HOUSE JOINT RESOLUTION NO. 52 Proposing an amendment to the Constitution of the State of Alaska relating to certain public corporations. REPRESENTATIVE JEANNETTE JAMES, SPONSOR spoke in support of HJR 52. She referred to previous legislation, which she sponsored regarding legislative confirmation of the Alaska Permanent Fund Corporation Board. She clarified that she became interested in the issue because of the elimination and reappointment of board members at the beginning of new administrations. She maintained that a board which manages one of the biggest assets of the state should not be "wiped out one day and a whole new set of folks put in the next day." She noted that members were replaced due to a difference in philosophy: they were of the wrong party. She tried to tie elimination of Board members to cause. She has no complaints regarding individual board members. She explained that the Department of Law informed her that the observed that the Alaska Permanent Fund Corporation Board is not in the Constitution. Boards of existing public corporations are not in statute. She concluded that a constitutional amendment was needed to include the Alaska Permanent Fund Corporation Board and other boards and commissions into statute. She stressed that her intent is to provide continuity. Representative James noted that HJR 52 adds to existing language in Alaska's Constitution, which currently provides for legislative confirmation of all boards or commissions, which are the head of a principal department or a regulatory or quasi-judicial agency. The legislation adds governing entities of a public corporation established by law, which manage significant state assets as defined by law. She gave examples of affected agencies: Alaska Industrial Development and Export Authority (AIDEA), Alaska Science and Technology Foundation, Alaska Housing Finance Corporation (AHFC), Alaska Railroad corporation (ARRC), and Alaska Aerospace Development Corporation. Representative James added that the legislation also states that: "With respect to public corporations, the legislature may by law exclude the applicability of this section to a public corporation." She concluded that the legislation would allow confirmations and establish in law how the appointments could be withdrawn or replaced. She pointed out that the legislature confirms the boards of hairdressers and others that do not handle huge state funds. The legislation is permissive. She maintained that the founding fathers did not "have a clue that we would amass so much money in so many public corporations in this state." Vice Chair Bunde questioned if a ballot question would result in the perception that the legislature is trying to get more control over the Permanent Fund. Representative James responded that her other legislation failed because it specifically identified the Alaska Permanent Fund Corporation Board. She reiterated that the legislation mentions all public corporations and added that the general population has more knowledge of these corporations. She concluded that the legislation would have more support. Representative J. Davies suggested that the provision to exclude a corporation be eliminated. He agreed that these corporations are more important to the state of Alaska than the Board of Hairdressers. Representative J. Davies suggested that the language on page 1, lines 12 - 15 be deleted. Co-Chair Therriault stressed that it is impossible to foretell what new boards would be created and questioned if the legislature should have the latitude to decide which boards should have legislative participation. Representative J. Davies responded by questioning if the exclusion should pertain to other boards. Representative Grussendorf noted that there are some boards that are not confirmed by the legislature. He did not recall of any problems with boards outside of legislative oversight. He questioned the affect of requiring legislative approval. He maintained that governors pick the best people for the job and felt that legislative confirmation could result in politicizing the appointments. Representative James stated that she did not care if legislative approval is required. She clarified that her concern is to prevent the ability of a board from being eliminated all at one time. She explained that the legislature could not protect the elimination of a board unless it was confirmed. She stressed that the issue is what needs to be done to prevent appointees from being removed from their duties before their term is up. She pointed out that legislators respond to the public. She maintained that legislative action is based on constituent input. She stated that she would be happy to skip the confirmation process. She reiterated that the issue is to prevent the elimination of the entire board. She stressed that it is a serious issue when it affects the Alaska Industrial Development and Export Authority (AIDEA), Alaska Housing Finance Corporation (AHFC), or the Alaska Permanent Fund Corporation boards. Representative Austerman referred to page 8. Representative James noted that law defines public corporations. In response to a question by Representative G. Davis, Representative James explained that all of the licensing boards are regulatory. She noted that the Department of Law indicated that public corporation do not fall under current statutes. Representative G. Davis questioned if the law could be changed to make them fit. Representative James did not know if it would be possible. Representative Phillips expressed sympathy with the intent, but stated that she agreed with Representative Grussendorf. (TAPE CHANGE, HFC 00 - 88, SIDE 2) Representative Phillips stated that she was uncomfortable with "the legislative body having the intelligence, and the wherewith all, and the financial knowledge to make a decision on the confirmation of the Permanent Fund Board." Representative James pointed out that the legislature could not eliminate the board at one time since terms are staggered. She stated that she would be happy to consider alternatives. She observed that most of the people that are chosen for the Permanent Fund Board are people of high credibility and quality and are very intelligent, and probably can do a perfectly good job. She acknowledged that staff is available to advise new members, but stressed that members are not just there for looks and high visibility, but to do a job. Representative J. Davies questioned if Representative James had explored another way of putting the section in the Constitution without requiring appointments. Representative James explained that the only way the legislature can make rules and regulations regarding public corporation is through confirmation of appointments. Representative J. Davies asked if "with respect to public corporations, its members can only be removed as provided by law" would solve the problem. Representative James stated that she had not asked the Department of Law that specific question. Vice Chair Bunde observed that most confirmations are perfunctory. He stressed that the confirmation process is viewed as a safety value. Representative James observed that appointments by an administrator, such as the governor, should be made with the best interest of the job in mind, but that without oversight the process could be used to advance friends. Representative James noted that the following boards would be affected: Alaska Aerospace Development Corporation Alaska Industrial Development and Export Authority Alaska Railroad corporation (ARRC) Alaska Seafood Marketing Institute (ASMI) Alaska Science and Technology Foundation Commission on Postsecondary Education Alaska Housing Finance Corporation (AHFC) Alaska Mental Health Trust Authority Alaska Municipal Bond Bank Authority Alaska Permanent Fund Corporation Alaska State Pension Investment Board Representative Grussendorf stressed that members that have been removed from the Permanent Fund Corporation Board were replaced with good people. They are picked for their knowledge and expertise. He stressed that problems could occur, as legislators become concern with issues such as regional representation. Vice Chair Bunde MOVED to delete "with respect to public corporations, the legislature may by law exclude the applicability of this section to a public corporation." Representative James stated that she did not have a preference on the language. Co-Chair Therriault felt that the latitude should be retained. Vice Chair Bunde stressed that members could be changed every two years with the amendment. He pointed out that there has not been a need to change the membership of the Permanent Fund Board over the past 25 years. A roll call vote was taken on the motion. IN FAVOR: Moses, Williams, Bunde, Davies, Davis OPPOSED: Foster, Grussendorf, Phillips, Austerman, Therriault Co-Chair Mulder was absent from the vote. The MOTION FAILED (5-5). Representative Foster MOVED to report CSHJR 52 (JUD) out of Committee with the accompanying fiscal note. Representative Grussendorf OBJECTED. Representative Austerman stated that he shares some of Representative Grussendorf concerns, but that he would not vote to hold the bill in committee. A roll call vote was taken on the motion. IN FAVOR: Davies, Moses, Austerman, Bunde, Davis, Foster, Kohring, Williams, Therriault OPPOSED: Grussendorf Co-Chair Mulder was absent from the vote. The MOTION PASSED (9-1). CSHJR 52 (JUD) was REPORTED out of Committee with "no recommendation" and a fiscal impact note by the Office of the Governor, published 2/18/00.