HOUSE BILL NO. 254 "An Act extending the termination date of the Big Game Commercial Services Board; and providing for an effective date." 1:46:51 PM STEVE HANDY, STAFF, REPRESENTATIVE LOUISE STUTES, read from a prepared statement: What the bill does: · House Bill 254, An Act extending the termination date of the Big Game Commercial Services Board and providing for an effective date, extends sunset date of the Big Game Commercial Service Board's (BGCSB) three years from June 30, 2016, to June 30, 2019. Who the BGCSB is: · The BGCSB is staffed by the Division of Corporations, Business and Professional Licensing and consists of; · two licensed Registered Guide · two licensed Transporters · two private landholders · two public members · one member from the Board of Game. What the BGCSB does: · The BGCSB provides a legislative command to assist in resource conservation and consumer protection. The Board develops professional and ethical standards, administers exams, makes final licensing decisions and takes civil action against persons who violate regulations. · Board members are appointed by the Governor and confirmed by the Legislature. Why should the BGCSB be extended? The Board's regulated professions include Assistant Guides, Class Guide Guide According to the report titled "Economic Impacts of Guided Hunting in Alaska" prepared for the Alaska Professional Hunters Association by McDowell Group, a research and consulting firm; · Guided hunting in Alaska accounted for a total of 2,210 jobs and $35 million in total labor income in 2012, including all direct, indirect and induced impacts. · Guided hunting generated a total of $78 million in economic activity in Alaska in 2012. · Guided hunters purchased nearly $2 million in hunting license and game tags. Due to oversight by the legislature, the Board was allowed to sunset before and this caused catastrophic effects. It was the sunset that contributed the financial difficulties reflected in the Legislative Audit before you. However, in December, 2015, the board was reinstated by the legislature. The Big Game Commercial Services Board is essential to the safety of hunters, guides and transporters coming to Alaska to harvest our natural resources and to the management of the resource itself. Please consider and pass HB 254 to secure the BGCSB. We have present Fred Parady, Deputy Commissioner of Department of Commerce, Community, and Economic Development and Sam Roher, president of Alaska Professional Hunter Association, and Eddie Grasser with the Alaska chapter of the Safari Club International to answer specific questions. 1:50:10 PM Representative Wilson asked for more details about when the Board sunsetted and the potential fiscal impact. Mr. Handy deferred to Mr. Parady. Co-Chair Thompson encouraged committee members to continue with questions and he would invite Mr. Parady to the table shortly. Representative Kawasaki asked when it sunsetted. Mr. Handy responded that it sunsetted in 2005. Representative Munoz remarked that there was legislation moving through the process that would increase hunting and licensing fees. She asked whether that legislation would bring in revenue sufficient to cover the deficit. If not, was the issue addressed with the bill sponsor. Mr. Handy again differed to DCCED. Co-Chair Neuman had received comments from Resident Hunters of Alaska and other groups that opposed the extension primarily because of charging transporters costs that might have been incurred by big game commercial services. The legislation also applied to people who carried non- transporters. He read from a statement prepared by Resident Hunters of Alaska: "…not all air carriers who transport hunters to and from the field choose to be a "transporter," in fact many of the major air-taxis who fly hunters are not "transporters" - are requesting the new fees for mandated transporter hunt activity reports…" Co-Chair Neuman remarked that they would be charged new fees that mandated transporter hunter activity reports. He suggested that other Alaska Airlines, Frontier, and Reeves transported hunters. He wondered if they would be required to pay the fees. He asked for details regarding the discrepancies. Mr. Handy deferred to the experts at DCCED. Co-Chair Neuman was not certain if he received the right answer. Mr. Handy conveyed that he did not have the answer and referred to the experts. Co-Chair Neuman asked who would also be addressing the bill before the committee. Co-Chair Thompson would bring up others in the room and online. He reviewed the list of available testifiers. Co-Chair Neuman had just been asked by one of his constituents about the issue. He asked how many registered guides were in the State of Alaska and how many guides and transporters were members of the Alaska Professional Hunters Association. Mr. Handy thought it was over 1000. He had other individuals that could provide specific numbers. Co-Chair Thompson invited Mr. Parady to come forward. 