's ever gotten a newsletter out by June 1. Between the end of session, being on the road, and your equipment being shipped back for two weeks, there is no way to get it done by June 1. SENATOR RANDY PHILLIPS agreed. SENATOR DONLEY thinks the whole thing ought to be deleted. SUSIE BARNETT, Professional Assistant, Legislative Ethics Committee, clarified that on page 3, lines 22 and 23, the funds referred to are leadership funds or committee funds, those kinds of things. It wouldn't affect your office account funds. SENATOR DONLEY thanks Ms. Barnett for that correction. He did not understand what the committee was proposing. He suggested a July 1 cutoff for mailings. A committee will not be able to generate something before July 1. SENATOR DUNCAN is not sure a committee should do something. Why would we want to authorize a committee to do a mailing at all during election season? A committee doesn't need to do a newsletter. SENATOR RANDY PHILLIPS agreed. He doesn't think Senator Donley wants the amendment he is proposing. SENATOR DUNCAN does not think Senator Donley would want that amendment either. SENATOR DONLEY doesn't care. He thinks maybe since he hasn't been a chairman in so long, he wouldn't know what to do with it. CHAIRMAN SHARP asked if the committee wanted to try to define "campaign period", delete "campaign period", delete all of Section 3? He doesn't care. SENATOR DUNCAN suggested leaving it alone. He thinks with Ms. Barnett's explanation that Section 3 is okay. It's only referring to a committee mailing. SENATOR LEMAN asked, what committee funds? TAPE 96-25, SIDE B CHAIRMAN SHARP asked if they have an amendment that addresses the page of the bill where the amendment ended up? Number 580 MS. CRAMER stated committee members have in front of them a handwritten amendment to amendment R.1. Page 1, line 5 through page 2, line 8 refers to amendment R.1, not to the bill. CHAIRMAN SHARP asked if they can do that. SENATOR RANDY PHILLIPS stated they could. MS. CRAMER stated page 2, lines 9-16 is what is left. SENATOR DUNCAN asked if everything would be taken out, but leave Section 3 in? MS. CRAMER responded, yes. Number 558 SENATOR RANDY PHILLIPS made a motion to adopt the amendment to amendment R.1. He asked Ms. Cramer to explain the amendment once again. MS. CRAMER replied the amendment to amendment R.1 would delete most of the material on page 1 and the first 8 lines on page 2. It leaves in place proposed new bill Section 3 and all the rest of the material in amendment R.1. SENATOR DONLEY asked what the amendment would do. MS. CRAMER responded it would take out language that appeared to suggest that spouses and spousal equivalents of legislators would not be able to testify before committees or interact with legislators on issues that they were concerned about, if they are not paid lobbyists. CHAIRMAN SHARP asked if that includes employees that are sent to lobby, if they are legislative spouses. MS. CRAMER replied that it would, if they were required to register as a lobbyist. CHAIRMAN SHARP asked if that meant that a governmental lobbyist, if they were a legislative spouse, would still be able to lobby the legislature? MS. CRAMER responded they could, because governmental folks are not covered by the lobbying law. CHAIRMAN SHARP thinks lobbying is lobbying. If you're asking for money or lobbying for a cause.... He has just seen a new federal law that forbids any lobbying by the beneficiaries of federal funds that are passed on through state grants. SENATOR DONLEY asked if they didn't have the prohibition where you can't use the money from a grant to come back and lobby with it? CHAIRMAN SHARP stated now, no beneficiaries of that money cannot lobby. SENATOR DUNCAN stated that would empty the hallways. Number 530 CHAIRMAN SHARP asked if there was any objection to the amendment to amendment R.1. Hearing none, he stated it was adopted. SENATOR LEMAN stated he has two other issues. The first relates to a letter of intent. He would prefer to change the statute. He asked Ms. Cramer to explain why she recommended a letter of intent. MS. CRAMER stated she could not find anything in the bill that would prohibit being employed by a political subdivision, so she couldn't find anything to amend to say it didn't apply to that. SENATOR LEMAN stated that is exactly his point: it never was the intent, but it is now the interpretation under which we have to operate. SENATOR RANDY PHILLIPS asked if that is APOC or the Ethics Committee? SENATOR LEMAN stated it is APOC. He asked if the regulations have been adopted yet. BROOKE MILES, Regulation of Lobbying, Alaska Public Offices Commission, stated the regulations have been adopted. SENATOR LEMAN thinks the APOC has gone well