HOUSE BILL NO. 464 An Act extending the termination date of the Board of Certified Real Estate Appraisers. PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT DIVISION, explained that the Division has done a review of the Board and has recommended its extension for a period of four years, to June 30, 2008. The Division has no operational recommendations for the Board. She noted that the licensing for real estate appraisers is found in the federal regulations in response to the congressional 1989 Financial Institutions Reform Recovery and Enforcement Act. The intent of the Act was twofold: to ensure that federally related transactions, or mortgages having involvement by Freddie Mac and Fannie Mae, would be completed by real estate appraisers who met minimum qualifications; and secondly, that the appraisals were conducted in compliance with uniform standards. Representative Foster asked how often the Board meets. Ms. Davidson was unsure, but thought it was twice a year. Representative Foster asked if the fiscal note reflected the Board's travel and per diem. Ms. Davidson explained that the Board's costs include licensing, the licensing examiner, travel and per diem, and costs related to investigative functions. Representative Foster asked if appraisers pay a licensing fee each year. Ms. Davidson answered that fees for occupational licensing are on a biannual basis. Representative Fate questioned why the revenue of the Board dropped from $77 thousand to $18 thousand in the year spanning 2001-2002. Ms. Davidson replied that it reflects the biannual licensing. The big influx of revenues during the year of licensing drops during the year it's carried forward. The Division has analyzed the Board on the cumulative 2-year basis when considering if the fee covers its costs. She referred to page 12 of the report (copy on file), noting that the schedule shows a cumulative deficit for the Board. Ms. Davidson pointed out that the renewal fees have been increased, which is expected to increase revenues by 45% to sufficiently address the deficit. RICK URION, DIRECTOR, DIVISION OF OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT, commented that the bill extends the Board. He brought up a housekeeping amendment for the committee's consideration. Co-Chair Harris pointed out that only the Co-Chairs had copies of the amendment. Co-Chair Williams advised that amendments must be provided to the committee the day before the hearing on a bill. Mr. Urion explained that the bill's sponsor didn't know that the bill would be heard in the committee today. Co-Chair Harris MOVED to ADOPT Amendment 1. Co-Chair Williams OBJECTED. Co-Chair Williams announced that HB 464 would be moved to the bottom of the calendar. HOUSE BILL NO. 464 An Act extending the termination date of the Board of Certified Real Estate Appraisers. Co-Chair Williams noted the previous motion on Amendment #1, and he asked Mr. Urion to explain the amendment. RICK URION, DIRECTOR, DIVISION OF OCCUPATIONAL LICENSING, DEPARTMENT OF COMMERCE & ECONOMIC DEVELOPMENT, explained that the proposed amendment attempts to solve a long- standing issue with the Department. The amendment was in a bill that the Governor intended to introduce last session before other legislation assumed priority. The amendment is not currently in a bill. Mr. Urion said that the Division of Occupational Licensing is mandated by law to charge fees for any profession that it licenses, and the fees cover the costs of regulation. It has been assumed that fines for professional violations are included in those fees, but Mr. Urion pointed out that the law does not allow for this. Although the collected fines have always been divided among occupations, the Division has been told that it cannot use those fines under the current ethics law, and that it may be in violation of that law. Mr. Urion continued explaining that the proposed amendment allows the division to continue its practice, and every licensed professional in the state supports it. He explained that disciplinary action involving hearing officers, investigators and attorney generals is one of the biggest expenses borne by each profession. He said that it only seems fair that the professions should also reap the benefits of the fines arising from those actions. He noted that the annual average is $66 thousand, and the licensing of thousands of people reaps a tiny benefit. The amendment would allow the Division to take the fines it collects from a profession and add them to the fees charged for the license. Amendment #1 reads: 23-LS1706\A.1 Mischel A M E N D M E N T OFFERED IN THE HOUSE BY REPRESENTATIVE SAMUELS TO: HB 464 Page 1, line 2, following "Appraisers": Insert "; and relating to occupational licensing fees  and receipts" Page 1, following line 3: Insert new bill sections to read:  "* Section 1. AS 08.01.065(c) is amended to read: (c) The [EXCEPT AS PROVIDED IN (f) - (i) OF THIS SECTION, THE] department shall establish fee levels under (a) of this section so that the total amount of fees, together with the fines and penalties collected for all occupations regulated by a board [AN OCCUPATION] approximately equals the total actual [REGULATORY] costs of the board and the department for  all occupations regulated by that board [FOR THE OCCUPATION]. If the department regulates more than one  occupation under another chapter of this title, the  department shall establish the fee levels so that the  total amount of fees, together with the fines and  penalties collected by the department for all  occupations regulated by the department under that  chapter, approximately equals the total actual costs of  the department for all of the occupations regulated by  the department under that chapter. The department shall annually review each fee level to determine whether the [REGULATORY] costs for the relevant  occupations [OF EACH OCCUPATION] are approximately equal to the fines, penalties, and fee collections related to those occupations [THAT OCCUPATION]. If the review indicates that the fines, penalties, and [AN OCCUPATION'S] fee collections [AND REGULATORY COSTS] are not approximately equal to the costs for the  relevant occupations, the department shall calculate fee adjustments and adopt regulations under (a) of this section to implement the adjustments. In January of each year, the department shall report on all fee levels and revisions for the previous year under this subsection to the office of management and budget. If a board regulates an occupation or group of occupations covered by this chapter, the department shall consider the board's recommendations concerning occupational [THE OCCUPATION'S] fee levels and [REGULATORY] costs before revising fee schedules to comply with this subsection. [IN THIS SUBSECTION, "REGULATORY COSTS" MEANS COSTS OF THE DEPARTMENT THAT ARE ATTRIBUTABLE TO REGULATION OF AN OCCUPATION PLUS (1) ALL EXPENSES OF THE BOARD THAT REGULATES THE OCCUPATION IF THE BOARD REGULATES ONLY ONE OCCUPATION; (2) THE EXPENSES OF A BOARD THAT ARE ATTRIBUTABLE TO THE OCCUPATION IF THE BOARD REGULATES MORE THAN ONE OCCUPATION.]  * Sec. 2. AS 08.01.065(f) is amended to read: (f) [NOTWITHSTANDING (c) OF THIS SECTION, THE DEPARTMENT SHALL ESTABLISH FEE LEVELS UNDER (a) OF THIS SECTION SO THAT THE TOTAL AMOUNT OF FEES COLLECTED BY THE STATE BOARD OF REGISTRATION FOR ARCHITECTS, ENGINEERS, AND LAND SURVEYORS APPROXIMATELY EQUALS THE TOTAL REGULATORY COSTS OF THE DEPARTMENT AND THE BOARD FOR ALL OCCUPATIONS REGULATED BY THE BOARD.] The department shall set [THE] fee levels under (a) of this  section [FOR THE ISSUANCE AND RENEWAL OF A CERTIFICATE OF REGISTRATION ISSUED UNDER AS 08.48.211] so that the fee levels are the same for all occupations regulated by the State Board of Registration for Architects,  Engineers, and Land Surveyors under AS 08.48 [BOARD].  * Sec. 3. AS 08.01.065(g) is amended to read: (g) [NOTWITHSTANDING (c) OF THIS SECTION, THE DEPARTMENT SHALL ESTABLISH FEE LEVELS UNDER (a) OF THIS SECTION SO THAT THE TOTAL AMOUNT OF FEES COLLECTED BY THE DEPARTMENT FOR ALL OCCUPATIONS REGULATED UNDER AS 08.11 APPROXIMATELY EQUALS THE TOTAL REGULATORY COSTS OF THE DEPARTMENT FOR ALL OCCUPATIONS REGULATED BY THE DEPARTMENT UNDER AS 08.11.] The department shall set [THE] fee levels under (a) of this section [FOR THE ISSUANCE AND RENEWAL OF LICENSES ISSUED UNDER AS 08.11] so that the fee levels are the same for all occupations regulated by the department under AS 08.11.  * Sec. 4. AS 08.01.065(i) is amended to read: (i) [NOTWITHSTANDING (c) OF THIS SECTION, THE DEPARTMENT SHALL ESTABLISH FEE LEVELS UNDER (a) OF THIS SECTION SO THAT THE TOTAL AMOUNT OF FEES COLLECTED BY THE DEPARTMENT OF COMMUNITY AND ECONOMIC DEVELOPMENT FOR SPECIALTY CONTRACTORS, HOME INSPECTORS, AND ASSOCIATE HOME INSPECTORS APPROXIMATELY EQUALS THE TOTAL REGULATORY COSTS OF THE DEPARTMENT FOR THOSE THREE REGISTRATION CATEGORIES.] The department shall set [THE] fee levels under (a) of this section [FOR THE ISSUANCE AND RENEWAL OF A CERTIFICATE OF REGISTRATION ISSUED UNDER AS 08.18] so that the fee levels are the same for specialty contractors, home inspectors, and  associate home inspectors under AS 08.18 [ALL THREE OF THESE REGISTRATION CATEGORIES] and so that the fee level for a home inspector with a joint registration is not different from the fee level for a home inspector who does not have a joint registration. In this subsection, "joint registration" has the meaning given in AS 08.18.171." Page 1, line 4: Delete "Section 1" Insert "Sec. 5" Page 1, following line 6: Insert new bill sections to read:  "* Sec. 6. AS 37.05.146(c)(24) is amended to read: (24) receipts of the Department of Community and Economic Development under AS 08.01.065 and from  fines and penalties