SENATE BILL NO. 271 "An Act relating to fees charged for inspections by the Department of Environmental Conservation; and providing for an effective date." SUE MOSSGROVE, Staff, Senator Robin Taylor stated that SB 271 had been introduced as a matter of fairness for all businesses providing food services from restaurants to day care centers. She noted that currently food inspection fees are included as a part of the permit process within Department of Environmental Conservation Food Safety and Sanitation Program. Ms. Mossgrove continued that during the interim, the Administrative Regulation and Review Committee held a hearing to review the increased fees proposed by the Department of Environmental Conservation. She added that while they continue to raise fees, they have not proved the services for which they have charged. She noted that several business owners have complained that this practice is unfair; for example, the fees for one establishment showed an increase from $75 in 1995 to $525 in 1999. She commented that another showed their fees increasing from $50 to $985. She disclosed that in the last two years they were inspected only one time. Ms. Mossgrove asserted that the Department of Environmental Conservation changed rate setting from one permit for the entire establishment, to individual permits and fees based on type of facility and risk. She noted that by separating food inspection fees from the permit process and not allowing Department of Environmental Conservation to charge for a service until they provide it, the sponsor hoped to bring equity to the businesses around the state. Senator Phillips asked for an example of the Department of Environmental Conservation charging for an inspection without following through on this service. Ms. Mossgrove presented an example of a business out at Dot Lake, a restaurant and convenience store that was charged $75 for an initial permit. She noted that this same business a few years later is paying for two separate permits, one for $150.00 and the other for $575.00 and added that this business was only inspected once over the last two years. Senator Adams asked if the sponsor would consider established rates for these inspections. He noted that the present statutes do not allow for this. Ms. Mossgrove responded that she did not think Senator Taylor would oppose such a measure. She noted that in previous legislation, the Department of Environmental Conservation was given the authority to charge fees without set guidelines on what is reasonably allowed. Senator Green clarified that if a business cannot get their license to operate they do not pay fees for an inspection. She referred to the attached fiscal note and pointed out that schools are exempted as well as charitable organizations. She asked what any of these charities were. Ms. Mossgrove stated that she could give no specific examples of these entities. Senator Green asked if Head Start could be one of them? Ms. Mossgrove stated that she believed so and noted that there was some discussion about other daycare facilities being overburdened with fees, which Head Start was exempt from. Senator Green referred to discussions with the Finance Subcommittee Chair for Department of Environmental Conservation and the potential of a refund for overcharges and increases. She asked if these considerations were taken into account while drafting this legislation. Ms. Mossgrove responded that no, this had not been considered. BETTY REVIS testified via teleconference from Tok. She stated that she runs a coffee cart, which only serves coffee and tea. She pointed out that even though this is the only service she provides, she is nonetheless charged the same inspection fees as a grocery store down the street. She continued that when she opened her business in 1993, she was required to pay $50.00 for inspections and noted the fees were presently increased to $210.00. She stated that she did not understand the reasoning for this or the fairness of it. She concluded that her business had not been inspected, this year or last. JANIS ADAIR, Director, Division of Environmental Health, Department of Environmental Conservation testified via teleconference from Anchorage that the fees charged to businesses have been equally problematic for them. She noted that the fees for inspection were raised due to a funding switch from general funds to general fund program receipts. She continued that the remaining general funds were reduced by the conference committee last year. She stated that these two things have exacerbated the situation. She added that it has been years since the department has been able to inspect every permitted facility. She pointed out that these inspections are conducted from a "risk based" perspective, to help understand why some facilities and businesses are not charged. She then explained how fees are broken into schedules and how they are allocated. She also explained why this proposed legislation would mean multiple billings to customers and additional increased costs. Tape: SFC - 00 #47, Side B 9:51 AM Ms. Adair noted that Head Start and public schools are exempted from these inspection fees, but because they are considered high-risk facilities, the department conducts inspections anyhow. She noted that children are more susceptible to food-borne illnesses than others. She responded to Ms. Revis' concerns by noting that the department intends to amend food service regulations, which will exempt espresso and coffee carts from the permitting and fee process. Co-Chair Torgerson wondered how many facilities are inspected as versus those being billed. Ms. Adair responded that this depends on the year, since any given year, inspectors quit and she noted that some of these same employees periodically go on family leave. She added that taking these factors into account, about fifty percent of the deemed facilities were inspected overall. She noted that most of these were seafood related, about 80 percent, since the department is mandated by the federal government to do so. Senator Wilken asked if the department bills 100 percent of these facility, but that only 40 percent of these are inspected. Ms. Adair responded that there are a host of facilities, which the department inspects and a subset of these are charged a fee. She noted that Senator Wilken was correct, that the department does charge a fee, which includes the total cost of the program, including inspections, but not all of these are inspected. Senator Wilken asked if some of the establishments receive a bill for inspection, but are not inspected. Ms. Adair responded that if a facility receives a bill, this reflects an allocation of the cost of the program, including the amount of inspection. She added that the food service aspect of the program was changed from a mix of general funding programming fees to 93 percent of programming fees, therefore, the cost of the program at seven percent would consist roughly of travel. She continued that the "costed-out" amount must be allocated across all users that are permitted and not exempted from a fee. Ms. Adair and Senator Leman discussed how the billing process worked for this inspection program. Co-Chair Torgerson asked if Alaska has laws requiring that a facility be inspected every year. Ms. Adair responded that there was not, much less a law requiring an inspection. She noted that an inspection is a way to determine compliance with food safety laws. She added that the Food and Drug Administration recommends that full service restaurants be inspected at least twice a year, but the department does not have the staff to do this. She explained in detail how inspections are presently conducted and noted that she would be happy to work with the Committee on this legislation. Co-Chair Torgerson noted that he would contact Ms. Adair for a list of inspections, those businesses inspected and how much money is charged. Senator Leman asked if the department would support the divestiture of some of these duties to some of the larger municipalities to conduct their own food service inspections such as which, Anchorage is currently involved. Ms. Adair responded that the department has considered this, but found that in the smaller communities the economy of scale does not exist. Co-Chair Torgerson ordered the bill HELD in Committee.