HB 309-APOC; CAMPAIGN CONTRIBUTIONS/REPORTING  9:12:06 AM CO-CHAIR SCHRAGE announced that the final order of business would be HOUSE BILL NO. 309, "An Act exempting candidates for municipal office and municipal office holders in municipalities with a population of 15,000 or less from financial or business interest reporting requirements; relating to campaign finance reporting by certain groups; and providing for an effective date." [Before the committee, adopted as a working document on 3/3/22, was the proposed committee substitute (CS) for HB 309, Version 32-LS0540\G, Bullard, 2/24/22 ("Version G").] 9:12:25 AM NILS ANDREASSEN, Executive Director, Alaska Municipal League, stated that the Alaska Municipal League (AML) has not had the opportunity to identify its position in support of or opposition to the proposed legislation. He spoke about "the burden of participation" finding folks to run for local offices and he emphasized the importance of encouraging participation. He said AML checked in with several members of the legislature, who were supportive of HB 309 and easing onerous requirements [to apply for elected positions] while ensuring adequate safeguards. He opined this is an important issue and HB 309 takes steps to improve the system. He said AML would take time to consider "what else is out there" to improve the election process for local officials. 9:15:08 AM CO-CHAIR HANNAN noted that 136 governments in Alaska "have opted out," and HB 309 would potentially affect 25. She questioned why the other smaller communities are not opting out when the majority of local governments have. She asked, "What is the struggle to opting out versus changing statutes so you don't have to comply?" MR. ANDREASSEN answered it could be the limited capacity of some of these local governments; they may not be aware of current statutes or what steps they can or should take in response to statute. He speculated that so many opting out may be "a symptom of the larger system that's in place." He suggested AML and the state may have a larger role in conveying the options to those small governments. CO-CHAIR HANNAN asked whether AML had heard from the Boroughs of Ketchikan Gateway, Kodiak Island, North Slope, Wasilla, or Skagway. She said she is struggling to understand the scope of the problem. She said Alaska has a "deep disclosure" and "Alaskans have gotten used to having that information available." She said she can understand Edna Bay, with a population of 43, as having difficulty with the requirements; however, she noted Edna Bay already does not have to file because of [its low population count]. She asked whether AML has heard from local governments "that they can't comply." MR. ANDREASSEN answered no, but noted that AML has not asked all the communities. He said HB 309 would provide the opportunity for AML to "dig a little bit deeper." Those communities AML has asked have given feedback that they "have had issues with how things are currently structured." He said he could get back to Co-Chair Hannan about those communities she had specifically asked about. 9:18:58 AM REPRESENTATIVE JONATHAN KRIESS-TOMKINS, Alaska State Legislature, as prime sponsor of HB 309, said one question to ask is whether the rule makes sense and adds value. He indicated it does not make sense to require filing for Edna Bay City Council members when the population there is just 43. Regarding compliance, he said he had heard from the mayor of Nome, Alaska, that it is "a pain in the butt." He said he would not be surprised if the list of communities that opts out continues to grow. He advised that many smaller communities can be saved the time if only larger communities fall under the requirement. He said when public officials are managing "tens of hundreds of millions of dollars," then it makes sense to have that level of transparency. The intent is to make it easier on those in smaller communities where that is not necessary. He speculated that the Alaska Public Offices Commission (APOC) has spent time "chasing down" city council members in the smaller communities to fill out the forms; so, it is a mutually time- consuming process. 9:22:02 AM HEATHER HEBDON, Executive Director, Alaska Public Offices Commission, echoing the comments of the bill sponsor, said APOC finds that in the small communities, council members may serve in a volunteer capacity, and many of them come and go, not serving a full term. She said they have to file a financial statement, an annual statement, a final statement, and a cycle of paperwork, and sometimes they are holding these positions for less than a three-year term. Further, she noted that many don't have an office and struggle with inconsistent mail service and limited connectivity [to the Internet]. She said the forms are being filed with the official's clerk, for example, and APOC is not even seeing the forms. These are the communities disadvantaged by the penalties for late filing, because the fees for late filing are disproportionate for small communities. She acknowledged that the North Slope Borough has money "flowing through" but shares other disadvantages of