1:54:02 PM FRED PARADY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC DEVELOPMENT, spoke in support of HB 254 to extend the sunset date for the BGCSB. He expressed the department's appreciation for the valuable insight provided to the department by the Legislative auditor and her staff for process improvements. In looking at the 2015 audit by the Division of Legislative Audit there were strong words of support provided to the board. Amongst the findings were that the board had provided reasonable assurances that licensees were qualifies and that the board's regulation and licensing benefitted public safety and safeguarded Alaska's wildlife. In light of the deficit, the department recommended a 3-year extension to 2019. The division's audit had 4 recommendations. The first was that the department improved its public notice process. The Department of Commerce, Community and Economic Development had completed the process by rewriting its policies, improving its checklists, and shifted responsibility for notifications to one person to ensure accountability. The second recommendation concerned investigations. There were currently approximately 70 cases before the board in the context of investigations. He mentioned that Angela Birt, Section Chief, was in charge of the investigative unit for all professions had insured that the gap in inactivity in an investigation was less than 60 days. It was part of her performance evaluation for each of her investigators. The department had created a system to sustain electronic contact when guides were in the field and created standard operating procedures. The department created a tickler file to send out reminders if there was inactivity for 30 days. Often the sources of inactivity were awaiting action by some other agency so that the investigation was momentarily on hold. The department had also created a sanction matrix that guided the implementation of investigations. Mr. Parady continued with the third recommendation by the Division of Legislative Audit which was to increase fees. The fees were increased for the 2015 2-year renewal cycle and were increased again for the 2017 cycle, part of what was drawing the question from the transporters. He was happy to report that whereas the deficit of the board was $1.1 million on June 30, 2015, it decreased by $896 thousand as of December 31, 2015. It was a decrease of $225 thousand in the current licensing cycle. He anticipated that the debt would be reduced by $535 thousand and would be eliminated in the subsequent 2-year cycle. The board was operating in the black at present and was working towards erasing its deficit. The fourth recommendation had to do with a transportation licensing update, the work of which had been accomplished. Mr. Parady emphasized the need for the board in order to direct the associated profession. Because of their unique insights into their activities the board provided assistance to the public, the state, the DCCED, and to the Division of Corporations, Business and Professional Licensing (DCBPL). In stepping back to the 30 thousand foot view, guides in this sort of activity as part of the tourism industry were a bright spot in the state's economy. He concluded his comments by noting that licensing would not go away even if the board did. The issues that came before the board were complex and the department appreciated the board's expertise in guiding the profession. He was ready for questions. 1:58:23 PM Representative Wilson wanted to understand how the board sunsetting caused the current deficit. Mr. Parady did not know all the details due to when he started as deputy commissioner. His general understanding was that the department did not have the board's expertise and insight guiding how to proceed with investigations in terms of knowing what was worthy of investigation and how to spend investigative resources. A second problem was noted in the audit that the deficit situation was made worse by about $236 thousand (Page 11 of the audit report) because the indirect cost allocation methodology that was corrected following a special audit in 2011. Representative Wilson asked for the fee increase information. Mr. Parady would provide a copy of the increases which occurred in 2015 and 2017 on a bi-annual cycle. He added that in 2017 the average increase was 31 percent. There was also a new records fee and a new transporter fee of $50 - a fee to help draw monies associated with specific activities and to spread the load to erase the deficit. Representative Wilson was concerned with the bill and was aware of guides that had been investigated. She was trying to understand whether the deficit resulted from something that had happened and the indirect costs or whether the DCCED had conducted investigations that should not have occurred. She provided an example. A fellow was charged and went to court. He was found not guilty and the department paid over $80 thousand trying to prosecute him. It was her understanding that the cost of $80 thousand was then passed on to other guides in the form of increased fees. She thought only those found guilty should have to pay the fees. She asked whether there was a provision that protected guides that did the right thing. Mr. Parady responded that her question was germane. It was a conflict that confronted the department in all of the DCBPL statues where the department was directed by the legislature to balance each profession within its fee structure when there was already a regulatory function in place for the general benefit of citizens of Alaska and perhaps should come from the general fund. He suggested that she would run into her questions that she had broached across any range of state activities where investigation took place. Some investigations did not result in a guilty conviction and therefore she was suggesting that they should not return to the board. However, the decision to conduct the investigation, the rules that governed the profession, and the need for the investigation rested within the profession. Unless there was a place to divert the costs they would be carried by the profession. 