HOUSE BILL NO. 91 "An Act relating to fees for certain persons filing disclosure statements or other reports with the Alaska Public Offices Commission; relating to a tax on legislative lobbyists; and providing for an effective date." 1:33:59 PM REPRESENTATIVE SAM KITO, SPONSOR, shared that the intent of the legislation was to help provide the resources needed by the Alaska Public Offices Commission (APOC) to do the work of protecting the public interest by being able to have receipts to support their operations. He said that the bill reflected and estimated level of receipt collection of approximately $250 thousand; the receipts collected in past years had been as much as $113 thousand. He said that the commission could only charge fees as identified in statute; current fees for registration for each lobbyist client was $250, which generated $113 thousand per year. He relayed that the commission had struggled to maintain staff to provide necessary audits. Auditing each campaign and each lobbyist was time consuming and sometimes resulted in accumulating penalties, which were then forgiven because the accumulation occurred under circumstances beyond the auditees control. The additional receipt authority would help to support operations and would aid in righting the state's fiscal situation. 1:37:10 PM Vice-Chair Gara understood the additional revenue the bill would raise, and he supported the bill. He believed the bill would enable the commission to hire staff to operate APOC efficiently. He surmised that implementation of the bill would raise the cost of running the commission to $245 thousand per year. Representative Kito replied that at present there was receipt authority available to the commission of up to $145,000. He stated that providing the receipt authority would not give the commission excess authority and the commission would still need to present to the legislature before adding additional staff. Currently, the commission did not have the authority to be able to generate additional revenue. 1:39:27 PM Co-Chair Foster noted that Representative Guttenberg and Representative Pruitt had joined the meeting. Vice-Chair Gara understood the bill would increase the receipt authority of designated general funds (DGF). He asked about the $220 thousand under Personnel Services on the fiscal note. CRYSTAL KOENEMAN, STAFF, REPRESENTATIVE SAM KITO, answered that the fiscal note indicated that funding was necessary on the personal services line to decrease the vacancy in APOC; by reducing the vacancy they would be able to better provide service to the public. Representative Wilson asked whether the money funds would be DGF. 1:41:26 PM Representative Kito answered that the funds would be DGF and made available to the level of the APOC. He added that the if fund exceeded the costs of facilitating the program, they could return to the legislature for an audit of the program. Representative Wilson asked about the agency's current receipt authority. She asked whether the bill would increase the amount of receipt authority. Representative Kito responded increasing the receipt authority would allow APOC to decrease the amount of general fund that they were expending. Representative Wilson wanted to make sure that the money from an increase in the fees would be used as the legislation intended. She referred to Page 1 of the bill and asked about "non-group" entities and how much they would pay in registration fees. Representative Kito answered that all entities would pay the same registration fees. Ms. Koeneman elaborated that any non-group entity with an annual operating budget of $250, or less, would be exempt. They would be able to fundraise to take in additional monies but if their annual operating expense was under $250, they would be exempt. Representative Wilson understood that the language did not pertain to volunteer groups, without operating expenses. Ms. Koeneman replied in the affirmative; the language included personal services and office space. Representative Kawasaki spoke to people that may not have the ability to pay if the fee was increased. He wondered whether the fees could be waived. 1:45:27 PM Representative Kito answered that there was a currently a process whereby a candidate could file an exempt campaign where they were not subject to any of the fees that applies to candidates. He understood that the election filing fee would still need to be paid but they would be exempt from paying the registration fee to APOC. Representative Kawasaki asked for clarification on the answer from APOC. HEATHER HEBDON, ALASKA PUBLIC OFFICES COMMISSION, ANCHORAGE (via teleconference), asked for Representative Kawasaki to repeat the question. Representative Kawasaki complied. Ms. Hebdon replied that there was a provision in statute that allowed for an exempt campaign; campaigns that had limited financial activity of less than $5,000 during the duration of the campaign could file an exemption statement and not have to report. She said that the exemption was not available on a statewide level and only applied to a municipal or judicial retention candidate. Representative Kawasaki asked whether anyone had ever come to APOC wanting to file but had been unable to pay the filing fee. Ms. Hebdon answered that it was a new fee, which meant that there was not history of such a circumstance. 