smaller communities, such as issues with connectivity. She concluded, "People aren't requesting copies of these statements; I don't know that ... it's serving a public interest having to go through this." 9:25:09 AM CO-CHAIR HANNAN pointed to a [4-page] spreadsheet [included in the committee packet, which lists those municipalities that are or are not subject to a public official financial disclosure (POFD)]. She asked for confirmation that "the bottom swath" municipalities with populations less than 1,000, including Edna Bay - are exempt from filing a POFD. MS. HEBDON clarified that candidates of communities listed in the bottom swath of the spreadsheet are not required to file at the time they submit their candidate petition to run for office; however, once elected, they are required to file. CO-CHAIR HANNAN noted Skagway, one of the municipalities she represents, would be exempted under HB 309, and she indicated that Skagway has not chosen to adopt an ordinance to opt out. She asked Ms. Hebdon to note the communities that are "still struggling with this" in order to identify where the population break is. 9:27:51 AM MS. HEBDON posited that drawing "a line in the sand" is a policy call for the legislature, and she reiterated her previous concerns regarding the smaller communities especially those with populations of less than 1,000. She remarked that more sophisticated municipalities may be capable, but she cannot say they meet their requirements any better, because many municipalities with populations of 1,500 down to 1,000 continue to struggle. She noted that the clerks' offices in the municipalities are the record holders, and they need to communicate with APOC. 9:29:23 AM REPRESENTATIVE KREISS-TOMKINS added that it is a question of what makes sense in terms of a default and whether the state should be putting forward this mandate for all communities when there has been minimal interest, in terms of [the public] inquiring about POFDs. He talked about allowing a community to decide "what makes sense to them from a POFD basis." 9:30:41 AM REPRESENTATIVE MCCARTY offered his understanding that the premise of HB 309 is "to have transparency of the integrity of candidates." He talked about how in small communities people know the business of everyone. He asked why "the 15,000 number" is seen as a problem. He then asked about the issues of mail delays and whether viable candidates are being prohibited from running for office. REPRESENTATIVE KREISS-TOMKINS responded that the question of the threshold is a policy call. Currently the line is 1,000, and under HB 309 it would be 15,000. He said he thinks the higher number makes sense based on observations from APOC and Mr. Andreassen. To the issue of how candidates are being prohibited from running for office, he referred to testimony heard at a previous meeting from the mayor of the City of Nome, as well as written testimony from Mr. Walker [included in the committee packet]. The issue is the hassle and time it takes to file the forms being a disincentive to running for office. He noted that planning commissions fall under the requirement, as well. 9:37:37 AM MR. ANDREASSEN, to the questions from Co-Chair Hannan and Representative McCarty, advised that it is important to remember how diverse the communities on the spread sheet are. He said population is one factor. Other factors include class of city or borough, total revenue and responsibilities, geographic area, and diversity. He proffered that communities have not identified this as a challenge because they follow the law and "prioritize their communications to the legislature." He advised that the more that is added to the number of requirements of municipalities, the more reduced is their ability to respond to all other priorities. He asked the committee to keep in mind that the clerks responsible for this filing are responsible for a multitude of other tasks in these smaller municipalities. He advised that the more that can be done to reduce their obligations, the better. He encouraged allowing these smaller municipalities to focus on the things that matter, such as public safety, education, and elections. 9:41:32 AM REPRESENTATIVE MCCABE asked whether the City of Fairbanks, with a population of 31,668, would maintain its opt out status under HB 309. REPRESENTATIVE KREISS-TOMKINS confirmed that under HB 309, the communities that had already opted out would continue to be opted out. REPRESENTATIVE MCCABE observed that the threshold proposed under HB 309 is targeted to help smaller areas where everyone knows his/her neighbor. He pointed to the Boroughs of Kodiak and North Slope as two that would be included under the 15,000 threshold but are spread out. He suggested the inclusion of those boroughs may "change the paradigm of what you're trying to do with this bill." 9:44:32 AM REPRESENTATIVE KREISS-TOMKINS reflected that that is an accurate assessment, and he suggested the threshold could be modified to, for example, 10,000 to try to capture the larger boroughs mentioned by Representative McCabe. He said he would not oppose an amendment to that effect. 