2:02:33 PM Co-Chair Thompson commented that the bill was only to extend the board rather than to address fees. Representative Wilson contended that if the department was performing undue investigations and putting the cost onto the board it was something that needed to be changed. For instance, in the audit report on Page 14, under "contractual" the state went from $94 thousand in FY 12 to $172 thousand, to $188 thousand. She assumed "contractual" had to do with investigator services. She wondered if she was correct. Co-Chair Thompson relayed that Ms. Curtis from the Division of Legislative Audit would be testifying following Mr. Parady's testimony. Mr. Parady was unsure of the contractual line item Representative Wilson was referring to. He thought that the Department of Law's services were covered through an interagency receipt. Representative Wilson was concerned that additional costs were being passed to guides through the board. She felt it was relevant and expressed misgivings about increasing fees such that it would discourage guides from participating in the industry. Representative Kawasaki referred to Exhibit 2 on page 14 of the BGCSB Audit produced by the Division of Legislative Audit (copy on file). He pointed to the personal services line between $250 thousand to $300 thousand the past couple of years. He also pointed to Exhibit 3 on page 18 where it showed the total number of licenses issued. The exhibit showed 111 total licenses issued in FY 12, 141 in FY 13, 157 in FY 14, and 119 in the following year. He was uncertain of the costs, time, and effort to process the renewals. He mentioned talking earlier in the day about the Board of Barbers and Hairdressers reporting that 1000 manicurists needed licenses. He thought it seemed like for that board it would take a significant amount of time to process renewals. He wondered how much time it would take for BGCSB to process its renewals. Mr. Parady responded that the activities in each of the licensee groups that were mandated in statute varied broadly. In dealing with Manicurist's licensures, for example, there were substantial health issues. He explained that for big game outfitters several times a year the department administered extensive tests for guides to be in the field. The cost of administering those tests would not necessarily exist for another profession. There were 43 professions that were licensed; 21 that had boards and 22 that did not. Licensing varied widely depending on the profession. Representative Guttenberg was concerned with administrative and legal costs associated with legal actions. He wondered if the department would be responsible for initiating charges if there was not a board. Mr. Parady responded in the affirmative. He supposed that costs would be borne by a particular profession if the "bad actors" in that profession were unlicensed and generated an investigation. ON a lighter note, he reported that in the two years of his tenure he had a case where a chiropractor treated a horse. There was a question about whether it was a violation of chiropractic or veterinary practice. It turned out to be a violation of veterinary practice. Representative Guttenberg thought Mr. Parady had answered his question about whether charges went back to the license holder, independent of whether the board existed. Vice-Chair Saddler asked, in the years which there was a deficit in the expenses of the board for investigations, if they were made up from the general fund. If not, he asked him to identify the funding source. Mr. Parady believed it remained within the DCBPL, a receipt-supported agency. He would confirm his answer later. Vice-Chair Saddler was unclear about Mr. Parady's answer. He suspected that investigators received payment for their services. He asked if it came out of the DCBPL's budget in which the legislature appropriated from the general fund. Mr. Parady responded that he needed to confirm his response. He explained that DCBPL operated within its budget, operating in the black. The agency was receipt- supported and did not received a general fund appropriation. Vice-Chair Saddler asked if the deficit was a result of ongoing receipt deficits from those individuals paying fees or if it was historical deficits from the past. Mr. Parady indicated that the board was currently operating in the black. The deficit was generated from the past. He clarified that he was referring to the rolled up DCBPL, receipt-supported in aggregate. Representative Gara mentioned that when he worked for the Office of the Attorney General there were a couple of attorneys he worked with. One of them handled criminal cases going after people that had committed game violations and one who handled civil cases going after penalties from people (some of them guides) who engaged in game violations. He asked if Mr. Parady's department received bills from the attorney general's office when it handled such cases. Mr. Parady would have to get back to Representative Gara with an answer. Representative Gara suggested fines would be collected as well. He wondered if the fines came through Mr. Parady's office. Mr. Parady stated that fines typically went into the general fund rather than their source. He would have to do some research and get back to Representative Gara. Representative Munoz asked about the criteria for beginning an investigation. Mr. Parady could provide a guide handout on the investigation matrix. Co-Chair Thompson asked that a copy be given to his staff to be dispersed. 