1:48:05 PM Representative Ortiz asked whether there had been a further reduction in appropriated APOC funds since FY16. Ms. Hebdon replied that the agency had received a cut in program authority the previous session, from $242.6 million to $143.3 million. She said that the fees had been unrealized as there had not been fees in statute to allow receipt authority up to the full $242.6 million. Representative Ortiz surmised that the agency had remained flat funded since FY16, and receipt authority had been reduced for receipts that had never been collected anyway. Ms. Hebdon answered in the affirmative. Representative Ortiz asked how long the current $250 lobbying registration fee been in place. Ms. Hebdon did not know the origination date, but the fee had been increased to $250 in 2003. 1:50:25 PM Representative Guttenberg offered a hypothetical of someone exceeding the $250 in operating expenses, but in in-kind donations, he wondered where this would fit in under the bill. Ms. Hebdon did not believe the hypothetical was the proper definition of non-group entity. She said a non-group entity was defined as a person, other than an individual, whose primary purpose was to influence an election. Those people had to meet certain criteria and could not participate in business activities, they did not have shareholders and were independent from the influence of business corporations. She said that to her knowledge only one non- group entity had ever registered with APOC, but that Citizens United had rendered the definition obsolete and groups no longer had to go through the steps to achieve non-group status, instead they registered as an entity and could make unlimited independent expenditures. 1:52:46 PM Vice-Chair Gara did not believe in holding a bill for a technical question that could be fixed on the floor. He pointed to an exemption on Page 2, line 3 for municipal office holders. He surmised that APOC did not have a fee for Tribal office holders. Ms. Hebdon answered that the office did not regulate Tribal elections. Vice-Chair Gara surmised that village office holders would not be charged a fee. Ms. Hebdon answered in the affirmative. Vice-Chair Gara spoke to the fee for a lobbying contract. He understood that the fee was for each contract and not per lobbyist. Ms. Hebdon replied in the affirmative; the fee was per client. Representative Wilson surmised that a group of volunteers that raised $3,500 for a local election would be charged the same fee as a larger organization that raised tens of thousands of dollars. Ms. Hebdon answered in the affirmative. Representative explained that the fee was not a tax. He said registering to participate in the process would cost the same for small or large entities. He said that the fee was nominal at $100 and would not apply to those who qualifies for an exemption. Representative Wilson thought that the tier for lobbyists was questionable. She asked whether it would take longer for APOC to track a donation of $100,000, rather than $4,000. 1:57:25 PM Ms. Hebdon answered that the amount did not necessarily change the number of reports submitted, but it changed the amount of audit hours tracking the transactional history. Representative Wilson asked why the amount had been selected for the lobbyist tiers. Representative Wilson answered that the lobbying side began at $250 per client. He believed that the $100 was nominal, but $250 was not for an organization raising only $1000 was not. The ranges of client volume reviewed by APOC fit more effectively to have a tiered structure for lobbyists that allowed a nominal fee to be identified for clients spending less money to lobby the legislature. 1:59:07 PM Co-Chair Seaton asked whether independent expenditure groups were not covered in the bill because of Citizens United. Ms. Hebdon believed they would be covered under the term "group." Co-Chair Seaton asked whether the term "non-group entity" did not apply because every non-group entity would be under the definition of a "group." definition of a group. Ms. Hebdon answered that, technically, it would be defined as a person, which included a group. Co-Chair Seaton expressed curiosity about fees not being collected because a credit or debit card could not be used. Ms. Hebdon answered that the issue had been fixed; lobbyists could now use a credit card. The issue had been that the agency had lacked a programmer to process electronic payments. Co-Chair Seaton asked for verification that that electronic payment process included candidate payments. Ms. Hebdon answered that currently the only people that paid fees to APOC were lobbyists. Co-Chair Seaton understood that if the bill passed, anyone paying fees to APOC could do so with a credit card. 2:03:13 PM Ms. Hebdon answered in the affirmative. Representative Kawasaki asked how the fees would be assessed on individuals that were paid monthly, salary and hourly. Ms. Hebdon deferred to the sponsor. Currently everyone paid the same fee regardless of how they were compensated. He said that APOC would entertain regualtion in order to clarify any nuances. Representative Pruitt asked for the definition of "representational lobbyist." 