9:45:27 AM REPRESENTATIVE PATKOTAK noted that he had served on the assembly of the North Slope Borough, and he had not realized the borough was "potentially exempted from it." Regarding boards and commissions, he noted some assembly members dealt with geo- bonding and investment committee members dealt with the Alaska permanent fund both dealing with large amounts of money. He said for those types of boards and commissions, he thinks having a disclosure requirement in place is diligent. On the other hand, the Inupiat [Heritage] Center boards and commissions dealt with "things that are less financial in nature," and he could see where the filing requirement for such an entity would be cumbersome. He offered his understanding that under HB 309, those municipalities under 15,000 would have the opportunity to opt in, and he asked whether there could be a choice to select which boards and commissions to opt in on. REPRESENTATIVE KREISS-TOMKINS responded that he thinks that opportunity would exist in that each borough would have the prerogative "to make those calls." REPRESENTATIVE PATKOTAK, based on that response, said he would be more comfortable with the 15,000 threshold currently proposed under HB 309. 9:50:10 AM CO-CHAIR HANNAN noted that Mr. Andreassen had referenced that perhaps it is "not just the population threshold." She questioned whether the bill sponsor had considered the style of government. She mentioned those who volunteer with zoning commissions and the conflict that can come from that. She further mentioned the powers of property taxation and police powers and said she thinks "there's some assurance to the community that their government is working on their behalf, not on a personal self-interest." She stated she has no problem exempting communities under 1,000, but 15,000 is "way too high." She posited that the consideration is not just population but the type and structure of government, and she asked the bill sponsor whether he had considered this. REPRESENTATIVE KREISS-TOMKINS answered, "I can't say we have." He said it makes sense to give each community the ability to decide what it wants and eliminate the state's "blanket mandate." Given feedback and information available, he said he would hesitate "to start breaking out different types of governments against others when it seems like, more or less, the reality's been the same across all types of governments." 9:54:28 AM The committee took an at-ease from 9:54 a.m. to 9:55 a.m. 9:55:28 AM REPRESENTATIVE MCCARTY suggested the question is whether APOC is the sole source for collecting information related to integrity and transparency. He reflected that quite a few communities have opted out, thus taking that burden off APOC. He said he has not heard during any testimony that the opting out has been a problem. He said he is "good with the 15,000" and "keeping the integrity of this." 9:57:51 AM REPRESENTATIVE MCCABE said he would not offer the amendment he had prepared. 9:58:00 AM CO-CHAIR HANNAN moved to adopt Amendment 1 to HB 309, Version G, labeled 32-LS0540\I.1, Bullard, 3/8/22, which read as follows: Page 1, line 2: Delete "15,000" Insert "3,000" Page 2, line 31: Delete "15,000" Insert "3,000 [15,000]" Page 4, line 17: Delete "15,000" Insert "3,000" Page 4, line 27: Delete "15,000" Insert "3,000" Page 5, line 12: Delete "15,000" Insert "3,000" Page 6, line 6: Delete "15,000" Insert "3,000" 9:58:03 AM CO-CHAIR SCHRAGE objected for the purpose of discussion. CO-CHAIR HANNAN spoke to Amendment 1, which she noted had been the one she anticipated Representative McCabe would have offered but did not. She said the threshold would be dropped to 3,000. She reiterated that she understands the burden to the smallest of communities. She pointed out that many of the 35 municipalities that would be included under HB 309 are functional first-class cities and boroughs, and she does not think they should be exempt. Changing the number to 3,000 would include the City of Skagway. She reiterated that a larger number is too high. She emphasized that she does not want to take the public disclosure information out of the record. She noted that Amendment 1 had been drafted to align with the original bill version, so the line numbering needs to be corrected for Version G. CO-CHAIR SCHRAGE said if Amendment 1 were to pass, the committee would give Legislative Legal Services the authority to make any conforming changes. 10:00:33 AM REPRESENTATIVE PATKOTAK said he would be more attuned to supporting an amendment with the hybrid idea he suggested previously. 10:00:52 AM CO-CHAIR SCHRAGE maintained his objection. 10:00:54 AM A roll call vote was taken. Representatives Drummond and Hannan voted in favor of the motion to adopt Amendment 1 to HB 309, Version G. Representatives McCarty, McCabe, Patkotak, and Schrage voted against it. Therefore, Amendment 1 failed to be adopted by a vote of 2-4. 10:01:49 AM CO-CHAIR HANNAN moved to report CSHB 309, Version 32-LS0540\G, Bullard, 2/24/22, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 309(CRA) was reported out of the House Community and Regional Affairs Standing Committee.