2:11:54 PM Co-Chair Neuman agreed that the state needed the BGCSB to oversee guides and transporters. His concerns had to do with some of the recommendations that were provided by the Division of Legislative Audit. He referred to Page 33 of the audit for the BGCSB which was the response from DCCED. He pointed to Recommendation 3 which talked about how the program had a known deficit in 2011 and after a legislative inquiry into the division's proposed necessary fee increases for the program, the decision was made not to pursue a fee increase at the time. He summarized that the board had been encouraged to increase its fees which the board had refused to do. It appeared that the board was looking at a modest increase. He asked what fees would have to be increased in order to reduce the deficit. He also wondered why the board had not taken any action at present. Mr. Parady thought that it was a historical description of the board's unwillingness to act in 2011. The board had enacted two full rounds of fee increases in 2013 and in 2015. He had a 1-page summary which he would share with staff. The increases were typically 31 percent. Some of them were 14 percent. The board was trying to keep the costs lower on the newer members coming into the profession. The most recent round of increases was 14 to 31 percent. 2:14:34 PM Co-Chair Neuman had no idea about what the percentage was applied to. Mr. Parady provided two examples. A new master guide license for a resident was $650 and for a non- resident it was $1350. After the fee increase the cost of a resident license would be $850 and for a non-resident it was $1700 - both numbers reflected a 31 percent increase. Co-Chair Neuman asked if the air transport industry would be charged additional fees. Mr. Parady would provide a written answer to his question. In general, he understood the transporter fee was $50 for transporting a big game animal. It was unclear to him as to whom might transport an animal that was not a registered transporter versus who had to be registered. Co-Chair Thompson invited Ms. Curtis to the table. KRIS CURTIS, LEGISLATIVE AUDITOR, ALASKA DIVISION OF LEGISLATIVE AUDIT, relayed that there was information in the audit report that would answer many of the questions that were asked earlier. She would first address Representative Wilson's questions concerning fees. She relayed that in the appendix of the audit there was historical information by license including the proposed fee at the time of the audit in the previous summer. There was a question regarding personal services and contractual information in Exhibit 2. There was a question about what was "contractual." She confirmed that Department of Law was included. The board could also hire experts for certain cases and could be found on the contractual line and it varied by investigation. She had heard some questions about what drove the investigative costs. She responded that her audit found that there was a high case load for the particular occupation. When Legislative Audit tested the timeliness of the investigations they found 17 out of 25 cases that were reviewed had periods of inactivity ranging from 5 months to 5 years. There were several cases that were not being addressed in a timely manner. There were some changes made including adding a dedicated investor to the board to help address some of the backlog. Ms. Curtis continued with her response. She addressed the questions about the number of licensees. Representative Kawasaki drew attention to Exhibit 3 on page 18 of the audit. She noted that in comparing the current audit to the one completed in 2011 overall there was a 13 percent decrease in the number of licenses (found in the footnote). Various types of licensees decreased to different rates and could be found in the exhibit. Ms. Curtis next addressed the most controversial recommendation of the audit having to do with the $1 million deficit. She had heard allegations that it was the sunset itself that caused the deficit. She did not know where the information was coming from. It was not something the audit concluded. She explained that when the occupation sunsetted, the occupation was still regulated by the department and would still incur costs that would have become part of the new deficit at the time the board was created. When her division did the audit in 2011 it identified the deficit at that time of $376 thousand. If the state did not reduce expenditures and increase revenues the deficit would increase. After that point the division changed its cost allocation methodology which increased the deficit by over $200 thousand. They tried to increase fees in 2012. There was a great amount of push back from the industry. Their proposed increases were over 60 percent. The occupation objected and ultimately the fees were not increased in FY 12. There were fewer licenses bringing in revenue to share the costs. She concluded that she had just listed the major contributors. Fees were increased in FY 14 but at that point the increase in revenues were not covering the costs. 