beyond legislative intent. Number 510 MS. CRAMER asked what the source of the prohibition was against municipal employment or political subdivision employment. SENATOR LEMAN asked Ms. Barnett if she would respond to that. MS. BARNETT responded no. She is not sure which section they are talking about. Are they talking about contracts and leases? SENATOR LEMAN asked for an explanation of what the Ethics Committee advisory opinion or ruling was on employment by a municipality, if that municipality was funding that project from an appropriation by the state. MS. BARNETT replied the advisory opinion to which she thinks Senator Leman is referring was an early 1993 opinion. That opinion referred to source of funds. It is the burden of the legislator or legislative employee to research what the source of funds are for contracts, leases, or grants. Is that what he is referring to? So it could affect contract employment. But there isn't anything regarding employment with a political subdivision under the new law. However, there was a memo put out years ago which addressed political subdivisions and employment by legislators. Does that ring a bell to Ms. Cramer? MS. CRAMER replied the only bell it rings with her is that you can be employed by a political subdivision and not violate dual office holding under the constitution. She doesn't think she's ever thought about political subdivision with the Ethics Code. SENATOR DONLEY stated he remembers a big floor fight and a vote in the house. MS. CRAMER stated there may have been a proposal that she was not involved in drafting. SENATOR DONLEY stated the house took it out of the bill. He thinks that was the year it passed the house, but didn't pass the senate. But there hasn't been an objection to it. CHAIRMAN SHARP stated he has no objection. He didn't know a legislator couldn't work professionally on a professional contract, or digging a ditch as far as that's concerned, for any municipality, no matter where the money comes from, when he or she wasn't in session. It's up to the municipality to bid it out. He can't imagine prohibiting that kind of work. What the hell's a guy supposed to do to make a living in this state? SENATOR DONLEY asked if anyone objects. Number 480 CHAIRMAN SHARP doesn't have an objection, but thinks a letter of intent is a weak way to go about it. He would load it right in the damn statute. MS. CRAMER stated she can create a place in statute, but if she doesn't know toward what harm she's directing the medicine, it may not be as useful as if she did. SENATOR LEMAN moved the adoption of the letter of intent. Number 465 CHAIRMAN SHARP asked if there was objection to the letter of intent. Hearing none, he stated the letter of intent was adopted. He also suggested that Senator Leman might wish to load that language somewhere in the bill. SENATOR LEMAN stated he has one other point on Section 45, page 24, lines 17-21. It has to deal with the word "substantial". The APOC has come up with what he thinks is an obtuse interpretation of "substantial". For example, if a legislator pays over $5,000.00 in raw fish taxes, then you have a substantial interest in state government. So the legislator then has to report the source and the amount of income. He thinks that interpretation is at odds with the original intent of the legislation. SENATOR DONLEY asked what Senator Leman would propose. SENATOR LEMAN stated he would propose defining "substantial". He asked Ms. Cramer if there is a definition for "substantial". MS. CRAMER does not recall that there is a definition for "substantial". There certainly isn't in AS 24.60. [After looking, Ms. Cramer does find a definition for substantial.] It is a long paragraph. "A person has a substantial interest in legislative, administrative, or political action if they will be directly and substantially affected financially by the action...." SENATOR DONLEY commented he loves it when the definition includes the word being defined. MS. CRAMER continued, stating there are some exceptions. If they seek contracts in excess of $10,000.00 or if they are lobbyists. It's not exactly helpful. SENATOR LEMAN stated that the APOC, by regulation, has now further interpreted that to mean anyone who pays more than $5,000.00 in taxes, because they might be affected by an action of state government. SENATOR DONLEY asked Senator Leman to just tell him what he wanted. MS. CRAMER stated she is not clear on the direction Senator Leman wants her to go. Number 406 SENATOR DONLEY asked how about raising the dollar amount from $1,000.00. SENATOR RANDY PHILLIPS asked what they do if they get a dividend over $1,000.00. Do they then have a substantial interest in that? SENATOR LEMAN thinks the problem hasn't