2:06:27 PM Ms. Hebdon replied that representational lobbyists filed registration but did not submit reports and received no compensation or fees other than reimbursement for travel and personal living expenses. Vice-Chair Gara asked whether a lobbyist on a contract could avoid the fee. Ms. Hebdon answered that they would pay a fee regardless of salary. Representative Kito understood there was a conceptual and other amendment. He did not object to either. 2:08:53 PM Representative Kawasaki MOVED to ADOPT Amendment 1: Page 3, lines 2-5: Delete all material and insert: "(1) $150 for a contract with a value of   less than $10,000;   (2) $350 for a contract with a value of at   least $10,000 but less than $25,000;   (3) $650 for a contract with a value of at   least $25,000 but less than $45,000; and   (4) $850 for a contract with a value of   $45,000 or more."  Representative Wilson OBJECTED for discussion. Representative Kawasaki explained that the amendment would keep the original concept of a progressive system being in place for contracts. Representative Wilson wondered how the sponsor felt about the figures in the amendment. Representative Kito replied that he had not worked on the numbers in the amendment, but he did not disagree with the concept. He agreed that there were lobbying clients that did not spend as much in Juneau and believed that it was appropriate to be sure that they were not making excessive payments to come to Juneau. Representative Wilson WITHDREW her OBJECTION. There being NO OBJECTION, Amendment 1 was ADOPTED. Co-Chair Foster MOVED to ADOPT Conceptual Amendment 2 to alter the bill's effective date from January 1, 2018 to January 1, 2019. There being NO OBJECTION, it was so ordered. 2:13:06 PM Representative Pruitt offered Conceptual Amendment 3. He explained the requirement that APOC have an office in every senate district was not currently enforced and was also unnecessary. He moved that the statutory language requiring an APOC office in every senate district be removed from regulations. Co-Chair Seaton OBJECTED for discussion. 2:14:17 PM AT EASE 2:14:51 PM RECONVENED Representative Pruitt WITHDREW the conceptual amendment. Vice-Chair Gara reviewed the fiscal note from the Department of Administration, OMB Component Number 70. The note reflected operating expenditures of $226.6 through FY24. Representative Wilson pointed to Page 2 of the fiscal note related to the vacancy rate. She understood that although the agency did not have the authority to use the funds for personal services, the fiscal note implied that maybe it could; she expressed confusion about the vacancy as addressed in the fiscal note. 2:17:18 PM Ms. Hebdon relayed that the agency would be looking at adding at least one more position. Representative Wilson wondered how a change in the vacancy rate would affect the legislation. Representative Kito answered that the department was authorized a certain number of positions not funded to the full level of positions. He said that if the vacancy rate were reduced it would create an opportunity for one of the positions to be filled utilizing the receipts that were collected. Representative Wilson felt that vacancy rates were usually addressed in appropriation bills. She expressed confusion about the 2 positions reflected in the note. 2:19:16 PM Representative Kito answered that adding 2 positions would increase the PCN count, but they would still not have the funding to fill the position. If the filled positions were existing PCNs, the vacancy rate would remain the same. He related that the challenge was that a certain number of PCNs had been authorized but there was not funding to fund the PCNs. Representative Wilson wanted assurances that the bill was not acting as an appropriation bill. 2:20:42 PM Co-Chair Seaton explained that if the bill passed there would be $220,500 appropriated for personal services within APOC. He asserted that the bill did not circumvent the appropriation process. Representative Wilson understood. 2:22:45 PM ALEXEI PAINTER, ANALYST, LEGISLATIVE FINANCE DIVISION, shared that the fiscal note in itself was not an appropriation, but typically fiscal notes were incorporated into the operating budget during conference committee. He stated that the additional funding included in the fiscal note would be added into the budget were the bill to pass. Representative Wilson understood. She maintained concern that the vacancy rate was being discussed under the bill rather than in the operating budget process. Mr. Painter answered that the budgeted vacancy rate would not necessarily change. However, currently there was funding for 5 of the 7 positions. The bill would give the funding for the remaining 2 positions. 2:24:55 PM Vice-Chair Gara understood that there were vacancy factors, and then there were vacancies of positions that could be funded. He did not recognize the discussion of vacancy factor in the fiscal note that Representative Wilson had suggested. Co-Chair Seaton MOVED to REPORT CSHB 91(FIN) out of committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. Representative Wilson OBJECTED. She expressed concern with the tier levels for lobbyists. She WITHDREW her OBJECTION. CSHB 91(FIN) was REPORTED out of committee with a "do pass" recommendation and with 2:27:30 PM AT EASE 2:31:28 PM RECONVENED