2:20:43 PM Representative Wilson was concerned about payments being received without a board in place. Ms. Curtis responded that that the cost of investigating would be borne by the occupation regardless of whether they had a board. The process would be different, but the costs would be the same. Representative Wilson supposed a problem was brought to the board and the board decided whether to go forward with a complaint. She wondered, without a board, if the problem would be brought to someone else in the administration who would determine whether the complaint moved forward. Ms. Curtis explained how it worked. A complaint was brought forward to be investigated. The board was not involved with the investigation at all. Members had to keep an arms- length distance to be able to eventually rule on it. The complaint would be investigated and an attempt would be made to work out a consent agreement with the claimant. If an agreement was not successful there would most likely be a review of the evidence by an assistant attorney general and a determination would be made about whether there was enough evidence. The commissioner would subsequently file a complaint with the board. They would move forward to try to take the license away. She was uncertain whether the progress would happen without the board. Representative Wilson asked if legislation was necessary to enforce using the fees paid to the state to help offset the state's deficit. Ms. Curtis responded that it was definitely outside of the board purview. She was uncertain about the violation of dedicated revenues. Representative Wilson expressed her opinion that increasing the fees like the state had been would definitely have an impact. They were private business folk not making a profit and would likely stop their service. She thought it was important to know whether the problem was being made better or worse. Co-Chair Neuman asked what caused the $1 million deficit. Ms. Curtis responded that it was due to an untimely increasing of fees. If the fees had been increased appropriately at the first sign of a deficit, it could have been addressed more timely. In addition, the division changed its cost allocation methodology after it was found to be inappropriate in 2011. She relayed that over $200 thousand of the deficit was because of the indirect cost allocations. Mainly, though, it was due to untimely increasing fees. 2:25:15 PM Co-Chair Neuman thought he was hearing that $200 thousand of the $1 million deficit was because the department changed the fee schedule as opposed to the board self- regulating and increasing its own fees. Ms. Curtis referred to Exhibit 2 that showed that the department allocated indirect costs to boards such as electricity. There was a methodology of allocating the costs to the boards. In 2011, when Legislative Audit looked they found that it was not appropriate because certain divisions were not getting their appropriate allocation and the methodology was changed. They started allocating based on licensees by board, an equitable way of allocating it. They had to do some widespread adjustments which resulted in the BGCSB having an increase of over $200 thousand in its deficit. Co-Chair Neuman confirmed that it was due to changes from the department. Ms. Curtis responded affirmatively. 2:26:42 PM Co-Chair Thompson OPENED public testimony. 2:26:57 PM MARK RICHARDS EXECUTIVE DIRECTOR, RESIDENT HUNTERS OF ALASKA, opposed the legislation. He noted a letter previously submitted on April 1, 2016. There were several reasons the group opposed extending the BGCSB the main one being that the board had been involving itself in issues that affected resident Alaska hunters outside its purview. Speaking about financial matters associated with the board he wanted to address the board's ongoing debt and why the group did not believe the board would be able to fund itself in the black moving forward. He pointed out that whether there was a BGCSB the guide industry would continue being regulated. Guide licensing and examinations would still take place, complaints would still come in, and investigations would still occur. Not all occupational licensees had their own board but were regulated and overseen by the State of Alaska. If the board sunsetted the continual modification and changes to guide regulations would stop. The associated costs with such changes and the continual lessoning of guide ethics regulations that allowed big game guides to do things like spotting animals from the air with the intention of harvesting those animals would also stop. He pointed out that the new 3000 percent increase in fees to transporters was in large part how the board intended to pay off its debt by the end of FY 17. The new fees to transporters were not enshrined permanently. In the letter by his group and another letter from Seahawk Air owner, Roland Ruoss reported that shortly the board would be voting on reducing or eliminating fees to transporters. There was also the possibility that a forthcoming legal opinion could render the entire transporter category