been so much the limit, as the interpretation of "substantial". SENATOR RANDY PHILLIPS asked Senator Leman to consider coming up with an amendment for the Rules Committee. Number 375 SENATOR DONLEY stated legislators have had definitions before about conflicts of interest that have run into the idea of, if it's a benefit available to a large group, you know what I mean? That might work. There are thousands of people selling that fish, so Senator Leman is one of a large group. SENATOR LEMAN added that all the fish buyers are doing is collecting the tax and passing it on. CHAIRMAN SHARP asked if there are any further specific amendments. Hearing none, he asked what the pleasure of the committee was. Number 362 SENATOR RANDY PHILLIPS made a motion to discharge SB 141 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated SB 141 was discharged from the Senate State Affairs Committee. SENATOR DONLEY thanked the committee and committee staff for all their time and effort on SB 141. CHAIRMAN SHARP replied that most of the thanks should go to the committee staff person. SB 275 STATE PROCUREMENT PRACTICES & PROCEDURES CHAIRMAN SHARP brought up SB 275 as the next order of business before the Senate State Affairs Committee. Number 345 JERRY BURNETT, Aide to Senator Randy Phillips, reviewed the changes to SB 275 as set out in a memo dated March 26, 1996 from Senator Phillips. Outlined below are the changes: Sections 1-6 are new. These sections require the Ombudsman, the Alaska Railroad, the Aerospace Development Corporation, Alaska Housing Finance Corporation, the Alaska State Pensions Investment Board, the Alaska Seafood Marketing Institute, the Legislature, and the Court System to comply with AS 36.30.170(b), the Alaska Bidders' Preference. Section 10 is the same as former Section 4, except that the 5,000 square foot exception has been changed to 3,000 square feet. Section 11 is the same as former Section 5, except that the University is not allowed to extend leases under this provision. Sections 6 and 7 of the original bill have been deleted. Section 14 is the same as former Section 10, except that the language on line 25 has been changed from "that regularly provides in the normal course of business" to " that deals in". Section 16 is the sam as former Section 12, with the exception that the terms "bidder" and "offeror" are clearly defined as having the same meaning for the purpose of AS 36.30.115(a-e). Section 20 is the same as former Section 16, with a new subsection (e) that prohibits the delegation by the chief procurement officer or the Commissioner of DOT/PF of the determination to make a single source procurement. Section 21 is the same as former Section 17, with the exception of changes in drafting style. Section 23 is the same as former Section 19, except that the title was changed to "Innovative Competitive Procurements". Section 24 is the same as former Sections 20 and 21. Section 25 replaces former Section 22, which makes any state official who makes a false statement in a determination under the procurement code guilty of a class A misdemeanor. Section 26 is the same as former Section 23, except that 5,000 square feet has been changed to 3,000 square feet. Section 30 is the same as former Section 27, with the addition of new language in subsection (b) that requires the Department of Transportation to maintain and submit to the Commissioner of the Department of Administration records of single source procurements. Section 32 is the same as former Section 29, with the addition of applying the procedures to "the proposed award of a contract". Section 33 replaces former Section 30, with all new language on the timing of a protest. Section 39 is the same as former Section 36, except for the change from 30 days to 90 days for the time limit for filing a claim on a contract. Section 43 is the same as former Section 40, except that paragraph (34) now exempts only Governor's Office contracts with the media for advertising, instead of an exemption for lobbying, public relations, and advertising. Section 44 is the same as former Section 41, except that it specifies "41 U.S.C." instead of "federal law". Section 51 is a new section that makes the first lease extension report due on August 31, 1997, formerly covered in Section 5. Section 53 is the same as former Section 48, with the addition of the sections applying the Alaska Bidders' Preference to agencies exempted from the procurement code. CHAIRMAN SHARP handed out Executive Branch Conflict of Interest reports. He advised members to look at the forms. We want to look at this in the Rules Committee. SENATOR DONLEY thinks that when ethics is considered, they should be considering a comprehensive ethics in government