collected in licensing and  disciplinary actions for occupations under AS 08.01.010 [AS 08.01.065(a), (c), AND (f)];  * Sec. 7. AS 08.95.920 is repealed." Co-Chair Harris questioned how it would differ from the courts' decision that their collected fines go directly to the General Fund to be appropriated by the Legislature. TAPE HFC 04 - 66, Side B    Co-Chair Harris continued, asking for clarification that when the Division imposed a fine, the fine returns for use by the Division rather than appropriation by the Legislature. Mr. Urion affirmed. PAT DAVIDSON, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT DIVISION, replied that Mr. Urion brought up an issue that concerns the Legislative Audit Division relating to including the fines. She noted that there are a couple of boards with fewer than 30 licensees, and a fine of a couple thousand dollars spread across only 25 or 30 licensees would mean a benefit of only a couple hundred dollars to the board which decided to impose the fine. The concern is that a combination of a certain board and a certain fine could raise questions about the Executive Branch Ethics Act. With regard to the concern about other statutes, Ms. Davidson said it is her understanding that imposing a fine must take place through a due process conducted by an unbiased individual. Otherwise, it may end up in court on the allegation that the board can't impose a fine that is so high that the board may appear to benefit from it. Ms. Davidson said that those are the only arguments she has heard with respect to including the fines in the calculation of the fees. Co-Chair Harris asked what the fines are imposed for. Mr. Urion replied that it's varied and includes unlicensed practice and drug and alcohol abuse. In response to a question by Co-Chair Harris, Mr. Urion answered that fines are not imposed for criminal activity. The people who are licensed pay enforcement. Co-Chair Harris asked if there is an unbiased or neutral way these fines could be appealed. Mr. Urion explained that a hearing officer makes the decision, the board says "yea" or "nay," and the defendant can accept it, or reject it and take it to the next higher court. Co-Chair Harris asked who pays for the legal fees if it is taken to the next higher court, and if the state reimburses the legal costs if the person is found innocent. Mr. Urion replied that to his knowledge, it has never happened before. In response to a question by Co-Chair Harris, Mr. Urion replied that the cases taken to higher court have never prevailed. The hearing officers' decisions are extremely well written and thorough. He gave the example of a recent $20 thousand fine in the real estate industry, and said that the defendant accepted it. He stated that the infraction had been going on for years, and it was the highest fine ever levied. In response to a question by Co-Chair Harris. Mr. Urion explained that Amendment #1 applies to all the boards and commissions of every profession. Representative Hawker commented that the bill seems to change the character of how the state assesses occupations, from the individual to the collective. He asked if that is the intent. Mr. Urion replied that it is current practice, and would allow an apprentice to pay less than a licensee. Representative Hawker thought that the bill indicates that occupations are regulated by an individual board, and would have to meet the costs of that board. Mr. Urion said that is true. Representative Stoltze expressed concern that the amendment has merit as a stand-alone bill, and he didn't want to see the bill extending the real estate appraisers bogged down with this amendment when the administration has the ability to introduce it through the Rules Committee. It's a policy consideration. Co-Chair Williams stated that it was not his intention to move the bill today. Mr. Urion responded to Representative Stoltze, explaining that he had brought the amendment before Labor & Commerce Committee, and the Committee wanted to move the bill and let Finance make the decision. He would have introduced it in a bill if he could have. Co-Chair Harris asked how long the bill has been sitting in Co-Chair Williams's office. Mr. Urion was unsure. Co-Chair asked why the amendment was not incorporated into a Finance Committee Substitute through the office of the Co-Chairman. Mr. Urion apologized, and said that he tried to do it through the sponsor who was wary of killing the real estate appraisers bill. He asserted that this is an appropriate vehicle and title, and that every licensed profession supports the amendment. Co-Chair Williams expressed concern that the committee members did not have the amendment earlier, and he suggested that Mr. Urion talk to the Finance members individually. HB 464 was heard and HELD in Committee for further consideration. ADJOURNMENT The meeting was adjourned at 2:40 P.M.