as it related to aircraft untenable and unworkable. The board would lose the fees to aircraft transporters permanently. He felt that the board needed to fund itself from the licensees as originally supposed to oversee as the guide board and as the legislature originally intended. Mr. Richards noted that the recent fiscal note that was given to the committee only showed the cost of meetings and did not reflect the other costs associated with the board such as administrative costs associated with changes to regulations or investigatory costs; the main source of the board's continued debt. He mentioned the McDowell report from the Alaska Professional Hunters Association that spoke to the income the guide industry generated across Alaska. He thought it was being used to bolster the need for the board to continue. He opined that the guide industry generated enough revenue that it should be able to fund its own board on the licensing fees of its licensees. He also relayed that the same report for the guide industry was also meaningless in terms of whether the guide industry needed the board to continue to function. He reiterated that the guide industry would not cease to exist if the board sunsetted. The question was whether the board could function in a manner that was beneficial to the state and the guide industry while being funded by its main licensees it oversaw. His group did not believe it could. He added that he had attended the BGCSB meetings for many years and heard guides complain about other guides abusing the system. He inquired about why the bad actors had not been dealt with. Complaints were filed with the Alaska State Troopers and with the board to no avail. He claimed that high investigatory costs were responsible for slowing down investigations and causing the board to sign consent agreements rather than bringing violators to the full brunt of the law. The consent agreements often allowed a guide to continue to operate. He surmised that the board could not function the way it was intended to function. His group would have no issue with the board if it would stay out of trying to affect resident hunters. He thanked committee members for their time. 2:32:56 PM SAM ROHRER, PESIDENT, ALASKA PROFESSIONAL HUNTERS ASSOCIATION, KODIAK (via teleconference), spoke in support of HB 254 to extend the BGCSB. He reported that currently there were approximately 304 active contracting guides in Alaska. He relayed that of the 304 active guides approximately half of them were members of the Alaska Professional Hunters Association. He signified that the board was critical to the long-term viability of the guiding industry. The board provided the only interaction between the division and the guiding industry. He supposed that without the board the industry had no meaningful input on the development of regulations that directly impacted the guiding industry. There were two specific issues he wanted to address. The first was the board's debt. He explained that it was important to note that some of the debt began to accumulate during the period of time when the board previously sunsetted. The current board inherited the debt which continued to increase due to investigations that the board had little or no input in. The situation had changed and the debt was well on its way to being retired. However, the debt would not go away even if the board disbanded. He claimed that without the board's oversight the debt would continue to grow and would continue to get charged back to the guide industry in the form of increased licensing fees. Mr. Rohrer continued by addressing a second issue. He pointed out that it was in the public's interest to have a well-regulated guide industry. An important aspect was the licensing of new registered guides. Under the current board, prospective guides went through rigorous testing including a written test and multiple oral tests taken in front of proctors made up of board members and currently licensed guides. During the period the board was sunsetted the registered guide test consisted of a multiple choice test and eventually with the test the answers became available online for a fee. He reiterated that without a board he did not believe it was possible to maintain the same level of testing and assumed the testing would return to the multiple choice test. He urged members to support HB 254. 2:35:56 PM PAUL CHERVENAK, SELF, KODIAK (via teleconference), spoke in favor of HB 254. He relayed that he was a 36 year resident and hunter of Alaska and was a licensed master guide and marine transporter. He believed in helping to develop standards and manage the industry to make it one of the safest and most professional there was. He opined that the BGCSB enabled it to happen. He also believed that hunters and commercial operators should help to pay for the industry they used. He supported the recent increase in license and reporting fees and urged members to support and move HB 254 out of committee. 