act. MR. BURNETT believes that someone from the Department of Administration would like to speak to some of the changes in the committee substitute. SENATOR DONLEY made a motion to adopt the committee substitute for SB 275. Number 205 CHAIRMAN SHARP, hearing no objection, stated the committee substitute was adopted. He asked for comments from the Department of Administration. Number 195 DUGAN PETTY, Director, Division of General Services, Department of Administration, stated there are four comments he would like to make on the committee substitute. It is his understanding that Section 14 still needs some work. That is the section that addresses the issue of brokering bidder preferences. He thinks there is still some improvement that could be made there. Under Section 20, the section on single-source procurements, the administration requests that there be an amendment introduced to allow for some level of delegation on single-source procurements. Under current statute, the sole-source requirement may not be delegated by the chief procurement officer, with the exception of small procurements. We'd like to maintain that level, recognizing that there's some level of sole-source that can be delegated to an agency head to make a determination. Other wise, the chief procurement officer will spend a lot of their time dealing with relatively small determinations for single sources. The current statutory limitation is $25,000.00. He thinks the preferable approach would be to identify it as a small procurement. If the committee thinks a $50,000.00 statutory procurement limitation is too high, he suggested lowering that figure to $25,000.00. It would be difficult to handle those without some level of delegation. Mr. Petty suggested language to make that change. MR. PETTY made the same suggestion under Section 21. The administration would like to see the current allowance for delegation of small procurements to continue. On Section 21, line 20, there is a comma after $100,000.00; the administration thinks the deletion of that comma could cause confusion. Those are the comments. Number 125 SENATOR LEMAN stated that if deleting the comma causes confusion, why not just re-order the sentence to say, "a construction contract under $100,000.00 or a contract for supplies, services, or professional services may be awarded without competitive sealed bidding." He moved that amendment. CHAIRMAN SHARP, hearing no objection, stated the amendment was adopted. MR. PETTY stated the administration can live with the committee substitute as it now reads. But Section 14 should be addressed. CHAIRMAN SHARP thinks they should forbid brokering of bids that take advantage of the preference. Number 085 MR. PETTY informed the committee that the administration has proposed an amendment on this issue. The amendment proposes to leave subsection (b) alone, but require that bidders have a history of selling the supplies of the general nature solicited by the state to other governments or to the general public. Number 050 SENATOR DONLEY does not remember having a problem with Section 14 the way it was. MR. PETTY responded the amendment would not impact the Alaska bidders' preference, but would simply address the disabled bidders' preference, the employment program preference, and the business employing disabled preference. SENATOR DONLEY asked what was wrong with Section 14 the way it was. MR. PETTY responded that the concern with Section 14 in the committee substitute is there is a question of whether that would solve the problem. SENATOR DONLEY asked what's wrong with Section 14 in the committee substitute. MR. PETTY replied, as he understands it, it's not specific enough to believe it would prevent the brokering issue, and also, it required someone to have sold a product or dealt in a product or supply within the past six months, because it's tied to the six months of the Alaska bidders' preference. So if an individual had sold a product 18 or 20 months ago, but not within the last 6 months, they would have been prevented from getting the preference, when they more appropriately should get it. TAPE 96-26, SIDE A Number 010 CHAIRMAN SHARP moved amendment #2 to SB 275. SENATOR LEMAN objected for the purpose of a clarification. He asked Mr. Petty if he meant "solicit to other governmental agencies," because that's not what the bill says. MR. PETTY stated he misspoke. He prefers the language as it is written. SENATOR LEMAN stated this is a little bit different from what he normally sees in statute. Maybe the drafting attorneys can-- SENATOR RANDY PHILLIPS interjected that SB 275 goes to the Judiciary Committee. SENATOR LEMAN thinks it may be interpreted as "solicit to other governments". What does