2:37:01 PM DICK ROHRER, SELF, KODIAK (via teleconference), was introduced to the guide business in 1965 when he came to Alaska. He had been licensed as a guide since 1971. He was a master guide and served 2 terms on the BGCSB beginning in 2005 when the board was reinstated. He spoke of being a financial officer to the board. He was disappointed when he found out through accounting methods that $236 thousand of revenue disappeared in 2011. In the same year he had heard the deficit at the time was $376 thousand. Taking both figures into consideration if the revenue had been maintained there would not have been a concern with revenue or expenses. Another thing that happened when the board was reinstated was that the board encouraged the Department of Commerce, Community and Economic Development to implement a computer system to keep hunting records in order to have information readily available for the various agencies. During the time it was being put together the board thought it had commitments from federal agencies to provide $30 thousand to $40 thousand in revenue to go towards the project that would have generated substantially more revenue. The board was unable to figure out a way to transfer the money directly to the board. He responded to a question asked by Representative Kawasaki relaying that there were only 112 under the board. He thought the number reflected only the number of master guide outfitters. He anticipated approximately 500 additional registered guide outfitters and approximately 700 to 1000 more class "A" assistant guides. He did not know the number of transporters. He pointed out that it was not the board that set the fees but rather the DCCED. He commented that it was the legislature through the BGCSB statutes that established the transporter license, rather than the board. He also noted that, under the statutory definitions, air taxi operators who flew from point-to-point were exempt from the transporter licensing requirement. It was only those air transporters that advertised big game hunting services and charged a different fee for hunts were required to have a transporter license. Any other air taxi operator was exempt from the licensing requiring and exempt from the $50 that he was claiming. KELLY VREM, CHAIRMAN, BIG GAME COMMERCIAL SERVICES BOARD, SUTTON (via teleconference), testified in support of the bill. He relayed that the board was operating in the black. The legal costs that caused the debt were out of the board's control as Ms. Curtis had pointed out. The board could only react to the charges levied against guides or transports after they were made. The board decided the appropriate level of punishment but did not get to decide who to pursue in a violation. There were multiple ways to incur a violation. It could be completely inadvertent. Some examples included failing to file a form, failing to get official permission from a land manager, or overtly meaning to subvert the law. He relayed that the board currently treated people with the same hammer. He felt a more nuanced approach was needed and could only be attained after reaching a consent agreement or obtaining a conviction. He relayed additional challenges having to do with the division raising the fees. Although he favored raising them he claimed there had not been adequate public input prior to the department deciding to do so. He believed it was the only board that used volunteer proctors. 2:45:14 PM VIRGIL UMPHENOUR, SELF, FAIRBANKS (via teleconference), was in support of the board. He shared that the guiding industry was unlike any other in the state: it was the most regulated and had the highest standards. The board was needed to decide whether investigations went forward. He was very aggravated to see the DCCED violate Alaskans' constitutional rights. He also mentioned that investigators typically launched large investigations. He provided an occurrence in which a young guide turned himself in and was fined. He thought the board was needed to set standards and to eliminate bureaucratic bullying. He thought the transporters had been getting a free ride for too long. He thanked the committee. Co-Chair Thompson CLOSED public testimony. 2:49:29 PM Representative Wilson asked about setting the fees. She wondered if DCCED had not set the fees correctly. Mr. Parady responded that the calculation of fees across the department had confounded the DCCED for the past decade. They had been the subject of a legislative audit twice. Although the fee calculations were founded in mathematics as the auditor described, the original push to increase the fees was resisted by the board. The fee increase was generated by the regulation rule making authority of the DCCED, but it was done with the advice and recommendation of the board. The delay lead to the worsening of the problem. Currently, the board and the department had initiated two rounds of fee increases, the board was operating in the black, and the deficit would be erased. Representative Wilson interjected that a larger picture was at hand. She suggested that boards were mandated to cover their costs with no costs to the state. She thought the question the legislature should be addressing was whether the state should allow boards to continue if they were not self-sufficient. Boards having the ability to reject fee increases was an issue unto itself. Mr. Parady agreed that it was in statute that the fee balance in each profession had to be self-supporting. The art of the mathematical calculation was in the allocation of costs: the compilation of all of the detail. It was currently changing with the state's new accounting system and the department would be adapting further. Representative Wilson was not