that mean? Municipal governments? MR. PETTY responded, municipal governments or other state agencies. We just want them to have some track record of having been in business. SENATOR RANDY PHILLIPS suggested, "other political jurisdictions". CHAIRMAN SHARP asked Senator Leman what he wanted to do. SENATOR LEMAN thinks it should say, "solicit to other agencies or governments," or something like that. MR. PETTY agreed. If the language was to say, "solicited to other state agencies, other governments, or to the general public," that would cover Senator Leman's concern and the intent of the legislation. SENATOR LEMAN made a motion to amend amendment #2 and incorporate those words. CHAIRMAN SHARP asked if there was objection. Hearing none, he stated the amendment to amendment #2 was adopted. Number 070 CHAIRMAN SHARP asked if there was objection to amendment #2. Hearing none, he stated the amendment was adopted. CHAIRMAN SHARP asked if there is any prohibition on "shopping" bids. MR. PETTY stated that under the invitation to bid procedures, that is not only inappropriate and unfair, but is not allowed under current law. However, he doesn't want to mislead the committee, because the innovative competitive procurement section states that under certain circumstances there are cases where it's not practical to use the invitation to bid process, which would prevent that, or the competitive sealed proposal process, because it's like trying to put a square peg in a round hole. CHAIRMAN SHARP asked if that would still prevent bid shopping. MR. PETTY responded that if the bid process was the appropriate vehicle, we wouldn't get to the innovative procurement; we would use the invitation to bid process. Our obligation is to award the bid to the low responsive responsible bidder. We can't have people change their bid. We couldn't do that under current law. Number 135 CHAIRMAN SHARP stated the committee has written testimony in support of SB 275 from Johanna Munson of Emcon Alaska, Inc. Number 150 CHAIRMAN SHARP wants the intent for buying off the GSA supply schedules to be used only for suppliers listed in the State of Alaska, and not to be used as a catalog for GSA suppliers outside the state. SENATOR DONLEY made a motion to move amendment C.6 (amendment #3), which addresses the chairman's concern. CHAIRMAN SHARP asked if there is objection. Hearing none, he stated the amendment is adopted. The chairman asked if there are other amendments. SENATOR RANDY PHILLIPS stated there is an amendment on Section 20. MR. PETTY stated that Section 20 is the single-source section. We want the authority to delegate small purchases. We currently have the ability to delegate the determination of a sole-source for a small procurement. That current threshold is $25,000.00. We would want to preserve the ability to delegate those small procurement determinations for single-source. SENATOR LEMAN moved amendment #4. MR. PETTY stated that the amendment would amend page 10, line 16 to read, "except for procurements of supplies, services, professional services, or construction that do not exceed the amount for small procurements under AS 36.30.320(a), as applicable. The authority to make a determination required by this section may not be delegated, even if the authority to contract is delegated under AS 36.30.015(a-b)." SENATOR RANDY PHILLIPS stated it is a "trust me" amendment. SENATOR DONLEY asked Senator Phillips if he knows what the amendment is. SENATOR RANDY PHILLIPS replied, no, but his aide is saying it's okay. SENATOR LEMAN asked if there is documentation of that determination made. We don't want this abused. MR. PETTY replied this is delegated to specific individuals, and it is made clear to them that they have the same threshold requirements of statute as the chief procurement officer. Under this, we would anticipate that we would have to do some training, because those thresholds have changed with SB 275. ELMER RASMUSSEN, Acting Director, Division of Engineering & Operations, Department of Transportation & Public Facilities, stated DOT requires that the same forms, process, and documentation level be used for small procurements, with the only difference being the person who signs it is the delegated individual, instead of the commissioner. SENATOR RANDY PHILLIPS made a motion to adopt amendment #4. Number 225 CHAIRMAN SHARP, hearing no objection, stated amendment #4 is adopted. SENATOR RANDY PHILLIPS made a motion to discharge SB 275 from the Senate State Affairs Committee with individual recommendations. CHAIRMAN SHARP, hearing no objection, stated SB 275 was discharged from the Senate State Affairs Committee. CHAIRMAN SHARP adjourned the Senate State Affairs Committee meeting at 5:23 p.m.