interested in moving the bill forward because of her concerns with the legislature breaking its own statute. She believed that because the board had a deficit it was not in compliance with the law. Mr. Parady offered that it was not the only board or profession in the same circumstance. He conveyed that in the audit report a revenue cycle was a 2-year period. For example, in the first year the revenue might be $350 thousand or $400 thousand. In the second year it might be $150 thousand. The department was trying not to send shock waves into the system in terms of correcting the deficit. The department was mindful of the statute and the statutory requirements. Representative Pruitt conveyed that the Division of Corporations, Business and Professional Licensing had been a giant mess for a while. It was not just the BGCSB. However, the BGCSB was the most expensive board due to investigations. As a result, it had the largest deficit. He reminded members that the legislature placed intent language in the bill directing the division to ensure that the state covered its costs. He recalled the Board of Real Estate raising its fees to cover costs and people were outraged. Subsequently, the costs were dropped down substantially. The legislation gave boards the ability to ensure their costs were covered relieving the department from having to do so. He thought boards would be in a better position going forward. Lastly, there was one board not covered by the statute being discussed: the Marijuana Board. He thought it would be a problem in the future. Co-Chair Thompson thought a future bill might be in order. 2:55:12 PM Representative Gattis noted that part of the problem for the BGCSB was that the fee structure was not increased when it should have been. She thought there also needed to be a change regarding investigations. She referred to a previous testimony in the meeting and offered that she might initiate a bill for consideration in the future. Vice-Chair Saddler reviewed one fiscal impact note from the Department of Commerce, Community and Economic Development. The appropriation was from the Division of Corporations, Business, and Professional Licensing. The Office of Management and Budget Component number was 2360, dated March 24, 2016 in the amount of $22.3 thousand for FY 17. Co-Chair Thompson relayed that the fiscal note he had was dated, April 1, 2016. Vice-Chair Saddler stood corrected. Representative Wilson asked why the deficits for the board were not reflected in a fiscal note. Co-Chair Thompson explained that the fiscal note reflected the amount of revenue that would be brought in, and the source from which it was being paid. It did not have deficits listed. However, there were reports from the DCCED that showed all of the boards and their deficits and overages. He would provide the information from the DCCED. Representative Wilson thought there should be a fiscal note that included an explanation of what the members had heard in the meeting. She thought it should reflect the fiscal impact. Representative Pruitt commented that the issue should be reflect on paper and was an accounting situation. He furthered that boards had borrowed from other boards to be able to pay the deficits previously. That was the reason the division was not in a deficit. He mentioned the Board of Nurses that brought in a substantial surplus. The surplus had been borrowed to pay for some of the deficit costs. He did not believe including it in a fiscal note was the proper way to address the issue. He asserted that it was a clustered problem triggering two audits. Many legislators had expressed frustration. 3:00:02 PM Representative Wilson thought there should still be a fiscal note from the Boards and Commissions that reflected the accounting of each board. The fiscal note was not reflective of the bill. Co-Chair Thompson mentioned that Mr. Parady and Ms. Curtis had reported the deficit of the board and explained that the amount of fees resulting from licensure would catch them up by FY 17 bringing the board into the black. Representative Pruitt indicated there was a difference between a board and the programs. All the bill was doing was extending the board. He asserted that the board had a $22.3 thousand cost. He suggested separating the two. Vice-Chair Saddler suggested that when the House Finance Committee was considering a board extension it should request that a statement of the balance of the deficit or credit for their investigations be included in the information packets for members. He referred to a comment Mr. Richards had made a comment about a pending legal decision regarding transporters. He wanted to know more about it. Co-Chair Thompson wondered if it was something that could be discussed because it was currently a pending court case. Vice-Chair Saddler was unsure. Co-Chair Thompson did not want to bring the issue up again but suggested addressing it on the House Floor. Vice-Chair Saddler withdrew his question. Co-Chair Neuman MOVED to REPORT HB 254 out of committee with individual recommendations and the accompanying fiscal impact note. There being NO OBJECTION, it was so ordered. HB 254 was REPORTED out of committee with a "do pass" recommendation and with a new fiscal impact note by the Department of Commerce, Community and Economic Development. 3:03:50 PM AT EASE 3:07:26 PM RECONVENED